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) - July 12, 1996
PSC Inc.
(Exact name of Registrant as Specified in its Charter)
New York
(State or other jurisdiction of Incorporation)
0-9919 16-096936
(Commission File Number) (IRS Employer Identification No.)
675 Basket Road, Webster, New York 14580
(Address of Principal Executive Offices)
(716) 265-1600
(Registrant's Telephone Number, including Area Code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
(a) On July 12, 1996, (the "Closing Date"), pursuant to and in
accordance with the terms of the Asset and Stock Purchase Agreement dated May
20, 1996 by and among PSC Inc. (the "Company"), Spectra-Physics, Inc., a
Delaware corporation ("Spectra-Physics"), and Spectra-Physics Holding. S.A., a
French corporation ("Spectra SA") and collectively with Spectra-Physics, the
"Sellers") (such Asset and Stock Purchase Agreement, as amended, the
"Acquisition Agreement"), (i) PSC Acquisition, Inc., a Delaware corporation and
a wholly-owned subsidiary of the Company ("Acquisition Corp.") purchased from
Spectra-Physics all of the issued and outstanding shares of capital stock of
Spectra-Physics Scanning Systems, Inc., a Delaware corporation ("Scanning")
(such shares, the "Scanning Shares") and the US Assets (as defined in the
Acquisition Agreement, (ii) the Company purchased from Spectra SA all of the
issued and outstanding shares of capital stock of TXCOM S.A., a French
Corporation ("TxCom"), owned by Spectra S.A. (the "TxCom Shares") (being 7,235
shares of common stock representing 72% of the issued and outstanding capital
stock of TxCom) and was assigned the TxCom Contracts (as defined in the
Acquisition Agreement), and (iii) certain wholly-owned subsidiaries of the
Company purchased from the Seller Subsidiaries (as defined in the Acquisition
Agreement) the International Assets (as defined in the Acquisition Agreement),
subject to the Assumed International Liabilities (as defined in the Acquisition
Agreement), (the purchase and sale of securities and assets pursuant to the
Acquisition Agreement are referred to herein collectively as the "Stock/Asset
Purchase"). Scanning, TxCom and the International Assets of the Seller
Subsidiaries comprised the Data Capture Group of Spectra-Physics AB, a
multinational corporation based in Sweden.
Simultaneously with the Stock/Asset Purchase, Acquisition Corp. consummated
a merger with Scanning, in which Scanning was the surviving corporation and its
name was changed to SpectraScan, Inc. ("SpectraScan").
The aggregate purchase price paid to the Sellers under the Acquisition
Agreement in respect of the Scanning Shares, the US Assets, the TxCom Shares and
the International Assets was $138,997,000 subject to adjustment as provided in
Sections 1.4 and 1.6 of the Acquisition Agreement (the "Purchase Price"). The
Purchase Price was paid in the following manner:
(1) $123,997,000 in cash (the "Cash Payment") on the Closing Date.
(2) the issuance by Acquisition Corp. of its $5,000,000 Subordinated
Installment Promissory Note due 2001.
(3) the issuance by the Company of 977,135 of its common shares;
said shares having an aggregate fair market value (determined
in accordance with the Acquisition Agreement) of $10,000,000.
<PAGE>
The sources of funds for the Cash Payment were as follows:
(1) $92,500,000 pursuant to a Credit Agreement dated July
12, 1996 among Acquisition Corp., as Borrower, the
Company, as Guarantor, the Initial Lenders named
therein and Fleet Bank, as Initial Issuing Bank and
Administrative Agent. The Initial Lenders were
Corestates Bank, N.A., Fleet Bank, Key Bank,
Manufacturers and Traders Trust Company, Pilgrim
America Prime Rate Trust, and Sumitomo Bank.
(2) $30,000,000 pursuant to 11.25% Senior Subordinated
Notes of SpectraScan, due June 30, 2006 issued
pursuant to Securities Purchase Agreements dated July
12, 1996 between SpectraScan, the Company and the
purchasers of the Senior Subordinated Notes. In
connection therewith, the Company issued and sold to
the Purchasers of the Senior Subordinated Notes
warrants evidencing rights to purchase an aggregate of
975,000 of its Common Shares. The Purchasers of the
Subordinated Notes and Warrants were John Hancock
Mutual life Insurance Company, John Hancock Variable
Life Insurance Company, the Lincoln National Life
Insurance Company (MZP), Lincoln National Income Fund,
Inc., Security- Connecticut Life Insurance Company,
Security-Connecticut Corporation, and the Equitable
Life Assurance Society of the United States.
(3) $1,497,000 from the Company's cash on hand.
The acquisition will be accounted for as a purchase. The Company will
recognize a one-time write-off of in-process research and development in
connection with the transaction aggregating approximately $60 million, pre-
tax. In addition, the Company will recognize an acquisition related
restructuring charge which amount will be finalized by September 30, 1996.
(b) Scanning is a leading manufacturer of countertop and in-counter bar
code scanners used primarily in retail checkout applications. The Company plans
to continue Scanning's operations in Scanning's Eugene, Oregon facilities.
Item 5. Other Events
On July 12, 1996 the Company named John F. O'Brien, President of
Scanning, as President of the Company. L. Michael Hone retains his position as
the Company's Chairman and Chief Executive Officer.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of business acquired:
It is impracticable to provide the Combined Financial
Statements of the Data Capture Group of Spectra-Physics AB as of December 31,
1995 and December 31, 1994 at this time. They will be filed on later than
September 25, 1996.
(b) Pro forma financial information:
It is impracticable to provide the pro forma financial
information at this time. They will be filed no later than September 25, 1996.
(c) Exhibits:
2.1 Asset and Stock Purchase Agreement among PSC Inc., Spectra-
Physics, Inc. and Spectra-Physics Holding, S.A. dated May 20, 1996, as amended
by letter dated July 12, 1996.
3.1 Certificate of Merger of PSC Acquisition, Inc. into Spectra-
Physics Scanning Systems, Inc.
filed with the Secretary of State of Delaware on July 12, 1996.
4.1 Form of 11.25% Senior Subordinated Note of SpectraScan,
Inc. due June 30, 2006 (Notes were issued to seven Purchasers in the aggregate
principal amount of $30,000,000).
4.2 Form of Note Guarantee dated July 12, 1996 made by PSC
Inc. and each of the domestic subsidiaries of PSC Inc. to each of the Purchasers
of the Senior Subordinated Notes.
4.3 Form of Warrant issued to the Purchasers named in the
Securities Purchase Agreements dated July 12, 1996 (Warrants were issued to
seven Purchasers for an aggregate of 975,000 common shares of the Company).
4.4 Subordinated Installment Promissory Note of PSC Acquisition,
Inc. issued to Spectra-Physics, Inc. on July 12, 1996 in the principal amount of
$5,000,000.
4.5 Note Guarantee dated July 12, 1996 made by PSC Inc. to Spectra
Physics, Inc.
10.1 Securities Purchase Agreement dated July 12, 1996 among
PSC Inc., SpectraScan, Inc. and Equitable Life Assurance Society of the United
States (separate but identical Securities Purchase Agreements were addressed to
each of the Other Purchasers of the Senior Subordinated Notes).
<PAGE>
10.2 Credit Agreement dated July 12, 1996 among PSC Acquisition, Inc.,
as Borrower, PSC Inc. as Guarantor, the Initial Lenders named therein and Fleet
Bank as Initial Issuing Bank and Administrative Agent, together with Form of
Term A Note, Form of Term B Note and Form of Working Capital Note.
10.3 Registration Rights and Holdback Agreement dated July 12,
1996 between Spectra-Physics, Inc. and PSC Inc.
10.4 Non-Compete Agreement dated July 12, 1996 between Spectra-
Physics, Inc. and PSC Inc.
10.5 Escrow Agreement dated July 12, 1996 among PSC Inc.,
Spectra-Physics, Inc. and The Chase Manhattan Bank N.A.
SIGNATURES
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.
PSC Inc.
(Registrant)
Dated: July 25, 1996 By: /s/ William J. Woodard
William J. Woodard
Vice President, Finance & Treasurer
Date: July 25, 1996 By: /s/ Scott D. Deverell
Scott D. Deverell
Controller & Principal Accounting
Officer
Exhibit 2.1
CONFIDENTIAL
____________________________________________________________
ASSET AND STOCK PURCHASE AGREEMENT
by and among
PSC Inc.
a New York corporation
and
SPECTRA-PHYSICS, INC.
a Delaware corporation
and
SPECTRA-PHYSICS HOLDING, S.A.
a French corporation
_________________________
Dated May 20, 1996
_________________________
_______________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I THE TRANSACTION.................................... 2
1.1 Sale and Purchase of Shares, Purchased Assets,
TxCom Shares and TxCom Rights.................................. 2
1.2 Definitions.............................................. 3
(a) Certain Definitions................................ 3
(b) Other Definitions.................................. 6
1.3 Pre-Closing Transfer of Certain Assets of
Scanning; Industrial Revenue Bonds............................. 8
1.4 Purchase Price........................................... 8
1.5 Payment of Cash Portion; Delivery of Buyer Stock
and Note; Assumption of Liabilities............................ 9
1.6 Purchase Price Adjustment................................ 10
1.7 Allocation of Purchase Price............................. 12
1.8 Closing.................................................. 12
1.9 Deliveries and Proceedings at Closing.................... 13
(a) Deliveries by Seller............................... 13
(b) Deliveries by Buyer................................ 13
(c) Other Deliveries................................... 14
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER................. 14
2.1 Representations and Warranties Pertaining to the
Business....................................................... 14
(a) Organization and Qualification..................... 14
(b) Capitalization..................................... 14
(c) Subsidiaries....................................... 15
(d) Authority.......................................... 15
(e) Non-Contravention.................................. 16
(f) Governmental Consents and Approvals................ 16
(g) Combined Financial Statements...................... 17
(h) Taxes.............................................. 17
(i) Properties......................................... 18
(j) Environmental Matters.............................. 19
(k) Patents; Trademarks etc............................ 19
(l) Domestic Employee Benefit Plans.................... 20
(m) Foreign Employee Benefit Plans..................... 21
(n) Contracts.......................................... 22
(o) No Changes......................................... 23
(p) Litigation or Proceedings.......................... 24
(q) Compliance with Laws............................... 24
(r) Labor Matters...................................... 25
(s) Insurance Coverage................................. 25
(t) Certain Transactions with Affiliates............... 25
(u) Securities Act..................................... 25
(v) Banks.............................................. 25
(w) Powers of Attorney................................. 25
2.2 Excluded International Assets, Etc....................... 26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER............ 26
3.1 Representations and Warranties of Buyer.................. 26
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<PAGE>
TABLE OF CONTENTS (cont'd)
Page
(a) Organization and Qualification..................... 26
(b) Capitalization..................................... 27
(c) Subsidiaries....................................... 27
(d) Authority.......................................... 27
(e) Non-Contravention.................................. 28
(f) Governmental Consents and Approvals................ 28
(g) Financial Statements............................... 29
(h) Taxes.............................................. 29
(i) Patents; Trademarks................................ 29
(j) No Changes......................................... 29
(k) Litigation or Proceedings.......................... 30
(l) Compliance with Laws............................... 31
(m) Buyer's Stock...................................... 31
(n) Securities Act..................................... 31
(o) SEC Filings........................................ 31
(r) Note............................................... 32
3.2 Certain Limitations on Representations and
Warranties..................................................... 32
ARTICLE IV CERTAIN OBLIGATIONS OF SELLER...................... 33
4.1 Conduct of Business Pending Closing...................... 33
4.2 Access................................................... 34
4.3 Exclusive Dealing........................................ 34
ARTICLE V CERTAIN OBLIGATIONS OF BUYER....................... 35
5.1 Conduct of Business Pending Closing...................... 35
5.2 Access................................................... 36
ARTICLE VI CONDITIONS TO CLOSING; TERMINATION................. 36
6.1 Conditions Precedent to Obligations of the Buyer
Group.......................................................... 36
(a) Bringdown of Representations and Warranties........ 36
(b) Performance and Compliance......................... 37
(c) Opinion of Counsel................................. 37
(d) Waiting Periods.................................... 37
(e) Litigation......................................... 37
(f) Non-Compete Agreement.............................. 37
(g) Transition Services Agreement...................... 37
(h) Minute Books and Resignations...................... 37
(i) Permits, Approvals and Authorizations.............. 38
(j) Certificate of Incorporation, Bylaws............... 38
(k) Certificates of Good Standing...................... 38
(l) Secretary's Certificate............................ 38
6.2 Conditions Precedent to the Obligations of the
Seller Group................................................... 38
(a) Bringdown of Representations and Warranties........ 38
(b) Performance and Compliance......................... 38
(c) Opinion of Counsel for the Buyer Group............. 39
(d) Waiting Periods.................................... 39
(e) Litigation......................................... 39
- ii -
<PAGE>
TABLE OF CONTENTS (cont'd)
Page
(f) TxCom Guarantee.................................... 39
(g) Permits, Approvals and Authorizations.............. 39
(h) Certificate of Incorporation, Bylaws............... 39
(i) Certificates of Good Standing...................... 39
(j) Secretary's Certificate............................ 39
6.3 Termination.............................................. 39
ARTICLE VII CERTAIN ADDITIONAL COVENANTS....................... 40
7.1 Costs, Expenses and Taxes................................ 40
7.2 Brokers.................................................. 40
7.3 Employment............................................... 41
7.4 Best Efforts............................................. 41
7.5 Transition Services Agreement............................ 41
7.6 Regulatory Filings....................................... 41
7.7 Use of Name.............................................. 42
7.8 Registration Rights...................................... 44
7.9 TxCom Guarantee.......................................... 44
7.10 Buyer's Further Assurances............................... 44
7.11 Restriction on Sale of Buyer Stock....................... 44
ARTICLE VIII INDEMNIFICATION.................................... 45
8.1 Indemnification by the Seller............................ 45
8.2 Indemnification By Buyer................................. 46
8.3 Limitations on Indemnification Obligations............... 46
8.4 Procedures Relating to Indemnification................... 48
8.5 Exclusive Remedy......................................... 49
ARTICLE IX TAX MATTERS........................................ 49
9.1 Tax Responsibility....................................... 49
9.2 Section 338(h)(10) Election.............................. 51
9.3 Refunds and Credits...................................... 53
9.4 Tax Sharing Agreements................................... 54
9.5 Dispute Resolution....................................... 54
ARTICLE X MISCELLANEOUS...................................... 54
10.1 Notices.................................................. 54
10.2 Successors and Assigns; Benefit.......................... 56
10.3 Public Announcements..................................... 56
10.4 Governing Law............................................ 56
10.5 Headings................................................. 56
10.6 Amendments............................................... 56
10.7 Limitation on Knowledge.................................. 56
10.8 Foreign Sales Agreements and TxCom Agreement............. 57
10.9 Consent to Jurisdiction.................................. 57
10.10 Post-Closing Access...................................... 58
10.11 Regarding Certain Consents............................... 58
10.12 Further Assurances....................................... 59
10.13 Preservation of Records Information...................... 59
10.14 Further Audit Assistance................................. 59
10.15 Specific Performance..................................... 59
- iii -
<PAGE>
TABLE OF CONTENTS (cont'd)
Page
10.16 Entire Agreement......................................... 60
- iv -
<PAGE>
EXHIBITS
Exhibit A - Foreign Sales Agreements
B - TxCom Share Transfer Order
C - TxCom Assignment and Assumption
Agreement
D - Terms of Note
E - Form of Escrow Agreement
F - Allocation of Purchase Price
G - Opinion of Seller's Counsel
H - Form of Non-Compete Agreement
I - Form of Transition Services
Agreement
J - Opinion of Buyer's Counsel
K - Form of Registration Rights
Agreement
- v -
<PAGE>
ASSET AND STOCK PURCHASE AGREEMENT
This is an ASSET AND STOCK PURCHASE AGREEMENT (the "Agreement") dated May
20, 1996, by and among PSC Inc., a New York corporation ("Buyer"),
Spectra-Physics, Inc., a Delaware corporation ("Seller") and Spectra-Physics
Holding, S.A., a French corporation ("SP Holding").
BACKGROUND
A. Seller is engaged, through Spectra-Physics Scanning Systems, Inc., a
Delaware corporation ("Scanning"), T.X.C.O.M., S.A., a French corporation
("TxCom"), and the Seller Subsidiaries (as defined below), in the business of
designing, manufacturing and marketing bar code scanners, wireless radio
frequency systems and retail automation systems for the automatic identification
and data collection industry (the "Business"). The Seller Subsidiaries consist
of Spectra-Physics S.A., a French corporation, Spectra-Physics S.r.l., an
Italian corporation, Spectra-Physics K.K., a Japanese company, Spectra-Physics
GmbH, a German corporation, Spectra-Physics Pty Ltd., an Australian corporation
and Spectra-Physics Ltd, a United Kingdom corporation.
B. The Business is conducted through and consists of (a) Scanning, (b)
TxCOM, (c) certain of the assets and liabilities of the Seller Subsidiaries,
which assets (the "International Assets") and which liabilities (the "Assumed
International Liabilities") are more particularly described in Section 1.2(a)
below and (d) the patents, subject to the license listed in Schedule 2.1(t)
hereto (the "US Assets"), owned by Seller and used in the Business which are set
forth in Schedule 2.1(k) hereto (the International Assets and the US Assets are
herein referred to as the "Purchased Assets").
C. Seller is the sole owner of all of the issued and outstanding shares of
capital stock of Scanning (the "Shares").
D. SP Holding owns 7235 shares of common stock (or 72% of the issued and
outstanding capital stock) of TxCom (the "TxCom Shares") and has the right to
purchase all of the remaining issued and outstanding capital stock of TxCom.
E. Seller desires to sell to Buyer, and Buyer desires to purchase, the
Shares and the US Assets. Seller desires to cause each Seller Subsidiary to sell
to one or more wholly-owned subsidiaries of Buyer (each a "Buyer Subsidiary" and
collectively the "Buyer Subsidiaries"), and Buyer desires to cause the Buyer
Subsidiaries to purchase, the International Assets, subject to the Assumed
International Liabilities, all upon the terms and subject to the conditions
hereinafter set forth. SP Holding desires to sell the TxCom Shares and to assign
certain contracts (including certain contract rights (the "TxCom Rights"),
subject to certain contract obligations (the "TxCom Obligations") (each as more
particularly described in Section 1.2(a)) (the "TxCom Contracts") to Buyer (or a
Buyer Subsidiary) and Buyer desires to purchase (or cause such Buyer Subsidiary
to purchase) the TxCom Shares and assume the TxCom Contracts (including the
TxCom Rights, subject to the TxCom Obligations). Seller, SP Holding and the
Seller Subsidiaries are sometimes referred to herein as the "Seller Group" and
Buyer and the Buyer Subsidiaries are sometimes referred to herein as the "Buyer
Group."
<PAGE>
TERMS
In consideration of the mutual covenants contained herein and intending to
be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE TRANSACTION
1.1 Sale And Purchase Of Shares, Purchased Assets, Txcom Shares And Txcom
Rights. Subject to the terms and conditions contained herein, at the Closing
referred to in Section 1.8 below:
(a) Seller shall sell, convey, assign, transfer and deliver to Buyer,
and Buyer shall purchase and acquire from Seller, the Shares;
(b) Seller shall sell, convey, assign, transfer and deliver to Buyer,
and Buyer shall purchase and acquire from Seller, the US Assets;
(c) Seller shall cause each Seller Subsidiary to sell, convey, assign,
transfer and deliver to the Buyer Subsidiaries, and Buyer shall cause one
or more Buyer Subsidiaries to purchase or acquire from each Seller
Subsidiary, the International Assets of such Seller Subsidiary, subject to
the Assumed International Liabilities of such Seller Subsidiary. The sale
of assets and transfer of liabilities by each Seller Subsidiary shall be
made to the Buyer Subsidiaries by means of a separate purchase and sale
agreement (each a "Foreign Sales Agreement" and collectively, the "Foreign
Sales Agreements"), which agreements shall each be substantially in the
form of Exhibit A hereto, with such changes therein as are necessary or
appropriate under local law or as the parties may otherwise agree; and
(d) SP Holding shall sell, convey, assign, transfer and deliver the
TxCom Shares and assign the TxCom Contracts (including the TxCom Rights and
the TxCom Obligations), to Buyer (or a Buyer Subsidiary), and Buyer shall
purchase and acquire (or shall cause such Buyer Subsidiary to purchase and
acquire) from SP Holding the TxCom Shares and assume the TxCom Contracts
(including the TxCom Rights, subject to the TxCom Obligations). Such
transfer shall be made by SP Holding to Buyer (or a Buyer Subsidiary) by
means of (i) a share transfer order, in customary form, and (ii) the TxCom
Assignment and Assumption Agreement (collectively, the "TxCom Agreement"),
which order and which agreement shall be substantially in the form of
Exhibit B and Exhibit C, respectively, hereto.
<PAGE>
1.2 Definitions.
(a) Certain Definitions.
(i) The term "International Assets" shall mean all assets, properties and
rights (contractual or otherwise) of every kind, nature and description
(including, without limitation, (i) furniture, machinery, parts, tools and
equipment, if any, (ii) inventory, (iii) accounts receivable, (iv) license,
distribution, dealer, sales representative, supplier, service, and other
commercial agreements, if any, (v) sales orders, purchase orders, quotations,
and bids, (vi) prepaid items, if any, (vii) licenses, permits, authorizations
and approvals, if any, (viii) customer lists, (ix) books and records, (x)
technical manuals and product and sales literature, (xi) all rights under
express or implied warranties, (xii) goodwill and (xiii) all claims or defenses
relating to any of the foregoing or to the Assumed International Liabilities (as
defined below)) of the Seller Subsidiaries existing on the Closing Date that are
used primarily in the Business, except for the Excluded International Assets (as
defined below).
(ii) The term "Excluded International Assets" shall mean cash and cash
equivalents, accounts receivable represented by discounted notes, any assets or
rights not used primarily in, or primarily benefitting, the Business and any
rights under insurance policies except for claims related to the Business that
are covered under such insurance policies but that have not yet been submitted.
Excluded International Assets shall specifically include leasehold rights and
improvements (other than with respect to the Purchased International Offices as
hereinafter defined), central management information systems of the Seller
Subsidiaries and related office equipment (but not including any readily-movable
local area network and wide area communication network used primarily in the
Business), telephone systems, other office equipment (such as photocopiers or
audiovisual equipment) not used exclusively in the Business, security deposits,
any claims for refunds of Taxes (as hereinafter defined) paid by the Seller
Subsidiaries, and except as set forth in Section 7.7 of this Agreement, any
rights in or to the name "Spectra-Physics" or the Spectra-Physics stylized "S"
logo.
<PAGE>
(iii) The term "Assumed International Liabilities" shall mean all
liabilities and obligations (contractual or otherwise) of every kind, nature and
description, known or unknown, of the Seller Subsidiaries that primarily relate
to the Business, the conduct of the Business or the International Assets,
excepting the Excluded International Liabilities (as hereinafter defined). For
avoidance of doubt, Assumed International Liabilities shall include all
obligations related to the Business's offices located in Belgium and Spain (the
"Purchased International Offices") (such locations being further specified in
Schedule 2.1(i) hereto).
(iv) The term "Excluded International Liabilities" shall mean the following
liabilities of the Seller Subsidiaries: (i) liabilities for Taxes, (ii)
liabilities or obligations for facility costs, such as obligations under real
estate leases (except with respect to the Purchased International Offices),
(iii) trade payables for goods and services relating to the overall operations
of the Seller Subsidiaries, such as for office supplies, facility maintenance
services and telephone service (except with respect to the Purchased
International Offices), and (iv) recourse liabilities in respect of accounts
receivable represented by discounted notes.
(v) The term "Foreign Business Employees" shall mean (i) those employees of
the Seller Subsidiaries set forth on Schedule 1.2(A)(v) hereto (provided such
employees are employees of the Seller Subsidiaries on the Closing Date), and
(ii) any other employees of the Seller Subsidiaries hired after the date hereof
and employed by the Seller Subsidiaries on the Closing Date whose work relates
primarily to the business and operations of the Business, such as employees who
sell and service the products sold by the Business, employees who process orders
and collect receivables with respect to products sold by the Business, support
staff whose primary function is to support such salesmen, servicemen, order
processors and accounts receivable clerks, and managerial employees whose
function is to manage such salesmen, servicemen, order processors, accounts
receivable clerks and staff.
(vi) The "TxCom Contracts" shall mean the (i) Share Purchase Agreement by
and between Compagnie Auxiliaire de Telecommunication, Ali Ben Ameur, GH
Conseil, Christian Hart de Keating, Philippe Malaise, Joseph Boissy, Vincent
Baumier, Daniel Mawas, Bernard Malaise, Alain Bonodot, SP Holding and Scanning,
(ii) Shareholders and Management Agreement by and between Spectra-Physics AB,
Scanning, SP Holding, Vincent Baumier, Bernard Malaise, Daniel Mawas and Alain
Bonodot, and (iii) Representation and Warranty Agreement by and between TxCom,
SP Holding, Vincent Baumier, Bernard Malaise, Daniel Mawas and Alain Bonodot,
all dated as of August 28, 1995.
<PAGE>
(vii) The "TxCom Rights" shall mean all of Spectra-Physics AB's, SP
Holding's and Scanning's right, title or interest in and to the TxCom Contracts.
(viii) The "TxCom Obligations" shall mean all of Spectra-Physics AB's, SP
Holding's and Scanning's liabilities and obligations under the TxCom Contracts.
(ix) The term "Subsidiary", when used in this Agreement, means, with
respect to any corporation or entity ("Person"), any other corporation or other
business entity in which such Person owns directly or indirectly fifty percent
(50%) or more of the effective voting power or equity interest or has the power
or authority to control such corporation or other business entity.
(x) The term "Industrial Revenue Bonds" shall mean the State of Oregon
Economic Development Commission $4,400,000 Industrial Revenue Bonds, dated as of
July 1, 1979.
(xi) The term "Material Adverse Effect" means any material adverse effect
on the financial condition or results of operation of the Business taken as a
whole, other than with respect to any adverse effects which, directly or
indirectly, relate to or result from (i) public or industry knowledge relating
to the transactions contemplated by this Agreement or (ii) past, existing or
prospective economic, regulatory or other conditions affecting the Business or
the industries in which the Business competes; provided that no act, omission,
occurrence, expense or liability shall be deemed to be or result in such a
material adverse effect unless the loss to or cost borne by the Business by
reason of such act, omission, occurrence, expense or liability is greater than
US $300,000; and provided further that for purposes of Section 6.1(A) of this
Agreement no act, omission, occurrence, expense or liability shall be deemed to
be or result in such a material adverse effect unless the loss to or cost borne
by the Business by reason of such act, omission, occurrence, expense or
liability is greater than US $2,000,000.
(xii) The term "Material Adverse Effect on Buyer" means any material
adverse effect on the financial condition or results of operation of Buyer or
its Subsidiaries taken as a whole, other than with respect to any adverse
effects which, directly or indirectly, relate to or result from (i) public or
industry knowledge relating to the transactions contemplated by this Agreement
or (ii) past, existing or prospective economic, regulatory or other conditions
affecting Buyer or its Subsidiaries or the industries in which they compete;
provided that no act, omission, occurrence, expense or liability shall be deemed
to be or result in such a material adverse effect on Buyer unless the loss to or
cost borne by Buyer or its Subsidiaries by reason of such act, omission,
occurrence,expense or liability is greater than US $300,000; and provided
further that for purposes of Section 6.2(A) of this Agreement no act, omission,
occurrence, expense or liability shall be deemed to be or result in such a
material adverse effect on Buyer unless the loss to or cost borne by Buyer or
its Subsidiaries by reason of such act, omission, occurrence, expense or
liability is greater than US $2,000,000.
<PAGE>
(b) Other Definitions. The following defined terms shall have the meaning
set forth in the referenced section.
Defined Term Term Defined In Section
Accounting Principles ......................... 2.1(g)
Accumulated Funding Deficiency ................ 2.1(l)(iii)
Adjusted Cash Portion ......................... 1.6(e)
Adjusted Purchase Price ....................... 1.6(e)
Agreement ..................................... Introductory Paragraph
Anti-Monopoly Law ............................. 2.1(f)
Audited Balance Sheet ......................... 2.1(g)
Breakup Fee ................................... 4.4
Business ...................................... Background Paragraph A
Buyer Group ................................... Background Paragraph F
Buyer's Subsidiaries .......................... Background Paragraph E
Buyer's Subsidiary ............................ Background Paragraph E
Buyer Proxy Statement ......................... 3.1(p)
Buyer Stock ................................... 1.4(a)
Buyer's Filings ............................... 3.1(s)
Buyer's Knowledge ............................. 10.7
Buyer's 10-K .................................. 3.1(c)
Cash Portion .................................. 1.4(a)
CECS .......................................... 2.1(m)
CERCLA ........................................ 2.1(j)
Closing ....................................... 1.8
Closing Cash Payment .......................... 1.5(a)
Closing Date Balance Sheet .................... 1.6(c), 1.6(d)
Code .......................................... 2.1(h)
Combined Financial Statements ................. 2.1(g)
Common Stock .................................. 1.4(a)
Confidentiality Agreement ..................... 8.5
Consent ....................................... 2.1(e)
Customer ...................................... 2.1(x)
Damages ....................................... 8.1
Election Forms ................................ 9.2
Elections ..................................... 9.2
Employee Pension Benefit Plan ................. 2.1(l)(iii)
Environmental Permits ......................... 2.1(j)
Environmental Laws ............................ 2.1(j)
ERISA ......................................... 2.1(l)(i)
Escrow Agent .................................. 1.5(d)
Escrow Agreement .............................. 1.5(d)
Escrowed Shares ............................... 1.5(d)
<PAGE>
Defined Term Term Defined In Section
Estimated Cash Portion Adjustment ............. 1.4(b)
Estimated Cash Portion of
the Purchase Price .......................... 1.4(b)
Exchange Act .................................. 3.1(s)
Foreign Sales Agreement ....................... 1.1(c)
GAAP .......................................... 2.1(g)
Government Authority .......................... 2.1(h)
Hazardous Substances .......................... 2.1(j)
HSR Act ....................................... 2.1(f)
Indemnification Notice ........................ 8.4(a)
Indemnified Party ............................. 8.4(a)
Indemnifying Party ............................ 8.4(a)
Intellectual Property ......................... 2.1(k)
IRS ........................................... 2.1(l)(i)
Licensed Products ............................. 7.7(b)
Licensed Names ................................ 7.7(b)
Multiemployer Plan ............................ 2.1(l)(ii)
Neutral Auditors .............................. 1.6(d)
Non-Assignable Contracts ...................... 10.11
Non-compete Agreement ......................... 6.1(f)
Note .......................................... 1.4(a)
Payroll Taxes ................................. 2.1(h)
Person ........................................ 1.2(f)
Phase I Investigation ......................... 2.1(j)
Potential Acquiror ............................ 4.4
Preliminary Closing Date Balance Sheet ........ 1.6(a)
Pro-Forma Adjustments ......................... 1.6(e)
Prohibited Transaction ........................ 2.1(l)(ii)
Purchase Price ................................ 10.8
Purchase Price ................................ 1.4(a)
Purchased Assets .............................. Background Paragraph B
Purchased International Offices ............... 1.2(a)(ii)
Registration Rights Agreement ................. 7.8
Reportable Event .............................. 2.1(l)(iii)
Representations and Warranties
Agreement .................................. 8.3(c)
Retained Names and Logos ...................... 7.7(a)
Return/Returns ................................ 2.1(h)
Scanning ...................................... Background Paragraph A
Securities Act ................................ 2.1(u)
Seller Subsidiary ............................. Background Paragraph A
Seller Group .................................. Background Paragraph E
Seller's Knowledge ............................ 10.7
Scanning's Benefit Plans ...................... 2.1(l)(i)
Seller Brokers ................................ 7.2
Scanning's Qualified Plans .................... 2.1(l)(iii)
Scanning's ERISA Affiliate .................... 2.1(l)(i)
Shares ........................................ Background Paragraph C
Spectra-Physics AB ............................ 1.5(a)
Subordinated Debt Commitment Letters .......... 3.1(q)
<PAGE>
Tax/Taxes ..................................... 2.1(h)
Third Party Claim ............................. 8.4(a)
Third Party Transaction ....................... 4.4
Transition Services Agreement ................. 6.1(g)
TxCom ......................................... Background Paragraph A
TxCom Agreement ............................... 1.1(d)
TxCom Guarantee ............................... 8.2(c)
TxCom Shares .................................. Background Paragraph D
Undisputed Amount ............................. 1.6(e)
US Assets ..................................... Background Paragraph B
1.3 Pre-Closing Transfer of Certain Assets of Scanning; Industrial Revenue
Bonds.
(a) Prior to Closing, Seller shall cause Scanning to dividend or otherwise
transfer to Seller or its designees all or substantially all cash and cash
equivalents of Scanning. As of the Closing, all intercompany payables or
receivables between the Business, on the one hand, and any affiliate of Seller
(other than Scanning or TxCom), on the other hand, shall be cancelled, except
for receivables from Spectra-Physics Lasers, Inc. to Scanning in respect of
sales of VLD/ASIC drivers by Scanning to Spectra-Physics Lasers, Inc. in the
ordinary course of business.
(b) Prior to Closing, Seller will pay or call for payment on the next
available prepayment date all of the outstanding Industrial Revenue Bonds.
1.4 Purchase Price.
(a) The aggregate purchase price for (i) the non-compete covenant described
in Section 6.1(f), (ii) the Shares, (iii) the TxCom Shares and TxCom Rights and
(iv) the Purchased Assets shall consist of One-Hundred Twenty Million Dollars
(US $120,000,000) (the "Cash Portion"), 977,135 fully paid and non-assessable
shares (the "Buyer Stock") of Buyer's Common Stock, par value $.01 per share
("Common Stock"), and a promissory note of Buyer (the "Note") in the principal
amount of Five Million United States Dollars (US $5,000,000), plus the
assumption by Buyer (and/or the Buyer Subsidiaries) of the Assumed International
Liabilities and the TxCom Obligations (such consideration, as adjusted as
provided herein, is collectively referred to herein as the "Purchase Price").
The Cash Portion of the Purchase Price shall be subject to adjustment as
provided in Section 1.6 below, and an increase or a decrease in the Cash Portion
of the Purchase Price will result in a corresponding increase or decrease in the
Purchase Price. The Note shall be dated the date of Closing and shall be on the
terms set forth on Exhibit D hereto.
<PAGE>
(b) At least five days prior to the Closing Date, Seller will deliver to
Buyer in writing its good faith estimate of the Cash Portion of the Purchase
Price based on the then most currently available financial information
concerning the Business' working capital, together with documentation setting
forth the basis for such estimate (such estimate of the Cash Portion of the
Purchase Price being the "Estimated Cash Portion of the Purchase Price" and 50%
of the amount by which the Estimated Cash Portion of the Purchase Price exceeds
US $120,000,000 being the "Estimated Cash Portion Adjustment").
1.5 Payment of Cash Portion; Delivery of Buyer Stock and Note; Assumption
of Liabilities. At the Closing, the Purchase Price (prior to being finally
adjusted pursuant to Section 1.6) shall be payable as follows:
(a) Buyer shall and/or shall cause the Buyer Subsidiaries to (i) pay an
amount (the "Closing Cash Payment") in United States Dollars equal to
$120,000,000 plus the Estimated Cash Portion Adjustment in cash or by wire
transfer of immediately available funds to a bank account or accounts designated
by Seller on behalf of itself, the Seller Subsidiaries, SP Holding and
Spectra-Physics AB ("Spectra-Physics AB"), (ii), subject to the provisions of
Section 1.5(d) hereto, deliver the Buyer Stock to Seller, free and clear of all
liens, claims, equities, options, calls, voting trusts, agreements, commitments
and encumbrances whatsoever other than restrictions arising under federal and
state securities laws and (iii) execute and deliver the Note to Seller. The
Purchase Price shall be allocated as provided in Section 1.7.
(b) The Buyer Subsidiaries will pursuant to the Foreign Sales Agreements
assume and agree to pay, perform, satisfy or otherwise discharge when due the
Assumed International Liabilities.
(c) Buyer will (or will cause the appropriate Buyer Subsidiary to),
pursuant to the TxCom Assignment and Assumption Agreement, assume the TxCom
Contracts (including the TxCom Obligations) and agree to pay, perform, satisfy
or otherwise discharge when due the TxCom Obligations.
(d) Buyer shall deposit with Chase Manhattan Bank, N.A. (the "Escrow
Agent") the number of shares of the Buyer Stock which equals US $3,000,000
divided by the closing price of the Common Stock on the NASDAQ National Market
System on the next to the last trading day prior to the Closing Date as reported
in the Wall Street Journal (the "Escrowed Shares"). The Escrowed Shares will be
held in escrow as security for the indemnification obligation set forth in
Article VIII in accordance with the terms of an escrow agreement (the "Escrow
Agreement"), substantially in the form of Exhibit E hereto.
<PAGE>
1.6 Purchase Price Adjustment.
(a) Within 60 days after the Closing, Scanning (acting through Roger
Tedford, its Vice President-Finance, or his successor as designated by John
O'Brien, the President of Scanning) shall cause to be prepared and concurrently
delivered to Seller and to Buyer a combined balance sheet of the Business as of
the Closing Date (the "Preliminary Closing Date Balance Sheet"). The Preliminary
Closing Date Balance Sheet shall be prepared using the same accounting
principles, practices and procedures as were used in the preparation of the
Audited Balance Sheet (as defined in Section 2.1(g)), applied on a consistent
basis (such accounting principles, practices and procedures so applied being the
"Accounting Principles").
(b) During the preparation of the Preliminary Closing Date Balance Sheet by
Scanning and the period of any dispute referred to below, Buyer shall provide
Seller and Seller's independent accountants full access to the books, records,
facilities and employees of the Business; provided, however, that any such
access shall be allowed only in such manner as not to interfere unreasonably
with the operation of the Business. Neither Seller nor Buyer will engage in any
substantive discussions with Scanning or its employees regarding preparation of
the Preliminary Closing Balance Sheet unless the other party is also represented
in such discussions.
(c) Either Buyer or Seller may dispute the amounts set forth on the
Preliminary Closing Date Balance Sheet, but only on the basis that such amounts
were not determined in accordance with the Accounting Principles or with regard
to computational errors; provided, however, that no dispute shall be considered
properly raised unless Buyer or Seller, as the case may be, shall have notified
Scanning and the other party in writing of each disputed item, specifying the
amount thereof in dispute and setting forth, in reasonable detail, the basis for
such dispute, within 30 days of such party's receipt of the Preliminary Closing
Date Balance Sheet. Any items not properly disputed by either party within such
30-day period shall be final, binding and conclusive on the parties hereto. If
neither Buyer nor Seller fails properly to notify Scanning and the other party
of any such dispute within such 30-day period the Preliminary Closing Date
Balance Sheet shall be deemed to be the "Closing Date Balance Sheet."
(d) In the event of a dispute with respect to the Preliminary Closing Date
Balance Sheet, Buyer and Seller shall attempt to resolve their differences and
any such resolution shall be final, binding and conclusive on the parties
hereto. If Buyer and Seller fail to reach a resolution with respect to any
disputed item within 10 business days of a party's written notice of dispute to
Scanning and the other party, Buyer and Seller shall submit the items remaining
in dispute for resolution to the Portland, Oregon office of KPMG Peat Marwick
LLP or, if such firm is unable to so act, by another internationally recognized
accounting firm selected by the Portland, Oregon office of KPMG Peat Marwick LLP
(the "Neutral Auditors"). The Neutral Auditors shall be instructed to determine
and report to the parties hereto upon such remaining disputed items within 30
<PAGE>
days after submission, and such report and determination shall be final, binding
and conclusive on the parties hereto. The Neutral Auditors' determination shall
be based solely on whether the item in dispute has been accounted for on the
Preliminary Closing Date Balance Sheet in accordance with the Accounting
Principles. The fees and disbursements of the Neutral Auditors shall be
allocated between Buyer and Seller in the same proportion that the aggregate
amount of such remaining disputed items so submitted to the Neutral Auditors
that is unsuccessfully disputed by each (as finally determined by the Neutral
Auditors) bears to the total amount of such remaining disputed items so
submitted. The Preliminary Closing Date Balance Sheet, as modified by resolution
by Seller and Buyer or by the Neutral Auditors, shall be the "Closing Date
Balance Sheet." If disagreements arise with respect to individual items of
inclusion and/or exclusion on the Preliminary Closing Balance Sheet, the parties
agree that the governing principle will be that the Purchase Price adjustment
contemplated by this section is intended to analyze the economic effects of a
change in Shareholders' equity from December 31, 1995 to the Closing Date and
that such change can only be appropriately measured when the Closing Balance
Sheet and Audited Balance Sheet are prepared on a consistent basis.
(e) Upon determination of the Closing Date Balance Sheet, the Cash Portion
of the Purchase Price shall be increased or decreased, as the case may be, by
the amount equal to the amount by which the Shareholder's equity on the Closing
Date Balance Sheet, as adjusted to exclude accounts receivable represented by
discounted notes, deferred tax assets, deferred tax liabilities and indebtedness
relating to the Industrial Revenues Bonds (such adjustments being the "Pro Forma
Adjustments") is greater or less than the Shareholder's equity on the Audited
Balance Sheet, as adjusted for the Pro-Forma Adjustments and the removal of cash
and cash equivalents and the note receivable, provided that such amount is
greater than US $500,000. In the event such amount is not greater than
US $500,000, no adjustment shall be made to the Cash Portion of the Purchase
Price pursuant to this Section 1.6. For the avoidance of doubt, the parties
agree that the Closing Date Balance Sheet shall not include any Excluded
International Liabilities, Excluded International Assets or any federal, state,
foreign or local income Taxes against which Seller has agreed to indemnify Buyer
pursuant to Section 8.1 hereof. If the Cash Portion of the Purchase Price, as
adjusted in accordance with this Section (the "Adjusted Cash Portion"), is in
<PAGE>
excess of the Closing Cash Payment, Buyer shall pay Seller such excess, or if
the Closing Cash Payment is in excess of the Adjusted Cash Portion, Seller shall
pay Buyer such excess. In either case, such amount shall be payable to Buyer or
Seller, as the case may be, in cash within five business days after the final
determination of such amount, and shall bear interest at a rate equal to the
rate of interest from time to time announced publicly by CoreStates Bank, N.A.
as its prime or base rate (calculated on the basis of a 365-day year for the
actual number of days elapsed from the Closing Date until the date of payment).
The Buyer Group and the Seller Group shall treat any such interest as interest
in their respective Tax Returns. Such payment shall be made by certified or
official bank check payable to the order of the Seller or the Buyer, as the case
may be, or by wire transfer to a bank account or accounts designated by the
Seller or Buyer, as the case may be. If (a) there is a dispute with respect to
the Preliminary Closing Date Balance Sheet and (b) even if all disputed items
were resolved in favor of a party, that party would still be required to make a
payment (the "Undisputed Amount") to the other party under this Section 1.6(e),
then pending resolution of the disputed items, such party will pay the
Undisputed Amount to the other party.
1.7 Allocation of Purchase Price. The Purchase Price shall be allocated
among the non-compete covenant described in Section 6.1(f), the Shares, the
TxCom Shares and the TxCom Rights, the US Assets and the International Assets
(by country) as set forth in Exhibit F. For purposes of all Taxes (as defined
below), Buyer and Seller agree to report the transactions contemplated in this
Agreement in a manner consistent with the final allocation under this Section
1.7, and agree that neither of them will take any position inconsistent
therewith for any Tax (as defined below) purposes, unless required to do so
pursuant to a "determination" within the meaning of section 1313 of the Code (as
defined below) or an analogous provision under state or local law.
1.8 Closing. The closing under this Agreement (the "Closing") will take
place at 10:00 a.m., local time, on the later of (i) July 1, 1996 or (ii) three
business days after all conditions contained in this Agreement have been
satisfied or waived, at the offices of Boylan, Brown, Code, Fowler, Vigdor &
Wilson, LLP, 2400 Chase Square, Rochester, New York 14604, or at such other
time, location or date as the parties shall mutually agree. The date on which
the Closing occurs is sometimes referred to herein as the "Closing Date." All
transactions at the Closing shall be deemed to take place simultaneously at the
close of business on the Closing Date, and no transaction shall be deemed to
have been completed and no document or certificate shall be deemed to have been
delivered until all transactions are completed and all documents are delivered.
<PAGE>
1.9 Deliveries and Proceedings at Closing. At the Closing:
(a) Deliveries by Seller. Seller will deliver or cause to be delivered to
Buyer:
(i) a certificate or certificates representing the Shares, which
certificate shall be properly endorsed for transfer by duly executed stock
powers, executed in blank or in favor of Buyer and otherwise in a form
acceptable for transfer on the books of Scanning;
(ii) a certificate or certificates representing the TxCom Shares, which
certificate shall be properly endorsed for transfer by a duly executed share
transfer order, executed in blank or in favor of Buyer (or a Buyer Subsidiary)
and otherwise in a form acceptable for transfer on the books of TxCom;
(iii) a patent assignment of the US Assets in form and substance reasonably
satisfactory to the parties hereto and their respective counsel duly executed by
Seller;
(iv) Foreign Sales Agreements, duly executed by the appropriate Seller
Subsidiaries;
(v) the TxCom Agreement, duly executed by SP Holding;
(vi) the Registration Rights Agreement as provided for in Section 7.8
hereto, duly executed by Seller; and
(vii) the Escrow Agreement, duly executed by Seller.
(b) Deliveries by Buyer. Buyer will deliver or cause to be delivered to
Seller:
(i) the Closing Cash Payment;
(ii) a certificate or certificates representing the Buyer Stock, duly
registered in the name of Seller or its designee;
(iii) Foreign Sales Agreements, duly executed by the appropriate Buyer
Subsidiaries;
(iv) the TxCom Agreement, duly executed by Buyer (or a Buyer Subsidiary);
(v) the Registration Rights Agreement as provided for in Section 7.8
hereto, duly executed by Buyer;
<PAGE>
(vi) the Escrow Agreement, duly executed by Buyer; and
(vii) the Note.
(c) Other Deliveries. The closing certificates, opinions of counsel and
other documents required to be delivered pursuant to this Agreement will be
exchanged.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
2.1 Representations and Warranties Pertaining to the Business. Seller and
SP Holding represent and warrant to the Buyer Group that:
(a) Organization and Qualification. Each of Seller, Scanning, TxCom, the
Scanning Subsidiaries and the Seller Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and each has all requisite corporate power and
corporate authority to own, operate and lease its properties and to carry on its
business as it is now being conducted. Complete and correct copies of the
Certificate of Incorporation and Bylaws of Scanning, TxCom, and the Scanning
Subsidiaries, as amended to date, have been made available to Buyer. Scanning is
duly qualified or registered as a foreign corporation to do business, and is in
good standing, in each jurisdiction in which the character of the properties
owned, operated or leased by it or the nature of its activities is such that
such qualification is required by applicable law, except where the failure to so
qualify and be in good standing would not, individually or in the aggregate,
have a Material Adverse Effect. All jurisdictions where Scanning is qualified as
a foreign corporation are listed on Schedule 2.1(a) hereto.
(b) Capitalization. The authorized capital stock of Scanning consists of
100 shares of common stock, $.01 par value per share, and there is no other
capital stock of Scanning authorized for issuance. There are 100 shares of
Scanning common stock issued and outstanding, all of which are owned by Seller,
and the Shares constitute the total issued and outstanding share capital of
Scanning. The authorized capital stock of TxCom consists of 10,043 shares of
common stock, with a par value of 100 French Francs per share, and there is no
other capital stock of TxCom authorized for issuance. There are 10,043 shares of
TxCom common stock issued and outstanding, 7235 of which are owned by SP
Holding. All of the Shares and the TxCom Shares have been duly authorized and
validly issued, are fully paid, non-assessable, and have not been issued and
are not owned or held in violation of any preemptive right of shareholders.
Seller and SP Holding, respectively, owns the Shares and the TxCom Shares and
will transfer the Shares and the TxCom Shares to Buyer pursuant to this
<PAGE>
Agreement free and clear of all liens, claims, equities, options, calls, voting
trusts, agreements, commitments and encumbrances whatsoever. No shares of
capital stock of Scanning or TxCom are reserved for issuance, and there are no
options, warrants, convertible instruments or other rights, agreements or
commitments, contingent or otherwise, obligating Scanning or TxCom to issue or
sell shares of capital stock. Scanning owns 870,923 shares of Series B
Convertible Preferred Stock of Catalina Electronic Clearing Systems, Inc., a
Delaware corporation ("CECS"). Complete and correct copies of the Certificate
of Incorporation and Bylaws of CECS, as amended to date, have been made
available to Buyer.
(c) Subsidiaries. Scanning has no Subsidiaries other than SpectraScan
(AUST) Pty Ltd., an Australian corporation, and SpectraScan Europe Ltd., a
United Kingdom corporation. Each of SpectraScan (AUST) Pty Ltd. and SpectraScan
Europe Ltd. is an inactive corporation incorporated in February 1996 which has
never held any assets, conducted any operations or incurred any liabilities
which have not been fully discharged (other than liabilities related to
incorporation or the registration of branch offices).
(d) Authority. Seller and SP Holding have the corporate power and corporate
authority to execute, deliver and perform this Agreement, and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
authorized by all necessary corporate, and, if necessary, shareholder, action on
the part of Seller and SP Holding. This Agreement has been duly and validly
executed and delivered by Seller and SP Holding and, assuming due execution and
delivery by Buyer and SP Holding, constitutes, the valid and binding obligations
of Seller and SP Holding, enforceable against Seller and SP Holding in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to creditors' rights generally and subject to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity). Each Seller Subsidiary and SP Holding has the corporate power and
corporate authority to execute, deliver and perform the Foreign Sales Agreement
and the TxCom Agreement, respectively, to which it will be a party and to
consummate the transactions contemplated thereby. Each Foreign Sales Agreement
and the TxCom Agreement have been duly and validly authorized by all necessary
corporate and, if necessary, shareholder action on the part of the appropriate
Seller Subsidiary and SP Holding, respectively. Each Foreign Sales Agreement
and the TxCom Agreement, when duly and validly executed by the appropriate
<PAGE>
Seller Subsidiary and SP Holding, respectively, assuming due execution and
delivery by Buyer (or the counterpart Buyer Subsidiary), will constitute the
valid and binding obligations of each such Seller Subsidiary and SP Holding,
respectively, enforceable against the appropriate Seller Subsidiary and SP
Holding, respectively, in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to creditors' rights generally and subject to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(e) Non-Contravention. Except as set forth on Schedule 2.1(e) hereto and
subject to the Seller Group's obtaining any consent, approval, authorization,
waiver or exemption (collectively, a "Consent") required pursuant to or in
connection with this Agreement, the execution, delivery and performance by
Seller and SP Holding of this Agreement and the consummation by the Seller Group
of the transactions contemplated hereby will not (i) violate any provision of
law, rule or regulation to which Scanning, TxCom or, with regard to the
Business, any of the Seller Subsidiaries is subject, which violation would,
individually or in the aggregate, have a Material Adverse Effect, (ii) conflict
or violate any order, judgment, injunction, award or decree applicable to
Scanning, TxCom or, with regard to the Business, any of the Seller Subsidiaries,
(iii) violate or conflict with the Certificate of Incorporation, Bylaws or other
similar governing documents of any member of the Seller Group, (iv constitute a
default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of Scanning, TxCom or, with regard to
the Business, any of the Seller Subsidiaries under any provision of any
agreement, contract or other instrument binding upon Scanning, TxCom or, with
regard to the Business, any of the Seller Subsidiaries or any license,
franchise, permit or other similar authorization held by Scanning, TxCom or,
with regard to the Business, any of the Seller Subsidiaries which would,
individually or in the aggregate, have a Material Adverse Effect, or (v) result
in the creation or imposition of any lien, encumbrance, charge or claim upon any
of the assets of Scanning, TxCom or any of the Purchased Assets.
(f) Governmental Consents and Approvals. Except as set forth on Schedule
2.1(f) hereto, the execution, delivery and performance by Seller and SP Holding
of this Agreement and the consummation by the Seller Group of the transaction
contemplated hereby does not require any consent from or filing with any
governmental body, agency or official except for (i) the filing of a report
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and the expiration of the applicable waiting period; (ii) any consent
or filing, including filings under the Anti-Monopoly Law (the "Anti-Monopoly
Law") to the Fair Trade Commission of Japan, that the Buyer Group is required to
<PAGE>
obtain or make; and (iii) consents and filings which, if not obtained or made,
will not individually or in the aggregate have a Material Adverse Effect or have
a material adverse effect on the ability of the parties hereto to consummate the
transactions contemplated hereby.
(g) Combined Financial Statements. Attached as Schedule 2.1(g) hereto are:
(i) combined balance sheets of the Business as of December 31, 1995 and 1994 and
(ii) a combined statement of operations and cash flows of the Business for each
of the three years in the period ended December 31, 1995 (such statements,
including the notes thereto, are collectively referred to herein as the
"Combined Financial Statements" and such December 31, 1995 balance sheet,
including the notes there-to, is referred to herein as the "Audited Balance
Sheet"). The Combined Financial Statements have been audited by Coopers &
Lybrand L.L.P., independent public accountants. The Combined Financial
Statements present fairly in all material respects the combined financial
position of the Business at December 31, 1995 and 1994, and results of its
operations and its cash flows for each of the three years in the three-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles in the United States, consistently applied.
(h) Taxes. Each of Scanning and its Subsidiaries and TxCom has (i) timely
filed, or had timely filed on its behalf, all material returns, reports and
other information statements ("Return" or "Returns") required to be filed in
respect of Taxes (as defined below) and (ii) paid, or has had paid on its
behalf, all Taxes shown to have become due pursuant to such Returns or for which
an assessment has been received, except for any assessment being contested in
good faith which contested assessments, if any, are set forth on Schedule 2.1(h)
hereto. Except as set forth on Schedule 2.1(h) hereto, (i) Scanning and its
Subsidiaries and TxCom are not parties to any tax sharing agreements, (ii) no
Tax Return is under audit as of the date hereof by any Governmental Authority
(as hereinafter defined) and (iii) Scanning and its Subsidiaries and TxCom have
not executed any waivers or consents extending the statute of limitations with
respect to any possible or actual audit or assessment by any Governmental
Authority with regard to any income Tax Return or any other material Tax Return,
which waiver or consent remains outstanding as of the date hereof. There are no
security interests in favor of any Governmental Authority on any of the assets
of any of Scanning and its Subsidiaries, Seller Subsidiaries (with respect to
the Business), and TxCom that arose in connection with any failure (or alleged
failure) to pay any Tax. Except as disclosed on Schedule 2.1(h), as of the date
hereof, there is no pending or unresolved dispute or claim concerning any tax
liability of any of Scanning and its Subsidiaries and TxCom either claimed or
raised by any Governmental Authority in writing. None of Scanning and its
Subsidiaries and TxCom has made any payments, is obligated to make any payments,
<PAGE>
or is a party to any agreement that, under certain circumstances, could obligate
it to make any payments that will not be deductible under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"). None of Scanning and its
Subsidiaries has been a member of an affiliated group filing a consolidated
federal income tax return, other than a group, the common parent of which is
Spectra-Physics Holdings USA, Inc. For purposes of this Agreement, "Tax" or
"Taxes" shall mean all taxes, assessments or other governmental charges of any
kind whatsoever imposed by the United States or any state, local or foreign
government or political subdivision or taxing authority thereof or therein (a
"Governmental Authority"), including, without limitation, any income, profits,
capital gains, franchise, sales, use, value added, gross receipts, transfer,
excise, property, property transfer, occupation, lease, capital stock, premium,
estimated customs, payroll, withholding or social security taxes, including all
interest, penalties and additions to tax imposed with respect to such amounts.
For purposes of this Agreement, "Payroll Taxes" shall mean all Taxes required to
be paid by an employer with respect to an employee or required to be withheld by
an employer.
(i) Properties. Scanning, SP Holding and, with respect to the Business, the
Seller Subsidiaries, have good and valid title to all their properties and
assets, real and personal, tangible and intangible (including those reflected on
the Audited Balance Sheet or acquired by Scanning or the Seller Subsidiaries
since the date of the Audited Balance Sheet, except property sold or otherwise
disposed of in the ordinary course of business since the date of the Audited
Balance Sheet), free and clear of all mortgages, liens, attachments, pledges,
encumbrances or security interests of any nature whatsoever, except (a) those
disclosed in the Audited Balance Sheet, (b) any liens for current Taxes not yet
due and payable or which may thereafter be paid without penalty, (c)
encumbrances described in Schedule 2.1(i) hereto, (d) zoning, building and other
similar governmental restrictions and liens imposed by operation of law
(including without limitation mechanics', carriers', workmen's, repairmen's,
landlord's or other similar liens arising from or incurred in the ordinary
course of business and for which the underlying payments are not yet
delinquent), and (e) easements, covenants, rights-of-way or other similar
restrictions and imperfections of title, none of which items referred to in
clauses (d) and (e) materially impair the use, value or marketability of title
of the property to which they relate in the Business as presently conducted
<PAGE>
taken as a whole. The properties and assets of Seller, SP Holding and the Seller
Subsidiaries to be acquired by the Buyer Group at the Closing constitute all
properties and assets, except for the Excluded International Assets, required to
operate the Business in the same manner as it was operated prior to the Closing.
Set forth on Schedule 2.1(i) hereto is a list of all real estate owned or leased
by Scanning, TxCom or, exclusively with respect to the Business, the Seller
Subsidiaries.
(j) Environmental Matters. Except as set forth on Schedule 2.1(j) hereto or
identified in connection with the Phase I environmental assessment performed by
Buyer (the "Phase I Investigation"), Scanning, TxCom, and, with respect to the
Business, the Seller Subsidiaries have obtained all environmental permits,
certificates, licenses, approvals, registrations and authorizations
("Environmental Permits") which are required in connection with the Business
except for Environmental Permits which if not obtained would not, individually
or in the aggregate, have a Material Adverse Effect. Set forth on Schedule
2.1(j) hereto is a schedule of all such Environmental Permits. Except as set
forth on Schedule 2.1(j) hereto and except as identified in connection with the
Phase I Investigation, (i) Scanning, TxCom and, with respect to the Business,
the Seller Subsidiaries have complied with such Environmental Permits except for
such possible violations which would not, individually or in the aggregate have
a Material Adverse Effect, (ii) Scanning, TxCom and, with respect to the
Business, the Seller Subsidiaries, have complied with the applicable
environmental statutes, rules, regulations, ordinances and orders of any
governmental entity with jurisdiction over such matters, as well as valid and
enforceable judicial and administrative rulings and regulations relating
thereto, including but not limited to those relating to Hazardous Substances (as
hereinafter defined) ("Environmental Laws") except for such possible violations
which would not, individually or in the aggregate, have a Material Adverse
Effect, and (iii) Scanning, TxCom and, with respect to the Business, the Seller
Subsidiaries have not received any written request for information, notice of
claim, demand or notification that it is or may be potentially responsible with
respect to any investigation or clean-up of any threatened or actual release of
any hazardous substance as defined in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA") or hazardous
waste as defined in the Resource Conservation and Recovery Act (collectively
"Hazardous Substances"), except for such matters which have since been resolved.
(k) Patents; Trademarks etc. Set forth on Schedule 2.1(k) is a true and
correct list as of the date hereof of (i) all patents, patent applications and
registered trademarks, tradenames, service marks, copyrights and all
applications pending on said date for trademark, trade name, service mark or
copyright registrations by (A) Seller or the Seller Subsidiaries and used
primarily in the conduct of the Business or (B) Scanning or TxCom and (ii) all
material licenses granted by or to (A) Seller or the Seller Subsidiaries and
used primarily in the conduct of the Business or (B) Scanning or TxCom which
relate, in whole or in part, to any items in the categories mentioned in (i)
<PAGE>
above (all items in (i) and (ii) hereinafter collectively referred to as
"Intellectual Property"). As of the date hereof, all relevant maintenance fees
with respect to the patents included in the Intellectual Property payable by
Scanning, TxCom or, with respect to the Business, Seller or the Seller
Subsidiaries have been paid and, to Seller's knowledge, none of the Intellectual
Property is subject to any interference, opposition or cancellation proceedings.
Except as set forth on Schedule 2.1(k) hereto, to Seller's knowledge, neither
Scanning, TxCom, nor the Seller Subsidiaries has, since January 1, 1990,
received a written claim or, since April 1, 1995, received an oral claim, from
any person (that has not been subsequently resolved) which asserts, with
specificity, that the operations of the Business infringe such person's
intellectual property rights, which claim relates to products of the Business
that exist or are in development and have expected annual sales of over
US $5,000,000.
(l) Domestic Employee Benefit Plans.
(i) Set forth on the Schedule 2.1(l) hereto is a true and complete list of
each material "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), deferred
compensation, incentive compensation, excess benefit, supplemental retirement,
stock purchase, stock option, severance, and other material employee benefit
plan, program or arrangement maintained, contributed to or required to be
contributed to by Scanning or any other employer that is, or was at any time,
together with Scanning, treated as a "single employer" under Section 414 of the
Code, (a "Scanning's ERISA Affiliate"), for the benefit of any employees of
Scanning (collectively, the "Scanning's Benefit Plans"). A true and complete
copy of each of Scanning's Benefit Plans (including any related trust
agreements), have been made available to Buyer. With respect to each of
Scanning's Benefit Plans (to the extent applicable) the Seller has made
available to Buyer (i) the most recent summary plan description, (ii) the most
recent annual report (Form 5500) filed with the Internal Revenue Service ("IRS")
and (iii) the most recent determination letter issued by the IRS.
(ii) Each of Scanning's Benefit Plans has at all times been maintained,
operated and administered in compliance with its terms and with all applicable
laws, except where noncompliance would not have a Material Adverse Effect on
the Business. No "prohibited transaction" (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) has occurred with respect to any of
Scanning's Benefit Plans. At no time for which any relevant statute of
limitations remain open have Scanning or any of Scanning's ERISA Affiliates
incurred any liability under Title I or Title IV of ERISA (other than for
payment of premiums to the Pension Benefit Guaranty Corporation ("PBGC")) with
<PAGE>
respect to Scanning's Benefit Plans. Neither Scanning nor any of Scanning's
ERISA Affiliates has ever participated in nor had an obligation to contribute to
any "multiemployer plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA).
(iii) Each of Scanning's Benefit Plans which is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) is qualified under
Section 401(a) of the Code ("Scanning's Qualified Plans") and each trust
maintained in connection with such a plan is exempt from federal income taxes
under Section 501 of the Code. There is no "accumulated funding deficiency"
(within the meaning of Section 302(a) of ERISA or Section 412(a) of the Code)
with respect to any of Scanning's Qualified Plans whether or not waived. There
is no reasonable basis, including without limitation, any "reportable event" (as
defined in Section 4043 of ERISA) that would constitute grounds for the
termination of any of Scanning's Qualified Plans by the PBGC or the appointment
of a trustee or administrator under Title IV of ERISA.
(iv) There are no pending investigations by any governmental agency
involving Scanning's Benefit Plans, no termination proceedings involving
Scanning's Benefit Plans, and to Seller's knowledge, no threatened or pending
claims (except for claims for benefits payable in the normal operation of
Scanning's Benefit Plans) or suits against any of Scanning's Benefit Plans.
(v) Except as set forth on the Schedule 2.1(l) hereto, neither Seller nor
any of its ERISA Affiliates contributes to, or ever has been required to
contribute to any employee benefit plan providing medical, health or life
insurance or other welfare type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Part 6 of Subtitle B of Title I of ERISA and Code
Section 4980(B)).
(m) Foreign Employee Benefit Plans. Each material pension, retirement,
savings, profit sharing, deferred compensation, incentive compensation, excess
benefit, supplemental retirement, stock purchase, stock option, severance, and
other material employee benefit plan, program or arrangement maintained,
contributed to or required to be contributed to by TxCom or the Seller
Subsidiaries for or on behalf of any Foreign Business Employee (each, a "Foreign
Plan") has been maintained, operated and administered in compliance in all
material respects with its terms and with all applicable laws.
(n) Contracts. Set forth on Schedule 2.1(n) hereto is a list of the
following contracts, agreements, arrangements, leases, permits, licenses and
commitments (except for purchase contracts and orders for inventory or supplies
made in the ordinary course of business) in existence on the date hereof to
which Scanning, TxCom and, with respect to the Business, any of the Seller
Subsidiaries is a party, or by which any of them is bound:
<PAGE>
(i) any contract not made in the ordinary course of business which by its
terms has an aggregate future liability in excess of US $300,000 or which is not
terminable on 180 days notice or less without penalty or premium;
(ii) all real property lease agreements;
(iii) joint venture agreements;
(iv) all employment or consulting agreements with employees of, or
consultants to, the Business, which may not be terminated without penalty within
thirty days after the Closing (other than oral employment agreements with
employees terminable at will without penalty, subject to the Business's normal
severance policies and applicable law);
(v) union or other collective bargaining agreements;
(vi) each agreement of Scanning and TxCom, and each agreement of the Seller
Subsidiaries that will be assumed by the Buyer Group pursuant to this Agreement,
containing any covenant restricting the freedom of Scanning, TxCom or the Seller
Subsidiaries, as the case may be, to compete in the current or a related
business of the Business; and
(vii) each agreement relating to the incurrence or guaranty of indebtedness
for borrowed money.
A correct and complete copy of each such contract listed on such Schedule
has been delivered to Buyer.
All contracts to which Scanning, TxCom and, with respect to the Business,
any of the Seller Subsidiaries is a party, or by which any of them is bound, are
legal, valid, binding and enforceable and in full force and effect and there is
not under any such contract any existing breach, default, event of default or
event which, with the giving of notice or the passage of time, or both, would
constitute a breach, default or event of default thereunder by Scanning, TxCom
or, with respect to the Business, any of the Seller Subsidiaries, or to Seller's
knowledge, the other party or parties thereto, except for any such failure to be
in full force or any such breach, default or event of default which would not,
individually or in the aggregate, have a Material Adverse Effect.
<PAGE>
(o) No Changes. Except as set forth on Schedule 2.1(o) hereto and except as
contemplated by this Agreement, since the date of the Audited Balance Sheet,
Scanning, TxCom and the Seller Subsidiaries have conducted the Business in the
ordinary course. Except as set forth on Schedule 2.1(o) hereto and except as
contemplated by this Agreement, since the date of the Audited Balance Sheet
there has not been:
(i) any change in the Business which has had a Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend, or other
distribution, in respect of Scanning's or TxCom's capital stock or any direct or
indirect redemption, purchase or other acquisition of such stock;
(iii) any split, combination or reclassification of outstanding capital
stock of Scanning or TxCom, or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of Scanning's or TxCom's capital stock;
(iv) any issuance by Scanning or TxCom, or commitment of them to issue, any
shares of their capital stock or securities convertible into or exchangeable for
shares of their capital stock;
(v) any issuance or sale by Scanning or TxCom of any bonds or other
corporate debt securities, or any partial or complete formation, acquisition,
disposition or liquidation of Scanning or TxCom;
(vi) any sale, assignment, lease, transfer or other disposition of any
asset or shares of capital stock of Scanning or TxCom, or any asset of the
Seller Subsidiaries used primarily in the Business, except in the ordinary
course of business;
(vii) any amendment, termination or waiver of any material right belonging
to Scanning or TxCom, or, with respect to the Business, the Seller Subsidiaries,
except in the ordinary course of business;
(viii) any increase in the compensation or benefits payable or to become
payable by either of Scanning or TxCom, to any of its officers or employees or
by the Seller Subsidiaries to the Foreign Business Employees except for
increases in the ordinary course of business; or
(ix) any agreement by Scanning or TxCom or any Seller Subsidiary (other
than the transactions contemplated by this Agreement) to do any of the
foregoing.
<PAGE>
(p) Litigation or Proceedings. Except as set forth in Schedule 2.1(p)
hereto and except for worker's compensation or Bureau of Labor and Industry
claims or cases arising in the ordinary course of business, to Seller's
knowledge, there are (i) no actions, suits, investigations, or proceedings
pending against Scanning or TxCom, or, with respect to the Business, the Seller
Subsidiaries, at law or in equity, by or before any court or governmental
department, agency or instrumentality and (ii) no actions, suits,
investigations, or proceedings threatened against Scanning or TxCom, or, with
respect to the Business, the Seller Subsidiaries, at law or in equity, by or
before any court or governmental department, agency or instrumentality, as to
which such threatened actions, suits, investigations or proceedings there is a
reasonable likelihood of an adverse determination and which, if adversely
determined, would individually or in the aggregate have a Material Adverse
Effect. There are no orders, rulings, decrees, writs, injunctions, judgments or
stipulations to which Scanning or TxCom, or, with respect to the Business, any
Seller Subsidiary, is a party by or with any court, arbitrator or administrative
agency, other than orders or stipulations entered into in the ordinary course of
business in connection with litigation proceedings and settlement thereof which
do not require payment by Scanning, TxCom or any Seller Subsidiary, individually
or in the aggregate after payment, of any amount greater than US $300,000.
(q) Compliance with Laws. Except with respect to Environmental Permits
which are the subject of Section 2.1(j) hereto, each of Scanning and TxCom, and
with respect to the Business, the Seller Subsidiaries, possesses all
governmental licenses, permits and authorizations necessary for the lawful
conduct of its respective businesses, except for any failure to possess any such
license, permit and authorization which would not, individually or in the
aggregate, have a Material Adverse Effect. Except with respect to Environmental
Laws which are the subject of Section 2.1(j), Scanning and TxCom, and, with
respect to the Business, the Seller Subsidiaries are in compliance with all
applicable laws, ordinances and regulations of federal, state, local and foreign
authorities, except where noncompliance would not, individually or in the
aggregate, have a Material Adverse Effect. To Seller's knowledge, except as set
forth on Schedule 2.1(j), neither Scanning, TxCom, nor, with respect to the
Business, the Seller Subsidiaries has received written notice or has actual
knowledge of any action, suit, proceeding, investigation, charge, complaint,
claim or demand that has been filed or commenced against Scanning, TxCom or,
with respect to the Business, the Seller Subsidiaries with respect to (i) any
alleged violation of any law, ordinance or regulation of any federal, state,
local or foreign authority or (ii) any alleged failure to have a license, permit
or authorization required in connection with the Business, except for any
alleged violation or alleged failure which would not, individually or in the
aggregate, have a Material Adverse Effect.
<PAGE>
(r) Labor Matters. There has been no employee strike or other organized
employee work stoppage by the employees of the Business during the past three
(3) years and, to Seller's knowledge, no such strike or stoppage is currently
threatened.
(s) Insurance Coverage. Set forth on Schedule 2.1(s) hereto is a list of
all policies of insurance currently held by, or maintained on behalf of Scanning
in effect for policy periods beginning on or after January 1, 1995, indicating
for each policy the carrier, the insured, the type of insurance, the amounts of
coverage and the expiration date. Except as set forth on Schedule 2.1(s), all
such policies are in full force and effect and Scanning, TxCom or, with respect
to the Business, any Seller Subsidiary has not received any written notice of
cancellation, material amendment or material dispute as to coverage with respect
to any such policies, which dispute relates to the Business.
(t) Certain Transactions with Affiliates. Except for arrangements
contemplated by or disclosed in this Agreement or as set forth on Schedule
2.1(t) hereto, there are no transactions of a continuing nature between
Scanning, TxCom or, with respect to the Business, the Selling Subsidiaries, on
the one hand, and any of their respective affiliates, on the other hand, which
are not subject to cancellation without liability or penalty and which will
continue beyond the Closing Date.
(u) Securities Act. The Buyer Stock and the Note being acquired by Seller
pursuant to this Agreement are being acquired for investment only and not with a
view to any public distribution thereof in violation of the Securities Act of
1933, as amended (the "Securities Act").
(v) Banks. The name of each bank in which Scanning has an account or safe
deposit box, the name and number of such account or box and the names of all
persons authorized to draw thereon or who have access thereto, with the amounts
they are authorized to draw are disclosed on Schedule 2.1(v).
(w) Powers of Attorney. The names of all persons, if any, holding powers of
attorney from Scanning, other than powers of attorney granted in the ordinary
course of business by Scanning to its attorneys, accountants or other agents,
are disclosed on Schedule 2.1(w).
(x) Significant Customers. To Seller's knowledge, as of the date hereof, no
Person who was one of the Business's top ten customers in 1995 (as measured by
1995 sales figures) (a "Customer") has informed Scanning orally or in writing
that such Customer will cease to do business with or materially reduce the
amount of business it is currently doing with the Business as a direct result,
in either case, of the acquisition of the Business by Buyer pursuant hereto;
provided, however, that nothing herein shall constitute a representation that
any Customer will continue its relationship with the Business.
<PAGE>
(y) Severance Benefits. Except as set forth in Schedule 2.1(v) hereto, none
of Scanning, TxCom or, with respect to the Business, the Seller Subsidiaries,
shall be obligated to make any severance or other payment or provide any
employee benefits to any director, officer or employee as a result of the
consummation of the transactions contemplated hereby, except, with respect to
Foreign Business Employees, as required by law.
(z) Net Worth. As of December 31, 1995, the shareholder's equity of Seller
was in excess of US $200,000,000.
2.2 Excluded International Assets, Etc. Notwithstanding anything contained
herein to the contrary, the Seller Group makes no representation, warranty or
covenant of any kind with respect to any Excluded International Asset, the
assets referred to in Section 1.3 of this Agreement or any matter constituting
an Excluded International Liability or against which Buyer is indemnified by
Seller pursuant to Section 8.1 hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Seller Group that:
(a) Organization and Qualification. Buyer and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and each has all requisite corporate
power and corporate authority to own, operate and lease its properties and to
carry on its business as it is now being conducted. Complete and correct copies
of the Certificate of Incorporation and Bylaws of Buyer, as amended to date,
have been made available to Seller. Buyer is duly qualified or registered as a
foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of the properties owned, operated or leased
by it or the nature of its activities is such that such qualification is
required by applicable law, except where the failure to so qualify and be in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer.
<PAGE>
(b) Capitalization. The authorized capital stock of Buyer consists of
40,000,000 shares of common stock, $.01 par value per share, of which 9,969,185
shares of common stock are issued and outstanding, 38,500 shares of common stock
are held in treasury and 4,016,149 shares of common stock are reserved for
issuance, and 10,000,000 shares of preferred stock, $.01 par value per share, of
which none are issued and outstanding. All such outstanding shares of common
stock have been duly authorized and validly issued and are fully paid and
non-assessable. Options to purchase 2,440,203 shares of common stock are issued
and outstanding. No other shares of capital stock of Buyer are reserved for
issuance, and there are no other options, warrants, convertible instruments or
other rights, agreements or commitments, contingent or otherwise, obligating
Buyer to issue or sell shares of capital stock, except that at the Closing Buyer
expects to issue a warrant to purchase 975,000 shares of Common Stock of Buyer
in connection with the subordinated debt financing referred to in the
Subordinated Debt Commitment Letters referred to in Section 3.1(q).
(c) Subsidiaries. Except as disclosed on the Form 10-K for the fiscal year
ended December 31, 1995 (including any exhibits thereto) filed by Buyer with the
Securities and Exchange Commission (the "Buyer's 10-K"), Buyer has no
Subsidiaries other than (a) any Subsidiaries which Buyer creates to effect the
transactions contemplated hereby and (b) PSC Asia Pacific Pty Ltd., an
Australian corporation incorporated on April 4, 1996.
(d) Authority. Buyer has the corporate power and corporate authority to
execute, deliver and perform this Agreement, and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
has been duly and validly authorized by all necessary corporate, and, if
necessary, shareholder action on the part of Buyer. This Agreement has been duly
and validly executed and delivered by Buyer and, assuming due execution and
delivery by Seller constitutes, the valid and binding obligations of Buyer,
enforceable against Buyer in accordance with its respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
subject to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity). Buyer and each Buyer Subsidiary has
the corporate power and corporate authority to execute, deliver and perform the
Foreign Sales Agreement and/or the TxCom Agreement to which it will be a party
and to consummate the transactions contemplated thereby. Each Foreign Sales
Agreement and the TxCom Agreement has been duly and validly authorized by all
necessary corporate and, if necessary, shareholder action on the part of Buyer
and the respective Buyer Subsidiary. Each Foreign Sales Agreement and/or the
TxCom Agreement when duly and validly executed by Buyer and/or the respective
<PAGE>
Buyer Subsidiary, and assuming due execution and delivery by the counterpart
Seller Subsidiary or SP Holding, respectively, will constitute the valid and
binding obligations of Buyer and/or each such Buyer Subsidiary, enforceable
against Buyer and/or the respective Buyer Subsidiary in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to creditors' rights
generally and subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(e) Non-Contravention. Except as described on Schedule 3.1(e), the
execution, delivery and performance by Buyer of this Agreement, and the
consummation by the Buyer Group of the transactions contemplated hereby will not
(i) violate any provision of law, rule or regulation to which the Buyer Group
is subject, which violation would, individually or in the aggregate, have a
Material Adverse Effect on Buyer, (ii) conflict or violate any order, judgment,
injunction, award or decree applicable to any member of the Buyer Group, which
violation or conflict would, individually or in the aggregate, have a Material
Adverse Effect on Buyer, (iii) violate or conflict with the Certificate of
Incorporation, Bylaws or other similar governing documents of any member of the
Buyer Group, (iv) constitute a default under or give rise to a right of
termination, cancellation or acceleration of any material right or obligation of
any member of the Buyer Group under any provision of any agreement, contract or
other instrument binding upon the Buyer Group or any license, franchise,
permit or other similar authorization held by any member of the Buyer Group,
which would, individually or in the aggregate, have a Material Adverse Effect
on Buyer or (v) result in the creation or imposition of any lien, encumbrance,
charge or claim upon any of the assets of Buyer.
(f) Governmental Consents and Approvals. Except as set forth on Schedule
3.1(f) hereto, the execution, delivery and performance by the Buyer Group of
this Agreement and the consummation by Buyer of the transaction contemplated
hereby does not require consent from or filing with any governmental body,
agency or official except for (i) the filing of a report under the HSR Act and
the expiration of the applicable waiting period, (ii) any consent, or filing, if
any, that the Seller Group is required to obtain or make, (iii) filing of a
report under the Anti-Monopoly Law with the Fair Trade Commission of Japan and
the expiration of the applicable waiting period and (iv) consents, and filings
which, if not obtained or made, will not individually or in the aggregate have a
Material Adverse Effect on Buyer or the ability of the parties hereto to
consummate the transactions contemplated hereby.
<PAGE>
(g) Financial Statements. Filed together with Buyer's 10-K are (i) the
consolidated balance sheets of Buyer and its Subsidiaries as of December 31,
1995 and 1994 and (ii) the related consolidated statement of operations and cash
flows for each of the three years in the period ended December 31, 1995 (such
statements, including the notes thereto, are collectively referred to herein as
the "Buyer Financial Statements.") The Buyer Financial Statements have been
audited by Arthur Andersen, LLP, independent public accountants. The Buyer
Financial Statements present fairly in all material respects the consolidated
financial position of Buyer and its Subsidiaries at December 31, 1995 and 1994,
and their consolidated results of operations and cash flows for each of the
three years in the three-year period ended December 31, 1995, in conformity with
generally accepted accounting principles in the United States, consistently
applied.
(h) Taxes. Buyer and each of its Subsidiaries has (i) timely filed all
material Returns in respect of Taxes required to be filed and (ii) paid, or has
had paid on its behalf, all Taxes shown to have become due pursuant to such
Returns or for which an assessment has been received, except for any assessment
being contested in good faith.
(i) Patents; Trademarks. To Buyer's knowledge, neither Buyer nor any of its
Subsidiaries has, since January 1, 1994, received a written claim or, since
April 1, 1995, received an oral claim, from any person (that has not been
subsequently resolved) which asserts, with specificity, that the operations of
Buyer or its Subsidiaries infringe such person's intellectual property rights,
which claim relates to products of Buyer or its Subsidiaries that exist or are
in development and have expected annual sales of over US $5,000,000.
(j) No Changes. Except as set forth on Schedule 3.1(j) hereto and except as
contemplated by this Agreement, since December 31, 1995, Buyer and its
Subsidiaries have conducted their respective businesses in the ordinary course.
Except as contemplated by this Agreement, since December 31, 1995, there has not
been:
(i) any change which has had a Material Adverse Effect on Buyer;
(ii) any declaration, setting aside or payment of any dividend, or other
distribution, in respect of Buyer's or any of its Subsidiaries' capital stock
(except for dividends or distributions declared, set aside or paid to Buyer or a
wholly-owned Subsidiary of Buyer) or any direct or indirect redemption,
purchase or other acquisition of such stock;
(iii) any split, combination or reclassification of outstanding capital
stock of Buyer or any issuance or the authorization of any issuance of any other
<PAGE>
securities in respect of, in lieu of or in substitution for shares of Buyer's or
any of its Subsidiaries' capital stock (except for the issuance or authorization
of issuance of such securities to Buyer or a wholly-owned Subsidiary of Buyer);
(iv) any issuance by Buyer or its Subsidiaries of, or commitment of Buyer
or any Subsidiary to issue, any shares of their capital stock or securities
convertible into or exchangeable for shares of their capital stock (except for
any such issuance to Buyer or to a wholly-owned Subsidiary of Buyer);
(v) any issuance or sale by Buyer or any of its Subsidiaries of any bonds
or other corporate debt securities, or any partial or complete formation,
acquisition, disposition or liquidation of Buyer or any Subsidiary of Buyer;
(vi) any sale, assignment, lease, transfer or other disposition of any
asset of Buyer or any Subsidiary of Buyer, except in the ordinary course of
business;
(vii) any amendment, termination or waiver of any material right belonging
to Buyer or its Subsidiaries, except in the ordinary course of business; or
(viii) any agreement by Buyer or any of its Subsidiaries (other than the
transactions contemplated by this Agreement) to do any of the foregoing.
(k) Litigation or Proceedings. Except as set forth in Schedule 3.1(k)
hereto and except for worker's compensation or Bureau of Labor and Industry
claims or cases arising in the ordinary course of business, to Buyer's
knowledge, there are (i) no actions, suits, investigations, or proceedings
pending against Buyer or its Subsidiaries, at law or in equity, by or before any
court or governmental department, agency or instrumentality and (ii) no actions,
suits, investigations, or proceedings threatened against Buyer or its
Subsidiaries, at law or in equity, by or before any court or governmental
department, agency or instrumentality, as to which such threatened actions,
suits, investigations or proceedings there is a reasonable likelihood of an
adverse determination and which, if adversely determined, would individually or
in the aggregate have a Material Adverse Effect on Buyer. There are no orders,
rulings, decrees, writs, injunctions, judgments or stipulations to which Buyer
or its Subsidiaries is a party by or with any court, arbitrator or
administrative agency, other than orders or stipulations entered into in the
ordinary course of business in connection with litigation proceedings and
settlement thereof which do not require payment by Buyer or its Subsidiaries,
individually or in the aggregate, of any amount greater than US $300,000.
<PAGE>
(l) Compliance with Laws. Buyer and its Subsidiaries possesses all
licenses, permits and authorizations necessary for the lawful conduct of their
respective businesses, except for any failure to possess any such license,
permit and authorization which would not, individually or in the aggregate, have
a Material Adverse Effect on Buyer. Buyer and its Subsidiaries are in compliance
with all applicable laws, ordinances and regulations of federal, state, local
and foreign authorities, except where non-compliance would not, individually or
in the aggregate, have a Material Adverse Effect on Buyer.
(m) Buyer's Stock. Buyer has authorized, and reserved, a sufficient number
of shares of Buyer's Common Stock to provide for the issuance of Buyer Stock
contemplated by this Agreement. When the Buyer Stock is issued in accordance
with Section 1.5 of this Agreement, all shares of the Buyer Stock shall have
been duly authorized and validly issued, shall be fully paid and non-assessable,
shall not have been issued in violation of any preemptive rights, shall not be
subject to any liens, claims, equities, options, calls, voting trusts,
agreements, commitments or encumbrances whatsoever and shall have been
authorized for inclusion on the NASDAQ National Market upon official notice of
issuance.
(n) Securities Act. The Shares and the TxCom Shares being purchased by
Buyer pursuant to this Agreement are being acquired for investment only and not
with a view to any public distribution thereof in violation of the Securities
Act.
(o) SEC Filings. Since January 1, 1994, Buyer has timely filed all required
reports, statements, schedules and registration statements with the Securities
and Exchange Commission required to be filed by Buyer pursuant to the Exchange
Act of 1934, as amended (the "Exchange Act"), all of which complied in all
material respects with all applicable requirements of the Exchange Act. Buyer
has delivered to Seller (i) Buyer's 10-K, (ii) its proxy statement dated March
25, 1996 relating to the April 30, 1996 meeting of its stockholders (the "Buyer
Proxy Statement") and (iii) and any other reports, statements, schedules and
registration statements filed by Buyer with the Securities and Exchange
Commission since January 1, 1996 (the items described in clauses (i), (ii) and
(iii) are collectively referred to as "Buyer's Filings"). None of Buyer's
Filings, including without limitation, any financial statements or schedules
included therein, at the time filed, contained any untrue statements of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
<PAGE>
(p) Certain Transactions; Contracts. There are (i) no transactions to which
Buyer is a party or otherwise related to Buyer that would be required to be
disclosed pursuant to Item 404 of the Regulation S-K (other than as disclosed in
Buyer's Proxy Statement) and (ii) no agreements or other documents entered into
by Buyer or otherwise related to Buyer required to be disclosed or filed as an
exhibit pursuant to Item 601 of the Regulation S-K (other than as disclosed in
or filed as an exhibit to Buyer's 10- K or Buyer's Form 10-Q for the fiscal
quarter ended March 31, 1996 filed by Buyer with the Securities and Exchange
Commission).
(q) Financing. Buyer has received and provided Seller with a copy of a
fully-executed commitment letter dated May 17, 1996, from Fleet National Bank,
and fully-executed subordinated financing letters dated May 17, 1996 from each
of John Hancock Mutual Life Insurance Company, The Equitable Life Assurance
Society of America and Lincoln Investment Management, Inc. (the "Subordinated
Debt Commitment Letters"). All such letters have been accepted by Buyer and are
legal, valid, binding, enforceable and in full force and effect.
(r) Note. Buyer has the corporate power and corporate authority to execute,
deliver and perform the Note. The execution, delivery and performance of the
Note by Buyer has been duly authorized by all necessary corporate and, if
necessary, shareholder action on the part of Buyer. When executed and delivered
by Buyer in accordance with this Agreement, the Note will constitute the valid
and binding obligation of Buyer enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to creditors' rights
generally and subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
3.2 Certain Limitations on Representations and Warranties. Each of the
parties is a sophisticated legal entity that was advised by experienced counsel
and, to the extent it deemed necessary, other advisors in connection with this
Agreement. Accordingly, each of the parties hereby acknowledges that (i) no
party has relied or will rely in respect of this Agreement or the transactions
contemplated hereby upon any document or written or oral information previously
furnished to or discovered by it or its representatives, other than this
Agreement (including the Schedules hereto) or such of the foregoing as are
delivered at the Closing, (ii) there are no representations or warranties by or
on behalf of any party hereto or any of its respective affiliates or
representatives other than those expressly set forth in this Agreement, and
(iii) the parties' respective rights and obligations with respect to this
Agreement and the events giving rise thereto will be solely as set forth in this
Agreement.
<PAGE>
ARTICLE IV
CERTAIN OBLIGATIONS OF SELLER
4.1 Conduct of Business Pending Closing. From and after the date hereto and
prior to Closing, and unless Buyer shall otherwise consent or agree in writing
and except as contemplated by this Agreement or as disclosed on Schedule 4.1
hereto, Seller covenants and agrees that:
(a) Scanning, TxCom and the Seller Subsidiaries will conduct the Business
in the ordinary course;
(b) Scanning, TxCom and the Seller Subsidiaries will use their reasonable
best efforts to preserve the business organization of the Business intact, to
maintain the services of their present key employees and to preserve the
goodwill of the suppliers, customers and others having business dealings with
them. If and as requested by Buyer, Scanning, TxCom and, with respect to the
Business, Seller Subsidiaries shall make reasonable arrangements for
representatives of Buyer to meet with their customers, suppliers and key
employees;
(c) Scanning, TxCom and, with respect to the Business, the Seller
Subsidiaries shall not, and Seller will not permit Scanning, SP Holding, TxCom
or, with respect to the Business, the Seller Subsidiaries, to:
(i) amend the Certificate of Incorporation, Bylaws or other similar
governing documents of Scanning or TxCom;
(ii) issue any capital stock of Scanning or TxCom or rights, warrants or
options to acquire shares of such capital stock or issue any securities
convertible into such shares or convertible into securities in turn so
convertible, or grant any options, warrants or rights to acquire any such
convertible securities;
(iii) split, combine or reclassify outstanding capital stock of Scanning or
TxCom;
(iv) enter into, assume or terminate any material contract or commitment or
amend, terminate or waive any material right of the Business, except in the
ordinary course of business and consistent with past practice;
(v) sell, transfer, lease or otherwise dispose of any assets of the
Business other than transfers, leases and dispositions in the ordinary course of
business;
(vi) incur, create or assume any mortgage, pledge, lien, restriction,
encumbrance or security interest on any assets of the Business, except in the
ordinary course of business;
<PAGE>
(vii) except for cash dividends, declare or pay any dividend or other
distribution in respect of any class of capital stock of Scanning or TxCom, or
make any payment to redeem, purchase or otherwise acquire, or call for
redemption, any of such stock;
(viii) incur any indebtedness for borrowed money with respect to the
Business except to the extent discharged on or before the Closing Date;
(ix) merge or consolidate with any other corporation or acquire any
stock, or, except in the ordinary course of business, any business, property or
assets of any other person, firm, association, corporation or other business
organization; or
(x) make or commit to make any capital expenditure, capital addition or
capital improvement with respect to the Business in excess of US $1,000,000 in
the aggregate.
4.2 Access. Prior to the Closing, Scanning, TxCom and, with respect to the
Business, the Seller Subsidiaries, shall give to Buyer and to Buyer's counsel,
accountants and other representatives reasonable access during normal business
hours to properties, books and records of the Business, and shall provide to
Buyer such financial and operating data and other information concerning the
Business as Buyer shall reasonably request.
4.3 Exclusive Dealing. From and after the date hereof and until the earlier
of Closing under or termination of this Agreement, Seller and Scanning will not,
and will not authorize or permit any of their officers, directors or employees
or any of their affiliates or authorize any of their investment bankers,
attorneys, accountants or other representatives retained by them or any of their
affiliates to, directly or indirectly, without the written consent of Buyer,
solicit or knowingly encourage the submission of, or furnish non-public
information (with the intent of inducing any person to make an offer) with
respect to the Business to, any person (a "Potential Acquiror") in connection
with, any proposal by a Potential Acquiror for a merger or other business
combination with the Business or the acquisition of a substantial equity
interest in the Business or a substantial portion of the Business's assets (a
"Third Party Transaction")(other than sales in the ordinary course of business),
other than as contemplated by this Agreement. Notwithstanding the foregoing or
any other provision contained herein to the contrary, if Seller breaches the
covenant contained in the previous sentence and, as a result thereof, Seller
terminates its obligations pursuant to this Agreement (other than as permitted
<PAGE>
by Section 6.3 hereof) and consummates a Third Party Transaction with a
Potential Acquiror, then Seller shall promptly pay to Buyer as liquidated
damages for such breach and as compensation for such termination US $3,000,000
plus an amount not to exceed US $1,500,000 to reimburse Buyer for (i) any non-
refundable bank commitment fee(s) and out-of-pocket expenses paid by Buyer
pursuant to the commitment letters referred to in Section 3.1(q) hereto and
(ii) any non-refundable fees and out- of-pocket expenses of Hambrecht & Quist
Incorporated which Buyer is obligated to pay or otherwise reimburse
(collectively, the "Breakup Fee"), and such Breakup Fee shall be the sole and
exclusive remedy of the Buyer Group in connection with a breach of the foregoing
covenant and such termination. In addition to Seller's termination rights under
Section 6.3, and notwithstanding any provision contained herein to the contrary,
Seller may also terminate its obligations under this Agreement pursuant to this
Section upon payment to Buyer of the Breakup Fee. In any event, upon payment of
the Breakup Fee to Buyer, this Agreement shall terminate and be of no further
force or effect, and the Seller and its affiliates shall have no further
liability to Buyer or its affiliates under or for any breach of this Agreement.
For avoidance of doubt, a Third Party Transaction shall not include any
transaction the consummation of which does not impede the consummation of the
transactions contemplated hereby.
ARTICLE V
CERTAIN OBLIGATIONS OF BUYER
5.1 Conduct of Business Pending Closing. From and after the date hereto and
prior to Closing, and unless Seller shall otherwise consent or agree in writing
and except as contemplated by this Agreement, Buyer covenants and agrees that:
(a) Buyer and its Subsidiaries will conduct their respective businesses in
the ordinary course;
(b) Buyer and its Subsidiaries will use their reasonable best efforts to
preserve the business organization of their respective businesses intact, to
maintain the services of their present key employees and to preserve the
goodwill of the suppliers, customers and others having business dealings with
them; and
(c) Buyer and its Subsidiaries shall not:
(i) amend their respective Articles of Incorporation, Bylaws or other
similar governing documents so as to affect adversely Seller or holders of
Buyer's Common Stock;
<PAGE>
(ii) issue any capital stock of Buyer or any of its Subsidiaries, or
rights, warrants or options to acquire shares of such capital stock or issue any
securities convertible into such shares or convertible into securities in turn
so convertible, or grant any options, warrants or rights to acquire any such
convertible securities (except (a) for issuances of such securities to Buyer or
a wholly-owned Subsidiary of Buyer, (b) for the grant of employee stock options,
(c) in connection with the exercise of employee stock options outstanding as of
the date hereof or (d) pursuant to employee stock purchase plans existing as of
the date hereof);
(iii) split, combine or reclassify the outstanding capital stock of Buyer;
(iv) declare or pay any dividend or other distribution in respect of any
class of Buyer's or any of its Subsidiaries' capital stock (except for dividends
or distributions declared or paid to Buyer or a wholly-owned Subsidiary of
Buyer), or make any payment to redeem, purchase or otherwise acquire, or call
for redemption, any of such stock; and
(v) enter into a transaction or take any other action that would be
required to be reported under Item 1, 2 or 3 of a Form 8-K Current Report
pursuant to Section 13 or 15(d) of the Exchange Act.
5.2 Access. Prior to the Closing, Buyer and its Subsidiaries, shall give to
Seller and to Seller's counsel, accountants and other representatives reasonable
access during normal business hours to properties, books and records of Buyer
and its Subsidiaries, and shall provide to Seller such financial and operating
data and other information concerning the business of Buyer and its Subsidiaries
as Seller shall reasonably request.
ARTICLE VI
CONDITIONS TO CLOSING; TERMINATION
6.1 Conditions Precedent to Obligations of the Buyer Group. The obligations
of the Buyer Group to proceed with the Closing under this Agreement are subject
to the fulfillment prior to or at Closing of the following conditions (any one
or more of which may be waived in whole or in part by Buyer at Buyer's option):
(a) Bringdown of Representations and Warranties. The representations and
warranties of Seller contained in this Agreement shall be true and correct on
and as of the Closing Date, with the same force and effect as though such
representations and warranties had been made on, as of and with reference to
<PAGE>
such date (other than such representations and warranties as are made as of
another date, which shall be true and correct as of such date), except where the
failure to be true and correct would not, individually or in the aggregate, have
a Material Adverse Effect, and Seller shall have delivered to Buyer a
certificate of Seller to such effect signed by a duly authorized
corporate officer of Seller.
(b) Performance and Compliance. The Seller Group shall have performed and
complied in all material respects with all of the covenants required by this
Agreement to be performed or complied with by them on or before the Closing
Date, and Seller shall have delivered to Buyer a certificate of Seller to such
effect signed by a duly authorized corporate officer of Seller.
(c) Opinion of Counsel. Buyer shall have received from Dechert Price &
Rhoads, counsel for the Seller Group, an opinion dated as of the Closing Date,
in a form reasonably satisfactory to counsel to Buyer with respect to the
matters set forth on Exhibit G.
(d) Waiting Periods. Any applicable waiting period under the HSR Act and
the regulations promulgated thereunder or the Anti-Monopoly Law and the
regulations promulgated thereunder shall have expired or been terminated.
(e) Litigation. No order of any court or administrative agency shall be
in effect that restrains or prohibits the transactions contemplated hereby.
(f) Non-Compete Agreement. Spectra-Physics AB shall have executed and
delivered to Buyer a non-compete agreement (the "Non-Compete Agreement"), which
Non-Compete Agreement shall be substantially in the form of Exhibit H attached
hereto.
(g) Transition Services Agreement. The Seller Subsidiaries shall have
entered into a transition services agreement (the "Transition Services
Agreement") with the Buyer Group with respect to the provision by the Seller
Subsidiaries of certain administrative services and the lease of certain office
space related to the non-U.S. operations of the Business, such Transition
Services Agreement to be substantially in the form of Exhibit I attached hereto.
(h) Minute Books and Resignations. Buyer shall have received the minute
books and stock record books of each of Scanning, the Scanning Subsidiaries (if
then available) and TxCom. Seller will cause to be removed or deliver to Buyer
the written resignations, effective as of the Closing Date, of all members of
the boards of directors of Scanning and the Scanning Subsidiaries and such of
the officers of Scanning and the Scanning Subsidiaries as Buyer has requested.
<PAGE>
(i) Permits, Approvals and Authorizations. All consents, waivers, permits
and approvals from any governmental or regulatory body, which are required by
applicable law to be obtained prior to consummation of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect on the Closing Date.
(j) Certificate of Incorporation, Bylaws. Buyer shall have received a
complete and correct copy of the Certificate of Incorporation and Bylaws of
Scanning, TxCom, Seller and SP Holding, each certified by the Secretary of the
respective corporation.
(k) Certificates of Good Standing. Buyer shall have received a Certificate
of Good Standing, dated within a recent date of Closing, for Scanning, TxCom,
Seller and SP Holding.
(l) Secretary's Certificate. Buyer shall have received a Certificate of the
Secretary of Seller, SP Holding, and each of the Seller Subsidiaries certifying
(a) the resolutions adopted by the Board of Directors (and stockholders, if
necessary) authorizing, as appropriate, this Agreement, the TxCom Agreement, the
Foreign Sales Agreements and all other agreements and related transactions
contemplated hereunder and (b) the signatures of the officers authorized to
execute such agreements.
6.2 Conditions Precedent to the Obligations of the Seller Group. The
obligations of the Seller Group to proceed with the Closing hereunder are
subject to the fulfillment prior to or at Closing of the following conditions
(any one or more of which may be waived in whole or in part by Seller at
Seller's option):
(a) Bringdown of Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and correct on and
as of the date of Closing, with the same force and effect as though such
representations and warranties had been made on, as of and with reference to
such date (other than such representations and warranties as are made as of
another date, which shall be true and correct as of such date), except where the
failure to be true and correct would not, individually or in the aggregate, have
a Material Adverse Effect on Buyer, and Buyer shall have delivered to Seller a
certificate of Buyer to such effect signed by a duly authorized corporate
officer of Buyer.
(b) Performance and Compliance. The Buyer Group shall have performed and
complied in all material respects with all the covenants required by this
Agreement to be performed or complied with by them on or before the Closing Date
and Buyer shall have delivered to Seller a certificate of Buyer to such effect,
signed by a duly authorized corporate officer of Buyer.
<PAGE>
(c) Opinion of Counsel for the Buyer Group. Seller shall have received from
Boylan, Brown, Code, Fowler, Vigdor & Wilson, LLP, counsel for the Buyer Group,
an opinion dated as of the Closing Date, in a form reasonably satisfactory to
counsel to the Seller Group with respect to the matters set forth on Exhibit I.
(d) Waiting Periods. Any applicable waiting period under the HSR Act and
the regulations promulgated thereunder or the Anti-Monopoly Law and the
regulations promulgated thereunder shall have expired or been terminated.
(e) Litigation. No order of any court or administrative agency shall be
in effect that restrains or prohibits the transactions contemplated hereby.
(f) TxCom Guarantee. Spectra-Physics AB shall have been released from its
guarantee obligations under the Guaranty dated August 28, 1995 in favor of
Vincent Baumier, Daniel Mawas, Bernard Malaise and Antoine Bonodot, dated
August 28, 1995 (the "TxCom Guarantee").
(g) Permits, Approvals and Authorizations. All consents, waivers, permits
and approvals from any governmental or regulatory body, which are required by
applicable law to be obtained prior to consummation of the transactions
contemplated hereby and shall be in full force and effect on the Closing Date.
(h) Certificate of Incorporation, Bylaws. Seller shall have received a
complete and correct copy of the Certificate of Incorporation and Bylaws of
Buyer and any subsidiaries Buyer creates to effect the transactions contemplated
hereby.
(i) Certificates of Good Standing. Seller shall have received a Certificate
of Good Standing, dated within a recent date of Closing, for Buyer and any
subsidiaries Buyer creates to effect the transactions contemplated hereby.
(j) Secretary's Certificate. Seller shall have received a Certificate of
Secretary of Buyer and any subsidiaries Buyer creates to effect the transactions
contemplated hereby certifying (a) the resolutions adopted by the Board of
Directors (and stockholders, if necessary) authorizing, as appropriate, this
Agreement, the TxCom Agreement, the Foreign Sales Agreements and all other
agreements and related transactions contemplated hereunder and (b) the
signatures of the officers authorized to execute such agreements.
6.3 Termination.
(a) This Agreement may be terminated:
<PAGE>
(i) by the mutual written agreement of Buyer and Seller;
(ii) by written notice of Buyer to Seller if the Closing has not
occurred within 60 days after the date hereof; provided, however, that
Buyer may not terminate the Agreement pursuant to this paragraph if Closing
shall not have occurred by such date primarily as a result of Buyer's
breach of its obligations hereunder; or
(iii) by written notice of Seller to Buyer if the Closing has not
occurred within 60 days after the date hereof; provided, however, that
Seller may not terminate the Agreement pursuant to this paragraph if
Closing shall not have occurred by such date primarily as a result of
Seller's breach of its obligations hereunder.
(b) In the event of termination by Seller or Buyer pursuant to
paragraph (a) of this Section 6.3, written notice thereof shall promptly be
given to the other and the transactions contemplated by this Agreement
shall be terminated, without further action by either. If the transactions
contemplated by this Agreement are terminated as provided herein:
(i) the provisions of Section 7.1 (relating to expenses) and Section
7.2 (relating to brokers' fees) hereto shall remain in full force and
effect; and
(ii) in no event shall any termination of this Agreement limit or
restrict the rights and remedies of either party hereto against the other
party which has willfully breached any of the agreements or other
provisions of this Agreement prior to termination hereto.
ARTICLE VII
CERTAIN ADDITIONAL COVENANTS
7.1 Costs, Expenses and Taxes. Buyer and Seller will pay all of the
expenses of the Buyer Group and the Seller Group, respectively, incurred in
connection with this Agreement and the transactions contemplated hereby. Buyer
will pay all sales, value added, transfer, documentary and similar taxes in
connection with the delivery of the Shares and the TxCom Shares and in respect
of the conveyances, assignments or transfers to Buyer or the Buyer Subsidiaries
of the Purchased Assets and the TxCom Rights.
7.2 Brokers. Each of the Seller Group and the Buyer Group represents and
warrants to the other that there are no claims (or any basis for any claim) for
brokerage commissions, finder's fees or like payments in connection with this
<PAGE>
Agreement or the transactions contemplated hereby resulting from any action
taken by them or on their behalf, except that Salomon Brothers Inc and the
Robinson-Humphrey Company, Inc. (the "Seller Brokers") have been retained by
Seller and Seller shall be responsible for any fees and expenses that may be due
to the Seller Brokers. Hambrecht & Quist Incorporated has been retained by Buyer
and Buyer shall be responsible for any fees and expenses that may be due to
Hambrecht & Quist Incorporated. The Seller Group shall indemnify and hold the
Buyer Group harmless and Buyer shall indemnify and hold the Seller Group
harmless with respect to their respective representations and warranties set
forth in this Section 7.2.
7.3 Employment. Effective as of the Closing Date, all Foreign Business
Employees shall become employees of the appropriate Buyer Subsidiaries, subject
to the satisfaction of any legal requirements regarding the transfer of
employment of such employees. The Buyer Subsidiaries shall in all circumstances
be responsible for any severance, termination or similar payment that may be due
to any Foreign Business Employee. Buyer agrees that to the extent length of
service is relevant for any purpose under any pension or other benefit plan or
arrangement made available to Foreign Business Employees, such Foreign
Business Employees shall receive credit for their years of service with the
applicable Seller Subsidiary. Buyer further agrees that any medical or life
insurance benefit plans made available to all employees of the Business shall
not contain a pre-existing condition exclusion.
7.4 Best Efforts. Subject to the terms and conditions of this Agreement,
each party will use its reasonable best efforts to cause the Closing to occur
including, without limitation, its reasonable best efforts to obtain all
necessary waivers, consents and approvals and effect all necessary registrations
and filings.
7.5 Transition Services Agreement. On the Closing Date, the Seller
Subsidiaries and the Buyer Subsidiaries shall enter into the Transition Services
Agreement.
7.6 Regulatory Filings. Seller and Buyer agree to file or cause to be filed
all necessary documentation with the appropriate government bodies as soon as
practicable to obtain as soon as possible all consents required by any
governmental bodies in order to consummate the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, Seller and Buyer
agree to file or cause to be filed, respectively, as soon as practicable after
the date hereof, but in no event more than five business days after the date
hereof, an acquired person's and acquiring person's HSR Act notification and
report form with respect to the transactions contemplated by this Agreement
required by the HSR Act. Buyer further agrees to file or cause to be filed, as
<PAGE>
soon as practicable after the date thereof, but in no event more than five
business days after the date hereof, a Notification of Acquisition of Business,
or any other appropriate form, with the Fair Trade Commission of Japan with
respect to the transactions contemplated by this Agreement in Japan, and Seller
further agrees to use its reasonable best efforts to cooperate with Buyer to
supply Buyer with such information or data as Buyer may require to prepare and
file such form. Seller and Buyer further agree to use their reasonable best
efforts to comply promptly with and, where appropriate, to respond in
cooperation with each other to, all requests or requirements which applicable
federal, state, local, foreign or other applicable law or governmental officials
may impose on them with respect to the transactions which are the subject of
this Agreement. In addition, anything in this Agreement to the contrary
notwithstanding, Buyer covenants and agrees to use its best efforts to (a) take
any action requested or accept any condition imposed by any government body in
connection with any consent required by any governmental body to consummate the
transactions contemplated in this Agreement and (b) resolve any objection
asserted with respect to the transactions contemplated hereby under any federal
or state statute, rule or regulation designed or intended to prohibit or
regulate actions in restraint of trade, including, if required by any applicable
government authority, agreeing to divest or hold separate pending required
divestitures, businesses owned directly or indirectly by Buyer and entering into
such other agreements, order or decrees with such government body as may be
required by such government body.
7.7 Use of Name.
(a) Anything herein to the contrary notwithstanding, no interest in or
right to use the name or mark "Spectra-Physics", any derivation thereof, any
name or mark confusingly similar therewith, or any logo used in connection
therewith (including without limitation the stylized logo "S") (collectively,
the "Retained Names and Logos"), is being transferred to Buyer or the Buyer
Subsidiaries pursuant to the transactions contemplated hereby, and except as set
forth in this Section 7.7, after the Closing, Scanning, TxCom and the Scanning
Subsidiaries will cease to have any interest in or right to use the Retained
Names and Logos. The Seller agrees that it will not at any time object to the
use of the word "SpectraScan" in the corporate name of Scanning and for all
other purposes related to the Business or any other business conducted by
Scanning, the Buyer Group or their successors or assigns in the future. Buyer
agrees to cause Scanning to file an amendment to its Certificate of
Incorporation to change its name promptly after the Closing to eliminate any
reference to the Retained Names and Logos.
(b) Seller grants Buyer a limited non-exclusive royalty-free license (A)
commencing on the Closing Date and ending two years after the Closing Date, to
<PAGE>
use the mark "Spectra-Physics," the name "Spectra-Physics Scanning Systems,
Inc." and the stylized logo "S" (the "Licensed Names") solely on (i) any
products or inventory in the possession of Scanning or, with regard to the
Business, the Seller Subsidiaries at the time of the Closing or (ii) any
products manufactured by Scanning during the two-year period after the Closing
Date (except for products using new molds) (collectively, the "Licensed
Products"), (B) commencing on the Closing Date and ending six months after the
Closing Date, to use solely in connection with the Business any signs, purchase
orders, invoices, sales orders, labels, letterhead, shipping documents,
brochures, displays, advertising, promotional materials, and other written
materials existing on the Closing Date that bear the Licensed Names, (C) with
regard to any labels affixed to products that bear the Licensed Names for which
government consent would be necessary to replace the Licensed Name appearing on
the label, to use such labels until the earlier of (i) receipt of government
approval to replace the Licensed Name appearing on the labels or (ii) two years
after the date of the Closing and (D) commencing on the Closing Date and ending
two years after the Closing Date, to use the phrase "formerly known as
Spectra-Physics Scanning Systems, Inc." on any written materials used solely in
connection with the Business. Notwithstanding the foregoing, Buyer agrees to use
its best efforts to discontinue its use of the Licensed Names as soon after the
Closing as commercially practicable, consistent with Buyer's good faith
judgment.
(c) Buyer agrees that all of its use of the Licensed Names shall inure to
the exclusive benefit of Seller for trademark purposes, and Buyer agrees not to
challenge Seller's ownership of the Licensed Names or the validity of the
Licensed Names or this license. The license granted by this Agreement is subject
to the concurrent right of Seller and its licensees to use the Licensed Names in
connection with any product, service or business. Buyer shall only use the
Licensed Names in providing Licensed Products that are of a quality equal or
superior to those provided by Scanning under the Licensed Names as of the date
hereto. Seller shall have the right to monitor and inspect the quality of such
Licensed Products from time to time on reasonable notice; provided that Seller
shall have no right to inspect or monitor any Licensed Products until they are
commercially available for sale. At Seller's request, Buyer shall submit for
Seller's inspection representative samples of all advertising, promotional and
marketing materials bearing the Licensed Names used in connection with the
Business. Buyer acknowledges that the purpose of the inspections conducted and
quality control standards prescribed by Seller in this Agreement is to maintain
the reputation, image and goodwill of the Licensed Names. Seller shall not bear
or assume any responsibility or liability to third parties as a result of
setting or enforcing such standards or for any failure of any Licensed Product
or of Buyer's conduct of the Business to conform to such standards.
<PAGE>
Buyer shall indemnify, defend and hold Seller harmless against any and all
claims, losses, liabilities, damages, and expenses (including attorneys' fees
and expenses) arising from or relating to Buyer's use of the Licensed Names in
conducting the Business or in marketing, distributing, offering, or selling the
Licensed Products or otherwise arising from or relating to Buyer and Seller's
use of similar names. Buyer shall take no action that would prejudice or
interfere with the validity of or Seller's ownership of the Licensed Names, and
Buyer shall not enter into any agreement with any third party which in any way
alters, diminishes or restricts the rights of Seller in the Licensed Names or
places any restrictions or conditions upon the use or appearance of any Licensed
Name. Buyer shall not prosecute any application for the registration of any
trademark, service mark or trade name containing any form or variation of any
Licensed Name (other than the name "SpectraScan"). Seller grants this license
"as is," and makes no representations or warranties concerning the Licensed
Names. Buyer may not assign, sublicense, pledge, grant or otherwise encumber or
transfer this license or any of its rights and obligations hereunder (whether by
operation of law or otherwise) without the prior written consent of Seller.
7.8 Registration Rights. At Closing, Buyer and Seller will enter into a
registration rights agreement (the "Registration Rights Agreement") which
agreement shall be substantially in the form of Exhibit K hereto.
7.9 TxCom Guarantee. If requested by Seller, Buyer agrees to enter into a
guarantee agreement with Vincent Baumier, Daniel Mawas, Bernard Malaise and
Antoine Bonodot in substantially the same form as, and in replacement of, the
TxCom Guarantee.
7.10 Buyer's Further Assurances. Buyer agrees to, and to cause its
Subsidiaries to, promptly transfer, convey, assign and deliver to Seller or its
designee all notices, correspondence, documentation, rights and payments
received by the Buyer Group after the Closing relating to the Excluded
International Assets, or any asset, claim or right dividended or otherwise
transferred to Seller or its designees pursuant to Section 1.3 of this
Agreement.
7.11 Restriction on Sale of Buyer Stock. Seller agrees not to sell, in a
privately negotiated transaction, any shares of Buyer Stock to Symbol
Technologies Inc. or its subsidiaries or affiliates. The parties agree that this
restriction shall not prohibit Seller from selling shares of Buyer Stock on or
through the facilities of any national securities exchange or the NASDAQ
National Market System.
<PAGE>
7.13 Patent License Agreement. From and after the Closing, the Buyer shall
be bound by, and shall be considered the "Licensor" for all purposes under, the
Patent License Agreement between Seller and Spectra-Physics Holdings USA, Inc.
referred to on Schedule 2.1(t).
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by the Seller. Subject to the limitations contained
herein, after the Closing, Seller and SP Holding shall indemnify and hold
harmless the Buyer Group from and against any loss, liability, claim,
obligation, damage or expense (including reasonable legal, consulting and
accounting fees and expenses and costs of litigation) (collectively "Damages")
that any member of the Buyer Group may incur or suffer arising out of or
resulting from:
(a) the inaccuracy of any representation or warranty made by Seller and SP
Holding in this Agreement or in any closing certificate delivered pursuant
hereto;
(b) any failure by Seller or SP Holding to perform any obligation or comply
with any covenant or agreement specified herein;
(c) any liability for federal or foreign income Taxes of Scanning and its
Subsidiaries, Seller Subsidiaries or TxCom with respect to any taxable period
that ends on or prior to the Closing Date;
(d) any liability owed to a Governmental Authority for state or local
income or franchise Taxes, Payroll Taxes or state or local sales and use Taxes
of Scanning and its Subsidiaries, Seller Subsidiaries, or TxCom with respect to
any taxable period that ends on or prior to the Closing Date, provided that a
Tax Return for the same type of tax for which such liability is owed was filed
with such Governmental Authority by or on behalf of Scanning and its
Subsidiaries, Seller Subsidiaries or TxCom on or before the Closing Date or was
caused to be filed by Seller with such Governmental Authority after the Closing
Date pursuant to Section 9.1(a), except to the extent any of the foregoing Taxes
are reflected on the Closing Date Balance Sheet;
(e) any liability for Taxes of Seller or of any other entity which is a
member of any consolidated, combined or unitary federal or state tax group of
which Scanning is or was a member on or before the Closing Date, pursuant to
Treasury Regulation 1.1502-6 or any analogous state or local tax provisions; and
(f) any liability for Taxes of Scanning and its Subsidiaries, Seller
Subsidiaries, or TxCom, other than the Taxes described in Section 8.1(c), (d) or
<PAGE>
(e), with respect to any taxable period that ends on or prior to the Closing
Date, except to the extent any such Taxes are reflected on the Closing Date
Balance Sheet.
8.2 Indemnification By Buyer. Subject to the limitations contained herein,
after the Closing, Buyer shall indemnify and hold harmless the Seller Group from
and against any Damages that any member of the Seller Group may incur or suffer
arising out of or resulting from:
(a) the inaccuracy of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered pursuant hereto;
(b) any failure by Buyer to perform any obligation or comply with any
covenant or agreement specified herein; and
(c) the Assumed International Liabilities, the TxCom Obligations and
Spectra-Physics AB's obligations under the TxCom Guarantee.
8.3 Limitations on Indemnification Obligations.
(a) Seller and SP Holding shall not have any liability under Sections
8.1(a) or Section 8.1(f) of this Agreement for Damages unless the aggregate of
all Damages for which Seller and SP Holding would, but for this sentence, be
liable exceeds US $1,350,000 on a cumulative basis, and then only to the extent
of any such excess. Seller and SP Holding shall not have any liability under
Section 8.1(d) of this Agreement for Damages unless the aggregate of all Damages
for which Seller and SP Holding would, but for this sentence, be liable exceeds
US $50,000 on a cumulative basis and then only to the extent of any such excess.
Under no circumstances shall Buyer and its affiliates be entitled to
indemnification for Damages under Section 8.1(a) and Section 8.1(f) of this
Agreement for an amount in excess of US $10,000,000.
(b) No action, claim or set off for Damages under Sections 8.1(a) and
8.1(f) of this Agreement shall be brought or made by the Buyer Group after the
date that is twelve (12) months after the Closing Date, except that such time
limitation shall not apply to claims for misrepresentations or breaches of
warranty relating to Sections 2.1(b) and 2.1(d). The time limitation specified
in this Section 8.3(b) shall not apply to any item as to which Buyer shall have,
before the expiration of the applicable period, previously made a claim by
delivering a notice (stating in reasonable detail the basis of such claim) to
Seller.
(c) The amount of any Damages for which indemnification is provided under
Sections 8.1 and 8.2 of this Agreement shall be (i), in the case of calculating
Buyer's Damages, net of any accruals or reserves reflected on the Closing Date
Balance Sheet with respect to the matters to which those Damages relate, (ii)
net of any amounts recovered by the indemnified party for such Damages pursuant
<PAGE>
to any indemnification by or indemnification agreement with any third party
and/or any insurance policies with respect to such Damages and (iii) offset to
the extent of the present value (calculated using a discount rate equal to the
appropriate applicable federal rate under Code Section 1274(d)) of any tax
benefit (including without limitation, any benefit attributable to a decrease in
income, increase in deductions or credits, or increase in basis) realized by the
indemnified party arising from, or in connection with, the incurrence or payment
of any such Damages. Buyer shall not be entitled to indemnification hereunder
with respect to Taxes of TxCom if the existence of such Taxes constitutes a
breach of the Seller's Representations and Warranties Agreement by and between
Vincent Baumier, Bernard Malaise, Daniel Mawas, Alain Bonodot and TxCom and SP
Holding, dated August 28, 1995 (the "Representations and Warranties Agreement")
and Buyer (as successor to SP Holding) receives indemnification for such breach
pursuant to the Representations and Warranties Agreement.
(d) Seller, SP Holding and Buyer shall have no obligation under this
Agreement to indemnify the other with respect to any matter that was or could
have been raised by the other in connection with the Closing Date Balance Sheet
pursuant to the terms of Section 1.6.
(e) From and after the Closing, no claim for indemnity shall be made by the
Buyer Group or the Seller Group, if such claim is based on an event or facts
disclosed to such party in writing prior to Closing.
(f) Buyer shall not have any liability under Section 8.2(a) of this
Agreement for Damages unless the aggregate of all Damages for which Buyer would,
but for this sentence, be liable exceeds US $1,350,000 on a cumulative basis,
and then only to the extent of any such excess. Under no circumstances shall
Seller, SP Holding and their affiliates be entitled to indemnification for
Damages under Section 8.2(a) of this Agreement for an amount in excess of
US $10,000,000.
(g) No action, claim or set off for Damages under Sections 8.2(a) of this
Agreement shall be brought or made by any member of the Seller Group after the
date that is twelve (12) months after the Closing Date, except that such time
limitation shall not apply to claims for misrepresentations or breaches of
warranty relating to Sections 3.1(b), 3.1(d), 3.1(m) and 3.1(r). The time
limitation specified in this Section 8.3(g) shall not apply to any item as to
which Seller or SP Holding shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice (stating in reasonable
detail the basis of such claim) to Buyer.
<PAGE>
8.4 Procedures Relating to Indemnification.
(a) In order for a party (the "Indemnified Party") to be entitled to any
payment under the indemnification provided for under this Agreement in respect
of, arising out of or involving a claim, legal proceeding or demand made by any
person, firm, governmental authority, corporation or other entity (other than
any of the parties to this Agreement or their affiliates) against the
Indemnified Party (a "Third Party Claim"), such Indemnified Party must notify
the other party (the "Indemnifying Party") in writing of the Third Party Claim,
setting forth in reasonable detail the basis for such claim, as promptly as
practicable, but in any case within 30 days, after receipt by such Indemnified
Party of written notice of the Third Party Claim (the "Indemnification Notice");
provided, however, that failure to give such Indemnification Notice shall not
affect the indemnification provided hereunder except to the extent that the
Indemnifying Party shall have been prejudiced as a result of such failure.
Thereafter, the Indemnified Party shall deliver to the Indemnifying Party,
within five business days after the Indemnified Party's receipt thereof, copies
of all notices and documents (including court papers) received by the
Indemnified Party relating to the Third Party Claim.
(b) In connection with any Third Party Claim, the Indemnifying Party, at
the sole cost and expense of the Indemnifying Party, may, upon written notice
to the Indemnified Party, assume the defense of any such Third Party Claim.
Should the Indemnifying Party so elect to assume the defense of a Third Party
Claim, the Indemnifying Party will not be liable to the Indemnified Party for
legal expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof. If the Indemnifying Party assumes such defense, the
Indemnified Party shall be entitled to participate in, but not control, the
defense thereof at its own expense. If the Indemnifying Party shall fail to
defend such Third Party Claim, or if after commencing or undertaking any such
defense to such Third Party Claim, fails to prosecute, or withdraws from such
defense, the Indemnified Party shall have the right to undertake such defense at
the Indemnifying Party's expense. Whether or not the Indemnifying Party
chooses to defend or prosecute any Third Party Claim, the Indemnified and
Indemnifying Parties shall cooperate in the defense or prosecution thereof. Such
cooperation shall include access during normal business hours afforded to the
Indemnifying Party to, and reasonable retention by the Indemnified Party of,
records and information which are reasonably relevant to such Third Party Claim,
and making employees available on a mutually convenient basis to provide
<PAGE>
additional information and explanation of any material provided hereunder, and
the Indemnifying Party shall reimburse the Indemnified Party for all its
reasonable out-of- pocket expenses in connection therewith. Regardless of
whether the Indemnifying Party elects to assume the defense of any such Third
Party Claim, the Indemnified Party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim without the
Indemnifying Party's prior written consent.
8.5 Exclusive Remedy. The indemnification provided in this Article XIII
shall be the sole and exclusive remedy after the Closing Date for monetary
damages available to the Buyer Group and the Seller Group for breach of any of
the terms, conditions, representations or warranties contained herein. As
between the Seller Group, on the one hand, and the Buyer Group and its
affiliates, including without limitation after the Closing, Scanning and TxCom,
on the other hand, the rights and obligations set forth in this Agreement will
be the exclusive rights and obligations with respect to this Agreement, the
events giving rise to this Agreement and the transactions provided for herein or
contemplated hereby (other than, prior to the Closing, the Confidentiality
Agreement dated February 1, 1996 between Buyer and Spectra-Physics AB (the
"Confidentiality Agreement")). Without limiting the generality or effect of the
foregoing, as a material inducement to the other parties hereto entering into
this Agreement, and in light of, among other factors, the acknowledgements
contained in Section 3.2, each of the parties to this Agreement hereby waives
any claim or cause of action, known and unknown, foreseen and unforeseen, which
exists or may arise in the future, or which it otherwise might assert, including
without limitation under the common law or federal or state securities laws,
trade regulation laws, Environmental Laws (including CERCLA or any other
statutes now or hereafter in effect) or other Laws, by reason of this Agreement,
the events giving rise to this Agreement and the transactions provided for
herein or contemplated hereby or thereby (other than in respect of the
Confidentiality Agreement), except for (i) claims or causes of action brought
under and subject to the terms and conditions of this Agreement, or (ii)
injunctive or other equitable relief (other than for rescission or rescissory or
similar damages).
ARTICLE IX
TAX MATTERS
9.1 Tax Responsibility.
(a) Seller shall be responsible for the preparation and filing of (i) all
federal and foreign income tax Returns and all consolidated, combined or unitary
state or local income or franchise tax Returns which include the results of
<PAGE>
Scanning for any taxable period ending on or before the Closing Date and all
other state or local income or franchise tax Returns of Scanning for a taxable
year that ends on the Closing Date; and (ii) all other Tax Returns of Scanning
which are required to be filed on or before the Closing Date (taking into
account any applicable extensions). Seller shall be responsible for remitting or
causing to be remitted to the proper Governmental Authority all payments of
Taxes required to be paid on or before filing any such return as shown thereon
except for any such Taxes that are reflected on the Closing Date Balance Sheet.
Seller shall submit to Buyer any Return prepared by Seller which has not
been filed on or before the Closing Date and which is required to be executed by
an officer of Scanning. Within fifteen business days of the receipt of such
return, Buyer shall cause the appropriate officer of Scanning to duly execute
such return and shall deliver such duly executed return to Seller. Buyer shall
also, within such fifteen-day time period, remit to Seller an amount equal to
the amount of any Taxes due with respect to such return, but only to the extent
such Taxes are reflected on the Closing Date Balance Sheet. Seller shall be
responsible for filing such return and remitting all payments of Taxes required
to be paid with respect to such return.
Seller will also be responsible for deferred income, if any, triggered into
income by Treasury Regulation Section 1.1502-13 and Treasury Regulation Section
1.1502-14 and excess loss accounts, if any, taken into income under Treasury
Regulation Section 1.1502-19 for all periods through the Closing Date and pay
any federal income Taxes attributable to such income. Seller will prepare and
file all Returns for which it is responsible for under this Section 9.1(a) in a
manner that is consistent with its past tax accounting methods or practice and
will take no position on such returns that relate to Scanning and its
Subsidiaries that materially and adversely affects Scanning and its Subsidiaries
after the Closing Date, unless such position would be reasonable in the case of
a person that owned Scanning and its Subsidiaries both before and after the
Closing Date or is consistent with past tax accounting methods or practice.
(b) Buyer shall cause Scanning to prepare and file all Tax Returns of
Scanning not described in Section 9.1(a). Buyer shall remit or cause Scanning to
remit to the proper taxing authorities all payments of Taxes required to be paid
on or before filing any such return as shown thereon. Buyer will take no
position (nor will cause Scanning to take a position) on any Return that would
materially and adversely affect either Seller or Scanning and its Subsidiaries
with respect to any Returns (and any liability for Taxes related thereto)
described in Section 9.1(a), unless such position would be reasonable in the
case of a person that owned Scanning and its Subsidiaries both before and after
the Closing Date or is consistent with past tax accounting methods or practice.
<PAGE>
(c) All Tax Returns of Scanning, or which include the results of Scanning,
(other than any one-day Returns required by reason of any election described in
Section 9.2 hereto) shall be prepared on the basis of a taxable period of
Scanning ending at the close of business on the Closing Date, unless clearly
required otherwise by applicable Tax law.
(d) Within 180 days after the Closing Date, Buyer shall provide to Seller
completed Tax Return packages and such other information reasonably requested by
Seller with respect to Scanning for the preparation of any Tax Return required
to be filed by Seller under Section 9.1(a)(i). In addition, Seller and Buyer
shall provide reasonable cooperation to each other in connection with (i) the
preparation or filing of any Tax Return, Tax election, Tax consent or
certification, or any claim for a Tax refund, (ii) any determination of
liability for Taxes, and (iii) any audit, examination or other proceeding in
respect of Taxes of Scanning. Such cooperation shall include making available,
on a reasonable basis, employees of the Seller, Buyer, or Scanning, as the case
may be, whose out-of-pocket costs, if any, such as travel and lodging, shall be
reimbursed by the party to which such employees are made available. After the
Closing Date, Seller and Buyer shall make available to each other, as reasonably
requested all information, records or documents of Scanning for all periods
prior to and including the Closing Date and shall preserve all such information,
records and documents until the expiration of any applicable statute of
limitations, including extensions thereof, provided that notice of such
extension is given to the party which did not grant the extension.
(e) Notwithstanding anything to the contrary in Section 8.4 of this
Agreement, Seller shall have the sole right, at its own expense, to control any
audit or examination by any Governmental Authority, to initiate any claim for
refund, to amend any Return, or to contest, resolve and defend against any
assessment, notice or deficiency, or other adjustment or proposed adjustment
relating to any Taxes for which Buyer seeks to be indemnified by Seller pursuant
to Section 8.1 hereto. Seller will not settle any such audit in a manner which
would materially and adversely affect Scanning and its Subsidiaries after the
Closing Date unless such settlement would be reasonable in the case of a person
that owned Scanning and its Subsidiaries both before and after the Closing Date
or such settlement is consistent with past tax accounting methods or practice of
Seller or Scanning and its Subsidiaries in handling such audits.
<PAGE>
9.2 Section 338(h)(10) Election.
Seller and Buyer agree that they shall jointly make or cause to be made the
election under Section 338(h)(10) of the Code and Treasury Regulation
Section 1.338(h)(10)-1(d) (and any corresponding election under state and local
Tax law) with respect to the purchase and sale of the Shares, except that Seller
and Buyer shall jointly elect not to have an election under Section 338(h)(10)
or Section 338(g) of the Code apply for California purposes (collectively, the
"Elections"). Because Seller is not the common parent of a "selling consolidated
group" of which Scanning is a member, as that term is defined under Treasury
Regulation Section 1.338(h)(10)-1, Seller shall cause the person that is the
common parent with respect to the selling consolidated group to join with Buyer
in making the Elections with respect to Scanning. (Any person authorized to make
the Elections with respect to the selling consolidated group and Scanning (on
behalf of Seller) is referred to as an "Authorized Person" herein). Buyer shall
prepare IRS Form 8023-A (and any required attachments) and any similar state and
local tax forms (and any required attachments) required to make the Elections
(collectively, the "Election Forms" and each singularly, the "Election Form")
and shall submit the Election Forms to Seller no later than 75 days prior to the
date the Election Forms are required to be filed. The amount of consideration
allocated to the purchase and sale of the Shares shall be consistent with the
Purchase Price allocation set forth in Section 1.7 hereto. In the event of any
dispute with regard to the content of any Election Form, the Parties shall
attempt to resolve such dispute using good faith efforts. If they have not done
so by the thirtieth day prior to the date the Election Form in question is
required to be filed, the dispute shall be resolved by the Neutral Auditors (in
accordance with Section 9.5 hereto) at least five business days prior to the
time the Election Form is required to be filed. Seller shall promptly deliver to
Buyer the Election Forms, which shall have been executed by the Authorized
Person. Buyer shall then duly execute the Election Forms or promptly cause the
Election Forms to be duly executed by the person authorized to execute such
forms on behalf of Buyer and shall file the Election Forms in accordance with
applicable Tax laws and the terms of this Agreement. Seller and Buyer shall take
or cause to be taken any other actions that are necessary for making or
perfecting the Elections. Buyer shall provide Seller with a copy of the Election
Forms as filed. Seller and Buyer shall report all transactions pursuant to this
Agreement for Tax purposes in a manner that is consistent with the Elections in
all jurisdictions which recognize the effectiveness of the Elections for Tax
purposes and shall take no position contrary thereto in such jurisdictions
unless required to do so pursuant to a "determination" within the meaning of
Section 1313 of the Code or an analogous provision under state or local law.
<PAGE>
Seller will pay any tax attributable to the making of the Section
338(h)(10) election and will indemnify Buyer and Scanning against any liability
or expense arising out of any failure to pay such tax. Seller will also pay any
state, local or foreign tax (and indemnify Buyer and Scanning against any
liability or expense arising out of any failure to pay such tax) attributable to
an election under state, local or foreign law similar to the election available
under Section 338(g) of the Code (or which results from the making of an
election under Section 338(g) of the Code) with respect to the purchase and sale
of the stock of Scanning hereunder where the state, local, or foreign tax
jurisdiction (i) does not provide or recognize a Section 338(h)(10) election or
(ii) does not apply its provisions corresponding to Section 338(h)(10) of the
Code to the purchase and sale of the stock of Scanning (for example, because
Scanning files a separate company tax return in such jurisdiction).
9.3 Refunds and Credits.
(a) Except as otherwise provided in Section 9.3(b), Seller shall be
entitled to any refund or credit (including any refund or credit resulting from
a carry back of a net operating loss, net capital loss or tax credit) of federal
and foreign income Taxes, any state or local income or franchise Taxes, Payroll
Taxes or state or local sales and use Taxes of Scanning and its Subsidiaries and
TxCom with respect to any taxable period that ends on or prior to the Closing
Date, except to the extent such refund or credit is reflected on the Closing
Date Balance Sheet.
Seller, at its expense, shall be responsible for filing and preparing any
Returns (including any amended Returns) necessary to obtain such refund or
credit. Buyer shall cooperate with Seller in connection with the preparation and
filing of such returns. Seller will indemnify Buyer for any penalty, interest or
costs incurred by Buyer that is attributable to such refund or credit.
<PAGE>
(b) Where permitted by applicable Tax law, Buyer and Scanning shall elect
not to carry back any net operating loss, net capital loss or tax credit that
arises in any taxable year ending after the Closing Date ("Carryback Item"), to
a taxable year of any consolidated, combined or unitary Returns filed by, or
with respect to, Scanning that ends on or before the Closing Date. If a
Carryback Item of Buyer or Scanning (or a successor to them) is required to be
carried back under applicable Tax law to a taxable year of any consolidated,
combined or unitary Returns filed by, or with respec to, Scanning, and is
absorbed or used in whole or in part in such year, Seller shall pay Buyer an
amount equal to any refund or credit attributable to such Carryback Item,
provided that Seller receives such refund or realizes the benefit of any such
credit. The amount of any such refund or credit attributable to the Carryback
Item shall be equal to the difference between the amount of such refund or
credit (net of any income taxes payable thereon) with and without the Carryback
Item. Amounts due pursuant to this paragraph shall be paid in full within 30
days after Seller receives a refund or credit. If a refund or credit
attributable to a Carryback Item is later reduced (for example, as a result of a
reduction in the amount of a Carryback Item caused by an audit adjustment),
Buyer shall pay to Seller the amount of such reduction including statutory
interest by the due date of any required tax payment by Seller or, if no payment
is due, within 30 days after the final determination of the amount of the
reduction in such benefit.
Seller shall be responsible for preparing and filing (or arranging for the
preparation and filing of) any Returns required to carry back a Carryback Item
to a taxable year ending on or before the Closing Date. Buyer shall reimburse
Seller for the reasonable cost of preparation of any such Returns. Buyer shall
indemnify Seller for any penalty, interest or costs incurred by Seller that is
attributable to Carryback Items.
(c) Except as otherwise provided in Section 9.3(a), Scanning shall be
entitled to any other refunds or credits of its Taxes for all taxable periods.
9.4 Tax Sharing Agreements. Effective as of the Closing Date, all tax
sharing agreements between Scanning and any member of any consolidated,
combined, or unitary group of which Scanning is a member on or before the
Closing Date shall be terminated. Neither Scanning nor such member shall have
any current or continuing obligations to or benefits from any other party under
such terminated agreements as of and after the Closing Date.
9.5 Dispute Resolution. In the event of a dispute concerning this Article
IX, the parties shall submit such dispute to the Neutral Auditors (to be
selected in the same manner as set forth under Section 1.6(d) hereto) whose
decision shall be binding on the parties. The Neutral Auditors' fee shall be
borne equally by Buyer and Seller.
<PAGE>
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or, if mailed, three business days after being mailed by
United States first-class, certified or registered mail, postage prepaid, or,
if sent by overnight delivery by a nationally recognized courier such as Federal
Express, one business day after deposit with such courier, or, if sent by
telecopy, upon confirmation of receipt, to the other party at the following
addresses (or at such other address as shall be given in writing by any party to
the other):
If to Seller Group to:
Spectra-Physics, Inc.
108 Webster Building
3411 Silverside Road
Wilmington, DE 19810
Telephone: (302) 478-4600
Fax: (302) 478-8962
Attn: Ms. Barbara Schoenberg
With required copies to:
Spectra-Physics AB
Box 5226
Sturegatan 32
Fourth Floor
S-102 45 Stockholm, Sweden
Telephone: 011-468-783-0725
Fax: 011-468-660-9226
Attn: Mr. Ulf Johansson
and
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Telephone: (215) 994-2971
Fax: (215) 994-2222
Attention: Carmen J. Romano, Esquire
If to Buyer Group, to:
PSC Inc.
675 Basket Road
Webster, NY 14580
Telephone: (716) 265-1600
Fax: (716) 265-6402
Attention: William J. Woodard, Vice-President -
Finance
<PAGE>
With required copies to:
Boylan, Brown, Code, Fowler, Vigdor
& Wilson, LLP
2400 Chase Square
Rochester, NY 14604
Telephone: (716) 232-5300
Fax: (716) 232-3528
Attention: Martin S. Weingarten, Esq.
10.2 Successors and Assigns; Benefit. This Agreement, and all rights and
powers granted hereby, will bind and inure to the benefit of the parties hereto
and their respective successors and assigns. No party hereto may assign its
rights or delegate its duties and obligations under this Agreement without the
prior written consent of the other party hereto; provided, however, that Buyer
may assign its rights hereunder to a wholly-owned Subsidiary of Buyer, provided
further that no such assignment shall limit or release any of Buyer's
obligations hereunder. Except as provided in Section 7.3 of this Agreement,
nothing in this Agreement, express or implied, is intended to confer on any
other person other than the parties hereto, the Seller Subsidiaries and the
Buyer Subsidiaries or their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
10.3 Public Announcements. Prior to the Closing, neither the Seller Group
nor the Buyer Group shall issue any press release or public announcement
regarding this Agreement or the transactions contemplated hereby except as and
to the extent that Buyer and Seller jointly agree, and except as any party shall
in the opinion of its counsel be obligated by law, rule or regulation of any
governmental or regulatory body or stock exchange, and in such event the party
issuing any release or public announcement or disclosure shall to the extent
practical, give the other party reasonable prior notice of such announcement or
disclosure and a reasonable opportunity to comment thereon.
10.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
10.5 Headings. The headings preceding the text of the sections and
subsections hereto are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
10.6 Amendments. No amendment to this Agreement shall be effective unless
it shall be in writing and signed by each of the parties against which it is to
be enforced.
<PAGE>
10.7 Limitation on Knowledge. To the extent any representation or warranty
of Seller in this Agreement is limited to "Seller's knowledge" or similar
language, knowledge shall be limited to any facts or circumstances actually
known after reasonable investigation by the individuals set forth on Schedule
10.7 hereto. To the extent any representation or warranty of Buyer in this
Agreement is limited to "Buyer's knowledge" or similar language, knowledge shall
be limited to any facts or circumstances actually known after reasonable
investigation by any of the individuals set forth on Schedule 10.7 hereto.
10.8 Foreign Sales Agreements and TxCom Agreement. Notwithstanding anything
to the contrary contained in any of the Foreign Sales Agreements or the TxCom
Agreement to be executed and delivered in accordance with Section 1.1(c) and
Section 1.1(d), respectively, of this Agreement, any "purchase price" referred
to in any such Foreign Sales Agreement or TxCom Agreement represents the portion
of the Purchase Price allocated to the assets and liabilities being transferred
by the Seller Subsidiary party to such Foreign Sales Agreement or by SP Holding
pursuant to the TxCom Agreement, respectively, and no amounts in excess of, or
less than, the Purchase Price shall be owed by Buyer as a result of the purchase
price specified in any Foreign Sales Agreement or TxCom Agreement. The purchase
price adjustment contemplated by the Foreign Sales Agreements and the TxCom
Agreement refer only to the adjustments to the purchase price referred to in the
appropriate Foreign Sales Agreement or TxCom Agreement, respectively, if any,
necessary as a result of the finalization of the allocation of the Purchase
Price in accordance with Section 1.7 of this Agreement, and no amounts shall be
owed by the Buyer Group or the Seller Group as a result of any such adjustments.
Notwithstanding anything contained in this Agreement, the Foreign Sales
Agreements or the TxCom Agreement to the contrary, nothing in the Foreign Sales
Agreements or the TxCom Agreement will be deemed to enlarge or diminish in any
way any of the parties' rights or obligations under this Agreement. To the
extent that any of the provisions of the Foreign Sales Agreements or the TxCom
Agreement are inconsistent with the provisions of this Agreement, the provisions
of this Agreement shall control. No party to any of the Foreign Sales Agreements
or the TxCom Agreement shall have any right to bring any claim thereunder for
breach of the representations or warranties contained therein. That portion of
the Purchase Price allocated to the International Assets transferred to a Buyer
Subsidiary from Spectra-Physics K.K. shall be deemed to be paid in Japanese Yen
at the spot price for Japanese Yen listed in the Wall Street Journal on the
Closing Date.
10.9 Consent to Jurisdiction. Buyer and Seller each irrevocably submits
to the exclusive jurisdiction of (a) the courts of the State of New York,
situated in the county of New York and (b)the United States District Court for
the Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of or related to this Agreement or any transaction
contemplated hereby. Buyer and Seller each hereby irrevocably consents to the
<PAGE>
service of summons, complaint and any and all other process in any such action
or proceeding brought in such jurisdictions within the State of New York by
delivery of copies of such process to it, at its address specified in
Section 10.1 of this Agreement or by certified mail direct to such address.
Buyer and Seller each hereby waives any objection that it may have based upon
lack of personal jurisdiction, including, without limitation, any objection to
the laying of venue or based on grounds of forum non conveniens, which it may
now or hereafter have to the bringing of any such action or proceeding in such
jurisdiction.
10.10 Post-Closing Access. Buyer and Seller shall reasonably cooperate with
each other after the Closing so that (subject to any limitations that are
reasonably required to preserve any applicable attorney-client privilege) each
party has access to the business records, contracts and other information
existing at the Closing Date and relating to the Business (whether in the
possession of Seller Group, Buyer Group, Scanning or TxCom) as is reasonably
necessary for (a) the preparation for or the prosecution or defense of any suit,
action, litigation or administrative, arbitration or other proceeding or
investigation (other than one by or on behalf of a party to this Agreement
against another party to this Agreement) by or against Scanning, TxCom or any
member of the Seller Group or Buyer Group, (b) the preparation and filing of any
Tax Return or election relating to the Business or any audit by any taxing
authority of any Returns of Scanning, TxCom or the Scanning Subsidiaries and (c)
the preparation and filing of any other documents required by any government
authority. The party requesting such information and assistance shall reimburse
the other party for all out-of-pocket costs and expenses incurred by such party
in providing such information and in rendering such assistance. The access to
files, books and records contemplated by this Section 10.10 shall be during
normal business hours and upon not less than two business days' prior written
request, shall be subject to such reasonable limitations as the party having
custody or control thereof may impose to preserve the confidentiality of
information contained therein, and shall not extend to material subject to a
claim of privilege unless expressly waived by the party entitled to claim the
same.
10.11 Regarding Certain Consents. Nothing in this Agreement shall be
construed as an attempt by any Seller Subsidiary to assign to the Buyer
Subsidiaries pursuant to this Agreement and/or the Foreign Sales Agreements any
contract, agreement, permit, franchise, claim or asset included in the
International Assets which is by its terms or by law nonassignable without the
consent of any other party or parties, unless such consent or approval shall
have been given, or as to which all the remedies for the enforcement thereof
available to any Seller Subsidiary would not by law pass to the Buyer
Subsidiaries as an incident of the assignments provided for by this Agreement (a
"Non-Assignable Contract"). To the extent that any such consent or approval in
respect of, or a novation of, a Non- Assignable Contract shall not have been
obtained on or before the Closing Date, Seller shall cause the Seller
<PAGE>
Subsidiaries to use reasonable efforts and to cooperate in any reasonable
arrangement to assure the Buyer Subsidiaries the benefits of such Non-
Assignable Contract to the extent permitted by law. To the extent lawful,
practicable and reasonable in the circumstances, including the obtaining of any
such necessary consent or approval after the Closing (provided that neither
Seller nor any Seller Subsidiary shall be required to pay any money or other
consideration or grant forbearances to any third party to effect such consent or
approval), Seller at the request and under the direction of Buyer shall cause
the appropriate Seller Subsidiary to take all reasonable actions to assure that
the rights of any Seller Subsidiary under the Non-Assignable Contracts shall be
preserved for the benefit of the Buyer Subsidiaries to the extent not involving
any undue hardships upon any Seller Subsidiary or unreasonable time constraints
in the request or compliance with such instructions. Buyer shall indemnify and
hold harmless Seller Group for performing such obligations and reimburse Seller
Group for its expenses related thereto.
10.12 Further Assurances. Following the Closing, each party shall cooperate
with the other and execute and deliver, or cause to be executed and delivered,
all such other instruments, including, without limitation, instruments of
conveyance, assignment and transfer, and take all such other actions as may
reasonably be requested by the other party hereto from time to time, consistent
with the terms of this Agreement, in order to effectuate the provisions and
purposes of this Agreement.
10.13 Preservation of Records Information. Buyer will hold all of the
material books and records of Scanning, TxCom, and, with respect to the
Business, the Seller Subsidiaries, existing on the Closing Date and not destroy
or dispose of any thereto for a period of seven years from the Closing Date.
Seller and Seller Subsidiaries shall preserve and keep any such books and
records it may retain with respect to the Business for a period of seven years
from the Closing Date.
10.14 Further Audit Assistance. Immediately following the Closing and
thereafter, Seller will use its reasonable best efforts to cause Coopers &
Lybrand L.L.P., its auditors, at Buyer's expense, to continue to provide Arthur
Andersen LLP with all such information and assistance with respect to the
Business' audited historical financial statements and quarterly financial data
as may reasonably be required by Arthur Andersen LLP, including but not limited
to the furnishing of any opinion or consents required for the inclusion of such
audited financial statements in any filings under the Securities Act or the
Exchange Act by Buyer.
<PAGE>
10.15 Specific Performance. Buyer and Seller each acknowledges and agrees
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agree that the
other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in addition to any other remedy to
which they may be entitled, at law or in equity.
10.16 Entire Agreement. This Agreement and the Exhibits and Schedules
hereto, each of which is hereby incorporated herein, set forth all of the
promises, covenants, agreements, conditions and undertakings between the parties
hereto with respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written, except the Confidentiality Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
SPECTRA-PHYSICS, INC.
By: /s/ Ulf Johansson
Title:As Authorized Agent
PSC Inc.
By: /s/ L. Michael Hone
Title:President, CEO, Chairman
SPECTRA-PHYSICS HOLDING, S.A.
By /s/ Ulf Johansson
Title: As Authorized Agent
<PAGE>
SPECTRA-PHYSICS, INC. SPECTRA-PHYSICS HOLDING, S.A.
108 Webster Building Avenue de Scandanavie
3411 Silverside Road ZA de Courtaboeuf
Wilmington, DE 19810 91940 Les Ulis
July 12, 1996
PSC Inc.
675 Basket Road
Webster, NY 14580
Gentlemen:
Reference is made to that certain Asset and Stock Purchase Agreement dated
May 20, 1996, by and among PSC Inc., Spectra-Physics, Inc., and Spectra-Physics
Holding, S.A. (the "Purchase Agreement"). Capitalized terms used but not defined
herein shall have the meaning ascribed to them in the Purchase Agreement.
This is to confirm our agreement to amend the Purchase Agreement as
follows:
1) Exhibit D, Terms of Note, to the Purchase Agreement is amended so as to
read in its entirety as is set forth on Attachment A hereto.
2) Exhibit F, Purchase Price Allocation, to the Purchase Agreement is
amended so as to read in its entirety as is set forth on Attachment B hereto.
3) In addition to all amounts due under the Purchase Agreement, PSC Inc.
shall pay to Seller on the date hereof, as compensation for the delay in the
Closing, the amount of $365,173. Such amount shall be treated as an increase in
the Purchase Price and shall be wired to the account specified in paragraph 2 of
that certain letter regarding the Closing Cash Payment dated the date hereof.
4) The number of Escrowed Shares shall be 315,789.
<PAGE>
On behalf of PSC Inc., please confirm that the foregoing correctly sets
forth our agreement by signing below.
Sincerely,
SPECTRA-PHYSICS, INC.
By: /s/ Lennart Rappe
Name: Lennart Rappe
Title: Authorized Representative
SPECTRA-PHYSICS HOLDING, S.A.
By: /s/ Lennart Rappe
Name: Lennart Rappe
Title: Authorized Representative
The undersigned hereby agrees with the foregoing:
PSC INC.
By: /s/ William J. Woodard
Name: William J. Woodard
Title: Vice President - Finance
<PAGE>
Attachment A
Exhibit D
Terms Of Note
Issuer: The Note will be issued by the purchaser of the U.S. Assets
and be guaranteed by PSC Inc.
Amount: U.S. $5,000,000
Optional Prepayable in whole or in part at any time without
Prepayment:premium or penalty
Maturity: 5 years after Closing Date
Amortization: Principal payable in 16 equal consecutive quarterly
installments of $312,500 each commencing 15 months after
Closing
Interest: Interest payable quarterly at 100 basis points in excess of
the rate of interest announced from time to time by
CoreStates Bank as its base or prime rate
Other: The Note will have the same covenants, events of default,
subordination and other provisions as are set forth in the
subordinated loan agreement and related note contemplated
by the Subordinated Debt Commitment Letters referred to in
Section 3.1(q) of the Agreement (the "Subordinated Loan
Agreement"); provided that the Note will be subordinated to
the indebtedness under the Subordinated Loan Agreement to
the same extent that such indebtedness is subordinated to
the senior secured bank financing contemplated by the
commitment letter between Fleet National Bank and PSC Inc.
referred to in Section 3.1(q) of the Agreement.
<PAGE>
Attachment B
Exhibit F
Purchase Price Allocation
The Purchase Price shall be allocated as follows:
(a) The Note shall be allocated to the U.S. Assets.
(b) The Buyer Stock shall be allocated to the Shares.
(c) The balance of the Purchase Price shall be allocated:
(i) First, to the Non-Compete Agreement in the
amount of US $5,000,000.
(ii) Next, to the International Assets of each
Seller Subsidiary in an amount equal to the
Assumed International Liabilities of such
Seller Subsidiary plus 105% (150% in the case
of Spectra-Physics GmbH) of the aggregate net
book value of the International Assets and
Assumed International Liabilities of such
Seller Subsidiary (i.e., book value of such
assets minus liabilities) at the Closing Date,
in each case as reflected in the Closing Date
Balance Sheet; provided, however, that the
premium over book value in the case of
Spectra-Physics S.r.l. shall equal US $300,000.
(iii) Next, to the TxCom Shares and the TxCom Rights,
in an amount equal to US $14,050,000.
(iv) Lastly, to the Shares.
Within 30 days after the determination of the Closing Date
Balance Sheet, Scanning shall prepare and submit to Seller and Buyer a
statement allocating the Purchase Price, which statement shall be prepared in
accordance with the allocation set forth above.
Exhibit 3.1
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF THE STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
MERGER, WHICH MERGES:
"PSC ACQUISITION, INC.," A DELAWARE CORPORATION,
WITH AND INTO "SPECTRA-PHYSICS SCANNING SYSTEMS, INC." UNDER THE NAME OF
"SPECTRASCAN, INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE
STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE TWELFTH DAY OF JULY,
A.D. 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
Edward J. Freel
Secretary of State
2246198 8100M Authentication: 8024599
960203468 Date: 07-12-96
<PAGE>
CERTIFICATE OF MERGER
OF
PSC ACQUISITION, INC.
INTO
SPECTRA-PHYSICS SCANNING SYSTEMS, INC.
We, the undersigned, being respectively the Chairman of the Board and
Secretary of Spectra-Physics Scanning Systems, Inc., and the President and
Secretary of PSC Acquisition, Inc., hereby certify:
1. That the name of each constituent corporation is as follows:
Spectra-Physics Scanning Systems, Inc., a Delaware corporation, and PSC
Acquisition, Inc., a Delaware corporation.
2. That a Plan and Agreement of Merger between the parties to the merger
has been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of subsection (c)
of Section 251 of the General Corporation law of the State of Delaware.
3. That the name of the surviving corporation of the merger is:
Spectra-Physics Scanning Systems, Inc.
4. That an amendment with respect to the name of Spectra-Physics Scanning
Systems, Inc., which is the surviving corporation shall be changed to
SPECTRASCAN, INC.
5. That the executed Plan and Agreement of Merger is on file at the
principal place of business of the surviving corporation. The address of the
principal place of business of the surviving corporation is 959 Terry Street,
Eugene, Oregon 97402-9120.
6. That a copy of the Plan and Agreement of Merger will be furnished by the
surviving corporation, on request and without cost, to any stockholder of any
constituent corporation.
<PAGE>
IN WITNESS WHEREOF, we have signed this Certificate this 12th day of July,
1996, and hereby affirm the truth of the statements contained herein under
penalty of perjury.
SPECTRA-PHYSICS SCANNING SYSTEMS, INC.
By: /s/ L. Michael Hone
L. Michael Hone, Chairman of the Board
Attest: /s/ Martin S. Weingarten
Martin S. Weingarten, Secretary
PSC ACQUISITION, INC.
By: /s/ L. Michael Hone
L. Michael Hone, President
Attest: /s/ Martin S. Weingarten
Martin S. Weingarten, Secretary
Exhibit 4.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN THE ABSENCE
OF REGISTRATION THEREUNDER ON AN EXEMPTION THEREFROM.
SPECTRASCAN, INC.
11.25% Senior Subordinated Note due June 30, 2006
No. R-
$
SPECTRASCAN, INC., a Delaware corporation (the "Company"), for value
received, hereby promises to pay to , or registered assigns, the principal
amount of DOLLARS ($_____________ ) on June 30, 2006, with interest (computed on
the basis of a 360-day year of twelve 30-day months) on the unpaid balance of
such principal amount at the rate of 11.25% per annum from the date hereof,
payable quarterly on each March 31, June 30, September 30 and December 31 after
the date hereof,
<PAGE>
commencing on [September 30, 1996/the first such date next succeeding the date
hereof], until the principal hereof shall have become due and payable (whether
at maturity or at a date fixed for prepayment or by declaration or otherwise),
and with interest on any overdue principal (including any overdue prepayment of
principal) and (to the extent permitted by applicable law) premium, if any, and
(to the extent permitted by applicable law) on any overdue installment of
interest, at the rate of 13.25% per annum until paid, payable quarterly as
aforesaid or, at the option of the holder hereof, on demand and, upon
acceleration of this Note, together with the Make Whole Amount specified in the
Securities Purchase Agreements hereinafter referred to, as liquidated damages
and not as a penalty; provided that in no event shall the amount payable by the
Company as interest and premium on this Note exceed the highest lawful rate
permissible under any law applicable hereto. Payments of principal, premium, if
any, and interest hereon shall be made in lawful money of the United States of
America by the method and at the address for such purpose specified in the
Securities Purchase Agreements hereinafter referred to, and such payments shall
be overdue for purposes hereof if not made on the scheduled date of payment
therefor, without giving effect to any applicable grace period and
notwithstanding that such payment may be prohibited under the terms of
subordination applicable hereto set forth below.
This Note is one of the Company's 11.25% Senior Subordinated Notes due
June 30, 2006, limited to $30,000,000 aggregate principal amount, issued
pursuant to those certain Securities Purchase Agreements dated July 12, 1996
(such agreements, as amended, modified and supplemented from time to time, the
"Securities Purchase Agreements") among the Company, PSC Inc. and the
institutional investors named therein, and the holder hereof is entitled to the
benefits of the Securities Purchase Agreements and the other Operative Documents
referred to in the Securities Purchase Agreements, including, without
limitation, the Note Guarantees, and may enforce the agreements contained herein
and therein and exercise the remedies provided for hereby and thereby or
otherwise available in respect hereof and thereof, all in accordance with the
terms hereof and thereof. This Note is subject to prepayment as specified in the
Securities Purchase Agreements. Capitalized terms used herein without definition
have the meanings ascribed to them in the Securities Purchase Agreements.
Payments on this Note are subordinate to Superior Indebtedness to the
extent and in the manner specified in section 10 of the Securities Purchase
Agreements.
This Note is in registered form and is transferable only by surrender
hereof at the principal executive office of the Company as provided in the
Securities Purchase Agreements. The Company may treat the Person in whose name
this Note is registered on the Note register maintained at such office pursuant
to the Securities Purchase Agreements as the owner hereof for all purposes, and
the Company shall not be affected by any notice to the contrary.
In case an Event of Default shall occur and be continuing, the unpaid
balance of the principal of this Note may be declared and become due and payable
in the manner and with the effect provided in the Securities Purchase
Agreements.
The parties hereto, including the maker and all guarantors and endorsers of
this Note, hereby waive presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance or
enforcement of this Note.
This Note shall be construed in accordance with and governed by the
domestic substantive laws of the State of New York without giving effect to any
choice of law or conflicts of law provision or rule that would cause the
application of domestic substantive laws of any other jurisdiction.
[The remainder of this page is left blank intentionally.]
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Note as an instrument
under seal as of the date first above written.
SPECTRASCAN, INC.
By /s/ William J. Woodard
William J. Woodard
Vice President
<PAGE>
FORM OF ASSIGNMENT
[To be signed only upon transfer of Note]
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the within Note, and
appoints______________ Attorney to transfer such Note on the books of
SPECTRASCAN, INC. with full power of substitution in the premises.
Date: , .
...............................................
(Signature must conform in all respects to name
of holder as specified on the face of the Note)
Signed in the presence of
.............................
Exhibit 4.2
Note Guarantee
dated July 12, 1996
Reference is hereby made to those certain Securities Purchase Agreements
dated July 12, 1996 (as the same may be amended, modified or supplemented from
time to time, the "Securities Purchase Agreements") among SpectraScan, Inc., a
Delaware corporation (the "Operating Company"), PSC Inc., a New York corporation
(the "Holding Company"), and the institutional investors named therein. The
Operating Company and the Holding Company are referred to herein as the
"Companies" and each as a "Company". Capitalized terms used herein without
definition have the meanings ascribed to them in the Securities Purchase
Agreements.
The undersigned (the "Guarantor"), for value received, hereby irrevocably
and unconditionally guarantees the due and punctual payment and performance of
the following obligations (each, a "Guaranteed Obligation" and collectively, the
"Guaranteed Obligations") when and as the same shall become due and payable in
accordance with the terms thereof, as the same may be amended, modified or
supplemented from time to time:
(a) the due and punctual payment of the principal of and premium
(including, without limitation, the Applicable Premiums), if any, and
interest on (including any interest accruing after the commencement of any
action or proceeding under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable domestic or foreign federal or state
bankruptcy, insolvency or other similar law, and any other interest that
would have accrued but for the commencement of such proceeding, whether or
not any such interest is allowed as an enforceable claim in any such
proceeding) and fees and other amounts payable with respect to the Notes;
and
(b) the due and punctual payment and performance of any and all other
indebtedness and obligations of either Company under the Securities
Purchase Agreements or otherwise arising under or referred to in any of the
other Operative Documents, all as amended, modified or supplemented from
time to time, including, without limitation, the payment of all amounts
required to be paid under sections 21 and 22 of the Securities Purchase
Agreements or under any other provision of any of the Operative Documents
relating to indemnification, reimbursement of expenses and the like.
The Guarantor hereby agrees that the Guarantor's liability hereunder is
joint and several with any other Person(s) (the "Other Guarantors") who may
guarantee the Guaranteed Obligations or any part thereof.
<PAGE>
Notwithstanding anything to the contrary herein, the obligations of the
Guarantor under this Note Guarantee are subordinated to Superior Indebtedness to
the extent and in the manner specified in the Securities Purchase Agreements.
This Note Guarantee is an absolute, primary, unconditional, irrevocable,
present and continuing guarantee of payment (and not of collectibility or
performance only), is not subject to any counterclaim, setoff, deduction,
withholding, diminution, abatement, recoupment, suspension, deferment, reduction
or defense and is in no way conditioned or contingent upon any attempt to
collect from the applicable Company or any Other Guarantor or upon any other
condition or contingency; if the applicable Company shall fail so to pay
punctually the principal of, or the premium, if any, interest or other amount on
any Guaranteed Obligation, the Guarantor will immediately pay the same to the
holder thereof, with interest (to the extent permitted by applicable law) on any
overdue amount, at a rate per annum equal to 2% above the non-default rate
otherwise applicable thereto, until paid and, upon any acceleration of any Note,
with the applicable premium, if any, specified in the Securities Purchase
Agreements, as liquidated damages and not as a penalty. Payments due on the
Guaranteed Obligations shall be overdue for purposes hereof if not made on the
originally scheduled date of payment therefor, without giving effect to any
applicable grace period. Payments by the Guarantor hereunder shall be made in
lawful money of the United States of America and may be required by any holder
of any Guaranteed Obligation on any number of occasions.
This Note Guarantee shall remain in full force and effect without regard
to, and the obligations of the Guarantor hereunder shall not be affected or
impaired by: (a) any amendment or modification of or supplement to any of the
Operative Documents, including, without limitation, any amendment, modification
and/or supplement which changes the timing or amount of any payment (or
prepayment) of the principal of or premium, if any, or interest on, or any other
terms of payment of, any of the Guaranteed Obligations; (b) any extension,
indulgence or other action or inaction in respect of any of the Operative
Documents; (c) any default by either Company, the Guarantor or any Other
Guarantor under, or any invalidity or unenforceability of, or any irregularity
or other defect in, any of the Operative Documents; (d) any exercise or
non-exercise of any right, remedy, power or privilege in respect of any of the
Operative Documents; (e) any transfer of the assets of either Company, the
Guarantor or any Other Guarantor to, or any consolidation or merger of either
Company, the Guarantor or any Other Guarantor with or into, any other Person;
(f) any bankruptcy, insolvency, reorganization or similar proceeding involving
or affecting either Company, the Guarantor or any Other Guarantor; (g) any
change in or addition to or partial or complete release of any collateral
securing the Guaranteed Obligations or any partial or complete release of any
Other Guarantor or other Person primarily or secondarily liable for the
Guaranteed Obligations; (h) any change of circumstances, whether or not foreseen
or foreseeable, or any impossibility of performance, whether through acts of
<PAGE>
God, action of any governmental authority or agency, change of law, other force
majeure or otherwise, whether or not beyond the control of either Company, the
Guarantor, any Other Guarantor or any other Person; (i) any attachment, claim,
demand, charge, Lien, order, process, encumbrance or any other happening or
event or reason, or any withholding or diminution at the source, by reason of
any taxes, assessments, expenses, obligations or liabilities of any character,
foreseen or unforeseen, and whether or not valid, incurred by or against any
Person, or any claims, demands, charges or Liens of any nature, foreseen or
unforeseen, incurred by any Person, or against any sums payable under any of the
Operative Documents, so that such sums would be rendered inadequate or would be
unavailable to make the payments therein provided; (j) the failure of the
Guarantor to receive any benefit or consideration from or as a result of its
execution, delivery and performance of this Note Guarantee or (k) any other
circumstance or cause, whether similar or dissimilar to any of the foregoing,
that might constitute a legal or equitable discharge or defense of the Guarantor
and whether or not the Guarantor shall have had notice or knowledge thereof, it
being agreed by the Guarantor that for the purposes hereof, the Guaranteed
Obligations shall be due and payable when and as the Guaranteed Obligations
shall be due and payable in accordance with the terms thereof notwithstanding
that collection or enforcement thereof may be stayed or enjoined under any law
or may otherwise be impossible and notwithstanding that the Notes may then be or
have become invalid, void or voidable for any reason.
The Guarantor hereby acknowledges receipt of a correct and complete copy of
each of the Operative Documents and consents to all of the terms and provisions
thereof, as the same may be from time to time hereafter amended, modified or
supplemented, and waives (a) presentment, demand for payment, and protest of
non-payment, of any principal of or premium, if any, interest or other amount on
any Guaranteed Obligation; (b) notice of acceptance of this Note Guarantee and
of presentment, demand, and intent to accelerate and protest; (c) notice of any
default under any of the Operative Documents or any other agreement relating
thereto; (d) demand for performance or observance of, and any enforcement of any
provisions of, or any pursuit or exhaustion of rights or remedies against the
Companies, the Guarantor, any other Guarantor or any other Person under any of
the Operative Documents and any requirements of diligence or promptness on the
part of any holder of any Guaranteed Obligation in connection therewith; and (e)
to the extent the Guarantor lawfully may do so, any and all other demands and
notices of every kind and description with respect to the foregoing or which may
be required to be given by any statute, or rule of law and any defense of any
kind (other than the defense of payment) which the Guarantor may now or
hereafter have with respect to any of the Operative Documents or any other
agreement relating thereto. Without limiting the generality of the foregoing, no
Person who is entitled to the benefits of this Note Guarantee shall be required
to make any demand upon, or to pursue or exhaust any of its rights or remedies
against, either Company, any Other Guarantor or any other Person or any
collateral or other security, prior to exercising any right hereunder, and no
delay or omission on the part of any such Person in exercising any right under
<PAGE>
any of the Operative Documents or any other agreement relating thereto shall
operate as a waiver or relinquishment of such right.
The Guarantor hereby grants each holder of any Guaranteed Obligation the
full power in the uncontrolled discretion of such holder, without notice to the
Guarantor and without in any way affecting the liability of the Guarantor under
this Note Guarantee: (a) to waive compliance with and any default under, and to
consent to any amendment or change of any terms of any of the Operative
Documents and any other agreement relating thereto, including, without
limitation, any change in the timing or amount of any payment (or prepayment) of
the principal of or premium, if any, or interest on, or any other terms of
payment of, any of the Guaranteed Obligations; and (b) to grant extensions or
renewals thereof and other indulgences with respect thereto, and to effect
releases, compromises or settlements with respect thereto.
The Guarantor hereby covenants and agrees that, until the Guaranteed
Obligations are indefeasibly paid in full in cash, the Guarantor will not
enforce or otherwise exercise any rights of reimbursement, subrogation,
contribution or other similar rights against each Company, any Other Guarantor
or any other Person with respect to any Guaranteed Obligation or otherwise.
The Guarantor will reimburse each holder of any Guaranteed Obligation for
all costs of collection or enforcement (including, without limitation,
reasonable attorneys' fees and expenses) incurred by such holder in enforcing
the obligations of the Guarantor hereunder.
This Note Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time any amount received in respect of any of the
Operative Documents is rescinded or must otherwise be restored or returned by
the payee thereof upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of either Company, the Guarantor or any Other Guarantor or upon
the appointment of any receiver or conservator of, or trustee or similar
official for, either Company, the Guarantor or any Other Guarantor or any
substantial part of the properties of either Company, the Guarantor or any Other
Guarantor, or otherwise, all as though such payment had not been made.
No amendment or waiver of any provision of this Note Guarantee or consent
to any default under, breach of or departure from this Note Guarantee by the
Guarantor shall in any event be effective unless the same shall be in writing
and signed by the Guarantor and the Required Holders of the Securities at the
time outstanding and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
<PAGE>
All notices and other communications under this Note Guarantee shall be in
writing and shall be addressed and delivered or mailed in accordance with the
provisions of section 23 of the Securities Purchase Agreements.
This Note Guarantee, including the validity hereof and the rights and
obligations arising hereunder, and all amendments and supplements hereof and all
waivers and consents hereunder shall be construed in accordance with and
governed by the domestic substantive laws of the State of New York without
giving effect to any choice of law or conflicts of law provision or rule that
would cause the application of the domestic substantive laws of any other
jurisdiction. The Guarantor, to the extent that the Guarantor may lawfully do
so, hereby consents to service of process, and to be sued, in the State of New
York and in The Commonwealth of Massachusetts and consents to the jurisdiction
of the courts of the State of New York and of The Commonwealth of Massachusetts
and of the United States District Court for the Southern District of New York
and for the District of Massachusetts, as well as to the jurisdiction of all
courts to which an appeal may be taken from such courts, for the purpose of any
suit, action or other proceeding arising out of any of the Guarantor's
obligations hereunder, and expressly waives any and all objections the Guarantor
may have as to venue in any such courts. The Guarantor further agrees that a
summons and complaint commencing an action or proceeding in any of such courts
shall be properly served and shall confer personal jurisdiction if served
personally or by certified mail to the Guarantor in care of the Companies at the
address of the Companies set forth in section 23 of the Securities Purchase
Agreements or as otherwise provided under the laws of the State of New York or
The Commonwealth of Massachusetts, as the case may be. Notwithstanding the
foregoing, the Guarantor agrees that nothing contained herein shall preclude the
institution of any such suit, action or other proceeding in any jurisdiction
other than the State of New York or The Commonwealth of Massachusetts.
THE GUARANTOR IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT,
ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST THE GUARANTOR IN RESPECT OF
THE GUARANTOR'S OBLIGATIONS HEREUNDER.
This Note Guarantee (together with the other Operative Documents) embodies
the entire agreement and understanding between the Guarantor and the holders of
the Guaranteed Obligations and supersedes all prior agreements and
understandings relating to the subject matter hereof. In case any provision in
this Note Guarantee or any of the other Operative Documents shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
<PAGE>
All or any of the rights of each holder of any Guaranteed Obligations
hereunder may be transferred or assigned at any time and shall be transferred
and assigned upon the transfer of any Guaranteed Obligation whether with or
without the consent of or notice to the Guarantor.
[The remainder of this page is left blank intentionally.]
<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed this Note Guarantee as
an instrument under seal as of the date first above written.
By: /s/ William J. Woodard
William J. Woodard
Vice President, Finance
and Treasurer
(Title)
Exhibit 4.3
___________________________________________________________________________
___________________________________________________________________________
WARRANT
To Purchase Shares of Common Stock,
$0.01 par value, of
PSC INC.
July 12, 1996
___________________________________________________________________________
___________________________________________________________________________
Exhibit 1(b)
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions............................................................1
1.1. Definitions of Terms.............................................1
1.2. Other Definitions................................................4
2. Exercise of Warrant....................................................4
2.1. Right to Exercise; Notice........................................4
2.2. Manner of Exercise; Issuance of Common Stock.....................4
2.3. Effectiveness of Exercise........................................5
2.4. Fractional Shares................................................5
2.5. Continued Validity...............................................6
3. Registration, Transfer, Exchange and Replacement of Securities; Legends6
3.1. Registration, Transfer, Exchange and Replacement of Securities...6
3.2. Legends..........................................................6
4. Anti-Dilution Provisions...............................................7
4.1. Adjustment of Number of Shares Purchasable.......................7
4.2. Adjustment of Exercise Price.....................................7
4.3. Rights Offering.................................................13
4.4. Certificates and Notices........................................14
4.5. Adjustments for Changes in Certain Data.........................15
5. Repurchase; Registration, etc.........................................15
6. Reservation of Common Stock...........................................15
7. Various Covenants of the Company......................................16
7.1. No Impairment or Amendment......................................16
7.2. Listing on Securities Exchanges, etc............................16
7.3. Anti-Dilution Provisions........................................16
7.4. Indemnification.................................................16
7.5. Certain Expenses................................................17
8. Miscellaneous.........................................................17
8.1. Nonwaiver.......................................................17
<PAGE>
8.2. Amendment.......................................................17
8.3. Communications..................................................17
8.4. Like Tenor......................................................17
8.5. Remedies........................................................17
8.6. Successors and Assigns..........................................18
8.7. Governing Law...................................................18
8.8. Headings; Entire Agreement; Partial Invalidity, etc.............18
Form of Notice of Exercise
Form of Assignment
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED AND MAY NOT BE TRANSFERRED IN THE ABSENCE
OF REGISTRATION THEREUNDER OR AN EXEMPTION THEREFROM
WARRANT
To Purchase Shares of Common Stock, $0.01 par value, of
PSC INC.
No. RW- July 12, 1996
THIS IS TO CERTIFY that, for value received, , or registered assigns, is
entitled upon the due exercise hereof at any time during the Exercise Period to
purchase [ ] shares of Common Stock of PSC Inc., a New York corporation (the
"Company"), at an Exercise Price of $9.476 per share (such Exercise Price and
the number of shares of Common Stock purchasable hereunder being subject to
adjustment as provided herein), and to exercise the other rights, powers and
privileges hereinafter provided, all on the terms and subject to the conditions
hereinafter set forth.
This Warrant is one of the Company's Warrants to Purchase Shares of Common
Stock (herein, together with any warrants issued in exchange therefor or
replacement thereof, all as amended or supplemented from time to time, called
the "Warrants") initially exercisable in the aggregate for 975,000 (subject to
adjustment) shares of Common Stock of the Company and issued pursuant to those
certain Securities Purchase Agreements, dated the Closing Date, by and among the
Company, SpectraScan, Inc. and the institutional investors named therein (as
amended, modified and supplemented from time to time, the "Securities Purchase
Agreements"). Reference is hereby made to the Securities Purchase Agreements for
a description of, among other things, certain terms relating to the Warrants and
the Warrant Shares and certain rights of the holders thereof, including the
right to require the repurchase of the Warrants and the Warrant Shares under
certain circumstances. Holders of Warrants and/or Warrant Shares are entitled to
the applicable benefits of the Securities Purchase Agreements and the other
Operative Documents and may enforce the applicable agreements contained therein,
all in accordance with and subject to the terms thereof, notwithstanding any
payment or prepayment or redemption or acquisition of any of the other
Securities issued pursuant to the Securities Purchase Agreements.
1. Definitions.
1.1. Definitions of Terms. The following terms have the meanings ascribed
to them in the Securities Purchase Agreements, unless the context clearly
requires otherwise: "corporation", "Notes", "Officers' Certificate", "Operative
<PAGE>
Documents", "Person", "Preferred Shares", "Required Holders", "Securities Act",
"shares" and "Subsidiary". In addition, the terms defined in this section 1,
whenever used and capitalized in this Warrant, shall, unless the context
otherwise requires, have the following respective meanings:
"Assignment" shall mean the form of Assignment appearing at the end of this
Warrant.
"Closing Date" shall mean July 12, 1996.
"Common Stock" shall mean the Common Stock, $0.01 par value, of the Company
as constituted on the Closing Date and any stock into which such Common Stock
shall have been changed or any stock resulting from any reclassification of such
Common Stock.
"Company" shall mean PSC Inc., a New York corporation, and any successor
corporation.
"Convertible Securities" shall mean evidences of indebtedness, shares
(including, without limitation, Preferred Shares) of stock or other securities
which are convertible into or exchangeable or exercisable for, with or without
payment of additional consideration, shares of Common Stock, either immediately
or upon the arrival of a specified date or the happening of a specified event.
"Current Market Price" of any security as of any date herein specified
shall mean the average of the daily closing prices for the 30 consecutive
trading days commencing 45 trading days before the day in question (or in the
event that a security has been traded for less than 45 days, each of the trading
days on which such security has been traded). The closing price for each day
shall be (a) if such security is listed or admitted for trading on any national
securities exchange, the last sale price of such security, regular way, or the
average of the closing bid and asked prices thereof if no such sale occurred, in
each case as officially reported on the principal securities exchange on which
such security is listed, or (b) if not reported as described in clause (a), the
average of the closing bid and asked prices of such security in the
over-the-counter market as shown by the National Association of Securities
Dealers, Inc. Automated Quotation System, if so quoted, as reported by any
member firm of the New York Stock Exchange selected by the Company. If such
security is quoted on a national securities or central market system in lieu of
a market or quotation system described above, the closing price shall be
determined in the manner set forth in clause (a) of the preceding sentence if
actual transactions are reported and in the manner set forth in clause (b) of
the preceding sentence if bid and asked prices are reported but actual
transactions are not.
"Exercise Price" shall mean the price per share of Common Stock set forth
in the preamble to this Warrant, as such price may be adjusted pursuant to
section 4.
<PAGE>
"Exercise Period" shall mean the period commencing on July 12, 1997 and
terminating at 5:00 p.m. Boston time on July 12, 2006.
"Fair Value" shall mean the fair value of the appropriate security,
property, assets, business or entity as determined by an independent appraiser
of recognized national standing (selected by the Company and reasonably
satisfactory to the Required Holders of the Warrants), in each case in
accordance with generally accepted financial practice, [provided that the
determination of the Fair Value of any security shall be made without applying a
discount for any lack of liquidity, minority position or lack of control of the
applicable security]. Such determination shall be set forth in writing, and the
Company shall, immediately following such determination, deliver a copy thereof
to each holder of Warrants then outstanding. The determination so made shall be
conclusive and binding on the Company and on each such holder. The Company shall
pay all of the expenses incurred in connection with any such determination,
including, without limitation, the expenses of the independent appraiser engaged
to make such determination. If the Company shall not have selected such
appraiser within 20 days after the occurrence of the event giving rise to the
need therefor, then the Required Holders of the Warrants at the time outstanding
may select such appraiser. Notwithstanding the foregoing, in the case of any
security, if clauses (a) or (b) of the definition of Current Market Price are
applicable to such security, then the Fair Value of such security shall be the
Current Market Price of such security.
"Notice of Exercise" shall mean the form of Notice of Exercise appearing at
the end of this Warrant.
"Other Securities" shall mean with reference to the exercise privilege of
the holders of the Warrants, any shares (other than shares of Common Stock) and
any other securities of the Company (including, without limitation, Preferred
Shares) or of any other Person which the holders of the Warrants at any time
shall be entitled to receive, or shall have received, upon the exercise or
partial exercise of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock (or Other Securities) pursuant to the terms of
the Warrants or otherwise.
"Securities Purchase Agreements" shall have the meaning specified in the
preamble to this Warrant.
"Stock Purchase Rights" shall mean any warrants, options or other rights to
subscribe for, purchase or otherwise acquire any shares of Common Stock or any
Convertible Securities, either immediately or upon the arrival of a specified
date or the happening of a specified event.
"Warrant Shares" shall mean the shares of Common Stock (and/or Other
Securities) issued or issuable, as the case may be, from time to time upon
exercise of the Warrants, including, without limitation, any shares of Common
<PAGE>
Stock (and/or Other Securities) issued or issuable with respect thereto by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, other reorganization or otherwise.
"Warrants" shall have the meaning specified in the preamble to this
Warrant.
1.2. Other Definitions. The terms defined in this section 1.2, whenever
used in this Warrant, shall, unless the context otherwise requires, have the
following respective meanings:
"this Warrant" (and similar references to any of the other Operative
Documents) shall mean, and the words "herein" (and "therein"), "hereof" (and
"thereof"), "hereunder" (and "thereunder") and words of similar import shall,
unless the context clearly requires otherwise, refer to, such instruments as
they may from time to time be amended, modified or supplemented.
2. Exercise of Warrant.
2.1. Right to Exercise; Notice. On the terms and subject to the conditions
of this section 2, the holder hereof shall have the right, at its option, to
exercise this Warrant in whole or in part at any time or from time to time
during the Exercise Period, all as more fully specified below, provided that a
partial exercise of this Warrant for less than the entire remaining amount of
Warrant Shares issuable under this Warrant shall be made only for a whole number
of shares.
2.2. Manner of Exercise; Issuance of Common Stock. To exercise this
Warrant, the holder hereof shall deliver to the Company (a) a Notice of Exercise
duly executed by the holder hereof (or its attorney) specifying the number of
Warrant Shares to be purchased, (b) an amount equal to the aggregate Exercise
Price for all Warrant Shares as to which this Warrant is then being exercised
and (c) this Warrant. At the option of the holder hereof, payment of the
Exercise Price shall be made (w) by wire transfer of funds to an account in a
bank located in the United States designated by the Company for such purpose,
(x) by check payable to the order of the Company, (y) by application of any
Warrant Shares or any Notes, as provided below, or (z) by any combination of
such methods.
Upon the exercise of this Warrant in whole or in part, the holder hereof
may, at its option, submit to the Company written instructions from such holder
to apply any specified portion of the Warrant Shares issuable upon such exercise
in payment of the Exercise Price required upon such exercise, in which case the
Company will accept such specified portion of the Warrant Shares (at a value per
share equal to the Current Market Price of such share, if applicable, or the
then Fair Value of such share less, in each case, the Exercise Price then in
effect), in lieu of a like amount of such cash payment.
<PAGE>
Upon the exercise of this Warrant in whole or in part by the holder of any
Notes, such holder may, at its option, surrender such Notes to the Company
together with written instructions from such holder to apply all or any
specified principal amount of such Notes against the payment of some or all of
the Exercise Price required upon such exercise, in which case the Company will
accept such specified principal amount in lieu of a like amount of such cash
payment. Upon any such partial application of the principal of any such Note,
the Company at its expense will promptly issue and deliver to or upon the order
of the holder thereof a new Note or Notes equal in aggregate principal amount to
the unpaid principal amount of such surrendered Note not so applied and dated so
as to result in no loss of interest. At the time of surrender of any such Note
pursuant to this section 2.2, the Company will pay to the holder surrendering
such Note all interest on the principal amount thereof so applied accrued to and
including the date of such surrender.
Upon receipt of the items referred to in section 2.3, the Company shall, as
promptly as practicable, and in any event within five days thereafter, cause to
be issued and delivered to the holder hereof (or its nominee) or the transferee
designated in the Notice of Exercise, a certificate or certificates representing
the number of Warrant Shares specified in the Notice of Exercise (but not
exceeding the maximum number of shares issuable upon exercise of this Warrant)
minus the number of Warrant Shares, if any, applied in payment of the Exercise
Price. Such certificates shall be registered in the name of the holder hereof
(or its nominee) or in the name of such transferee, as the case may be.
If this Warrant is exercised in part, the Company shall, at the time of
delivery of such certificate or certificates, issue and deliver to the holder
hereof or the transferee so designated in the Notice of Exercise, a new Warrant
evidencing the right of the holder hereof or such transferee to purchase at the
Exercise Price then in effect the aggregate number of Warrant Shares for which
this Warrant shall not have been exercised and this Warrant shall be cancelled.
2.3. Effectiveness of Exercise. Unless otherwise requested by the holder
hereof, this Warrant shall be deemed to have been exercised and such certificate
or certificates representing Warrant Shares shall be deemed to have been issued,
and the holder or transferee so designated in the Notice of Exercise shall be
deemed to have become the holder of record of such Warrant Shares for all
purposes, as of the close of business on the date on which the Notice of
Exercise, the Exercise Price and this Warrant shall have been received by the
Company.
2.4. Fractional Shares. The Company shall not issue fractional Warrant
Shares or scrip representing fractional Warrant Shares upon any exercise of this
Warrant. As to any fractional Warrant Shares which the holder hereof would
otherwise be entitled to purchase from the Company upon such exercise, the
Company shall issue one share which the holder hereof shall be entitled to
purchase from the Company at a price equal to the Exercise Price calculated as
of the date of the Notice of Exercise.
<PAGE>
Payment of such amount shall be made in any manner permitted under section 2.2
at the time of delivery of any certificate or certificates deliverable upon such
exercise.
2.5. Continued Validity. A holder of Warrant Shares issued upon the
exercise of this Warrant, in whole or in part, shall continue to be entitled to
all rights to which a holder of this Warrant is entitled pursuant to the
provisions of this Warrant except such rights as by their terms apply solely to
the holder of a Warrant, notwithstanding that this Warrant is cancelled
following such exercise. The Company will, at the time of any exercise of this
Warrant, upon the request of the holder of the Warrant Shares issued upon the
exercise hereof, acknowledge in writing, in form reasonably satisfactory to such
holder, its continuing obligation to afford to such holder all rights to which
such holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant, including, without limitation, those set forth
in sections 7.1, 7.2, 7.4 and 7.5 of this Warrant; provided that if such holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder all such rights.
3. Registration, Transfer, Exchange and Replacement of Securities; Legends.
3.1. Registration, Transfer, Exchange and Replacement of Securities.
Reference is hereby made to sections 17 and 18 of the Securities Purchase
Agreements for certain provisions relating to the registration, transfer,
exchange and replacement of the Warrants and Warrant Shares.
3.2. Legends. Neither this Warrant nor any Warrant Shares may be
transferred or assigned unless registered under the Securities Act or unless an
exemption from such registration is available. Until the date on which a
registration statement covering the Warrants becomes effective under the
Securities Act, each Warrant shall bear a legend in substantially the following
form:
"THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE
TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN
EXEMPTION THEREFROM."
Until the date on which a registration statement covering the Warrant Shares
becomes effective under the Securities Act, each certificate evidencing Warrant
Shares shall bear a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED AND MAY NOT BE TRANSFERRED IN THE ABSENCE
OF REGISTRATION THEREUNDER OR AN EXEMPTION
THEREFROM."
<PAGE>
4. Anti-Dilution Provisions.
4.1. Adjustment of Number of Shares Purchasable. Upon any adjustment of the
Exercise Price as provided in section 4.2, the holder hereof shall thereafter be
entitled to purchase, at the Exercise Price resulting from such adjustment, the
number of shares of Common Stock (calculated to the nearest 1/100th of a share)
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock purchasable hereunder
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
4.2. Adjustment of Exercise Price. In addition to any adjustment required
under the provisions of section 4.5 below, and except as otherwise provided in
section 4.2(n) below, the Exercise Price shall be subject to adjustment from
time to time as set forth in this section 4.2.
(a) Stock Dividends, Subdivisions and Combinations. If and whenever the
Company subsequent to the date hereof:
(i) declares a dividend upon, or makes any distribution in respect of,
any of its capital stock payable in shares of Common Stock, or
(ii) subdivides its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(iii) combines its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction (A) the numerator of which shall be the total number of outstanding
shares of Common Stock immediately prior to such event, and (B) the denominator
of which shall be the total number of outstanding shares of Common Stock
immediately after such event.
(b) Issuance of Additional Shares of Common Stock. If and whenever the
Company subsequent to the date hereof shall issue or sell any shares of Common
Stock (except as otherwise provided in the last paragraph of this section
4.2(b)), for a consideration per share less than the Fair Value per share
(determined as of the date specified in the next succeeding paragraph), the
Exercise Price upon each such issuance or sale shall be adjusted as of the date
specified in the next succeeding paragraph and shall be determined by
multiplying the Exercise Price in effect as of the date specified in the next
succeeding paragraph by a fraction the numerator of which is (A) the sum of (1)
the number of shares of Common Stock outstanding immediately prior to such issue
or sale multiplied by the Fair Value per share of Common Stock immediately prior
to such issue or sale plus (2) the aggregate consideration, if any, received by
<PAGE>
the Company upon such issue or sale, divided by (B) the total number of shares
of Common Stock outstanding immediately after such issue or sale, and the
denominator of which is the Fair Value per share of Common Stock immediately
prior to such issue or sale.
For purposes of this section 4.2(b), the date as of which the Exercise
Price shall be adjusted and the date as of which the Fair Value shall be
determined shall be the earlier of (i) the date on which the Company shall enter
into a firm contract for the issuance of such shares of Common Stock and (ii)
immediately prior to the date of actual issuance of such shares of Common Stock.
No adjustment of the Exercise Price shall be made under this section 4.2(b)
upon the issuance of any shares of Common Stock which are (i) distributed to
holders of Common Stock pursuant to a stock dividend or subdivision for which an
adjustment shall previously have been made under section 4.2(a) or (ii) issued
pursuant to the exercise of any Stock Purchase Rights or pursuant to the
conversion or exchange of any Convertible Securities in each case to the extent
that sections 4.2(c) or (d) applied to the issuance of such Stock Purchase
Rights or Convertible Securities.
(c) Issuance of Stock Purchase Rights. If and whenever the Company
subsequent to the date hereof shall issue or sell any Stock Purchase Rights and
the consideration per share for which shares of Common Stock may at any time
thereafter be issuable upon exercise thereof (or, in the case of Stock Purchase
Rights exercisable for the purchase of Convertible Securities, upon the
subsequent conversion or exchange of such Convertible Securities) shall be less
than the Fair Value per share (determined as of the date specified in the next
succeeding paragraph), the Exercise Price upon each such issuance or sale shall
be adjusted as provided in section 4.2(b) as of the date specified in the next
succeeding paragraph on the basis that the maximum number of shares of Common
Stock ever issuable upon exercise of such Stock Purchase Rights (or upon
conversion or exchange of such Convertible Securities following such exercise)
shall be deemed to have been issued as of the date of the determination of the
Fair Value specified in the next succeeding paragraph.
For the purposes of this section 4.2(c), the date as of which the Exercise
Price shall be adjusted and the date as of which the Fair Value shall be
determined shall be the earlier of (i) the date on which the Company shall enter
into a firm contract for the issuance of such Stock Purchase Rights and (ii)
immediately prior to the date of actual issuance of such Stock Purchase Rights.
(d) Issuance of Convertible Securities. If and whenever the Company
subsequent to the date hereof shall issue or sell any Convertible Securities
(except as otherwise provided in the last paragraph of this section 4.2(d)) and
the consideration per share for which shares of Common Stock may at any time
thereafter be issuable pursuant to the terms of such Convertible Securities
shall be less than the Fair Value per share (determined as of the date specified
<PAGE>
in the next succeeding paragraph), the Exercise Price upon each such issuance or
sale shall be adjusted as provided in section 4.2(b) as of the date specified in
the next succeeding paragraph on the basis that the maximum number of shares of
Common Stock ever necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued as of the date of the
determination of the Fair Value specified in the next succeeding paragraph.
For the purposes of this section 4.2(d), the date as of which the Exercise
Price shall be adjusted and the date as of which the Fair Value shall be
determined shall be the earlier of (i) the date on which the Company shall enter
into a firm contract for the issuance of such Convertible Securities and (ii)
immediately prior to the date of actual issuance of such Convertible Securities.
No adjustment of the Exercise Price shall be made under this section 4.2(d)
upon the issuance of any Convertible Securities which are issued pursuant to the
exercise of any Stock Purchase Rights to the extent that section 4.2(c) applied
to the issuance of such Stock Purchase Rights.
(e) Minimum Adjustment. If any adjustment of the Exercise Price pursuant to
this section 4.2 shall result in an adjustment of less than $.0001, no such
adjustment shall be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which, together with any adjustments so carried forward, shall amount
to $.0001; provided that upon any adjustment of the Exercise Price resulting
from (i) the declaration of a dividend upon, or the making of any distribution
in respect of, any stock of the Company payable in Common Stock, or (ii) the
reclassification by subdivision, combination or otherwise, of the Common Stock
into a greater or smaller number of shares, the foregoing figure of $.0001 per
share (or such figure as last adjusted) shall be proportionately adjusted, and
provided, further, that upon the exercise of this Warrant, the Company shall
make all necessary adjustments (to the nearest .0001 of a cent) not theretofore
made to the Exercise Price up to and including the date upon which this Warrant
is exercised.
(f) Readjustment of Exercise Price. Upon each change in (i) the
consideration, if any, payable for any Stock Purchase Rights or Convertible
Securities referred to in section 4.2(c) or (d), (ii) the consideration, if any,
payable upon exercise of such Stock Purchase Rights or upon the conversion or
exchange of such Convertible Securities or (iii) the number of shares of Common
Stock issuable upon the exercise of such Stock Purchase Rights or the rate at
which such Convertible Securities are convertible into or exchangeable for
shares of Common Stock, the Exercise Price in effect at the time of such event
shall forthwith be readjusted to the Exercise Price which would have been in
effect at such time had such Stock Purchase Rights or Convertible Securities
provided for such changed consideration, number of shares of Common Stock so
issuable or conversion rate, as the case may be, at the time initially granted,
issued or sold. On the expiration of any Stock Purchase Rights not exercised or
of any right to convert or exchange under any Convertible Securities not
<PAGE>
exercised, the Exercise Price then in effect shall forthwith be increased to the
Exercise Price which would have been in effect at the time of such expiration
had such Stock Purchase Rights or Convertible Securities never been issued. No
readjustment of the Exercise Price pursuant to this section 4.2(f) shall (i)
increase the Exercise Price by an amount in excess of the adjustment originally
made to the Exercise Price in respect of the issue, sale or grant of the
applicable Stock Purchase Rights or Convertible Securities or (ii) require any
adjustment to the amount paid or number of Warrant Shares received by any Person
upon any exercise of this Warrant prior to the date upon which such readjustment
to the Exercise Price shall occur.
(g) Reorganization, Reclassification or Recapitalization of the Company. If
and whenever subsequent to the date hereof the Company shall effect (i) any
reorganization or reclassification or recapitalization of the capital stock of
the Company (other than in the cases referred to in section 4.2(a)), (ii) any
consolidation or merger of the Company with or into another Person, (iii) the
sale, transfer or other disposition of the property, assets or business of the
Company as an entirety or substantially as an entirety or (iv) any other
transaction (or any other event shall occur) as a result of which holders of
Common Stock become entitled to receive any shares of stock or other securities
and/or property (including, without limitation, cash) with respect to or in
exchange for the Common Stock, there shall thereafter be deliverable upon the
exercise of this Warrant or any portion thereof (in lieu of or in addition to
the Warrant Shares theretofore deliverable, as appropriate) the highest number
of shares of stock or other securities and/or the greatest amount of property
(including, without limitation, cash) to which the holder of the number of
Warrant Shares which would otherwise have been deliverable upon the exercise of
this Warrant or any portion thereof at the time would have been entitled upon
such reorganization or reclassification or recapitalization of capital stock,
consolidation, merger, sale, transfer, disposition or other transaction or upon
the occurrence of such other event, and at the same aggregate Exercise Price.
Prior to and as a condition of the consummation of any transaction or event
described in the preceding sentence, the Company shall make equitable, written
adjustments in the application of the provisions set forth herein and in the
other Operative Documents (to the extent the same are for the benefit of the
holders of the Warrants and/or Warrant Shares) satisfactory to the Required
Holders of the Warrants and, if applicable, Warrant Shares, so that all such
provisions shall thereafter be applicable, as nearly as possible, in relation to
any shares of stock or other securities or other property thereafter deliverable
upon exercise of the Warrants. Any such adjustment shall be made by and set
forth in a supplemental agreement of the Company and/or the successor entity, as
applicable, for the benefit of and in form and substance acceptable to the
Required Holders of the Warrants, which agreement shall bind the Company and/or
the successor entity, as applicable, and all holders of Warrants then
outstanding and shall be accompanied by a favorable opinion of the regular
outside counsel to the Company or the successor entity, as applicable (or such
other firm as is reasonably acceptable to the Required Holders of the Warrants),
<PAGE>
as to the enforceability of such agreement and as to such other matters as the
Required Holders of the Warrants may reasonably request.
(h) Other Dilutive Events. If any other transaction or event (other than
those explicitly referred to in this section 4.2), including, without
limitation, any issuance, repurchase, redemption, or other distribution in
respect of any shares of stock or securities of the Company or of any other
Person, including any Person referred to in section 4.2(g), shall occur as to
which the other provisions of this section 4 are not strictly applicable but the
failure to make any adjustment to the Exercise Price or to any of the other
terms of this Warrant would not fairly protect the purchase rights and other
rights represented by this Warrant in accordance with the essential intent and
principles hereof, then, and as a condition to the consummation of any such
transaction or event, and in each such case, the Company shall appoint a firm of
independent public accountants of recognized national standing (which may be the
regular auditors of the Company), which shall give its opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established in this section 4, necessary to preserve, without
dilution, the rights represented by this Warrant. The certificate of any such
firm of accountants shall be conclusive evidence of the correctness of any
computation made under this section 4. The Company shall pay the fees and
expenses of such firm of accountants in connection with any such opinion. Upon
receipt of such opinion, the Company will promptly deliver a copy thereof to the
holder of this Warrant and shall make the adjustments described therein.
(i) Determination of Consideration. For purposes of this section 4, the
consideration received or receivable by the Company for the issuance, sale or
grant of shares of Common Stock, Stock Purchase Rights or Convertible
Securities, irrespective of the accounting treatment of such consideration,
shall be valued and determined as follows:
(i) Cash Payment. In the case of cash, the gross amount paid by the
purchasers without deduction of any accrued interest or dividends, any
reasonable expenses paid or incurred and any reasonable underwriting
commissions or concessions paid or allowed by the Company in connection
with such issue or sale.
(ii) Non-Cash Payment. In the case of consideration other than cash,
the Fair Value thereof (in any case as of the date immediately preceding
the issuance, sale or grant in question).
(iii) Certain Allocations. If shares of Common Stock, Stock Purchase
Rights and/or Convertible Securities are issued or sold together with other
securities or other assets of the Company for a consideration which covers
more than one of the foregoing categories of securities and assets, the
consideration received or receivable (computed as provided in clauses (i)
and (ii) of this section 4.2 (i)) shall be allocable to such shares of
<PAGE>
Common Stock, Stock Purchase Rights and/or Convertible Securities as
reasonably determined in good faith by the Board of Directors of the
Company (provided such allocation is set forth in a written resolution and
a certified copy thereof is furnished to the holder of this Warrant
promptly (but in any event within 10 days) following its adoption).
(iv) Dividends in Securities. If the Company shall declare a dividend
or make any other distribution upon any stock of the Company payable in
shares of Common Stock, Convertible Securities or Stock Purchase Rights,
such shares of Common Stock, Convertible Securities or Stock Purchase
Rights, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
(v) Stock Purchase Rights and Convertible Securities. The
consideration for which each share of Common Stock shall be deemed to be
issued upon the issuance or sale of any Stock Purchase Rights or
Convertible Securities shall be determined by dividing (A) the total
consideration, if any, received by the Company as consideration for the
Stock Purchase Rights or the Convertible Securities, as the case may be,
plus the minimum aggregate amount of additional consideration, if any, ever
payable to the Company upon the exercise of such Stock Purchase Rights
and/or upon the conversion or exchange of such Convertible Securities, as
the case may be, but without deduction of any accrued interest or
dividends, any reasonable expenses paid or incurred and any reasonable
underwriting commissions or concessions paid or allowed by the Company in
connection with such issue or sale; by (B) the maximum number of shares of
Common Stock ever issuable upon the exercise of such Stock Purchase Rights
or upon the conversion or exchange of such Convertible Securities.
(vi) Merger, Consolidation or Sale of Assets. If any shares of Common
Stock, Convertible Securities or Stock Purchase Rights are issued in
connection with any merger or consolidation of which the Company is the
surviving corporation, the amount of consideration therefor shall be deemed
to be the Fair Value of such portion of the assets and business of the
non-surviving corporation as shall be attributable to such Common Stock,
Convertible Securities or Stock Purchase Rights, as the case may be. In the
event of (A) any merger or consolidation of which the Company is not the
surviving corporation or (B) the sale, transfer or other disposition of the
property, assets or business of the Company as an entirety or substantially
as an entirety for stock or other securities of any other Person, the
Company shall be deemed to have issued the number of shares of Common Stock
for stock or securities of the surviving corporation or such other Person
computed on the basis of the actual exchange ratio on which the transaction
was predicated and for a consideration equal to the Fair Value on the date
of such transaction of such stock or securities of the surviving
corporation or such other Person, and if any such calculation results in
<PAGE>
adjustment of the Exercise Price, the determination of the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to
such merger, consolidation or sale, for the purposes of section 4.2(g),
shall be made after giving effect to such adjustment of the Exercise Price.
(j) Record Date. If the Company shall take a record of the holders of the
Common Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in Common Stock, Convertible Securities or Stock
Purchase Rights or (ii) to subscribe for or purchase Common Stock, Convertible
Securities or Stock Purchase Rights, then all references in this section 4 to
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be, shall be deemed to be references to such record
date.
(k) Shares Outstanding. The number of shares of Common Stock deemed to be
outstanding at any given time shall not include shares of Common Stock held by
the Company or any Subsidiary of the Company.
(l) Maximum Exercise Price. At no time shall the Exercise Price exceed the
amount set forth in the first paragraph of the Preamble of this Warrant except
as a result of an adjustment thereto pursuant to section 4.2(a)(iii) or 4.2(g).
(m) Application. All subdivisions of this section 4.2 are intended to
operate independently of one another. If a transaction or an event occurs that
requires the application of more than one subdivision, all applicable
subdivisions shall be given independent effect.
(n) No Adjustments under Certain Circumstances. Anything herein to the
contrary notwithstanding, no adjustment to the Exercise Price shall be made in
the case of any issuance of shares of Common Stock (or Other Securities) upon
the exercise in whole or part of any Warrant.
4.3. Rights Offering; Dividends. If the Company shall effect an offering of
securities pro rata among its stockholders, the holder hereof shall be entitled,
at its option, to elect to participate in each and every such offering as if
this Warrant had been exercised and such holder were, at the time of any such
rights offering, then a holder of that number of Warrant Shares to which such
holder is then entitled on the exercise hereof. If the Company shall declare or
pay any dividend or make any other distribution to the holders of its Common
Stock in respect thereof (other than a dividend or distribution payable in
shares of Common Stock, Convertible Securities or Stock Purchase Rights for
which an adjustment is made under section 4.2), such dividend or distribution
shall also be paid to the holder hereof as if this Warrant had been exercised
and such holder were, at the time of any such declaration or payment, then a
holder of that number of Warrant Shares to which such holder is then entitled on
the exercise hereof.
<PAGE>
4.4. Certificates and Notices.
(a) Adjustments to Exercise Price. As promptly as practicable (but in any
event not later than five days) after the occurrence of any event requiring any
adjustment under this section 4 to the Exercise Price (or to the number or kind
of securities or other property deliverable upon the exercise of this Warrant),
the Company shall, at its expense, deliver to the holder of this Warrant either
(i) an Officers' Certificate or (ii) a certificate signed by a firm of
independent public accountants of recognized national standing (which may be the
regular auditors of the Company), setting forth in reasonable detail the events
requiring the adjustment and the method by which such adjustment was calculated
and specifying the adjusted Exercise Price and the number of shares of Common
Stock purchasable upon exercise of this Warrant after giving effect to such
adjustment. The certificate of any such firm of accountants shall be conclusive
evidence of the correctness of any computation made under this section 4.
(b) Extraordinary Corporate Events. If and whenever the Company subsequent
to the date hereof shall propose to (i) pay any dividend to the holders of
shares of Common Stock or to make any other distribution to the holders of
shares of Common Stock (including, without limitation, any cash dividend), (ii)
offer to the holders of shares of Common Stock rights to subscribe for or
purchase any additional shares of any class of stock or any other rights or
options or (iii) effect any reclassification of the Common Stock (other than a
reclassification involving merely the subdivision or combination of outstanding
shares of Common Stock), (iv) engage in any reorganization or recapitalization
or any consolidation or merger (other than a merger in which no distribution of
securities or other property is to be made to holders of shares of Common
Stock), (v) consummate any sale, transfer or other disposition of its property,
assets and business as an entirety or substantially as an entirety, (vi) effect
any other transaction which might require an adjustment to the Exercise Price
(or to the number or kind of securities or other property deliverable upon the
exercise of this Warrant), including, without limitation, any transaction of the
kind described in section 4.2(g) or (vii) commence or effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall deliver to the holder of this Warrant an Officers' Certificate giving
notice of such proposed action, specifying (A) the date on which the stock
transfer books of the Company shall close, or a record shall be taken, for
determining the holders of Common Stock entitled to receive such dividend or
other distribution or such rights or options, or the date on which such
reclassification, reorganization, recapitalization, consolidation, merger, sale,
transfer, other disposition, transaction, liquidation, dissolution or winding up
shall take place or commence, as the case may be, and (B) the date as of which
it is expected that holders of Common Stock of record shall be entitled to
receive securities or other property deliverable upon such action, if any such
date is to be fixed. Such Officers' Certificate shall be delivered in the case
of any action covered by clause (i) or (ii) above, at least 30 days prior to the
<PAGE>
record date for determining holders of Common Stock for purposes of receiving
such payment or offer, and, in any other case, at least 30 days prior to the
date upon which such action takes place and 20 days prior to any record date to
determine holders of Common Stock entitled to receive such securities or other
property.
(c) Effect of Failure. Failure to give any certificate or notice, or any
defect in any certificate or notice required under this section 4.4 shall not
affect the legality or validity of the adjustment of the Exercise Price or the
number of Warrant Shares purchasable upon exercise of this Warrant.
4.5. Adjustments for Changes in Certain Data. The Company hereby agrees
that the initial aggregate number of shares of Common Stock issuable upon
exercise in full of the Warrants issued on the Closing Date to the initial
holders thereof was 975,000 shares of Common Stock, which was intended to
constitute ___% of the shares of Common Stock outstanding immediately following
the Closing (calculated on a fully-diluted basis assuming the conversion,
exercise and exchange of all securities convertible into or exercisable or
exchangeable for Common Stock, including, without limitation, the shares of
Common Stock issuable upon exercise of the Warrants). If for any reason the
shares purchasable upon the exercise of the Warrants issued on the Closing Date
did not constitute __% of the shares of Common Stock outstanding as of such time
(and as so calculated), the Company shall forthwith reissue each Warrant then
outstanding with appropriate adjustments in the Exercise Price and in the number
of shares issuable upon exercise thereof (together with an Officers' Certificate
setting forth in reasonable detail the computation of such adjustments), and all
such adjustments shall be reasonably satisfactory to the holders thereof.
5. Repurchase; Registration, etc. Reference is hereby made to sections 11 and 12
of the Securities Purchase Agreements for certain provisions relating to (a) the
repurchase of the Warrants and Warrant Shares under certain circumstances and
(b) the registration rights of the holders of the Registrable Shares (as defined
in the Securities Purchase Agreements).
6. Reservation of Common Stock. The Company has reserved and will at all times
reserve and keep available, solely for issuance, sale and delivery upon the
exercise of this Warrant, such number of shares of Common Stock (and/or Other
Securities) equal to the number of shares of Common Stock (and/or Other
Securities) issuable upon the exercise of this Warrant. All such shares of
Common Stock (and/or Other Securities) shall be duly authorized and, when issued
upon exercise of this Warrant in accordance with the terms hereof, will be
validly issued and fully paid and nonassessable with no liability on the part of
the holders thereof.
<PAGE>
7. Various Covenants of the Company.
7.1. No Impairment or Amendment. The Company shall not by any action
including, without limitation, amending its charter, any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate to protect the
rights of the holder hereof against impairment. Without limiting the generality
of the foregoing, the Company (a) will not permit the par value of any Warrant
Shares issuable upon exercise of this Warrant to be greater than 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 issue fully paid
and nonassessable Warrant Shares, (c) will obtain and maintain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction as may be necessary to enable the Company to perform its
obligations under this Warrant, (d) will not issue any capital stock or enter
into any agreement the terms of which would have the effect, directly or
indirectly, of preventing the Company from honoring its obligations hereunder
and (e) will not amend or modify any term, condition or provision of its charter
or by-laws in a manner which is, or could reasonably be expected to be,
materially adverse to the interests of any holder of Warrants and/or Warrant
Shares.
So long as any Warrants or Warrant Shares are outstanding, the Company will
acknowledge in writing, in form satisfactory to any holder of any such security,
the continued validity of the Company's obligations hereunder.
7.2. Listing on Securities Exchanges, etc. At all times following the
exercise of this Warrant, the Company will maintain the listing of all Warrant
Shares on each securities exchange or market or trading system on which the
Common Stock (or Other Securities) is then or at any time thereafter listed or
traded.
7.3. Anti-Dilution Provisions. If the Company issues any Stock Purchase
Rights or Convertible Securities or other securities containing provisions
protecting the holder or holders thereof against dilution in any manner more
favorable to such holder or holders thereof than those set forth in this
Warrant, such provisions (or any more favorable portion thereof) shall be deemed
to be incorporated herein as if fully set forth in this Warrant and, to the
extent inconsistent with any provision of this Warrant, shall be deemed to be
substituted therefor.
7.4. Indemnification. Without limiting the generality of any provision of
the Securities Purchase Agreements or any of the other Operative Documents, the
Company shall indemnify, save and hold harmless the holder of this Warrant and
the holder of any Warrant Shares from and against any and all liability, loss,
cost, damage, reasonable attorneys' and accountants' fees and expenses, court
costs and all other out-of-pocket expenses reasonably incurred by such holder in
<PAGE>
connection with preserving, exercising and/or enforcing any of the terms hereof.
7.5. Certain Expenses. The Company shall pay all expenses in connection
with, and all taxes (other than stock transfer taxes) and other governmental
charges that may be imposed in respect of, the issue, sale and delivery of this
Warrant and any Warrant Shares.
8. Miscellaneous.
8.1. Nonwaiver. No course of dealing or any delay or failure to exercise
any right, power or remedy hereunder on the part of the holder of this Warrant
or of any Warrant Shares shall operate as a waiver of or otherwise prejudice
such holder's rights, powers or remedies.
8.2. Amendment. Any term, covenant, agreement or condition of the Warrants
may, with the consent of the Company, be amended, or compliance therewith may be
waived (either generally or in a particular instance and either retroactively or
prospectively), by one or more substantially concurrent written instruments
signed by the Required Holders of the Warrants, provided that (a) no such
amendment or waiver shall change the number of Warrant Shares issuable upon the
exercise of any Warrant or the manner of exercise or the amount of any payment
due upon exercise without the prior written consent of the holder of such
Warrant and (b) no such amendment or waiver shall extend to or affect any
obligation not expressly amended or waived or impair any right consequent
thereon.
8.3. Communications. All communications provided for herein shall be
delivered, mailed or sent by facsimile transmission addressed in the manner and
shall be effective as of the time specified in the Securities Purchase
Agreements.
8.4. Like Tenor. All Warrants shall at all times be identical, except as to
the preamble to each Warrant.
8.5. Remedies. The Company stipulates that the remedies at law of the
holder or holders of this Warrant and/or of any Warrant Shares 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. No remedy conferred in this Warrant on the holder of any
Warrant or Warrant Shares is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or under any other agreement, document or
instrument or now or hereafter existing at law or in equity or by statute or
otherwise.
<PAGE>
8.6. Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Company, the holder or holders of this Warrant and, as applicable, of any
Warrant Shares, to the extent provided herein, and shall be enforceable by such
holder or holders.
8.7. Governing Law. This Warrant, including the validity hereof and the
rights and obligations of the Company and of the holder hereof and all
amendments and supplements hereof and all waivers and consents hereunder, shall
be construed in accordance with and governed by the domestic substantive laws of
the State of New York without giving effect to any choice of law or conflicts of
law provision or rule that would cause the application of the domestic
substantive laws of any other jurisdiction.
8.8. Headings; Entire Agreement; Partial Invalidity, etc. The table of
contents to and headings in this Warrant are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof. This Warrant, together
with the other Operative Documents, embodies the entire agreement and
understanding between the holder hereof and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof. In case any
provision in this Warrant or any of the other Operative Documents shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
[The remainder of this page is left blank intentionally.]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed as
an instrument under seal and to be attested by its duly authorized officers as
of the date first above written.
PSC INC.
By: /s/ William J. Woodard
William J. Woodard
Vice President, Finance
<PAGE>
FORM OF NOTICE OF EXERCISE
(To be executed only upon partial or full exercise
of the within Warrant)
The undersigned registered holder of the within Warrant irrevocably
exercises the within Warrant for and purchases shares of Common Stock (or Other
Securities) [Specify applicable class and/or kind of securities] of PSC INC. and
herewith makes payment therefor in the amount of $ , all at the price, in the
manner and on the terms and conditions specified in the within Warrant, and
requests that a certificate (or certificates in denominations of shares) for
such shares hereby purchased be issued in the name of and delivered to (choose
one) (a) the undersigned or (b) , whose address is and, if such shares shall not
include all the Warrant Shares issuable as provided in the within Warrant, that
a new Warrant of like tenor for the number of Warrant Shares not being purchased
hereunder be issued in the name of and delivered to (choose one) (a) the
undersigned or (b) , whose address is .
Dated: , .
[ ]
By
(Signature of Registered Holder)
NOTICE: The signature on this Notice of Exercise must correspond with the name
as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever.
<PAGE>
(To be executed only upon the assignment
of the within Warrant)
FOR VALUE RECEIVED, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto______________________ , whose address
is ________________________________________________ , all of the rights of the
undersigned under the within Warrant, with respect to shares of Common Stock (or
Other Securities) [Specify applicable class and/or kind of securities] of PSC
INC. and, if such shares shall not include all the Warrant Shares issuable as
provided in the within Warrant, that a new Warrant of like tenor for the number
of Warrant Shares not being transferred hereunder be issued in the name of and
delivered to [choose one] (a) the undersigned or (b) ______________________ ,
whose address is ___________________________________ , and does hereby
irrevocably constitute and appoint ___________________________ Attorney to
register such transfer on the books of PSC INC. maintained for the purpose, with
full power of substitution in the premises.
Dated: , .
[ ]
By
(Signature of Registered Holder)
NOTICE: The signature on this Assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatever.
Exhibit 4.4
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD, UNLESS
IT HAS BEEN REGISTERED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
PSC ACQUISITION INC.
SUBORDINATED INSTALLMENT PROMISSORY NOTE
US $5,000,000
July 12, 1996
For value received and intending to be legally bound, PSC ACQUISITION INC.,
a Delaware corporation (the "Operating Company"), hereby promises to pay to the
order of Spectra-Physics, Inc., a Delaware corporation (together with any
subsequent holder of this Note, the "Holder"), the principal sum of Five Million
Dollars ($5,000,000), together with interest thereon as hereinafter provided,
payable at the times and in the manner hereinafter provided, and Operating
Company further agrees as is hereinafter set forth. Certain capitalized terms
used herein and not otherwise defined herein are defined in Section 12 hereof.
1. Interest. This Note shall bear interest from the date hereof on the
unpaid principal amount hereof at a variable rate of interest per annum equal to
the Prime Rate, plus one percent (1%). This Note shall also bear interest on
overdue principal and, to the extent permitted by law, on any overdue interest
at a variable rate of interest per annum equal to the Prime Rate, plus three
percent (3%). In no event shall the amount payable by the Operating Company as
interest on this Note exceed the highest lawful rate permissible under any law
applicable thereto. All interest shall be calculated based upon a 360 day year
and the actual number of days elapsed. The interest rate on this Note shall
change automatically without notice to the Operating Company immediately with
each change in the Prime Rate.
2. Payments. The principal hereof shall be payable in sixteen (16)
consecutive quarterly installments, due on each April 12, July 12, October 12
and January 12, commencing October 12, 1997, each in the amount of Three Hundred
and Twelve Thousand Five Hundred Dollars ($312,500). This Note shall have a
final maturity, at which all principal amounts remaining outstanding shall be
repaid in full, on July 12, 2001. Accrued but unpaid interest shall be due and
payable on each April 12, July 12, October 12, and January 12, commencing
October 12, 1996, and at maturity; provided that interest on overdue principal
and overdue interest shall, at the option of the Holder, be payable on demand.
Payments of principal and interest shall be made in lawful money of the United
States of America, by wire transfer of immediately available funds to the
following account:
<PAGE>
CoreStates Bank of Delaware N.A.
ABA: #031000011
Credit: CoreStates Bank of Delaware
Demand Checking
Name of: Spectra-Physics, Inc.
Account Number: #0095-6176
or by such other method or to such address as the Holder may specify to the
Operating Company in writing.
3. Prepayment. The Operating Company shall have the right to prepay the
unpaid principal balance hereof, in whole or in part, at any time so long as all
accrued and unpaid interest hereunder is simultaneously paid in full. Any
partial prepayment of this Note pursuant to this Section 3 shall be applied to
the payment of installments of the principal hereof in inverse order of
maturity.
4. Financial Statements And Information. So long as this Note remains
outstanding, the Operating Company shall provide to the Holder the documents
described in Sections 7(a) through 7(j) of the Securities Purchase Agreements;
provided, however, that for purposes of applying this Section of this Note (i)
the capitalized terms used in such Sections of the Securities Purchase
Agreements shall be deemed to have the meanings ascribed to them in this Note,
(ii) the phrase "Required Holders of the Notes and of the Warrants" used in
Section 7(b) of the Securities Purchase Agreements shall mean the Holder,
(iii) the phrase "this Agreement, the Other Securities Purchase Agreements and
the Securities" shall mean the Operative Documents, and (iv) the phrase "the
Seller or" the phrase "Seller Notes and/or the" in Section 7(i) of the
Securities Purchase Agreements shall be deemed deleted.
5. Inspection. The Operating Company and the Holding Company will permit
any Person designated by the Holder, on reasonable notice and at the Holder's
expense (unless a Default or Event of Default shall have occurred and be
continuing, in which case at the Operating Company's expense), to visit and
inspect any of the properties of the Holding Company and its Subsidiaries, to
examine its and their books and records (and to make copies thereof and take
extracts therefrom) and to discuss its and their affairs, finances and accounts
with and to be advised as to the same by, its and their officers and outside
counsel (and if a Default or Event of Default shall have occurred and be
continuing, its and their independent accountants, each of whom the Companies
hereby direct and authorize to engage in such discussions under such
circumstances), all at such reasonable times and intervals as the Holder may
desire.
<PAGE>
6. Subordination Of Notes. The provisions of Section 10 of the Securities
Purchase Agreement (other than Section 10.4(d)) are incorporated herein as if
set forth in full herein, provided, however, that (i) the capitalized terms used
in such Section 10 of the Securities Purchase Agreements shall be deemed to have
the meanings ascribed to them in this Note, (ii) the references to "this
Agreement" and/or "the other Securities Purchase Agreements" in Sections 10.2(a)
and 10.11 of the Securities Purchase Agreements shall be deemed deleted,
(iii) the term "Agreement" in Sections 10.4(a)(ii), 10.8 and 10.10 of the
Securities Purchase Agreements shall mean this Note, (iv) the phrase "and the
right to exercise any of the Warrants" in Section 10.11 of the Securities
Purchase Agreements shall be deemed deleted, (v) in each instance where there is
a reference to the vote, consent or approval of holders of a specified
percentage of the principal amount of Superior Indebtedness, such reference
shall be deemed to mean the holders of such specified percentage of the
principal amount of each class of Superior Indebtedness (and for this purpose a
"class" of Superior Indebtedness shall refer to each of (a) the Indebtedness
under the Subordinated Debt Documents and any Refinancing Agreement relating
thereto, and (b) the Indebtedness under the Bank Credit Documents and any
Refinancing Agreement relating thereto, each of which is a separate class,) and
(vi) Section 10.4(a)(i) shall be deemed to read:
(i) a Material Default shall have occurred which (other than in the case of
a default under section 6.01(f) of the Bank Credit Agreement or sections
16.1(e), (f) or (g) of the Securities Purchase Agreements) permits the holder or
holders of any Superior Indebtedness to immediately accelerate the maturity
thereof;
7. Covenants. Each of the Operating Company and the Holding Company
covenants and agrees that so long as any portion of this Note remains
outstanding, unless the Holder otherwise agrees in writing, it shall, and shall
cause its Subsidiaries to:
7.1 Comply with each of the covenants set forth in Sections 14.1 through
14.19, excluding Section 14.6(b) and Section 14.7, of the Securities Purchase
Agreements, provided, however, that:
(i) the capitalized terms used in such Sections of the Securities Purchase
Agreements shall be deemed to have the meanings ascribed to them in this Note;
(ii) with respect to Section 14.5(a), (1) the term "Refinancing Agreement"
as used in paragraph (iv) shall have the meaning ascribed to it in the
Securities Purchase Agreements, and (2) paragraph (ii) thereof shall be deemed
to read as follows:
(ii) Funded Debt evidenced by the notes issued under the Securities
Purchase Agreements and under any Refinancing Agreement relating to such notes
(but no other extension, refinancing, refunding or renewal of such Notes)
provided that the aggregate principal amount of such Funded Debt and Current
Debt outstanding under the Securities Purchase Agreements and such notes and
under any Refinancing Agreement relating thereto shall at no time exceed
$31,500,000 minus the sum of all repayments of the principal of such Funded Debt
or Current Debt.
<PAGE>
(iii) with respect to Section 14.16(a), the term "the Securities" shall be
deemed replaced by the term "this Note";
(iv) with respect to Section 14.16(c), (1) the term "Acquisition Documents"
shall be deemed replaced by the term "Subordinated Debt Documents", (2) the
terms "any holder of any of the Securities" shall be deemed replaced by the term
"the Holder", (3) the terms "Notes or to pay the Put Price under section 12"
shall be deemed replaced by the term "Note", (4) the terms "agreements,
documents or instruments referred to in section 4.3, including, without
limitation," shall be deemed deleted, and (5) the terms "term of the Bank" shall
be deemed replaced by the terms "term of the Subordinated Debt Documents, Bank";
(v) with respect to Section 14.17(c), the terms "Agreement and the Other
Securities Purchase Agreements" shall be deemed replaced by the term "Note" and
the terms "and thereof" shall be deemed deleted; and
(vi) with respect to Section 14.18, the term "Required" shall be deemed
deleted.
7.2 Subject to Section 8.6 hereof, comply with each of the covenants set
forth in Section 14.7 of the Securities Purchase Agreements.
8. Remedies.
8.1 Events Of Default Defined; Acceleration Of Maturity. If any one or more
of the following events ("Events of Default") shall occur (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body), that is to say:
(a) if default shall be made in the due and punctual payment of all or any
part of the principal of this Note when and as the same shall become due and
payable, whether at the stated maturity thereof, by notice of or demand for
prepayment, or otherwise;
(b) if default shall be made in the due and punctual payment of any
interest on this Note when and as such interest shall become due and payable and
such default shall have continued for a period of five Business Days;
<PAGE>
(c) if default shall be made in the performance or observance of any
covenant, agreement or condition contained in Section 4 (with respect to Section
7(g) of the Securities Purchase Agreements) or Section 5 (with respect to
Sections 14.2(b) or 14.5 through 14.19, inclusive, of the Securities Purchase
Agreements);
(d) if default shall be made in the performance or observance of any other
of the covenants, agreements or conditions contained in this Note or any of the
other Operative Documents and such default shall have continued for a period of
30 days after the earlier to occur of (i) either Company's obtaining actual
knowledge of such default or (ii) either Company's receipt of written notice of
such default;
(e) if the Holding Company or any Material Subsidiary of the Holding
Company shall make a general assignment for the benefit of creditors, or shall
not pay its debts as they become due, or shall admit in writing its inability to
pay its debts as they become due, or shall file a voluntary petition in
bankruptcy, or shall be adjudicated bankrupt or insolvent, or shall file any
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, or shall file any answer admitting
or not contesting the material allegations of a petition filed against it in any
such proceeding, or shall seek or consent to or acquiesce in the appointment of
any trustee, custodian, receiver, liquidator or fiscal agent for it or for all
or any substantial part of its properties, or shall (or its directors or
stockholders shall) take any action looking to its dissolution or liquidation;
(f) if, within 30 days after the commencement of an action against the
Holding Company or any Material Subsidiary of the Holding Company seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation, such
action shall not have been dismissed or all orders or proceedings thereunder
affecting the operations or the business of the Holding Company or such Material
Subsidiary stayed, or if the stay of any such order or proceeding shall
thereafter be set aside, or if, within 30 days after the appointment without the
consent or acquiescence of the Holding Company or such Material Subsidiary of
any trustee, custodian, receiver, liquidator or fiscal agent for the Holding
Company or any Material Subsidiary of the Holding Company or for all or any
substantial part of their respective properties, such appointment shall not have
been vacated;
(g) if, under the provisions of any law for the relief or aid of debtors,
any court or governmental agency of competent jurisdiction shall assume custody
or control of the Holding Company or of any Material Subsidiary of the Holding
Company or of all or any substantial part of their respective properties and
such custody or control shall not be terminated or stayed within 30 days from
the date of assumption of such custody or control;
<PAGE>
(h) if (1) the Holding Company or any Subsidiary of the Holding Company
shall fail to (i) make any payment due on any Indebtedness (other than this Note
and other than Indebtedness under the Bank Credit Documents or the Securities
Purchase Agreements (or any Refinancing Agreement related thereto)) or other
obligation (including any in respect of any lease or any Shares upon the
exercise by any Person of any put or call option or other similar right of
redemption or repurchase with regard to such Shares in accordance with the terms
of such option or right), if the aggregate outstanding amount thereof (and of
any other Indebtedness or other obligation as to which the Holding Company or
any Subsidiary is in default) exceeds $2,000,000 or (ii) perform, observe or
discharge any covenant, condition or obligation in any agreement, document or
instrument evidencing, securing or relating to such Indebtedness or other
obligation, if the effect of any such failure of the character described in this
clause (1) is to cause, or permit any other Person to cause, any payment in
respect thereof in an aggregate amount of $2,000,000 or more to become due and
payable, or (2) if any such Indebtedness or other obligation or Indebtedness
under the Bank Credit Documents or the Securities Purchase Agreements (or any
Refinancing Agreement related thereto) in aggregate amount of $2,000,000 or more
shall be accelerated or shall become due and payable by its terms and shall not
be paid or extended;
(i) if a final judgment for the payment of money which, together with all
other outstanding final judgments for the payment of money against the Holding
Company and/or any of its Subsidiaries, exceeds an aggregate of $2,000,000 shall
be rendered by a court of record against the Holding Company or any Subsidiary,
and the Holding Company or such Subsidiary shall not discharge the same or
provide for its discharge in accordance with its terms, or procure a stay of
execution thereof within 30 days from the date of entry thereof and within such
period of 30 days, or such longer period during which execution of such judgment
shall have been stayed, move to vacate such judgment or appeal therefrom and
cause the execution thereof to be stayed pending determination of such motion or
during such appeal;
(j) if any representation or warranty made by or on behalf of the Holding
Company or any Subsidiary of the Holding Company in the Acquisition Agreement,
this Note or in any of the other Operative Documents or in any agreement,
document or instrument delivered under or pursuant to any provision hereof or
thereof shall prove to have been materially false or incorrect on the date as of
which made;
<PAGE>
(k) if, at any time, this Note or any of the other Operative Documents
shall for any reason (other than the scheduled termination thereof in accordance
with its terms) expire, fail to be in full force and effect or be disaffirmed,
repudiated, cancelled, terminated or declared to be unenforceable, null and
void;
(l) if (i) any Plan shall fail to satisfy the minimum funding standards of
ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted under
section 412 of the Code, (ii) a notice of intent to terminate any Plan shall
have been or is reasonably expected to be filed with the PBGC or the PBGC shall
have instituted proceedings under section 4042 of ERISA to terminate or appoint
a trustee to administer any Plan or the PBGC shall have notified either Company
or any ERISA Affiliate that a Plan may become a subject of any such proceedings,
(iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning
of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, shall exceed $250,000, (iv) either Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, (v) either Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) either Company or any
Subsidiary of either Company establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that would
increase the liability of either Company or any Subsidiary of either Company
thereunder; and any such event or events described in clauses (i) through (vi)
above, either individually or together with any other such event or events, has
resulted in, or could reasonably be expected to result in a Material Adverse
Change; or
(m) if (i) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Commission under the Exchange Act), directly or indirectly, of Voting Stock of
the Holding Company (or other securities convertible into such Voting Stock)
representing 30% or more of the combined voting power of all Voting Stock of the
Holding Company; (ii) during any period of up to 24 consecutive months,
commencing before or after the date of this Note, individuals who at the
beginning of such 24-month period were directors of the Holding Company shall
cease for any reason to constitute a majority of the board of directors of the
Holding Company; or (iii) any Person or two or more Persons acting in concert
shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or their
acquisition of the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Holding Company;
then, in the case of an Event of Default of the character described in
subdivisions (a), (b), (c), (d), (h), (i), (j), (k), (l) or (m) of this Section
8.1 and at the option of the Holder, exercised by written notice to the
Operating Company, the principal of this Note shall forthwith become due and
payable, together with interest accrued thereon, without presentment, demand,
<PAGE>
protest or other notice of any kind, all of which are hereby expressly waived,
and the Operating Company shall forthwith upon any such acceleration pay to the
Holder the entire principal of and interest accrued on this Note, provided,
further, that in the case of an Event of Default of the character described in
Subsections (e), (f) or (g) of this Section 8.1, the principal of this Note
shall forthwith become due and payable, together with interest accrued thereon
(including any interest accruing after the commencement of any action or
proceeding under the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable domestic or foreign federal or state bankruptcy,
insolvency or other similar law, and any other interest that would have accrued
but for the commencement of such proceeding, whether or not any such interest is
allowed as an enforceable claim in such proceeding), without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and the Operating Company shall forthwith upon any such acceleration pay
to the Holder the entire principal of and interest accrued on this Note.
8.2 Suits for Enforcement, etc. Subject to the provisions of Section 6, in
case any one or more of the Events of Default specified in Section 8.1 shall
have occurred, and irrespective of whether this Note has become or has been
declared immediately due and payable under Section 8.1, the Holder may proceed
to protect and enforce its rights either by suit in equity or by action at law,
or both. Without limiting the generality of the foregoing (and without
derogating from any provision contained in this Note or any of the other
Operative Documents), upon the occurrence and during the continuance of an Event
of Default, the Holder shall have the right to apply for and have a receiver
appointed for each of the Companies and their respective Subsidiaries, or any
one or more of them, by a court of competent jurisdiction in any action taken by
Holder to enforce its rights and remedies hereunder and under the other
Operative Documents in order to manage, protect and preserve the assets of the
Companies and their respective Subsidiaries and continue the operation of the
business of the Companies and their respective Subsidiaries, or to sell or
dispose of the assets of the Companies and their respective Subsidiaries, and to
collect all revenues and profits thereof and apply the same to the payment of
all expenses and other charges of such receivership, including the compensation
of the receiver, and the Companies hereby consent to such appointment without
regard to the existence of any misfeasance or malfeasance or the presence of any
defenses that would otherwise be available to such application.
8.3 Remedies Cumulative. No remedy conferred in this Note or in any of the
other Operative Documents upon the Holder is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or thereunder or now or hereafter
existing at law or in equity or by statute or otherwise.
8.4 Remedies Not Waived. No course of dealing between either Company and
any of their respective Subsidiaries, on the one hand, and the Holder, on the
other hand, and no delay by the Holder in exercising any rights hereunder or
under any of the other Operative Documents shall operate as a waiver of any
rights of any such holder.
<PAGE>
8.5 Application of Payments. In case any one or more of the Events of
Default specified in Section 8.1 shall have occurred, all amounts to be applied
to the prepayment or payment of the Note, shall be applied, after the payment of
all related costs and expenses incurred by the Holder (including, without
limitation, reasonable compensation to any and all trustees, liquidators,
receivers or similar officials and reasonable fees, expenses and disbursements
of counsel) in such order of priority as is determined by the Holder.
8.6 Automatic Waivers of Certain Financial Covenant Defaults. If default
shall be made in the performance or observance of the covenants contained in
Section 7.2 hereof, and the Required Holders of the notes issued under the
Securities Purchase Agreements waive, in accordance with the terms of the
Securities Purchase Agreements, the analogous default under the analogous
provisions of Section 14.7 of the Securities Purchase Agreements, then,
notwithstanding any other provision herein to the contrary, upon receipt of a
copy of such waiver, the Holder shall be deemed to have also waived such default
under Section 7.2 hereof, on the same terms and subject to the same conditions
as the analogous default was waived under the Securities Purchase Agreements;
provided that in the event the Holding Company or any of its Subsidiaries pays
the holders of the notes under the Securities Purchase Agreements a fee or
increases the rate of interest to be paid to such Holders in connection with
obtaining such waiver, the Operating Company shall at the same time pay Holder a
proportional fee or shall make adjustments to the interest rate payable
hereunder to reflect comparable treatment of Holder hereunder.
9. Expenses; Indemnity. The Companies, jointly and severally, will pay or
cause to be paid (or reimbursed, as the case may be) and will defend, indemnify
and hold the Holder and each of its directors, officers, employees, agents,
advisors and Affiliates (each, an "Indemnitee") harmless (on an after tax basis)
in respect of all costs, losses, expenses (including, without limitation, the
reasonable fees, costs, expenses and disbursements of counsel) and damages
(collectively, "Indemnified Costs") incurred by or asserted against any
Indemnitee in connection with the performance and/or enforcement of this Note or
any of the other Operative Documents (including, without limitation, so-called
work-outs and/or restructurings and all amendments, waivers and consents
hereunder and thereunder, whether or not effected) which may otherwise be
related in any way to this Note or any other Operative Documents or such
Indemnitee's relationship to either Company or any of their respective
Affiliates or any of their respective properties and assets, including, without
limitation, any and all Indemnified Costs related in any way to the requirements
of any Environmental Laws (as the same may be amended, modified or supplemented
from time to time) or to any environmental investigation, assessment, site
monitoring, containment, clean up, remediation, removal, restoration, reporting
and sampling, whether or not consented to, or requested or approved by, any
Indemnitee, and whether or not such Indemnified Cost is attributable to an event
or condition originating from any properties or assets of either Company or any
of their respective Subsidiaries or any other properties previously or hereafter
owned, leased, occupied or operated by either Company or any of their respective
Subsidiaries. Notwithstanding the foregoing, the Companies shall not have any
obligation to an Indemnitee under this Section 9 with respect to any Indemnified
Cost which is finally determined by a court of competent jurisdiction to have
arisen solely and directly as a result of the willful misconduct or bad faith of
such Indemnitee.
<PAGE>
10. Governing Law; Jurisdiction; Waiver of Jury Trial. This Note and,
unless explicitly provided otherwise therein, each of the other Operative
Documents, including the validity hereof and thereof and the rights and
obligations of the parties hereunder and thereunder, and all amendments and
supplements hereof and thereof and all waivers and consents hereunder and
thereunder, shall be construed in accordance with and governed by the domestic
substantive laws of the State of New York without giving effect to any choice of
law or conflicts of law provision or rule that would cause the application of
the domestic substantive laws of any other jurisdiction. The Operating Company,
to the extent that it may lawfully do so, hereby consents to service of process,
and to be sued, in the State of New York and consents to the jurisdiction of the
courts of the State of New York and of the United States District Courts for the
Southern District of New York, as well as to the jurisdiction of all courts to
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of any of its obligations hereunder or
thereunder or with respect to the transactions contemplated hereby or thereby,
and expressly waives any and all objections it may have as to venue in any such
courts. The Operating Company further agrees that a summons and complaint
commencing an action or proceeding in any of such courts shall be properly
served and shall confer personal jurisdiction if served personally or by
certified mail to it at its address set forth in Section 11.6 hereof or as
otherwise provided under the laws of the State of New York. Notwithstanding the
foregoing, each Company agrees that nothing contained in this Section 10 shall
preclude the institution of any such suit, action or other proceeding in any
jurisdiction other than the State of New York. THE OPERATING COMPANY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING
INSTITUTED BY OR AGAINST SUCH COMPANY IN RESPECT OF ITS OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11. General Provisions.
11.1 This Note (together with the other Operative Documents) embodies the
entire agreement and understanding among the Holder and the Companies and
supersedes all prior agreements and understandings relating to the subject
matter hereof.
11.2 Each covenant contained herein and in each of the other Operative
Documents shall be construed (absent an express provision to the contrary) as
being independent of each other covenant contained herein and therein, so that
compliance with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other covenant.
11.3 If any provision in this Note or in any of the other Operative
Documents refers to any action taken or to be taken by an Person, or which such
Person is prohibited from taking, such provision shall be applicable, whether
such action is taken directly or indirectly by such Person, whether or not
expressly specified in such provision.
<PAGE>
11.4 The Holder shall not be required to pursue any party hereto, including
any guarantor, before exercising any other such rights.
11.5 If any of the terms or provisions of this Note shall be deemed
unenforceable, the enforceability of the remaining terms and provisions shall
not be affected.
11.6 All communications provided for herein and, unless explicitly provided
otherwise therein, in any of the other Operative Documents shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such communication by a recognized overnight delivery service (charges
prepaid), (b) by a recognized overnight delivery service (charges prepaid), or
(c) by messenger. Any such communication must be sent (i) if to either Company
(or any Subsidiary of either Company), to such Company (or such Subsidiary) at:
PSC Inc.
675 Basket Road
Webster, New York 14580
Telephone (716) 265-1600
Fax (716) 265-6402
Attention: William J. Woodard,
Vice-President - Finance
or at such other address (or telecopy number) as may be furnished in writing by
the Companies, to the Holder at:
Spectra-Physics, Inc.
108 Webster Building
3411 Silverside Road
Wilmington, Delaware 19810
Telephone: (302) 478-4600
Fax: (302) 478-8962
Attention: Ms. Barbara Schoenberg
or at such other address as may be furnished to the Companies in writing.
Communications under this Section 11.6 shall be deemed given only when actually
received.
11.7 The section headings of this Note are for convenience only and shall
not affect the meaning or interpretation of this Note or any provision hereof.
11.8 This Note shall inure to the benefit of and be enforceable by the
respective successors and assigns of the Holder.
<PAGE>
11.9 This Note is being issued pursuant to the Acquisition Agreement and in
payment of the purchase price for the US Assets. Pursuant to the Merger
Agreement, immediately after the issuance of this Note, the Operating Company
will merge into Scanning and Scanning will be the surviving corporation.
11.10 This Note is to be guaranteed by the Holding Company and by each
Subsidiary of the Holding Company (other than any Foreign Subsidiary and the
Operating Company), including any Person which hereafter becomes a Subsidiary of
the Holding Company (other than any Foreign Subsidiary), pursuant to a guarantee
substantially in the form of Exhibit A attached hereto (each, a "Note
Guarantee"; collectively, the "Note Guarantees"). The Holding Company, and each
other Person signing a Note Guaranty, by execution thereof, agrees to perform
each of the provisions hereof applicable thereto.
11.11 Any term of this Note and, unless explicitly provided otherwise
therein, of any of the other Operative Documents may, with the consent of the
Companies, be amended, or compliance therewith may be waived, in writing only,
by the Holder, provided that no such amendment or waiver shall extend to or
affect any obligation not expressly amended or waived or impair any right
consequent thereon.
12. Defined Terms.
12.1 The term "Acquisition Agreement" shall mean that certain Asset and
Stock Purchase Agreement dated May 20, 1996, by and among PSC Inc., a New York
corporation, the Holder and Spectra-Physics Holding, S.A., a French corporation,
as amended, modified, and supplemented from time to time.
12.2 The term "Affiliate" shall mean Affiliate as defined in Section 15.1
of the Securities Purchase Agreements but shall not include Spectra-Physics,
Inc., a Delaware corporation or any of its affiliates.
12.3 The term "Default" shall mean any condition or event which constitutes
or, after notice or lapse of time or both, would constitute an Event of Default.
12.4 The term "Event of Default" shall have the meaning ascribed to it in
Section 8 hereof.
12.5 The term "Material Adverse Change" shall mean a material adverse
change in or effect upon any of (a) the condition (financial or otherwise),
business, performance, operations, properties, profits or prospects of the
Operating Company individually, the Operating Company and its Subsidiaries taken
as one enterprise, the Holding Company and its Subsidiaries taken as one
enterprise or any of the material assets or liabilities acquired or assumed
pursuant to the Acquisition Agreement, (b) the legality, validity or
enforceability of the Operative Documents, (c) the rights and remedies of the
Holder, or (d) the ability of the Holding Company, the Operating Company or any
of the other Material Subsidiaries to perform its obligations under any of the
Operative Documents and/or to comply with any of the terms thereof applicable to
it.
<PAGE>
12.6 The term "Material Default" shall mean (a) any default in the payment
when due of fees or expenses that constitute Superior Indebtedness and/or (b)
any default under Section 6.01(f) of the Bank Credit Agreement and any other
Event of Default (other than an Event of Default under Section 6.01(a)) under
the Bank Credit Agreement, or a default or Event of Default, as applicable,
under the analogous provisions of any Refinancing Agreement relating to the Bank
Credit Agreement and/or (c) any default under Sections 16.1(e), (f) or (g) of
the Securities Purchase Agreements and any other Event of Default (other than an
Event of Default under Section 16.1(a) or 16.1(b)) under the Securities Purchase
Agreements, or a default or Event of Default, as applicable, under the analogous
provisions of any Refinancing Agreement relating to the Securities Purchase
Agreements.
12.7 The term "Notes" or any reference thereto in any provision hereof
which has been incorporated by reference to the Securities Purchase Agreements
shall mean and be deemed to refer to this Note.
12.8 The terms "Note Guarantee" and "Note Guarantees" shall have the
meanings ascribed to them in Section 11.10 hereof.
12.9 The term "Operating Company" shall mean PSC Acquisition Inc., a
Delaware corporation, and any successor thereto including, after the Merger,
Scanning.
12.10 The term "Operative Documents" shall mean this Note together with the
Note Guarantees, each as it may from time to time be amended, modified or
supplemented.
12.11 The term "Prime Rate" shall mean the rate established by CoreStates
Bank, N.A. ("CoreStates") from time to time as its "base or prime rate." The
Prime Rate is not necessarily CoreStates's most favored rate.
12.12 The term "Refinancing Agreement" shall mean (i) the Refinancing
Agreement as defined in the Securities Purchase Agreements, and (ii) the loan
agreements, documents and instruments, if any, entered into by the Companies in
compliance with this Note, pursuant to which Indebtedness is incurred by the
Companies which refinances or refunds all or any portion of the Indebtedness
under the Subordinated Debt Documents, provided that all of such refinancing or
refunding Indebtedness is permitted under Section 7 hereof and provided,
further, that the terms of such loan agreements, documents and instruments,
taken as a whole, are no more restrictive upon the Obligors and are no more
adverse to the interests of the Holder than those of the Subordinated Debt
Documents.
<PAGE>
12.13 The term "Restricted Payment" as applied to any Person shall mean:
(a) any dividend or other distribution, direct or indirect, on account of
any Shares of such Person now or hereafter outstanding (including, without
limitation, Preferred Shares) or any securities convertible into or exercisable
or exchangeable for such Shares or any rights, options or warrants to acquire
any such Shares, except (i) any such dividend or distribution payable to the
Holding Company, the Operating Company and/or any Wholly-Owned Subsidiary
Guarantor and (ii) a pro rata distribution payable to all of the stockholders of
the Holding Company solely in shares of Common Stock of the Holding Company and
as a result of which there is no change in the relative ownership interest of
any stockholder in the Holding Company or any of such stockholder's rights; and
(b) any redemption, retirement, purchase or other acquisition, direct or
indirect, of any Shares of such Person now or hereafter outstanding (including,
without limitation, Preferred Shares) or any securities convertible into or
exercisable or exchangeable for such Shares or any rights, options or warrants
to acquire any such Shares.
12.14 The term "Securities Purchase Agreements" shall mean those certain
Securities Purchase Agreements dated as of the date hereof by and among
SpectraScan, Inc., a Delaware corporation, the Holding Company and the
institutional investors named therein with respect to the issuance and sale by
the Operating Company to such institutional investors of an aggregate of
$30,000,000 principal amount of its 11.25% Senior Subordinated Notes due 2006,
as such Securities Purchase Agreements exist on the date hereof. This Section
12.14 shall not be interpreted so as to restrict the Holding Company or its
Subsidiaries from entering into any amendment, modification, supplement or
waiver of the Securities Purchase Agreements permitted by the other provisions
hereof.
12.15 The term "Subordinated Debt Documents" shall mean the "Operative
Documents" as such term is defined in the Securities Purchase Agreements.
12.16 The term "Subordinated Indebtedness" shall mean the principal amount
of the Indebtedness evidenced by this Note, together with any interest, fee,
expense and/or other amount due thereon or payable with respect thereto,
including any such amounts payable by any guarantor of this Note.
12.17 The term "Superior Indebtedness" shall mean (i) the Superior
Indebtedness under the Securities Purchase Agreements, and (ii) the principal
amount of all Funded Debt and Current Debt of the Operating Company under the
Subordinated Debt Documents or any Refinancing Agreement relating thereto,
together with any interest (including Accrued Bankruptcy Interest), premium, if
any, fee, expense and/or other amount due thereon or payable with respect
thereto, including any such amounts payable by any guarantor under the
Subordinated Debt Documents, provided that the aggregate principal amount shall
at no time exceed $31,500,000 minus the sum of all repayments of the principal
of the Indebtedness under the Subordinated Debt Documents.
<PAGE>
12.18 Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Securities Purchase Agreements.
IN WITNESS WHEREOF, the Operating Company has executed this Note as an
instrument under seal as of the date first above written.
PSC ACQUISITION INC.
By:/s/ William J. Woodard
Vice President, Finance
Exhibit 4.5
NOTE GUARANTEE
THIS NOTE GUARANTEE is made and granted this 12th day of July, 1996 by PSC
INC., a New York corporation ("Guarantor"), to and in favor of SPECTRA-PHYSICS,
INC., a Delaware corporation ("SPI").
BACKGROUND
WHEREAS, SPI and Spectra-Physics Holding, S.A., a French corporation, and
Guarantor have entered into that certain Asset and Stock Purchase Agreement
dated May 20, 1996 (the "Acquisition Agreement");
WHEREAS, in accordance with the Purchase Agreement, PSC ACQUISITION INC., a
Delaware corporation and wholly-owned direct or indirect subsidiary of Guarantor
(the "Company"), is executing and delivering to SPI, concurrently with the
execution and delivery of this Note Guarantee, a certain Subordinated Promissory
Note of even date herewith (the "Note"); and
WHEREAS, after the execution and delivery of this Note Guarantee, the
Company will merge with Spectra-Physics Scanning Systems, Inc. ("Scanning") and
Scanning will remain as the surviving entity.
AGREEMENT
NOW THEREFORE, for value received and intending to be legally bound hereby,
the Guarantor hereby irrevocably and unconditionally guarantees the due and
punctual payment and performance of the following obligations (each, a
"Guaranteed Obligation" and collectively, the "Guaranteed Obligations") when and
as the same shall become due and payable in accordance with the terms thereof,
as the same may be amended, modified or supplemented from time to time:
<PAGE>
The due and punctual payment of the principal of and interest on (including
any interest accruing after the commencement of any action or proceeding
under the federal bankruptcy laws, as now or hereafter constituted, or any
other applicable domestic or foreign federal or state bankruptcy,
insolvency or other similar law, and any other interest that would have
accrued but for the commencement of such proceeding, whether or not any
such interest is allowed as an enforceable claim in any such proceeding)
and fees and other amounts payable with respect to the Note.
The Guarantor hereby agrees that the Guarantor's liability hereunder is
joint and several with any other individual or entity (the "Other Guarantors")
who may guarantee the Guaranteed Obligations or any part thereof.
Notwithstanding anything to the contrary herein, the obligations of the
Guarantor under the Note Guarantee, and the rights of the holder hereof are
subordinated to Superior Indebtedness and to the rights of the holders thereof
to the extent and in the manner specified in the Note.
This Note Guarantee is an absolute, primary, unconditional, irrevocable,
present and continuing guarantee of payment (and not of collectibility or
performance only), is not subject to any counterclaim, setoff, deduction,
withholding, diminution, abatement, recoupment, suspension, deferment, reduction
or defense and is in no way conditioned or contingent upon any attempt to
collect from the Company or any Other Guarantor or upon any other condition or
contingency; if the Company shall fail so to pay punctually the principal of,
interest or other amount on any Guaranteed Obligation, the Guarantor will
immediately pay the same to the holder thereof, with interest (to the extent
permitted by applicable law) on any overdue amount, at a rate per annum equal to
2% above the non-default rate otherwise applicable thereto, until paid. Payments
due on the Guaranteed Obligations shall be overdue for purposes hereof if not
made on the originally scheduled date of payment therefor, without giving effect
to any applicable grace period. Payments by the Guarantor hereunder shall be
made in lawful money of the United States of America and may be required by the
holder of any Guaranteed Obligation on any number of occasions.
<PAGE>
This Note Guarantee shall remain in full force and effect without regard
to, and the obligations of the Guarantor hereunder shall not be affected or
impaired by: (a) any amendment or modification of or supplement to the Note,
including, without limitation, any amendment, modification and/or supplement
which changes the timing or amount of any payment (or prepayment) of the
principal of or interest on, or any other terms of payment of, any of the
Guaranteed Obligations; (b) any extension, indulgence or other action or
inaction in respect of any of the Note; (c) any default by the Company, the
Guarantor or any Other Guarantor under, or any invalidity or unenforceability
of, or any irregularity or other defect in, the Note; (d) any exercise or
non-exercise of any rights, remedy, power or privilege in respect of the Note;
(e) any transfer of the assets of the Company, the Guarantor or any Other
Guarantor to, or any consolidation or merger of the Company, the Guarantor or
any Other Guarantor with or into, any other Person (as defined in the Note); (f)
any bankruptcy, insolvency, reorganization or similar proceeding involving or
affecting the Company, the Guarantor or any Other Guarantor; (g) any change in
or addition to or partial or complete release of any collateral securing the
Guaranteed Obligations or any partial or complete release of any Other Guarantor
or other Person primarily or secondarily liable for the Guaranteed Obligations;
(h) any change of circumstances, whether or not foreseen or foreseeable, or any
impossibility of performance, whether through acts of God, action of any
governmental authority or agency, change of law, other force majeure or
otherwise, whether or not beyond the control of the Company, the Guarantor, any
Other Guarantor or any other Person; (i) any attachment, claim, demand, charge,
Lien (as defined in the Note), order, process, encumbrance or any other
happening or event or reason or any withholding or diminution at the source, by
reason of any taxes, assessments, expenses, obligations or liabilities of any
character, foreseen or unforeseen, and whether or not valid, incurred by or
against any Person, or any claims, demands, charges or Liens of any nature,
<PAGE>
foreseen or unforeseen, incurred by any Person, or against any sums payable
under any of the Note, so that such sums would be rendered inadequate or would
be unavailable to make the payments therein provided; (j) the failure of the
Guarantor to receive any benefit or consideration from or as a result of its
execution, delivery and performance of this Note Guarantee or (k) any other
circumstance or cause, whether similar or dissimilar to any of the foregoing,
that might constitute a legal or equitable discharge or defense of the Guarantor
and whether or not the Guarantor shall have had notice or knowledge thereof, it
being agreed by the Guarantor that for the purposes hereof, the Guaranteed
Obligations shall be due and payable when and as the Guaranteed Obligations
shall be due and payable in accordance with the terms thereof notwithstanding
that collection or enforcement thereof may be stayed or enjoined under any law
or may otherwise be impossible and notwithstanding that the Notes may then be or
have become invalid, void or voidable for any reason.
The Guarantor hereby acknowledges receipt of a correct and complete copy of
the Note and consents to all of the terms and provisions thereof, as the same
may be from time to time hereafter amended, modified or supplemented, and agrees
to perform and comply with all of the covenants contained therein applicable
thereto as if it were a party thereto. The Guarantor hereby waives (a)
presentment, demand for payment, and protest of non-payment, of any principal of
or interest or other amount on any Guaranteed Obligation; (b) notice of
acceptance of this Note Guarantee and of presentment, demand, and intent to
accelerate and protest; (c) notice of any default under the Note or any other
agreement relating thereto; (d) demand for performance of observance of, and any
enforcement of any provisions of, or any pursuit or exhaustion of rights or
remedies against the Company, the Guarantor, any other Guarantor or any other
Person under the Note and any requirements of diligence or promptness on the
<PAGE>
part of any holder of any Guaranteed Obligation in connection therewith; and (e)
to the extent the Guarantor lawfully may do so, any and all other demands and
notices of every kind and description with respect to the foregoing or which may
be required to be given by any statute, or rule of law and any defense of any
kind (other than the defense of payment) which the Guarantor may now or
hereafter have with respect to the Note or any other agreement relating thereto.
Without limiting the generality of the foregoing, no Person who is entitled to
the benefits of this Note Guarantee shall be required to make any demand upon,
or to pursue or exhaust any of its rights or remedies against, the Company, any
Other Guarantor or any other Person or any collateral or other security, prior
to exercising any right hereunder, and no delay or omission on the part of any
such Person in exercising any right under the Note or any other agreement
relating thereto shall operate as a waiver or relinquishment of such right.
The Guarantor hereby grants the holder of any Guaranteed Obligation the
full power in the uncontrolled discretion of such holder, without notice to the
Guarantor and without in any way affecting the liability of the Guarantor under
this Note Guarantee: (a) to waive compliance with and any default under, and to
consent to any amendment or change of any terms of the Note and any other
agreement relating thereto, including, without limitation, any change in the
timing or amount of any payment (or prepayment) of the principal of or interest
on, or any other terms of payment of, any of the Guaranteed Obligations; and (b)
to grant extensions or renewals thereof and other indulgences with respect
thereto, and to effect releases, compromises or settlements with respect
thereto.
The Guarantor hereby covenants and agrees that, until the Guaranteed
Obligations are indefeasibly paid in full in cash, the Guarantor will not
enforce or otherwise exercise any rights of reimbursement, subrogation,
contribution or other similar rights against the Company, any Other Guarantor or
any other Person with respect to any Guaranteed Obligation or otherwise.
The Guarantor will reimburse the holder of any Guaranteed Obligation for
all costs of collection or enforcement (including, without limitation,
reasonable attorneys' fees and expenses) incurred by such holder in enforcing
the obligations of the Guarantor hereunder.
<PAGE>
This Note Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time any amount received in respect of the Note is
rescinded or must otherwise be restored or returned by payee thereof upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, the Guarantor or any Other Guarantor or upon the appointment of any
receiver or conservator of, or trustee or similar official for, the Company, the
Guarantor or any Other Guarantor or any substantial part of the properties of
the Company, the Guarantor or any Other Guarantor, or otherwise, all as though
such payment had not been made.
No amendment or waiver of any provision of this Note Guarantee or consent
to any default under, breach of or departure from this Note Guarantee by the
Guarantor shall in any event be effective unless the same shall be in writing
and signed by the Guarantor and the holder of the Note and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
All notices and other communications under this Note Guarantee shall be in
writing and shall be addressed and delivered or mailed in accordance with the
provisions of Section 11.6 of the Note.
The Note Guarantee, including the validity hereof and the rights and
obligations arising hereunder, and all amendments and supplements hereof and all
waivers and consents hereunder shall be construed in accordance with and
governed by the domestic substantive laws of the State of New York without
giving effect to any choice of law of conflicts of law provision or rule that
would cause the application of the domestic substantive laws of any other
<PAGE>
jurisdiction. The Guarantor, to the extent that the Guarantor may lawfully do
so, hereby consents to service of process, and to be sued, in the State of New
York and consents to the jurisdiction of the courts of the State of New York and
of the United States District Court for the Southern District of New York, as
well as to the jurisdiction of all courts of which an appeal may be taken from
such courts, for the purpose of any suit, action or other proceeding arising out
of any of the Guarantor's obligations hereunder, and expressly waives any and
all objections the Guarantor may have as to venue in any such courts. The
Guarantor further agrees that a summons and complaint commencing an action or
proceeding in any of such courts shall be properly served and shall confer
personal jurisdiction if served personally or by certified mail to the Guarantor
in care of the Companies at the address of the Company set forth in Section 11.6
of the Note or as otherwise provided under the laws of the State of New York.
Notwithstanding the foregoing, the Guarantor agrees that nothing contained
herein shall preclude the institution of any such suit, action or other
proceeding in any jurisdiction other than the State of New York.
THE GUARANTOR IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT,
ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST THE GUARANTOR IN RESPECT OF
THE GUARANTOR'S OBLIGATIONS HEREUNDER.
This Note Guarantee (together with the Note) embodies the entire agreement
and understanding between the Guarantor and the holder of the Guaranteed
Obligations and supersedes all prior agreements and understandings relating to
the subject matter hereof. In case any provision in this Note Guarantee or of
the Note shall be invalid, illegal or unenforceable, the validate, legality and
enforceability of the remaining provisions hereof and thereof shall not in any
way be affected or impaired thereby.
All or any of the rights of the holder of any Guaranteed Obligations
hereunder may be transferred or assigned at any time and shall be transferred
and assigned upon the transfer of any Guaranteed Obligation whether with or
without the consent of or notice to the Guarantor.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this Note
Guarantee on the day and year first above written.
PSC INC.
By: /s/ William J. Woodard
William J. Woodard
Vice President, Finance
and Treasurer
Exhibit 10.1
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
PSC INC.
SPECTRASCAN, INC.
$30,000,000 11.25% Senior Subordinated Notes of SpectraScan, Inc.
due June 30, 2006
Warrants for 975,000 Shares of Common Stock, $0.01 par value,
of PSC Inc. (subject to adjustment)
______________
SECURITIES PURCHASE AGREEMENT
______________
July 12, 1996
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Authorization of Securities; Other Purchasers; etc...........-1-
2. Sale and Purchase of Securities..............................-2-
3. Closing......................................................-2-
4. Conditions to Closing........................................-3-
4.1. Representations and Warranties Correct.................-3-
4.2. Performance; No Default................................-3-
4.3. Related Transactions...................................-3-
4.4. Compliance Certificate.................................-5-
4.5. Note Guarantees........................................-5-
4.6. Opinions of Counsel for the Companies and the Sellers..-5-
4.7. Opinion of Your Special Counsel........................-5-
4.8. Certain Additional Documents to be Delivered at or Prior
to the Closing.........................................-5-
4.9. Sale of Securities to Other Purchasers.................-6-
4.10. Legal Investment; Certificate..........................-6-
4.11. Sale and Purchase Not Forbidden by Law.................-6-
4.12. Payment of Closing Fee and Transactions Costs..........-6-
4.13. Proceedings and Documents..............................-6-
5. Representations and Warranties...............................-6-
5.1. Organization, Standing, etc. of the Companies..........-6-
5.2. Subsidiaries...........................................-7-
5.3. Qualification..........................................-7-
5.4. Business, etc..........................................-7-
5.5. Shares; Stockholders...................................-8-
5.6. Financial Statements...................................-9-
5.7. Changes; Solvency, etc.................................-9-
5.8. Tax Returns and Payments..............................-10-
5.9. Funded Debt, Current Debt, Liens, Investments and
Transactions with Affiliates..........................-10-
5.10. Title to Properties; Liens; Leases....................-11-
5.11. Litigation, etc.......................................-11-
5.12. Valid and Binding Obligations; Compliance with Other
Instruments, Borrowing Restrictions, etc..............-11-
5.13. ERISA.................................................-12-
5.14. Consents, etc.........................................-13-
5.15. Proprietary Rights; Licenses..........................-14-
<PAGE>
5.16. Offer of Securities; Investment Bankers...............-14-
5.17. Government Regulation.................................-14-
5.18. Labor Relations; Suppliers, Distributors and Customers-14-
5.19. Voting Provisions.....................................-15-
5.20. Disclosure............................................-15-
6. Use of Proceeds.............................................-15-
7. Financial Statements and Information........................-16-
8. Inspection..................................................-20-
9. Prepayment of Notes.........................................-20-
9.1. Required Annual Prepayment Without Premium of Notes...-20-
9.2. Optional Prepayment With Premium of Notes.............-20-
9.3. Optional Prepayment With Premium of the Notes with the
Proceeds of Certain Public Offerings..................-20-
9.4. Allocation of Partial Prepayments of Notes............-21-
9.5. Notice of Optional Prepayments of Notes...............-21-
9.6. Maturity; Accrued Interest; Surrender, etc. of Notes..-21-
9.7. Purchase of Notes.....................................-21-
9.8. Payment on Non-Business Days..........................-22-
9.9. Application of Notes in Satisfaction of Exercise Price of
Warrants..............................................-22-
10. Subordination of Notes......................................-22-
10.1. Certain Definitions...................................-22-
10.2. Subordinated Indebtedness Subordinated to Superior
Indebtedness; No Amendments...........................-23-
10.3. Dissolution, Liquidation, Reorganization, etc.........-24-
10.4. No Payments With Respect to Subordinated Indebtedness
in Certain Circumstances..............................-25-
10.5. Payments and Distributions Received...................-27-
10.6. Subrogation...........................................-27-
10.7. Notice................................................-28-
10.8. Subordination Not Affected, etc.......................-28-
10.9. Obligations Unimpaired................................-28-
10.10. Holders of Subordinated Indebtedness Entitled to Assume
Payments Not Prohibited in Absence of Notice..........-29-
10.11. Limitation on Right of Action........................-29-
11. Registration, etc...........................................-30-
11.1. Shelf Registration....................................-30-
11.2. Incidental Registration...............................-31-
11.3. Permitted Registration................................-32-
<PAGE>
11.4. Registration Procedures...............................-33-
11.5. Indemnification.......................................-33-
11.6. Restrictions on Other Agreements......................-34-
12. Put Rights..................................................-35-
12.1. Put Rights............................................-35-
13. Board Inspection Rights.....................................-37-
14. Covenants of the Companies..................................-37-
14.1. Books of Record and Account; Reserves.................-37-
14.2. Payment of Taxes; Existence; Maintenance of Properties;
Compliance with Laws; Lines of Business; Proprietary
Rights................................................-38-
14.3. Insurance.............................................-39-
14.4. Limitation on Discount or Sale of Receivables.........-39-
14.5. Limitation on Funded Debt.............................-39-
14.6. Limitation on Restricted Payments; Payments on Seller
Notes.................................................-40-
14.7. Certain Financial Covenants...........................-41-
14.8. Limitation on Investments.............................-43-
14.9. Limitation on Liens...................................-44-
14.10. Limitation on Transactions with Affiliates...........-45-
14.11. Limitation on Rental Obligations; Capital Expenditures;
Hedge Agreements......................................-45-
14.12. Limitation on Issuance of Shares of Subsidiaries.....-46-
14.13. Limitation on Subsidiary's Consolidation or Merger...-46-
14.14. Limitation on Holding Company's Consolidation or Merger-47-
14.15. Limitation on Disposition of Property................-47-
14.16. Modification of Certain Documents, Agreements and
Instruments...........................................-48-
14.17. Further Assurances;..................................-49-
14.18. Additional Subsidiaries..............................-49-
14.19 Limitation on Tax Consolidation.......................-49-
15. Definitions.................................................-49-
15.1. Definitions of Capitalized Terms......................-49-
15.2. Other Definitions.....................................-63-
15.3. Accounting Terms and Principles; Laws.................-64-
16. Remedies....................................................-64-
16.1. Events of Default Defined; Acceleration of Maturity...-64-
16.2. Suits for Enforcement, etc............................-69-
16.3. Remedies Cumulative...................................-70-
16.4. Remedies Not Waived...................................-70-
<PAGE>
16.5. Application of Payments...............................-70-
17. Registration, Transfer and Exchange of Securities...........-70-
18. Replacement of Securities...................................-71-
19. Amendment and Waiver........................................-71-
20. Method of Payment of Securities.............................-72-
21. Expenses; Indemnity.........................................-72-
22. Taxes.......................................................-73-
23. Communications..............................................-73-
24. Survival of Agreements, Representations and Warranties, etc.-74-
25. Successors and Assigns; Rights of Other Holders.............-74-
26. Purchase for Investment; ERISA..............................-74-
27. Governing Law; Jurisdiction; Waiver of Jury Trial...........-76-
28. Rule 144A...................................................-77-
29. Miscellaneous...............................................-77-
Schedule I Schedule of Purchasers
Exhibit 1(a)(i) Form of Note
Exhibit 1(a)(ii) Form of Note Guarantee
Exhibit 1(b) Form of Warrant
Exhibit 3 Wire Instructions
Exhibit 4.3(a) Form of Seller Notes
Exhibit 4.6(a) Opinion of Boylan, Brown, Code, Fowler, Vidgor and
Wilson, LLP
Exhibit 4.6(b) Opinion of Fried, Frank, Harris, Shriver & Jacobson
Exhibit 4.6(c) Opinion of Dechert Price & Rhoads
Exhibit 4.7 Opinion of Choate, Hall & Stewart
Exhibit 4.8 Additional Documents to be Delivered at or Prior
to the Closing
Exhibit 5.2 Subsidiaries
Exhibit 5.5(a) Shares; Stockholders
Exhibit 5.5(b) Other Securities; Commitments; Preemptive and Registration
Rights
Exhibit 5.6(a) Financial Statements
Exhibit 5.6(b) Projections
<PAGE>
Exhibit 5.6(c) Pro Forma Unaudited Balance Sheet
Exhibit 5.7 Restricted Payments
Exhibit 5.8 Taxes
Exhibit 5.9 Funded Debt, Current Debt, Liens, Investments,
Transactions with Affiliates and Leases
Exhibit 5.11(a) Litigation
Exhibit 5.11(b) Other Litigation
Exhibit 5.15 Proprietary Rights and Licenses
Exhibit 5.19 Voting Provisions
Exhibit 6 Use of Proceeds
Exhibit 7(c)(v) Information as to New Subsidiaries
Exhibit 15.1 Pro Forma EBITDA
<PAGE>
PSC INC.
SPECTRASCAN, INC.
675 Basket Road
Webster, New York 14580
July 12, 1996
THE EQUITABLE LIFE ASSURANE SOCIETY
OF THE UNITED STATES (1)
c/o Alliance Capital Management L.P.
135 West 50th Street, 6th Floor
New York, New York 10020
Ladies and Gentlemen:
PSC INC., a New York corporation (the "Holding Company"), and SPECTRASCAN,
INC., a Delaware corporation (formerly named Spectra-Physics Scanning Systems,
Inc., the surviving corporation of the Merger hereinafter referred to) and a
Wholly-Owned Subsidiary of the Holding Company (the "Operating Company") (the
Holding Company and the Operating Company are sometimes collectively referred to
herein as the "Companies" and each as a "Company"), jointly and severally agree
with you as follows. Certain capitalized terms used herein are defined in
section 15.
1. Authorization of Securities; Other Purchasers; etc.
(a) The Operating Company has authorized the issue and sale of its
11.25% Senior Subordinated Notes due June 30, 2006 (herein, together with
any notes issued in exchange therefor or replacement thereof, called the
"Notes") in the aggregate principal amount of $30,000,000. The Notes are to
be substantially in the form of Exhibit 1(a)(i) attached hereto. Interest
is payable on the Notes, quarterly in arrears on each March 31, June 30,
September 30 and December 31, commencing September 30, 1996, and at
maturity. In no event shall the amount paid or agreed to be paid by the
Operating Company as interest and premium on any Note exceed the highest
lawful rate permissible under any law applicable thereto. The Notes are to
be guaranteed by the Holding Company and by each Subsidiary of the Holding
Company (other than any Foreign Subsidiary and the Operating Company),
including any Person which hereafter becomes a Subsidiary of the Holding
(1) There will be separate but identical Securities Purchase Agreements
addressed to each of the Other Purchasers.
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Company (other than any Foreign Subsidiary), pursuant to a guarantee
substantially in the form of Exhibit 1(a)(ii) attached hereto (each, a
"Note Guarantee"; collectively, the "Note Guarantees").
(b) The Holding Company has authorized the issue and sale of its
warrants evidencing rights to purchase 975,000 shares of Common Stock
(subject to adjustment) (herein, together with any warrants issued in
exchange therefor or replacement thereof, called the "Warrants"). The
Warrants are to be exercisable on or after July 12, 1997, are to terminate
at the close of business on July 12, 2006 and are to be substantially in
the form of Exhibit 1(b) attached hereto.
(c) The Securities are to be issued under this Agreement and separate
Securities Purchase Agreements (the "Other Securities Purchase Agreements")
identical herewith (except as to the name and address of each of the other
purchasers) being entered into concurrently by the Companies with each of
the other purchasers (the "Other Purchasers") named in Schedule I attached
hereto. The issue of Securities to you and the issues of Securities to each
of the Other Purchasers are separate transactions, and you shall not be
liable or responsible for the acts or defaults of the Other Purchasers.
2. Sale and Purchase of Securities. The Companies will issue and sell to you
and, subject to the terms and conditions hereof and in reliance upon the
representations and warranties of the Companies contained herein and in the
other Operative Documents, you will purchase from the Companies, at the Closing
specified in section 3, such Securities as are specified on that portion of
Schedule I attached hereto as is applicable to you. The aggregate purchase price
of the Securities shall be $30,000,000, which shall be allocated (a) $29,400,000
to the Notes and (b) $600,000 to the Warrants. The Companies, the Other
Purchasers and you agree that the values ascribed to the Securities (which
values shall be used by the Companies, the Other Purchasers and you, as well as
any subsequent holder of any of the Securities, for all purposes, including the
preparation of tax returns) shall be determined in accordance with the
foregoing.
3. Closing. The closing of the sale and purchase of the Securities hereunder
(the "Closing") shall take place at the office of Messrs. Choate, Hall &
Stewart, Exchange Place, 53 State Street, Boston, Massachusetts 02109, on July
12, 1996 or such other date to which you may agree (the "Closing Date"). The
Closing shall occur not later than 11:00 A.M. Boston time (your reinvestment
deadline) on the Closing Date. At the Closing, the Companies will deliver to you
the Securities to be purchased by you at the Closing against payment of the
purchase price thereof to (or for the benefit of) the Companies in immediately
available funds in accordance with the wire instructions set forth on Exhibit 3
attached hereto. Delivery of the Securities to be purchased by you at the
Closing shall be made in the form of one or more Notes and Warrants, in such
denominations and registered in such names as are specified on Schedule I
attached hereto, and in each case dated and, in the case of each Note, bearing
interest from, the Closing Date. If at the Closing the Companies shall fail to
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tender the Securities to be delivered to you thereat as provided herein, or if
at the Closing any of the conditions specified in section 4 shall not have been
fulfilled to your reasonable satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement, without thereby
waiving any other rights you may have by reason of such failure or such
non-fulfillment.
4. Conditions to Closing. Your obligation to purchase and pay for the Securities
to be purchased by you hereunder at the Closing is subject to the fulfillment to
your satisfaction, prior to or at the Closing, of the following conditions:
4.1. Representations and Warranties Correct. The representations and
warranties made by the Companies herein and in the other Operative Documents
shall have been correct when made and shall be correct at and as of the time of
the Closing (after giving effect to the transactions consummated at the
Closing).
4.2. Performance; No Default. The Companies shall have performed all
agreements and complied with all conditions contained herein and in the other
Operative Documents required to be performed or complied with by them prior to
or at the Closing, and at the time of the Closing, no Default or Event of
Default shall exist and no condition shall exist which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change.
4.3. Related Transactions.
(a) Pursuant to and in accordance with the terms of the Asset and
Stock Purchase Agreement dated May 20, 1996 by and among the Holding
Company, Spectra-Physics, Inc., a Delaware corporation ("Spectra-Physics"),
and Spectra-Physics Holding, S.A., a French corporation ("Spectra SA" and
collectively with Spectra-Physics, the "Sellers") (such Asset and Stock
Purchase Agreement, as amended, modified and supplemented from time to time
in accordance with section 14.16 of this Agreement, the "Acquisition
Agreement"), (i) Spectra-Physics shall have sold to PSC Acquisition, Inc.,
a Delaware corporation and a Wholly-Owned Subsidiary of the Holding Company
("Acquisition Corp.") all of the issued and outstanding shares of capital
stock (and all securities convertible into or exercisable or exchangeable
for such capital stock) of Spectra-Physics Scanning Systems, Inc., a
Delaware corporation ("Scanning") (such shares, the "Scanning Shares") and
the US Assets (as defined in the Acquisition Agreement), (ii) Spectra SA
shall have sold to the Holding Company all of the issued and outstanding
shares of capital stock of TXCOM S.A., a French corporation ("TxCom"),
owned by Spectra S.A. (the "TxCom Shares") (being 7,235 shares of common
stock representing 72% of the issued and outstanding capital stock of
TxCom) and shall have assigned to the Holding Company the TxCom Contracts
(as defined in the Acquisition Agreement), and (iii) the Seller
Subsidiaries (as defined in the Acquisition Agreement) shall have sold the
International Assets (as defined in the Acquisition Agreement), subject
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to the Assumed International Liabilities (as defined in the Acquisition
Agreement), to certain Wholly-Owned Subsidiaries of the Holding Company
(the purchase and sale of securities and assets pursuant to the Acquisition
Agreement are referred to herein collectively as the "Stock/Asset
Purchase"). Pursuant to and in accordance with the Plan and Agreement of
Merger of even date by and between Acquisition Corp. and Scanning (the
"Merger Agreement") (the Acquisition Agreement, the Merger Agreement and
the other agreements, documents and instruments executed in connection
therewith, all as amended, modified and supplemented from time to time in
accordance with section 14.16 of this Agreement, are sometimes collectively
referred to as the "Acquisition Documents"), Acquisition Corp. shall have
been merged with and into Scanning and the Operating Company shall be the
surviving corporation, all as contemplated by the Merger Agreement (the
"Merger") (the Stock/Asset Purchase and the Merger are collectively
referred to as the "Acquisition"). The Certificate of Merger related to the
Merger shall have been filed with all necessary governmental authorities,
including, without limitation, the Secretary of State of the State of
Delaware, and you shall have received evidence of same reasonably
satisfactory to you. No condition under any of the Acquisition Documents
for the benefit of either of the Companies shall have been waived. The
aggregate purchase price to be paid to the Sellers under the Acquisition
Agreement in respect of the Scanning Shares, the US Assets, the TxCom
Shares and the International Assets, shall not exceed (i) $120,000,000
payable in cash at the Closing (subject to adjustment as provided in
sections 1.4 and 1.6 of the Acquisition Agreement), (ii) the issuance of
$5,000,000 aggregate principal amount of Subordinated Installment
Promissory Notes of the Operating Company due 2001, which notes shall be in
the form of Exhibit 4.3(a) attached hereto and subordinated to the Notes on
terms and conditions satisfactory to you (such notes, as amended, modified
and supplemented from time to time in accordance with section 14.16 of this
Agreement, the "Seller Notes"), (iii) shares of Common Stock of the Holding
Company having an aggregate fair market value (determined in accordance
with the Acquisition Agreement) equal to $10,000,000, and (iv) the
assumption of the Assumed International Liabilities. Each of the
Acquisition Documents shall be in form and substance reasonably
satisfactory to you in all material respects.
(b) The capitalization of each Company shall be in all respects
satisfactory to you. Without limiting the generality of the foregoing,
after giving effect to the transactions contemplated hereby, the Companies
shall not have any Funded Debt or Current Debt other than that evidenced by
the Notes and that which is specified on Exhibit 5.9 attached hereto.
(c) Pursuant to and in accordance with the terms of the Credit
Agreement dated as of the date hereof (such agreement, as amended, modified
and supplemented from time to time in compliance with section 14.16 of this
Agreement, the "Bank Credit Agreement") among Acquisition Corp., the
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Holding Company, as guarantor, and the initial lenders named therein
(together with their respective successors and assigns under the Bank
Credit Agreement, the "Banks") and Fleet Bank, as initial issuing bank and
administrative agent (the Bank Credit Agreement and the other agreements,
documents and instruments executed in connection therewith or pursuant
thereto (including any Hedge Agreements (as defined in the Bank Credit
Agreement)), all as amended, modified and supplemented from time to time in
compliance with section 14.16 of this Agreement, are sometimes collectively
referred to as the "Bank Credit Documents"), the Operating Company shall
have established a senior revolving credit facility and shall have borrowed
not less than $80,000,000 under two separate term loans maturing June 30,
2001 and December 31, 2002, respectively. The Banks' commitment under such
revolving credit facility shall be $20,000,000, and shall expire on June
30, 2001. The aggregate amount of the Operating Company's unused borrowing
availability immediately following the Closing under such revolving credit
facility shall be not less than $5,000,000. The collateral for such
revolving credit facility and term loans shall consist of all assets of the
Companies and their Subsidiaries (other than any Foreign Subsidiary).
4.4. Compliance Certificate. At the Closing, you shall have received an
Officers' Certificate, dated the Closing Date, certifying that the conditions
specified in sections 4.1 and 4.2 have been fulfilled.
4.5. Note Guarantees. At the Closing, the Holding Company and each of the
Subsidiaries of the Holding Company (other than any Foreign Subsidiary and the
Operating Company) shall have executed and delivered to you the Note Guarantees.
4.6. Opinions of Counsel for the Companies and the Sellers. At the Closing,
you shall have received (a) an opinion, dated the Closing Date, from Messrs.
Boylan, Brown, Code, Fowler, Vidgor and Wilson, LLP, counsel for the Companies,
substantially in the form of Exhibit 4.6(a) attached hereto, (b) an opinion,
dated the Closing Date, from Messrs. Fried, Frank, Harris, Shriver & Jacobson,
intellectual property counsel to the Companies, substantially in the form of
Exhibit 4.6(b) attached hereto, and (c) a letter from Messrs. Dechert Price &
Rhoads, counsel to the Sellers, authorizing you to rely on their opinion
delivered pursuant to the Acquisition Agreement.
4.7. Opinion of Your Special Counsel. At the Closing, you shall have
received an opinion, dated the Closing Date, from your special counsel, Messrs.
Choate, Hall & Stewart, substantially in the form of Exhibit 4.7 attached
hereto.
4.8. Certain Additional Documents to be Delivered at or Prior to the
Closing. You shall have received the items specified on Exhibit 4.8 attached
hereto, each of which shall be satisfactory to you in all material respects.
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4.9. Sale of Securities to Other Purchasers. At the Closing, the Companies
shall sell to the Other Purchasers the Securities to be purchased at the Closing
by the Other Purchasers pursuant to the Other Securities Purchase Agreements and
shall receive payment in full of the purchase price thereof.
4.10. Legal Investment; Certificate. Your purchase of the Securities to be
issued pursuant hereto shall be permitted under the laws and regulations of any
jurisdiction to which you are subject (without resort to any provision of any
such law permitting limited investments by you without restriction as to the
character of the particular investment), and you shall, if requested by you,
have received an Officers' Certificate, dated the Closing Date, certifying as to
such matters as you may request to enable you to determine whether your purchase
is so permitted.
4.11. Sale and Purchase Not Forbidden by Law. The offer, issue, sale and
delivery by the Companies of the Securities to be issued pursuant hereto and
your purchase of such Securities at the Closing shall not be prohibited by and
shall not subject you to any tax, penalty, liability or other onerous condition
under or pursuant to any law, statute, rule or regulation.
4.12. Payment of Closing Fee and Transactions Costs. The Companies shall
have paid in immediately available funds (a) a non-refundable closing fee to you
and the Other Purchasers in the aggregate amount of $300,000 (1.0% of the
aggregate principal amount of the Notes), which shall be allocated among you and
the Other Purchasers in proportion to the aggregate principal amount of Notes to
be purchased by you and the Other Purchasers, and (b) all fees, expenses and
disbursements incurred by you at or prior to the time of the Closing in
connection with the transactions contemplated by the Operative Documents,
including, without limitation, the reasonable fees, expenses and disbursements
of your special counsel.
4.13. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by the Operative Documents and all agreements,
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to you and your special counsel, and you and
your special counsel shall have received all such counterpart originals or
copies of such agreements, documents and instruments as you or they may
reasonably request.
5. Representations and Warranties. The Companies jointly and severally represent
and warrant that (after giving effect to the transactions consummated at the
Closing):
5.1. Organization, Standing, etc. of the Companies. Each Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite power and authority
to own, lease and operate its properties, to carry on its business as now
conducted, and now proposed to be conducted as described in the Disclosure
Document referred to in section 5.4, to execute, deliver and perform each of the
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Operative Documents to which it is (or is to be) a party and to consummate the
transactions contemplated by the Operative Documents. No approval of the
stockholders of either Company or any class thereof is required in connection
therewith which has not previously been obtained.
5.2. Subsidiaries. Exhibit 5.2 attached hereto is a complete and correct
list of the Holding Company's Subsidiaries (corporate or other) which correctly
specifies as to each such Subsidiary (a) its legal name, (b) the jurisdiction of
its organization, (c) each other jurisdiction in which it is qualified to do
business, (d) the authorized Shares of each Subsidiary (specifying the class or
classes thereof) and the number of such Shares outstanding, (e) the number (and
percentage) of such outstanding Shares owned by the Holding Company and its
other Subsidiaries and (f) the name of each other holder, if any, of such
Shares, together with the number (and percentage) held by such other holder.
Each Subsidiary of the Holding Company is a corporation or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
own, lease and operate its properties, to carry on its business as now
conducted, and now proposed to be conducted, as described in the Disclosure
Document referred to in section 5.4 and to execute, deliver and perform each of
the Operative Documents to which it is (or is to be) a party and to consummate
the transactions contemplated thereby. All of the outstanding Shares of each
Subsidiary of the Holding Company are validly issued, fully paid and
nonassessable and not subject to preemptive rights on the part of any other
Person, and all of such Shares have been offered, issued and sold by the issuer
thereof in compliance with all applicable laws. All of the Shares of the Holding
Company's Subsidiaries owned by the Holding Company and its Subsidiaries as
shown on Exhibit 5.2 attached hereto are so owned of record and beneficially and
free of any Lien (other than the Liens permitted pursuant to section 14.9(a)),
proxy, voting agreement, voting trust or similar agreement or restriction. The
Operating Company is a Wholly-Owned Subsidiary of the Holding Company.
5.3. Qualification. The Holding Company and each of its Subsidiaries is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the character of the properties owned or leased or the
nature of the activities conducted makes such qualification or licensing
necessary, except for those jurisdictions in which the failure to be so
qualified or licensed or to be in good standing has not resulted in, and could
not reasonably be expected to result in, a Material Adverse Change.
5.4. Business, etc. The Holding Company and its Subsidiaries are engaged in
the business of designing, engineering, manufacturing and selling bar code
scanning equipment (the "Business"), as further described in the Holding
Company's Annual Report on Form 10-K filed by the Holding Company with the
Commission for the fiscal year ended December 31, 1995, including all exhibits
and appendices thereto (the "Disclosure Document"), a true, correct and complete
copy of which has been furnished to you.
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5.5. Shares; Stockholders.
(a) The authorized and outstanding Shares of the Holding Company are
fully and accurately described on Exhibit 5.5(a) attached hereto. All of
the outstanding Shares of the Holding Company are, and all Shares issued
upon exercise of any Warrants in accordance with the terms thereof will be,
validly issued, fully paid and nonassessable and not subject to preemptive
rights on the part of any other Person, and all of such Shares have been
(or will have been) offered, issued and sold by the Holding Company in
compliance with all applicable laws. The number of shares of Common Stock
of the Holding Company beneficially owned by each director and executive
officer of the Holding Company and its Subsidiaries and each other Person
that, individually or together with its Affiliates, beneficially owns 5% or
more of such shares of Common Stock (on a fully diluted basis), along with
the percentage of the total outstanding shares of Common Stock of the
Holding Company that such number represents of Common Stock of the Holding
Company (on a fully diluted basis), are set forth on Exhibit 5.5(a)
attached hereto. There are no outstanding Preferred Shares of the Holding
Company.
(b) Except as set forth on Exhibit 5.5(b) attached hereto, except as
provided in sections 11 and 12 and except for the Warrants: (i) there are
no outstanding rights, options, warrants or agreements for the purchase
from, or sale or issuance by, the Holding Company or any of its
Subsidiaries of any of its Shares or any other securities convertible into
or exercisable or exchangeable for such Shares; (ii) there are no
agreements on the part of the Holding Company or any of its Subsidiaries to
issue, sell or distribute any Shares or any properties and assets of the
Holding Company or any of its Subsidiaries; (iii) neither the Holding
Company nor any of its Subsidiaries has any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its Shares or
any interest therein or to pay any dividend or make any distribution in
respect thereof; and (iv) no Person is entitled to (A) any preemptive or
similar right with respect to the issuance of any Shares of the Holding
Company or any of its Subsidiaries or (B) any rights with respect to the
registration of any Shares of the Holding Company or any of its
Subsidiaries under the Securities Act.
(c) The aggregate number of shares of Common Stock issuable upon
exercise in full of the Warrants immediately after the Closing is 975,000
which, if then issued, would constitute 6.8% of the Common Stock
(calculated on a fully-diluted basis assuming the conversion, exercise and
exchange of all outstanding securities convertible into and exercisable or
exchangeable for shares of Common Stock, including without limitation the
Warrants). The Holding Company has reserved 975,000 shares of Common Stock
solely for issuance upon exercise of the Warrants.
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5.6. Financial Statements. You have been furnished with:
(a) the financial statements referred to on Exhibit 5.6(a) attached
hereto, which financial statements are complete and correct in all material
respects (subject, in the case of any unaudited financial statements, to
the absence of footnote disclosure and normal year-end and audit
adjustments) and have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby and present fairly
in all material respects the financial position and the results of
operations and cash flows of the Person(s) purported to be covered thereby
as at the respective dates and for the respective periods indicated in
conformity with GAAP (subject, in the case of any unaudited financial
statements, to the absence of footnote disclosure and normal year-end and
audit adjustments);
(b) the projections referred to on Exhibit 5.6(b) attached hereto,
which projections were prepared in good faith, are based upon assumptions
that the Companies believe are reasonable and take into account all
material information regarding the matters set forth therein. Such
projections represent a reasonable estimate by the Companies of the future
financial performance of the Holding Company and its Subsidiaries. The
Companies do not presently anticipate any material deviation from such
projections and the Companies reasonably believe that the results of
operations reflected therein are attainable; and
(c) the pro forma unaudited consolidated balance sheet of the Holding
Company and its Subsidiaries referred to on Exhibit 5.6(c) attached hereto,
which balance sheet fairly presents the financial position of the Holding
Company and its Subsidiaries as at May 31, 1996, adjusted on a pro forma
basis to give effect to the consummation of the transactions contemplated
by the Operative Documents, and reflects all known material liabilities of
the Holding Company and its Subsidiaries, contingent or other, as at the
Closing Date, required by GAAP to be reflected therein.
5.7. Changes; Solvency, etc. Since December 31, 1995: (a) there has been no
change in the assets, liabilities or financial condition of the Holding Company
and its Subsidiaries from that set forth in the balance sheet as at such date
referred to on Exhibit 5.6 attached hereto, other than changes in the ordinary
course of business which have not been, either in any case or in the aggregate,
materially adverse; (b) no condition or event has occurred which has resulted
in, or could reasonably be expected to result in, a Material Adverse Change; and
(c) except as set forth on Exhibit 5.7 attached hereto, neither the Holding
Company nor any of its Subsidiaries has, directly or indirectly, declared,
ordered, paid or made any Restricted Payment. Each of the Holding Company and
its Subsidiaries are Solvent.
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5.8. Tax Returns and Payments. The Holding Company and its Subsidiaries
have filed all tax returns required by law to be filed and have paid all taxes,
assessments and other governmental charges levied upon their respective
properties, assets, income, receipts, franchises or sales, other than those not
yet delinquent and those, not substantial in aggregate amount, being or about to
be contested as provided in section 14.2(a). The income tax liability of the
Holding Company and its Subsidiaries has been finally determined by the Internal
Revenue Service, and satisfied, or the time for audit has expired, for the
fiscal years listed on Exhibit 5.8 attached hereto. The Holding Company and its
Subsidiaries have not executed any waiver or waivers that would have the effect
of extending the applicable statute of limitations in respect of income tax
liabilities. The charges, accruals and reserves in the financial statements of
the Holding Company and its Subsidiaries in respect of taxes for all fiscal
periods are adequate in the opinion of the Companies, and the Companies know of
no unpaid assessments for additional taxes for any fiscal period or of any basis
therefor.
5.9. Funded Debt, Current Debt, Liens, Investments and Transactions with
Affiliates. Exhibit 5.9 attached hereto correctly describes:
(a) all Funded Debt and/or Current Debt of the Holding Company and/or
any of its Subsidiaries to be outstanding immediately following the Closing
(other than that evidenced by the Notes);
(b) all Liens to which any of the properties and assets of the Holding
Company and/or any of its Subsidiaries will be subject immediately
following the Closing (other than those of the character described in
section 14.9(b));
(c) all Investments (and all agreements and commitments to make
Investments) of the Holding Company and/or any of its Subsidiaries to be
owned or held (or in effect) immediately following the Closing (other than
Cash Equivalents);
(d) all Affiliates of the Holding Company and/or any of its
Subsidiaries and all transactions or series of transactions that involved
(or will involve) an aggregate value of $1,000,000 or more with Affiliates
of the Holding Company and/or any of its Subsidiaries which were
consummated during the 12-month period ended on the Closing Date or which
the Holding Company and/or any of its Subsidiaries is now obligated or now
intends to consummate at any time in the future; and
(e) each lease, other than Capital Leases, under which the Holding
Company and/or any of its Subsidiaries is lessee or sublessee and is or
shall be obligated to pay $25,000 or more during any period of twelve
consecutive months after the Closing Date, and, with respect to each such
lease, the name of the lessor, the lessee or sublessee, a general
description of the property leased, the annual Rental Obligations payable
thereunder and the term thereof.
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5.10. Title to Properties; Liens; Leases. The Holding Company and its
Subsidiaries have good and marketable title to all of their respective
properties and assets, including, without limitation, the properties and assets
reflected in the balance sheet, dated December 31, 1995, referred to on Exhibit
5.6 attached hereto, except properties and assets disposed of since such date in
the ordinary course of business, free of all Liens (other than the Liens
permitted under section 14.9). The Holding Company and its Subsidiaries enjoy
peaceful and undisturbed possession under all material leases under which they
operate, and all of such leases are valid, subsisting and in full force and
effect. None of such leases contains any unusual or burdensome provision, which,
in either case, has resulted in, or could reasonably be expected to result in, a
Material Adverse Change.
5.11. Litigation, etc. Except as set forth on Exhibit 5.11(a), there is no
action, proceeding or investigation pending or, to the knowledge of either
Company, threatened (or any basis therefor known to either Company) which
questions the validity of any of the Operative Documents or any action taken or
to be taken pursuant thereto or which has resulted in, or could reasonably be
expected to result in, a Material Adverse Change. There is no outstanding
judgment, decree or order which has resulted in, or could reasonably be expected
to result in, a Material Adverse Change. Exhibit 5.11(b) attached hereto is a
complete and correct list of all actions and proceedings pending against the
Holding Company and any of its Subsidiaries.
5.12. Valid and Binding Obligations; Compliance with Other Instruments,
Borrowing Restrictions, etc.
(a) This Agreement has been duly authorized, executed and delivered by
each Company and constitutes the valid and legally binding obligation of
each Company enforceable against such Company in accordance with its terms.
Each of the other Operative Documents to which either Company and/or any of
their respective Subsidiaries is a party has been duly authorized by such
Person and, when executed and delivered, will constitute the valid and
legally binding obligation of such Person, enforceable against it in
accordance with its terms.
(b) Neither of the Companies nor any of their respective Subsidiaries
is in violation of or in default under any term of its Organizational
Documents, or of any agreement, document, instrument, judgment, decree,
order, law, statute, rule or regulation applicable to it or any of its
properties and assets, in any way which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change. Without
limiting the generality of the foregoing, the Holding Company and each of
its Subsidiaries is in compliance with (and neither it nor any of its
predecessors in interest has received any notice to the contrary) and there
is no reasonable possibility of any liability of or any judgment, decree or
order binding upon or applicable to the Holding Company and/or any of its
Subsidiaries or any of their respective properties and assets under or on
account of any Environmental Laws, except where the same has not
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resulted in, and could not reasonably be expected to result in, a Material
Adverse Change.
(c) The execution, delivery and performance of and the consummation of
the transactions contemplated by the Operative Documents will not violate
or constitute a default under, or permit any Person to accelerate or to
require the prepayment of any Indebtedness of the Holding Company or any of
its Subsidiaries or to terminate any material lease or agreement of the
Holding Company or any of its Subsidiaries pursuant to, or result in the
creation of any Lien upon any of the properties or assets of the Holding
Company or any of its Subsidiaries pursuant to, any term of its
Organizational Documents or of any agreement, document, instrument,
judgment, decree, order, law, statute, rule or regulation applicable to any
of them or any of their respective properties and assets.
(d) Neither the Holding Company nor any of its Subsidiaries is a party
to or bound by or subject to any agreement, document, instrument, judgment,
decree, order, law, statute, rule or regulation (other than the Operative
Documents and the Bank Credit Agreement and laws, statutes, rules or
regulations affecting creditors or businesses generally) (i) which
restricts its right or ability to incur Indebtedness, to issue securities
or to consummate the transactions contemplated hereby; (ii) under the terms
of or pursuant to which its obligation to pay all amounts due from it
and/or to perform all obligations imposed on it and/or to comply with the
terms applicable to it under any of the Operative Documents is in any way
restricted; (iii) which restricts its right or ability to make any
distributions to its stockholders or in respect of any of its Shares, to
mortgage or dispose of its properties, to consummate any merger,
consolidation or acquisition, to make Investments or Capital Expenditures,
to enter into and perform leases, to pay executive compensation and/or to
conduct its business as now conducted and now proposed to be conducted, or
(iv) which has resulted in, or could reasonably be expected to result in, a
Material Adverse Change.
5.13. ERISA.
(a) Each Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for
such instances of noncompliance which have not resulted in, and could not
reasonably be expected to result in, a Material Adverse Change. Neither
Company nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of ERISA), and
no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by
either Company or any ERISA Affiliate, or in the imposition of any Lien on
<PAGE>
any of the rights, properties or assets of either Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not individually or in
the aggregate result in a Material Adverse Change.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of
such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent
actuarial valuation report, did not exceed the aggregate current value of
the assets of such Plan allocable to such benefit liabilities. The term
"benefit liabilities" has the meaning specified in section 4001 of ERISA
and the terms "current value" and "present value" have the meaning
specified in section 3 of ERISA.
(c) The Companies and the ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate could result in a
Material Adverse Change. The Companies and the ERISA Affiliates have made
all required contributions to Multiemployer Plans. Neither Company nor any
ERISA Affiliate has incurred, nor would reasonably expect to incur, any
Withdrawal Liability upon a complete or partial withdrawal from any
Multiemployer Plan that individually or in the aggregate could result in a
Material Adverse Change. To the best of the Companies' knowledge, no
Multiemployer Plan is, or is reasonably expected to be, insolvent, in
reorganization or terminated within the meaning of Title IV of ERISA.
(d) Neither the Holding Company nor any of its Subsidiaries has any
material post retirement benefit obligations (determined in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B
of the Code).
(e) The consummation of the transactions contemplated by the Operative
Documents will not involve any transaction that is subject to the
prohibitions of section 406(a) of ERISA or in connection with which a tax
could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation by the Companies in the first sentence of this section
5.13(e) is made in reliance upon and subject to the accuracy of your
representation in section 26 as to the sources of the funds used to pay the
purchase price of the Securities to be purchased by you.
5.14. Consents, etc. No consent, approval or authorization of, or
declaration or filing with, or other action by, any Person (including, without
limitation, any creditor of or lender to the Holding Company or any of its
Subsidiaries and any governmental (13)
<PAGE>
authority) is required as a condition precedent to the valid execution, delivery
and performance of and the consummation of the transactions contemplated by the
Operative Documents.
5.15. Proprietary Rights; Licenses. Except as disclosed on Exhibit 5.15
attached hereto, the Holding Company and its Subsidiaries have all Proprietary
Rights and Licenses as are adequate for the conduct of their respective
businesses as now conducted and now proposed to be conducted, without any known
conflict with the rights of others. Each such Proprietary Right and License is
in full force and effect, all material obligations with respect thereto have
been fulfilled and performed and, to the knowledge of the Companies, there is no
infringement thereon by any other Person. No default in the performance or
observance by the Holding Company and/or any of its Subsidiaries (or, to the
knowledge of the Companies, any of their respective predecessors in interest) of
its obligations thereunder has occurred which permits, or after notice of lapse
of time or both would permit, the revocation or termination of any material
Proprietary Right or License or which has resulted in, or could reasonably be
expected to result in, a Material Adverse Change.
5.16. Offer of Securities; Investment Bankers. Neither Company nor any of
their respective Subsidiaries nor any Person acting on their behalf (a) has
directly or indirectly offered the Securities or any part thereof or any similar
securities for issue or sale to, or solicited any offer to buy any of the same
from, anyone other than you and the Other Purchasers and not more than 65 other
institutional investors, (b) has taken or will take any action which would bring
the issuance and sale of the Securities within the provisions of Section 5 of
the Securities Act or the registration or qualification provisions of any
applicable blue sky or other securities laws, (c) has dealt with any broker,
finder, commission agent or other similar Person in connection with the sale of
the Securities and the other transactions contemplated by the Operative
Documents, other than Fleet National Bank, or (d) is under any obligation to pay
any broker's fee, finder's fee or commission in connection with such
transactions, other than a fee to Fleet National Bank, which fee is the
obligation solely of the Holding Company.
5.17. Government Regulation. Neither the Holding Company nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Investment Company Act of 1940 or the
Interstate Commerce Act, each as amended.
5.18. Labor Relations; Suppliers, Distributors and Customers. No dispute
involving employees of the Holding Company or any of its Subsidiaries or the
relationship of the Holding Company or any of its Subsidiaries with its
employees has resulted in, or could reasonably be expected to result in, any
Material Adverse Change. The relationships with the suppliers to and
distributors for and customers of the Holding Company and its Subsidiaries are
satisfactory commercial working relationships and, during the 12-month period
ended on the Closing Date, no such supplier, distributor or customer has
<PAGE>
cancelled or otherwise terminated its relationship with or decreased its
services, supplies or materials to or its usage or purchase of the services or
products of the Holding Company or any of its Subsidiaries in a manner which has
resulted in, or could reasonably be expected to result in, a Material Adverse
Change. The Holding Company is not aware of any intention of any such supplier,
distributor or customer to take any such action which could reasonably be
expected to result in a Material Adverse Change.
5.19. Voting Provisions. Except as set forth on Exhibit 5.19 attached
hereto, neither the Organizational Documents of the Holding Company nor any
other agreement, document or instrument binding on or applicable to the Holding
Company or its stockholders contains any provision requiring a higher voting
requirement with respect to action taken (and/or to be taken) by the
stockholders or directors of the Holding Company than that which would apply in
the absence of such provision.
5.20. Disclosure. Neither this Agreement nor any of the other Operative
Documents nor any other document, certificate or written statement furnished to
you by or on behalf of either Company or any of their respective Subsidiaries in
connection with the transactions contemplated by the Operative Documents
(including, without limitation, the Disclosure Document), contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading in the
light of the circumstances under which such statements were made, it being
understood that, except as set forth in section 5.6, no representation or
warranty is made with respect to any projections or other prospective financial
information. There is no fact known to either Company (other than information
concerning general economic conditions known to the public generally) which has
resulted in, or could reasonably be expected to result in, a Material Adverse
Change which has not been set forth in this Agreement, the other Operative
Documents and the other documents, certificates and written statements referred
to above in this section 5.20.
6. Use of Proceeds.
(a) The proceeds of the sale of the Securities received by the
Companies at the Closing will be used on the Closing Date to make the
payments to the Persons and for the purposes specified on Exhibit 6
attached hereto and any remaining balance of such proceeds will be used for
general corporate purposes of the Operating Company and its Subsidiaries.
(b) The Companies do not own, and will not, and will not permit any of
their respective Subsidiaries to, directly or indirectly, use any part of
the proceeds of the sale of the Securities for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation G (12 CFR Part
207) of the Board of Governors of the Federal Reserve System (herein called
a "margin security") or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any margin
<PAGE>
security or for any other purpose which might constitute the transactions
contemplated by the Operative Documents a "purpose credit" within the
meaning of said Regulation G or cause this Agreement or any of the other
Operative Documents to violate Regulation G or any other regulation of the
Board of Governors of the Federal Reserve System, or the Exchange Act or
any other applicable law, statute, regulation, rule, order or restriction.
7. Financial Statements and Information. The Companies will furnish to you
in duplicate, so long as you shall be obligated to purchase Securities hereunder
or shall hold any of the Notes or Warrants, and to each other institutional
holder from time to time of any of the Notes or Warrants:
(a) as soon as available and in any event within 45 days after the end
of each quarterly accounting period in each fiscal year of the Holding
Company (other than the last quarterly accounting period of each such
fiscal year), the consolidated and, if otherwise prepared, consolidating
balance sheets of the Holding Company and its Subsidiaries as at the end of
such period and the related consolidated and, if otherwise prepared,
consolidating statements of income, retained earnings and cash flows for
such period and for the portion of such fiscal year ended on the last day
of such period, in each case setting forth in comparative form the
corresponding figures for the same period and portion of the prior fiscal
year and the corresponding figures from the budgets for such period and for
the fiscal year which includes such period;
(b) as soon as available and in any event within 90 days after the end
of each fiscal year of the Holding Company, the consolidated and
consolidating balance sheets of the Holding Company and its Subsidiaries as
at the end of such year and the related consolidated and consolidating
statements of income and retained earnings and a consolidated and, if
otherwise prepared, consolidating statement of cash flows for such year, in
each case setting forth in comparative form the corresponding figures for
the prior fiscal year and the corresponding figures from the budget for
such fiscal year, all in reasonable detail and accompanied by an opinion
acceptable to the Required Holders of the Notes and of the Warrants on such
consolidated financial statements of the Holding Company) and its
Subsidiaries of Arthur Andersen LLP (or other accountants of recognized
national standing selected by the Holding Company) which report shall (i)
state that the audit of such accountants in connection with such
consolidated financial statements has been conducted in accordance with
generally accepted auditing standards and that such accountants believe
that such audit provides a reasonable basis for their opinion, (ii) contain
the other statements required from time to time by the American Institute
of Certified Public Accountants, (iii) include the opinion of such
accountants that such consolidated financial statements present fairly in
all material respects the consolidated financial position of the Holding
Company and its Subsidiaries as at the end of such fiscal year and the
<PAGE>
consolidated results of operations and cash flows for such fiscal year, in
conformity with GAAP, and (iv) be accompanied by a separate letter from
such accountants which shall state (A) that such accountants are familiar
with the terms of this Agreement, the Other Securities Purchase Agreements
and the Securities and provide negative assurance relative to compliance
with the applicable covenants of this Agreement, the Other Securities
Purchase Agreements and the Securities as they relate to accounting matters
and (B) whether or not their examination has disclosed the existence,
during or at the end of the fiscal year covered by such financial
statements and/or the date of such letter, of any Default or Event of
Default and, if their examination has disclosed such a condition or event,
specifying in reasonable detail the nature and period of existence thereof,
provided that in issuing such certificate such accountants shall not be
required to go beyond normal accounting procedures conducted in connection
with issuing their report referred to above;
(c) together with each delivery of financial statements pursuant to
sections 7(a) and 7(b), an Officers' Certificate which shall:
(i) certify that such financial statements have been prepared in
accordance with GAAP (subject, in the case of any unaudited financial
statements, to normal year-end and audit adjustments and the omission
of footnotes) applied on a consistent basis throughout the periods
covered thereby and present fairly in all material respects the
consolidated financial position and the consolidated results of
operations and cash flows of the Holding Company and its Subsidiaries
as at the end of and for the periods covered thereby in conformity
with GAAP;
(ii) state that, after due inquiry, the signers do not have
knowledge of the existence, during the fiscal period covered by such
financial statements or as at the date of such Officers' Certificate,
of (A) any "reportable condition" (as defined in Statement on Auditing
Standards No. 60 issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants) in the internal
control structure of the Holding Company or any of its Subsidiaries or
(B) any Default or Event of Default, or, if such is not the case,
specifying in reasonable detail the nature and period of existence
thereof and what action the Holding Company or the applicable
Subsidiary has taken, is taking and proposes to take with respect
thereto;
(iii) (A) show in reasonable detail all computations required to
demonstrate compliance, during and at the end of the fiscal period
covered by such financial statements, with the provisions of sections
14.5, 14.6, 14.7, 14.9, 14.11 and 14.15 (including, without
limitation, the computation of Consolidated EBITDA for such period)
and (B) in the case of the Officer's Certificate accompanying the
<PAGE>
financial statements required under section 7(b), set forth in
reasonable detail the fair market values of any significant properties
and assets disposed of during the fiscal year covered by such
financial statements;
(iv) include in reasonable detail management's discussion and
analysis of the results of operations and the financial condition of
Holding Company and its Subsidiaries as at the end of and for the
fiscal period covered by such financial statements, including a
discussion of any significant variation from the budgets for such
period delivered pursuant to section 7(h); and
(v) if there shall exist any Subsidiary of the Holding Company as
of the date of such Officers' Certificate which did not exist as of
the date of the last Officers' Certificate delivered pursuant to this
section 7(c), specify with respect to each such Subsidiary the
information called for by Exhibit 7(c)(v), contain a brief description
of the nature of each such Subsidiary's business and certify that each
such new Subsidiary is a party to a Note Guarantee;
(d) as promptly as practicable (but in any event not later than five
Business Days) after receipt thereof, copies of all final reports or
written comments (including, without limitation, audit reports, management
letters and any other reports with respect to the internal control
structure of the Holding Company or any of its Subsidiaries) submitted by
independent accountants;
(e) as promptly as practicable (but in any event not later than five
Business Days) after the same are available, copies of (i) all notices,
proxy statements, financial statements, reports and documents as the
Holding Company shall send or make available generally to its stockholders
or as any Subsidiary of the Holding Company shall send or make available
generally to its stockholders other than the Holding Company and (ii) all
periodic and special reports, documents and registration statements (other
than on Form S-8) which the Holding Company or any Subsidiary of the
Holding Company furnishes or files, or any officer or director or
stockholder of the Holding Company or any of its Subsidiaries furnishes or
files with respect to the Holding Company or any of its Subsidiaries with
the Commission (or any analogous foreign governmental authority) or any
securities exchange if furnished or available to the Holding Company or any
of its Subsidiaries;
(f) as promptly as practicable (but in any event not later than five
Business Days) after the Chief Executive Officer or Chief Financial Officer
of the Holding Company becomes aware of the occurrence of any of the
following conditions or events, an Officers' Certificate specifying in
reasonable detail the nature and period of existence thereof, what action
the Holding Company or any of its Subsidiaries has taken, is taking and
proposes to take with respect thereto:
<PAGE>
(i) with respect to any Plan, any reportable event, as defined in section
4043(b) of ERISA and the regulations thereunder, for which notice thereof
has not been waived pursuant to such regulations as in effect on the date
hereof; (ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by either Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has been
taken by the PBGC with respect to such Multiemployer Plan; or (iii) any
event, transaction or condition that could result in the incurrence of any
liability by either Company or any ERISA Affiliate pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on any of the
rights, properties or assets of either Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing, has resulted in, or could reasonably be
expected to result in, a Material Adverse Change;
(g) as promptly as practicable (but in any event not later than two
Business Days) after the occurrence of any Default or Event of Default, or
of any condition or event which has resulted in, or could reasonably be
expected to result in, a Material Adverse Change, an Officers' Certificate
specifying in reasonable detail the nature and period of existence thereof,
what action the Holding Company or any of its Subsidiaries has taken, is
taking and proposes to take with respect thereto and the date, if any, on
which it is estimated the same will be remedied;
(h) as promptly as practicable (but in any event not later than 30
days) after the end of each fiscal year of the Holding Company, an annual
budget prepared on a quarterly basis for the Holding Company and its
Subsidiaries for the succeeding fiscal year (displaying anticipated balance
sheets and statements of income, retained earnings and cash flows) and,
promptly upon preparation thereof, any revisions of such annual budget;
(i) such other material information and notices relating to the
Holding Company and/or any of its Subsidiaries as shall be furnished to or
received from the Sellers or any bank, financial institution or other
Person to which the Holding Company or any of its Subsidiaries is indebted
for borrowed money (other than that relating solely to collateral for such
Indebtedness), including, without limitation, any notice of default or
event of default under the Seller Notes and/or the Bank Credit Agreement,
such information and notices to be furnished to the holders of the
Securities at the same time as it is furnished to, or immediately after it
is received from, any such bank, financial institution or other Person; and
<PAGE>
(j) such other information as from time to time may reasonably be
requested.
8. Inspection. The Holding Company will permit any Person designated by any
institutional holder of any of the Notes or Warrants on reasonable notice and at
such holder's expense (unless a Default or Event of Default shall have occurred
and be continuing, in which case, at the Companies' expense), to visit and
inspect any of the properties of the Holding Company and its Subsidiaries, to
examine its and their books and records (and to make copies thereof and take
extracts therefrom) and to discuss its and their affairs, finances and accounts
with and to be advised as to the same by, its and their officers and outside
counsel (and if a Default or Event of Default shall have occurred and be
continuing, its and their independent accountants, each of whom the Companies
hereby direct and authorize to engage in such discussions under such
circumstances), all at such reasonable times and intervals as such holder may
desire.
9. Prepayment of Notes.
9.1. Required Annual Prepayment Without Premium of Notes. In addition to
paying the entire outstanding principal amount of and the interest due on the
Notes on the maturity date thereof, on each June 30, commencing June 30, 2003,
until the Notes have been paid in full, the Operating Company will prepay
without premium $7,500,000 principal amount of the Notes (or such lesser
principal amount thereof as shall then be outstanding). No partial prepayment of
the Notes shall alter the obligation of the Operating Company to make the
required prepayments provided for in this section 9.1.
9.2. Optional Prepayment With Premium of Notes. At any time and from time
to time, the Operating Company may, at its option, upon notice as set forth in
section 9.5, prepay all or any part (in an integral multiple of $500,000 and a
minimum of $1,000,000 or such lesser principal amount thereof as shall then be
outstanding) of the Notes upon the concurrent payment of an amount equal to the
Make Whole Amount. Any partial prepayment of Notes pursuant to this section 9.2
shall be applied to the payment of installments of principal of the Notes in
inverse order of maturity.
9.3. Optional Prepayment With Premium of the Notes with the Proceeds of
Certain Public Offerings. Concurrent with (or immediately following) a closing
of a sale by the Holding Company to the public of its Shares pursuant to an
effective registration statement filed by the Holding Company with the
Commission under the Securities Act resulting in net proceeds to the Holding
Company from such sale of not less than $25,000,000, the Operating Company may,
at its option, upon notice as set forth in section 9.5, prepay all (subject to
the limitation set forth in the second proviso to this sentence) or any part (in
an integral multiple of $500,000 and a minimum of $1,000,000 or such lesser
principal amount thereof as shall then be outstanding) of the Notes upon the
concurrent payment of an amount equal to the Special Prepayment Premium,
<PAGE>
provided that such prepayment shall be made only with available net proceeds of
such sale of Shares to the public, and provided, further, that in no event shall
the aggregate principal amount of Notes prepaid by the Operating Company from
time to time pursuant to this section 9.3 exceed $10,000,000. Each notice
pursuant to section 9.5 of a prepayment under this section 9.3 shall be
accompanied by an Officers' Certificate certifying and demonstrating that this
section 9.3 is being complied with in connection with such prepayment and
specifying the source or sources of funds to be used for such prepayment. Any
partial prepayment of Notes pursuant to this section 9.3 shall be applied to the
payment of installments of principal of the Notes in inverse order of maturity.
9.4. Allocation of Partial Prepayments of Notes. In the case of each
partial prepayment of the Notes under this section 9, the principal amount to be
prepaid shall be allocated among all of the Notes at the time outstanding
(excluding any Notes at the time owned by either Company or any Affiliate of
either Company) in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof, with adjustments, to the extent practicable,
to compensate for any prior prepayments not made exactly in such proportion.
9.5. Notice of Optional Prepayments of Notes. In the case of each
prepayment under sections 9.2 and 9.3, the Operating Company shall give written
notice thereof to each holder of any Notes not less than 30 nor more than 60
days prior to the date fixed for such prepayment. Each such notice shall set
forth: (a) the date fixed for prepayment (which, in the case of a prepayment
under section 9.3 may be a good faith approximation of such date); (b) the
aggregate principal amount of Notes to be prepaid on such date; and (c) the
aggregate principal amount of Notes held by such holder to be prepaid on such
date and the amount of accrued interest and an estimation of the Applicable
Premium to be paid to such holder on such date (together with the calculation of
such estimated Applicable Premium, which calculation shall be satisfactory to
each holder of the Notes to be prepaid).
9.6. Maturity; Accrued Interest; Surrender, etc. of Notes. In the case of
each prepayment of all or any part of any Note, the principal amount to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the premium, if any, due thereon. Any Note prepaid in full shall be
surrendered to the Operating Company at the Operating Company's principal place
of business promptly following prepayment and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal amount of
any Note.
9.7. Purchase of Notes. The Companies will not, and will not permit any
Affiliate of either Company to, directly or indirectly, purchase or otherwise
acquire, or offer to purchase or otherwise acquire, any outstanding Notes except
by way of payment or prepayment in accordance with the provisions of the Notes
and this Agreement.
<PAGE>
9.8. Payment on Non-Business Days. If any amount hereunder or under the
Notes shall become due on a day which is not a Business Day, such payment shall
be due on the next succeeding Business Day.
9.9. Application of Notes in Satisfaction of Exercise Price of Warrants. In
the event that any holder of any Note shall apply all or any portion of the
principal amount of such Note in satisfaction (in whole or in part) of the
payment of the Exercise Price (as defined in the Warrants), any partial
application of the principal amount of any such Note shall be applied to the
payment of installments of principal due thereunder in the inverse order of
maturity.
10. Subordination of Notes.
10.1. Certain Definitions. As used in this section 10, the following terms
have the following respective meanings:
"Accrued Bankruptcy Interest" shall mean, with respect to any
Indebtedness, all interest accruing thereon after the filing of a petition
by or against either Company under the Bankruptcy Code, in accordance with
and at the rate (including any rate applicable upon any default or event of
default, to the extent lawful) specified in the documents evidencing or
governing such Indebtedness, whether or not the claim for such interest is
allowed as a claim after such filing in any proceeding under the Bankruptcy
Code.
"Bankruptcy Code" shall mean 11 U.S.C. 101 et seq., as from time to
time hereafter amended, and any successor or similar federal statute.
"Material Default" shall mean (a) any default in the payment when due
of fees or expenses that constitute Superior Indebtedness and/or (b) any
default under section 6.01(f) of the Bank Credit Agreement and any other
Event of Default (other than an Event of Default under section 6.01(a))
under the Bank Credit Agreement, or a default or Event of Default, as
applicable, under the analogous provisions of any Refinancing Agreement.
"Obligors" shall mean each of the Companies and each Person who has
executed and delivered a Note Guarantee.
"Permissible Securities" shall mean securities the payment of which is
subordinated, at least to the extent provided in this section 10 with
respect to the Subordinated Indebtedness, to the payment of all Superior
Indebtedness at the time outstanding and all securities issued in exchange
therefor.
"Refinancing Agreement" shall mean the loan agreements, documents and
instruments, if any, entered into by the Companies in compliance with this
Agreement, pursuant to which Indebtedness is incurred by the Companies
which
<PAGE>
refinances or refunds all or any portion of the Indebtedness under the Bank
Credit Documents, provided that all of such refinancing or refunding
Indebtedness is permitted under section 14.5(a)(iv) and provided, further,
that the terms of such loan agreements, documents and instruments, taken as
a whole, are no more restrictive upon the Obligors and no more adverse to
the interests of the holders of the Securities than those of the Bank
Credit Documents.
"Subordinated Indebtedness" shall mean the principal amount of the
Indebtedness evidenced by the Notes, together with any interest, premium,
if any, fee, expense and/or other amount due thereon or payable with
respect thereto, including any such amounts payable by any guarantor of the
Notes.
"Superior Indebtedness" shall mean the principal amount of all Funded
Debt and Current Debt (including the face amount of letters of credit) of
the Operating Company under the Bank Credit Agreement, the other Bank
Credit Documents or under any Refinancing Agreement, together with any
interest (including Accrued Bankruptcy Interest), premium, if any, fee,
expense, other reimbursement obligations in respect of letters of credit
and/or other amount due thereon or payable with respect thereto, including
any such amounts payable by any guarantor of any Superior Indebtedness,
provided that the aggregate principal amount (and face amount of letters of
credit) of all Superior Indebtedness (a) under the term loan facilities
established by the Bank Credit Agreement (or any Refinancing Agreement)
shall at no time exceed (i) $84,000,000 minus (ii) the sum of all
repayments of the principal of such Indebtedness and (b) under the
revolving credit facility established by the Bank Credit Agreement (or any
Refinancing Agreement) shall at no time exceed (i) $21,000,000 minus
(ii) the sum of all repayments of the principal of such Indebtedness (other
than any repayment that may be thereafter reborrowed under the revolving
credit facility) and minus (iii) the sum of all permanent reductions in the
amount of the borrowing availability under such revolving credit facility.
10.2. Subordinated Indebtedness Subordinated to Superior Indebtedness; No
Amendments.
(a) Each Obligor for itself and its successors and assigns covenants
and agrees, and each holder of any Subordinated Indebtedness, by its
acceptance thereof, shall be deemed to have agreed, notwithstanding
anything to the contrary in this Agreement, the Other Securities Purchase
Agreements, the Notes, or any of the other Operative Documents, that the
payment of the Subordinated Indebtedness shall be subordinated to the
extent and in the manner set forth in this section 10, to the prior payment
in full (in cash, Cash Equivalents of the kind described in clause (a) of
the definition of such term, other forms reasonably satisfactory to the
holder or holders of at least 75% in aggregate principal amount of the
Superior Indebtedness, or a combination of the foregoing) of all Superior
<PAGE>
Indebtedness, and that each holder of Superior Indebtedness, whether now
outstanding or hereafter created, incurred, assumed or guaranteed, shall be
deemed to have acquired Superior Indebtedness in reliance upon the
provisions contained in this section 10. No present or future holder of
Superior Indebtedness shall be prejudiced in the right to enforce the
subordination of the Subordinated Indebtedness effected pursuant to this
section 10 by any act or failure to act on the part of any Obligor.
(b) Neither this section 10 nor any of the terms of the Subordinated
Indebtedness relating to the timing or amount of any payment (or
prepayment) of the principal of or premium, if any, or interest on the
Subordinated Indebtedness, or any other amount (including any fee or
expense) due thereon, shall be amended without the written consent of the
holder or holders of at least 66-2/3% in aggregate principal amount of the
Superior Indebtedness at the time outstanding.
(c) Unless and until the Superior Indebtedness has been paid in full
(in cash, Cash Equivalents of the kind described in clause (a) of the
definition of such term, other forms reasonably satisfactory to the holder
or holders of at least 75% in aggregate principal amount of the Superior
Indebtedness, or a combination of the foregoing), the Obligors shall not
grant to the holders of the Subordinated Indebtedness any Lien in or on any
of the assets of the Obligors to secure the Subordinated Indebtedness,
without the written consent of the holder or holders of at least 75% in
aggregate principal amount of the Superior Indebtedness at the time
outstanding.
10.3. Dissolution, Liquidation, Reorganization, etc. Upon any payment or
distribution of the assets of either Company of any kind or character, whether
in cash, property or securities, to creditors upon any dissolution, winding-up,
total or partial liquidation, reorganization, composition, arrangement,
adjustment or readjustment of such Company or its securities, whether voluntary
or involuntary, or in bankruptcy, insolvency, reorganization, liquidation or
receivership proceedings, or upon a general assignment for the benefit of
creditors, or any other marshalling of the assets and liabilities of such
Company, or otherwise (hereinafter a "Liquidation Payment"), then and in any
such event:
(a) the holders of the Superior Indebtedness shall be entitled to
receive payment in full (in cash, Cash Equivalents of the kind described in
clause (a) of the definition of such term, other forms reasonably
satisfactory to the holder or holders of at least 75% in aggregate
principal amount of the Superior Indebtedness, or a combination of the
foregoing) (or to have such payment duly provided for in a manner
reasonably satisfactory to the holders of Superior Indebtedness) of all
Superior Indebtedness, before any Liquidation Payment, whether in cash,
property or securities (other than Permissible Securities), is made on
account of or applied to the Subordinated Indebtedness;
<PAGE>
(b) the Subordinated Indebtedness shall forthwith become due and
payable, and any Liquidation Payment, whether in cash, property or
securities (other than Permissible Securities), to which the holders of the
Subordinated Indebtedness would be entitled except for the provisions of
this section 10, shall be paid or delivered by any debtor, custodian,
liquidating trustee, agent or other Person making such Liquidation Payment,
directly to the holders of the Superior Indebtedness, or their
representative or representatives, ratably according to the aggregate
amounts remaining unpaid on account of such Superior Indebtedness, for
application to the payment thereof, to the extent necessary to pay all such
Superior Indebtedness in full after giving effect to any concurrent payment
or distribution, or provision therefor, to the holders of such Superior
Indebtedness; and
(c) each holder of the Subordinated Indebtedness at the time
outstanding hereby irrevocably authorizes and empowers each holder of the
Superior Indebtedness or such holder's representative to collect and
receive such holder's ratable share of any Liquidation Payment and to
receipt therefor, and, if any holder of Subordinated Indebtedness fails to
file a claim therefor at least seven (7) calendar days prior to the date
established by rule of law or order of court for such filing, to file and
prove (but not to vote) such claims therefor, provided that such holder of
Superior Indebtedness shall concurrently send written notice thereof to
each holder of Subordinated Indebtedness, together with a copy of the proof
of claim so filed.
Upon any payment or distribution of assets referred to in this section 10,
the holders of the Subordinated Indebtedness shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
bankruptcy, insolvency, reorganization, liquidation, receivership or other
proceeding is pending, or a certificate of the debtor, custodian, liquidating
trustee, agent or other Person making any such payment or distribution to such
holders, for the purpose of ascertaining the Persons entitled to participate
therein, the holders of the Superior Indebtedness, the then outstanding
principal amount of the Superior Indebtedness and any and all amounts payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this section 10.
10.4. No Payments With Respect to Subordinated Indebtedness in Certain
Circumstances.
(a) The Obligors will not, directly or indirectly, make or agree to
make, and neither the holder nor any assignee or successor holder of any
Subordinated Indebtedness will accept or receive any payment or
distribution (in cash, property or securities (other than Permissible
Securities) by set-off or otherwise), direct or indirect, of or on account
of all or any portion of any Subordinated Indebtedness if, at the time of
such payment or distribution or immediately after giving effect thereto all
of the following four conditions shall be satisfied:
<PAGE>
(i) a Material Default shall have occurred which (other than in
the case of a default under section 6.01(f) of the Bank Credit
Agreement) permits the holder or holders of any Superior Indebtedness
to immediately accelerate the maturity thereof;
(ii) the Operating Company and the holder or holders of
Subordinated Indebtedness shall have received written notice (given as
provided in this Agreement) (each a "Subordination Notice") of such
Material Default from the holder or holders of such Superior
Indebtedness, or their representative or representatives (which notice
shall state that it is a "Subordination Notice" and shall make
explicit reference to the provisions of this section 10.4);
(iii) such Material Default shall not have been cured by any
Obligor or waived in writing by the requisite holder or holders of the
Superior Indebtedness with respect to which such Material Default
shall have occurred; and
(iv) less than 150 days shall have elapsed after the date of
receipt by the Operating Company and the holders of the Subordinated
Indebtedness of such Subordination Notice (any period during which the
restrictions imposed by this Section 10.4(a) are in effect being
hereinafter referred to as a "Blockage Period");
provided, however, that, for the purpose of this section 10.4(a), (x) not
more than one Blockage Period shall be in effect during any period of 360
consecutive days, (y) Blockage Periods shall not be in effect on more than
three occasions, and (z) no facts or circumstances constituting a Material
Default on the date any Subordination Notice is given may be used or shall
be effective as a basis for any subsequent Subordination Notice.
(b) The restrictions imposed by section 10.4(a) shall cease to apply
and the Obligors may resume payments in respect of the Subordinated
Indebtedness (including any payments which shall not have been made on
account of the provisions of this section 10, but excluding any payments
which may have become due solely on account of any acceleration of the
maturity of the Subordinated Indebtedness) or any judgment with respect
thereto upon the earliest to occur of (i) the cure of the Material Default
by any Obligor, (ii) the written waiver thereof by the requisite holder or
holders of the Superior Indebtedness with respect to which such Material
Default shall have occurred, (iii) the expiration of the Blockage Period
and (iv) the termination of such
<PAGE>
Blockage Period by such requisite holder or holders of such Superior
Indebtedness.
(c) In the event any of (i) a default in the payment of any principal
or interest that constitutes a default in the payment of Superior
Indebtedness, which default continues unremedied and unwaived, (ii) the
failure of the Obligors to pay any Superior Indebtedness upon the maturity
thereof or (iii) an acceleration of the maturity of the principal of any
Superior Indebtedness in accordance with the terms thereof (which
acceleration has not been rescinded or annulled), such Superior
Indebtedness shall first be paid in full (in cash, Cash Equivalents of the
kind described in clause (a) of the definition of such term, other forms
reasonably satisfactory to the holder or holders of at least 75% in
aggregate principal amount of the Superior Indebtedness, or a combination
of the foregoing) (or provision for such payment shall be made in a manner
reasonably satisfactory to the holder or holders of such Superior
Indebtedness) before any payment or distribution (in cash, properties or
securities (other than Permissible Securities), by set-off or otherwise) is
made on account of or applied on the Subordinated Indebtedness.
(d) Nothing herein shall affect or impair the right of any holder of
any Notes to apply any amount payable in respect thereof to the payment of
any amount due upon the exercise of any Warrants at any time.
10.5. Payments and Distributions Received. If any payment or distribution
of any kind or character, whether in cash, property or securities (other than
Permissible Securities), shall be received by any holder of any of the
Subordinated Indebtedness in contravention of this section 10, such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered and transferred to, the holders of the Superior Indebtedness, or
their representative or representatives, ratably according to the aggregate
amount remaining unpaid on account of such Superior Indebtedness, for
application to the payment thereof, to the extent necessary to pay all such
Superior Indebtedness in full, after giving effect to any concurrent payment or
distribution, or provision therefor, to the holders of such Superior
Indebtedness, provided, that amounts so paid over shall be returned promptly to
the applicable holders of the Subordinated Indebtedness in the event the
Superior Indebtedness was otherwise paid in full. In the event of the failure of
any holder of any of the Subordinated Indebtedness to endorse or assign any such
payment or distribution, any holder of the Superior Indebtedness or such
holder's representative is hereby irrevocably authorized to endorse or assign
the same.
10.6. Subrogation. Subject to the payment in full of all Superior
Indebtedness, in case cash, property or securities otherwise payable or
deliverable to the holders of the Subordinated Indebtedness shall have been
applied pursuant to this section 10 to the payment of Superior Indebtedness,
then and in each such case, the holders of the Subordinated Indebtedness shall
be subrogated to the rights of each holder of Superior
<PAGE>
Indebtedness to receive any further payment or distribution in respect of or
applicable to the Superior Indebtedness; and, for the purposes of such
subrogation, no payment or distribution to the holders of Superior Indebtedness
of any cash, property or securities to which any holder of Subordinated
Indebtedness would be entitled except for the provisions of this section 10
shall, and no payment over pursuant to the provisions of this section 10 to the
holders of Superior Indebtedness by the holders of the Subordinated Indebtedness
shall as between the Obligors, their creditors (other than the holders of
Superior Indebtedness) and the holders of Subordinated Indebtedness, be deemed
to be a payment by the Obligors to or on account of Superior Indebtedness.
10.7. Notice. In the event that any Subordinated Indebtedness shall be
transferred and/or shall become due and payable before the expressed maturity
thereof as the result of the occurrence of a default, the Operating Company will
give immediate written notice in writing of such happening to each holder of
Superior Indebtedness (together, in the case of any such transfer, with the
address of the transferee for purposes of this section 10, it being agreed that
the holders of Superior Indebtedness shall not be obligated to give to any such
transferee any notice required hereunder to be given by them to the holders of
Subordinated Indebtedness unless the holders of Superior Indebtedness shall have
received such notice (and the address of such transferee) from the Operating
Company (or, in the case of any such transfer, a notice from the transferee
containing substantially the same information)).
10.8. Subordination Not Affected, etc. The terms of this section 10, the
subordination effected hereby and the rights created hereby of the holders of
the Superior Indebtedness shall not be affected by (a) any amendment,
modification or waiver of or supplement to any Superior Indebtedness or any
agreement, document or instrument relating thereto, provided that such
amendment, modification, waiver or supplement is not in violation of this
Agreement, (b) any exercise or non-exercise of any right, power or remedy under
or in respect of any Superior Indebtedness (or any security or collateral
therefor) or pursuant to any agreement, document or instrument relating thereto
or (c) any consent, release, indulgence, delay or other action, inaction or
omission, in respect of any Superior Indebtedness (or any security or collateral
therefor) or pursuant to any agreement, document or instrument relating thereto,
whether or not any holder of any Subordinated Indebtedness shall have had notice
or knowledge of any of the foregoing.
10.9. Obligations Unimpaired. The provisions of this section 10 are solely
for the purpose of defining the relative rights of the holders of Superior
Indebtedness on the one hand and the holders of Subordinated Indebtedness on the
other hand, and (a) subject to the rights, if any, under this section 10 of the
holders of Superior Indebtedness, nothing in this section 10 shall (i) impair as
among the Obligors and the holder of any Subordinated Indebtedness the
obligation of the Obligors, which is unconditional and absolute, to pay to the
holder thereof all amounts due thereon in accordance with the terms thereof or
(ii) except as otherwise provided in section 10.11, prevent the holder of any
<PAGE>
Subordinated Indebtedness from exercising all remedies available to such holder,
whether arising under the Operative Documents, applicable law or otherwise, and
(b) no Person is entitled to any third party beneficiary rights or other similar
rights on account of or under this section 10 other than the holders of the
Superior Indebtedness. The failure to make any payment due in respect of the
Subordinated Indebtedness or to comply with any of the terms and conditions of
any of the agreements, documents and instruments related to the Subordinated
Indebtedness by reason of any provision of this section 10 shall not be
construed as preventing the occurrence of any Default or Event of Default with
respect to the Subordinated Indebtedness.
10.10. Holders of Subordinated Indebtedness Entitled to Assume Payments Not
Prohibited in Absence of Notice. No holder of Subordinated Indebtedness shall at
any time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to it, unless and until such holder shall
have received written notice thereof (given as provided in this Agreement) from
the Operating Company or from any holder of Superior Indebtedness or any agent
or representative thereof. Prior to the receipt of any such notice, each holder
of Subordinated Indebtedness shall be entitled to assume conclusively that no
such facts exist, without, however, limiting any right of any holder of Superior
Indebtedness under this section 10 to recover from any holder of the
Subordinated Indebtedness any payment made in contravention of this section 10.
Each payment on the Subordinated Indebtedness by the Operating Company shall be
deemed to constitute a representation of the Operating Company that such payment
is permitted to be paid by the Operating Company under this section 10.
Each holder of Subordinated Indebtedness shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself to be a
holder of Superior Indebtedness or to be the agent or representative of any
holder of Superior Indebtedness to establish that such notice has been given by
any such Person. In the event that such holder of Subordinated Indebtedness
determines in good faith that further evidence is required with respect to the
right of any such Person to participate in any payment or distribution pursuant
to this section 10, such holder of Subordinated Indebtedness may request such
Person to furnish evidence to the reasonable satisfaction of such holder of
Subordinated Indebtedness as to any fact pertinent to the rights of such Person
under this section 1, and if such evidence is not furnished, such holder of
Subordinated Indebtedness may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
10.11. Limitation on Right of Action. Notwithstanding anything to the
contrary contained in this Agreement, the Notes or any of the other Operative
Documents, the holders of the Subordinated Indebtedness agree that, if any
Superior Indebtedness is outstanding, the holders of the Subordinated
Indebtedness will not exercise any right or remedy available to them on account
of any Default or Event of Default (other than the right to accelerate the
Subordinated Indebtedness in accordance with the terms thereof and the right to
exercise any of the Warrants) at any time at which payments may not be made in
<PAGE>
respect of the Subordinated Indebtedness under section 10.4(a) unless and until
the first to occur of (a) the holder or holders of any Superior Indebtedness
shall have commenced appropriate proceedings (judicial or nonjudicial) for the
enforcement of their rights and remedies, including, without limitation, (i) any
action by any holder of any Superior Indebtedness against or with respect to any
Obligor to seek collection, or enforce collection, of any Superior Indebtedness,
or (ii) any exercise by any holder of any Superior Indebtedness of any right to
foreclose on any security interest or to sell any collateral or to exercise any
set-off or similar right, (b) a proceeding under the Bankruptcy Code or any
similar state statute or law (including any law providing for the appointment of
a receiver or other similar official) shall have been commenced by or against
either Company or any of their respective Subsidiaries (other than by the
holders of the Subordinated Indebtedness), or (c) an Event of Default shall have
occurred and shall have continued uncured and unwaived for a period of 150 days,
provided that, in any event, the holders of the Subordinated Indebtedness may
commence any legal proceeding or take any other appropriate action if and to the
extent necessary to prevent the imminent expiration of any applicable period of
limitations or the loss of any right under any applicable statute of limitations
or other law.
11. Registration, etc.
11.1. Shelf Registration.
(a) As soon as practicable following the Closing Date, the Holding
Company shall prepare and file with the Commission a registration statement
on Form S-3 with respect to all of the Registrable Shares and shall use its
best efforts to cause such registration statement to become effective as
soon as practicable, but in any event not later than the one year
anniversary of the Closing Date, so as to permit the sale to the public of
the Registrable Shares through such methods and means as shall be specified
in such registration statement at the direction of the holders of the
Registrable Shares. The Holding Company shall use its best efforts to keep
such registration statement current and effective with respect to all of
the Registrable Shares by such action as may be necessary or appropriate,
including, without limitation, the filing of post-effective amendments and
supplements, until the earlier of (i) the second anniversary of the
effectiveness of the registration statement and (ii) the date on which all
of the Registrable Shares have been sold to the public pursuant to an
effective registration statement or in accordance with Rule 144 (or any
similar provision then in force) under the Securities Act. In addition, if
at any time and from time to time prior to July 12, 2006, a registration
statement on Form S-3 is not effective with respect to the Registrable
Shares of any holder thereof, upon the request of such holder of
Registrable Shares, the Holding Company shall prepare and file with the
Commission a registration statement on Form S-3 with respect to such
holder's Registrable Shares (and the Registrable Shares of any other holder
thereof who shall notify the Holding Company, within 10 days of receiving
the notice referred to below in this Section 11.1(a), that it requests that
<PAGE>
its Registrable Shares be included in such registration statement) and
shall use its best efforts to cause such registration statement to become
effective as soon as practicable following each such request of any holder
of Registrable Shares, so as to permit the sale to the public of such
Registrable Shares through such methods and means as shall be specified in
such registration statement at the direction of the holder or holders of
75% of the Registrable Shares to be included in such registration. The
Holding Company shall use its best efforts to keep such registration
statement current and effective with respect to all of the Registrable
Shares included in such registration statement by such action as may be
necessary or appropriate, including, without limitation, the filing of
post-effective amendments and supplements, until the earlier of (i) the
second anniversary of the effectiveness of such registration statement and
(ii) the date on which all of the Registrable Shares have been sold to the
public pursuant to an effective registration statement or in accordance
with Rule 144 (or any similar provision then in force) under the Securities
Act. Immediately following its receipt of any holder's request to register
Registrable Shares, the Holding Company shall notify each other holder of
Registrable Shares. The Holding Company may be required pursuant to this
Section 11.1 to file (and keep effective) such registration statements on
any number of occasions by the several holders of Registrable Shares.
(b) The obligations of the Holding Company under this section 11.1 are
subject to the following terms:
(i) the Holding Company shall not include in the registration
effected pursuant to this section 11.1 any other securities
(including, without limitation, any to be issued and sold by the
Holding Company), without the prior written consent of the holder or
holders of 75% of the Registrable Shares to be included in such
registration; and
(ii) the Holding Company shall pay all Registration Expenses
related to such registrations effected pursuant to this section 11.1.
(c) The Companies jointly and severally represent and warrant that the
Holding Company has and shall continue at all times to satisfy all of the
conditions to the use of Form S-3, including, without limitation, the
timely filing of all reports required to be filed under the Exchange Act
during the twelve calendar months preceding the date in question.
11.2. Incidental Registration.
(a) If the Holding Company at any time or from time to time shall
determine to effect the registration, qualification and/or compliance of
any of its Shares (whether in connection with an offering by the Holding
Company or others) (otherwise than pursuant to a registration effected
<PAGE>
pursuant to section 2 of the Registration Rights and Holdback Agreement
dated as of July 12, 1996, by and between Spectra-Physics and the Holding
Company or a registration on a form inappropriate for an underwritten
public offering or relating solely to securities to be issued in a merger,
acquisition of the stock or assets of another entity or in a similar
transaction), then, in each such case, the Holding Company will:
(i) promptly give written notice of the proposed registration,
qualification and/or compliance (which shall include a list of the
jurisdictions in which the Holding Company intends to register or
qualify such securities under the applicable blue sky or other state
securities laws) to each holder of any Registrable Shares; and
(ii) include among the Shares which it then registers or
qualifies all Registrable Shares specified by any holder thereof in a
written request or requests, made within 30 days after receipt of such
written notice from the Holding Company.
(b) The obligations of the Holding Company under this section 11.2 are
subject to the following terms:
(i) the Holding Company shall pay all Registration Expenses
related to any registration, qualification or compliance requested
pursuant to this section 11.2; and
(ii) if, in connection with any underwritten offering pursuant to
this section 11.2, the managing underwriter(s) shall impose a
limitation on the number or kind of securities which may be included
in any such registration because, in its reasonable judgment, such
limitation is necessary to effect an orderly public distribution, then
the Holding Company shall be obligated to include in such registration
statement only such limited portion of the Registrable Shares (which
may be none) as is determined in good faith by such managing
underwriter, provided that, if any securities are being offered for
the account of any Person other than the Holding Company and the
holders of the Registrable Shares, the reduction in the number of
Registrable Shares included in such registration shall not represent a
greater percentage of the amount of Registrable Shares originally
requested to be registered and sold in such registration than the
lowest such percentage reduction imposed upon any other Person.
11.3. Permitted Registration. If and to the extent that any holder or
holders of any Registrable Shares shall have, at the time of delivery of the
written request referred to in section 11.2, no present intention of selling or
distributing such securities, the Holding Company shall be obligated to effect
<PAGE>
the registration, qualification and compliance of such securities of such holder
or holders only if and to the extent, in each case, that such registration,
qualification and compliance are at the time permitted by the applicable
statutes or rules and regulations thereunder or the practices of the
governmental authority concerned.
11.4. Registration Procedures. In the case of each registration,
qualification and/or compliance contemplated by this section 11, the Holding
Company will keep the holder or holders of Registrable Shares advised in writing
as to the initiation of proceedings for such registration, qualification and
compliance and as to the completion thereof, and will advise each such holder,
upon request, of the progress of such proceedings. In addition, the Holding
Company will follow procedures customarily observed by issuers in registered
public offerings, and accord to the holder or holders of Registrable Shares all
rights (including, without limitation, the right to perform appropriate "due
diligence") customarily accorded to selling stockholders in secondary
distributions and to managing underwriters if the transaction in question is or
were an underwritten public offering. At the expense of the Holding Company, the
Holding Company will in the case of each registration, qualification and/or
compliance contemplated by this section 11 (a) take all necessary action under
any applicable blue sky or other state securities law to permit the sale and/or
distribution of the Registrable Shares pursuant thereto, all as requested by the
holder or holders of Registrable Shares included therein, provided that the
Holding Company shall not be required to so register or qualify the Registrable
Shares in any jurisdiction if, solely as a result thereof, the Holding Company
must qualify generally to do business therein or consent to general service of
process therein, (b) comply with applicable requirements of all regulatory
entities, including, without limitation, the National Association of Securities
Dealers, Inc., (c) furnish each holder of Registrable Shares included therein
such number of registration statements, prospectuses, supplements, amendments,
offering circulars and other documents incidental thereto as such holder from
time to time may reasonably request, (d) list all Registrable Shares on each
securities exchange on which securities of the same class are then listed and
(e) furnish (or cause to be furnished) to each holder of Registrable Shares, all
undertakings, agreements, certificates, opinions, financial statements and
"comfort letters" of the sort customarily provided to selling stockholders in
secondary distributions and to the managing underwriters, if the transaction in
question is or were an underwritten public offering. Each holder of Registrable
Shares will furnish to the Holding Company upon request by the Holding Company
such information regarding such holder and any distribution of Registrable
Shares proposed by such holder as may be required to consummate any
registration, qualification and/or compliance contemplated by this section 11.
11.5. Indemnification. Without limiting the generality of section 21, the
Companies will jointly and severally indemnify, defend and hold harmless each
holder of Registrable Shares included in any registration, qualification and/or
compliance contemplated by this section 11 and each underwriter of such
securities, and each Person, if any, who controls each such holder and
underwriter within the meaning of the Securities Act, and their respective
<PAGE>
directors, officers, employees, agents, advisors and Affiliates (each, an
"Indemnified Person"), to the fullest extent enforceable under applicable law
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, supplement, amendment, offering circular or other document related
to any registration, qualification or compliance or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation (or
alleged violation) of the Securities Act or other securities laws in connection
with any such registration, qualification or compliance, and will reimburse each
such Indemnified Person for any legal or any other expenses reasonably incurred
in connection with investigating and/or defending (and/or preparing for any
investigation or defense of) any such claim, loss, damage, liability, action or
violation; provided that the Companies will not be liable in any such case to
any such Indemnified Person if, but only to the extent that, any such claim,
loss, damage, liability, action, violation or expense is finally determined to
arise out of or result from any untrue statement in or omission from written
information furnished to the Holding Company by an instrument duly executed by
such Indemnified Person and stated to be specifically for use therein. Each
holder of Registrable Shares will, if securities held by such holder are
included in a registration effected pursuant to this section 11, indemnify,
defend and hold harmless the Holding Company, each of its directors and officers
who signs the related registration statement, and each Person, if any, who
controls the Holding Company within the meaning of the Securities Act, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
supplement, amendment, offering circular or other document or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Holding Company and such directors, officers or Persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
(and/or preparing for any investigation or defense of) any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) was made in (or omitted from) such registration statement, prospectus,
supplement, amendment, offering circular or other document in reliance upon and
in conformity with written information furnished to the Holding Company by an
instrument duly executed by such holder and stated to be specifically for use
therein; provided that the liability of any such holder under this section 11.5
shall be limited to the net sales proceeds actually received by such holder as a
result of the sale by it of securities in such registration.
11.6. Restrictions on Other Agreements. The Holding Company will not grant
any right relating to the registration of its securities if the exercise thereof
interferes with or is inconsistent with or will delay (or could reasonably be
expected to interfere with or be inconsistent with or delay) the exercise and
enjoyment of any of the rights granted under this section 11, without the
<PAGE>
written consent of holders of 75% or more of (34) the Registrable Shares at the
time issued and/or issuable, which consent may be given or withheld in the sole
discretion of such holders. The Holding Company will not permit any of its
Subsidiaries to effect, or to grant any right relating to, the registration of
its securities.
12. Put Rights.
12.1. Put Rights. Each holder of Put Securities (as defined below) shall
have the right to require the Companies to purchase all or any portion of the
Put Securities owned by such holder concurrently with the occurrence of any Put
Event (as defined below), in each case at a purchase price equal to the
aggregate Put Price (as defined below) for such Put Securities. Each such holder
may exercise such option by delivering to the Companies a notice (a "Put
Notice") specifying that the Put Securities therein described are to be
purchased by the Companies and, if the Underlying Securities are not then
Publicly Traded, specifying the appraiser (first referred to in the definition
of Fair Value below) that shall determine the Fair Value of the Put Securities.
Upon receipt of any such Put Notice from a holder of Put Securities, the
Companies shall be obligated, jointly and severally, to purchase the Put
Securities specified in such Put Notice on the date upon which such Put Event
shall occur (the "Put Closing Date"), unless in any case the Companies and such
holder agree to a different date. The closing for any payment of the Put Price
due to any holder of Put Securities under this section 12.1 shall occur at the
principal office of the Companies, unless the Companies and such holder agree to
a different location, and the aggregate Put Price shall be paid in immediately
available funds against delivery of the certificates evidencing such Put
Securities as are to be purchased from such holder at such closing. Promptly
after receipt by the Companies of a Put Notice from a holder of Put Securities,
the Companies will notify each other holder of Put Securities of receipt of such
Put Notice and thereafter shall furnish to each holder such information relating
to the same as such holder may request from time to time. The Companies will
notify each holder of Put Securities of the occurrence of any event which will,
or could reasonably be expected to, result in a Put Event at least 30 days (but
not more than 60 days) prior to the occurrence of such Put Event. The Companies
shall not permit a Put Event to be consummated unless the notice required by the
preceding sentence with respect to such Put Event has been delivered in
accordance with such preceding sentence.
12.2. Defined Terms. As used herein, the following terms have the following
respective meanings:
"Current Market Price" of any Underlying Security as of any date
herein specified shall mean the average of the daily closing prices for the
30 consecutive trading days commencing 45 trading days before the day in
question. The closing price for each day shall be (a) if such Underlying
Security is listed or admitted for trading on any national securities
exchange, the last sale price of such Underlying Security, regular way, or
<PAGE>
the average of the closing bid and asked prices thereof if no such sale
occurred, in each case as officially reported on the principal securities
exchange on which such Underlying Security is listed, or (b) if not
reported as described in clause (a), the average of the closing bid and
asked prices of such Underlying Security in the over-the-counter market as
shown by the National Association of Securities Dealers, Inc. Automated
Quotation System, if so quoted, as reported by any member firm of the New
York Stock Exchange selected by the Companies.
"Fair Value" shall mean the fair value of the appropriate Put Security
as determined in accordance with generally accepted financial practice by
an independent appraiser of recognized national standing selected by the
holders of a majority of the Put Securities requested to be repurchased
(provided such appraiser is reasonably satisfactory to the Companies). The
Companies shall use their best efforts to enable the independent appraiser
to provide its determination not later than 10 days following its
selection. Each such determination of Fair Value shall be set forth in
writing and shall be conclusive and binding on the Companies and on the
holders of the Put Securities to be repurchased. The Companies shall pay
all of the expenses incurred in connection with each such determination,
including, without limitation, the expenses of each appraiser.
"Publicly Traded" shall mean, with respect to the Underlying
Securities or the equity securities referred to in the definition of "Put
Event", on any date, listed or admitted for trading on any national
securities exchange or quoted on the over-the-counter market of the
National Association of Securities Dealers, Inc. Automated Quotation
System, in each case on such date and during the immediately preceding 45
consecutive days and having an average daily trading volume of not less
than 78,500 during such period.
"Put Event" shall mean (a) the merger or consolidation of the Holding
Company or any of its Material Subsidiaries with or into another Person
(other than a merger of the Holding Company with or into another Person,
the sole purpose and result of which is to change the jurisdiction of
incorporation of the Holding Company to another state of the United States)
which does not have a class of Publicly Traded equity securities registered
under the Exchange Act and where the consideration to be received by the
holders of the Holding Company's Shares in connection with such merger or
consolidation does not consist solely of cash payable in full upon
consummation of such merger or consolidation, or (b) the sale, transfer or
other disposition by the Holding Company or any of its Material
Subsidiaries of all or any substantial part of its properties and assets to
another Person for consideration which (i) is other than (A) Publicly
Traded equity securities registered under the Exchange Act and/or (B) cash
and (ii) is then distributed to the stockholders of the Holding Company or
the holders of Superior Indebtedness.
"Put Price" at any date, as applied to any Put Security, shall mean
(i) if the Underlying Securities are not then Publicly Traded, the Fair
<PAGE>
Value thereof as of the date of occurrence of the applicable Put Event and
(ii) if the Underlying Securities are then Publicly Traded, the Current
Market Price thereof as of the date of occurrence of the applicable Put
Event. The Put Price of any Warrant shall be reduced by an amount equal to
the amount payable upon exercise thereof (if and to the extent not
otherwise paid to the Holding Company).
"Put Securities" shall mean the Warrants and the Underlying
Securities, each of which is a "Put Security".
12.3 Continued Effect. The provisions of this section 12 are applicable to
successive Put Events. No failure on the part of any holder of the Put
Securities to exercise any right under this section 12 arising on account of any
Put Event shall affect or impair any other right of such holder, in respect of
the Put Securities or otherwise, under any of the Operative Documents. The
covenants contained in this section 12 shall continue in effect so long as any
Put Securities are outstanding and, without limiting the generality of the
foregoing, shall survive the payment, prepayment and/or replacement of any other
Securities and any merger, consolidation, recapitalization, sale of assets or
other similar transaction or event involving the Holding Company and/or any of
its Subsidiaries.
13. Board Inspection Rights.
(a) At any reasonable time and from time to time, upon reasonable
notice, the Companies will permit any holder of the Notes or Warrants or
any agents or representatives thereof, to examine and make abstracts from
any resolutions and consents of, and any minutes and other records of
meetings of, the respective boards of directors (and committees thereof) of
the Holding Company and its Subsidiaries, and to discuss the affairs,
finances and accounts of the Holding Company and its Subsidiaries with any
of their directors.
(b) The Holding Company will meet at least once each calendar year
with representatives of the holders of the Notes and Warrants to discuss
the affairs, finances and accounts of the Holding Company and its
Subsidiaries.
14. Covenants of the Companies. From and after the date of this Agreement, and
thereafter so long as any of the Notes shall remain outstanding, the Companies
will duly perform and observe, for the benefit of the holders of the Notes, each
and all of the covenants and agreements hereinafter set forth:
14.1. Books of Record and Account; Reserves. Each Company will, and
will cause each of its Subsidiaries to (a) at all times keep proper books
of record and account in which full, true and correct entries shall be made
of its transactions in accordance with GAAP and (b) set aside on its books
from its earnings for each fiscal year all such proper reserves as shall be
required in accordance with GAAP in connection with its business.
<PAGE>
14.2. Payment of Taxes; Existence; Maintenance of Properties;
Compliance with Laws; Lines of Business; Proprietary Rights. Each Company
will, and will cause each of its Subsidiaries to:
(a) pay and discharge promptly as they become due and payable all
taxes, assessments and other governmental charges or levies imposed
upon it or its income or upon any of its property, as well as all
claims of any kind (including claims for labor, materials and
supplies) which, if unpaid, might by law become a Lien upon its
property; provided that no such Person shall be required to pay any
such tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good
faith by appropriate proceedings promptly initiated and diligently
conducted and if it shall have set aside on its books such reserves,
if any, with respect thereto as are required by GAAP; provided,
further, that each Company will, and will cause each of its
Subsidiaries to, pay any such tax, assessment, charge, levy or claim
prior to the commencement of any proceeding to foreclose any Lien
securing the same;
(b) do or cause to be done all things necessary to preserve and
keep in full force and effect its existence (except that nothing in
this section 14.2(b) shall prohibit the consummation of any merger,
consolidation or other business combination permitted under sections
14.13, 14.14 and/or 14.15, as applicable);
(c) maintain and keep its material properties in good repair,
working order and condition, so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times;
(d) comply in all material respects with all applicable laws,
statutes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental authorities in respect of
the conduct of its business and the ownership of its property
(including, without limitation, all Environmental Laws); provided that
no such Person shall be required by reason of this section 14.2(d) to
comply therewith at any time while it shall be contesting its
obligation to do so in good faith by appropriate proceedings promptly
initiated and diligently conducted, and if it shall have set aside on
its books such reserves, if any, with respect thereto as are required
by GAAP;
(e) engage only in the Business (and in other lines of business
related to the Business) substantially in the manner described in the
Disclosure Document; and
(f) own or have a valid license for all material Proprietary
Rights and Licenses used by it in the conduct of its business.
<PAGE>
14.3. Insurance. Each Company will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers,
insurance with respect to its properties and businesses against loss or
damage of the kinds customarily insured against by Persons of established
reputation engaged in the same or a similar business and similarly
situated, in such amounts and by such methods as shall be customary for
such Persons and reasonably deemed adequate by the Companies.
14.4. Limitation on Discount or Sale of Receivables. Neither Company
will, and neither Company will permit any of their respective Subsidiaries
to, directly or indirectly, discount or sell any of their accounts
receivable, except that each Company or any such Subsidiary may settle
doubtful accounts or may grant discounts (such as quantity or prompt
payment discounts) in the ordinary course of business.
14.5. Limitation on Funded Debt and Current Debt. Neither Company
will, and neither Company will permit any of their respective Subsidiaries
to, be liable or create, assume, incur, guarantee, or in any manner become
liable, contingently or otherwise, in respect of any Funded Debt or Current
Debt other than:
(a) in the case of the Holding Company and the Operating Company:
(i) Funded Debt evidenced by the Notes;
(ii) Funded Debt evidenced by the Seller Notes, but no extension,
refinancing, refunding or renewal thereof;
(iii) Funded Debt and Current Debt outstanding on the date hereof and
referred to in Exhibit 5.9 attached hereto (excluding any Funded Debt or
Current Debt evidenced by the Seller Notes or outstanding under the Bank
Credit Documents), but no extension, refinancing, refunding or renewal
thereof;
(iv) Funded Debt or Current Debt outstanding under the Bank Credit
Documents and under any Refinancing Agreement (but no other extension,
refinancing, refunding or renewal of the Bank Credit Documents), provided
that the aggregate principal amount (and face amount of letters of credit)
of such Funded Debt and Current Debt (A) under the term loan facilities
established by the Bank Credit Agreement (or any Refinancing Agreement)
shall at no time exceed (1) $84,000,000 minus (2) the sum of all repayments
of the principal of such Indebtedness and (B) under the revolving credit
facility established by the Bank Credit Agreement (or any Refinancing
Agreement) shall at no time exceed (1) $21,000,000 minus (2) the sum of all
repayments of the principal of such Indebtedness (other than any repayment
that may be thereafter reborrowed under such revolving credit facility) and
minus (3) the sum of all permanent reductions in the amount of the
borrowing availability under such revolving credit facility;
(v) additional Funded Debt or Current Debt not otherwise permitted
<PAGE>
under this section 14.5, provided that, both at the time of and immediately
after giving effect to the incurrence thereof and the retirement of any
Indebtedness which is concurrently being retired:
(A) no Default or Event of Default shall have occurred and be
continuing; and
(B) the aggregate outstanding principal amount of Funded Debt and
Current Debt incurred pursuant to this clause (v) shall not exceed at
any time the greater of (1) $10,000,000 and (2) such amount that, if
incurred at the end of the immediately preceding fiscal quarter of the
Holding Company, would have caused the Consolidated Indebtedness Ratio
(calculated at the end of such fiscal quarter on a pro forma basis) to
exceed 2.50 to 1.00; and
(vi) Funded Debt and Current Debt owed to any Wholly-Owned Subsidiary;
and
(b) in the case of any Subsidiary of the Holding Company (other than the
Operating Company):
(i) Funded Debt evidenced by the Note Guarantees;
(ii) Funded Debt arising under Guarantees of Funded Debt of the
Companies permitted under section 14.5(a)(iii), 14.5(a)(iv) and/or
14.5(a)(v); and
(iii) Funded Debt or Current Debt (other than that of a Foreign
Subsidiary) owed to the Holding Company or a Wholly-Owned Subsidiary (other
than a Foreign Subsidiary), provided that such Funded Debt or Current Debt
is evidenced by a promissory note.
For purposes of this section 14.5, any Person becoming a Subsidiary of the
Holding Company after the date hereof shall be deemed, at the time it becomes a
Subsidiary, to have incurred all of its then outstanding Funded Debt and Current
Debt, and any Person extending, refinancing, refunding or renewing any Funded
Debt or Current Debt shall be deemed to have incurred such Funded Debt or
Current Debt, as the case may be, at the time of such extension, refinancing,
refunding or renewal.
14.6. Limitation on Restricted Payments; Payments on Seller Notes.
(a) Neither Company will, and neither Company will permit any of their
respective Subsidiaries to, directly or indirectly, make or commit to make
any Restricted Payment; provided that the Holding Company may acquire
shares of Common Stock for an aggregate purchase price not to exceed
<PAGE>
$3,000,000 if, both at the time of each such purchase and immediately after
giving effect thereto, (i) Consolidated Net Worth shall be not less than
$44,000,000 and (ii) no Default or Event of Default shall have occurred and
be continuing.
(b) Neither Company will, and neither Company will permit any of their
respective Subsidiaries to, make any payment or prepayment in respect of
the Seller Notes if such payment or prepayment is prohibited by the
subordination provisions of the Seller Notes.
14.7. Certain Financial Covenants. The Companies will, and will cause
their respective Subsidiaries to:
(a) Fixed Charge Coverage Ratio. Maintain at the end of each fiscal quarter
of the Holding Company specified below in this section 14.7(a) a ratio of
(i) (x) Consolidated EBITDA for the most recently completed four fiscal
quarters of the Holding Company (provided that, if such four fiscal quarter
period includes either or both of the fiscal quarters ending on March 31,
1996 or June 30, 1996, Consolidated EBITDA shall be calculated by using Pro
Forma EBITDA for each such fiscal quarter in such four fiscal quarter
period) less (y) the sum of (A) Consolidated Capital Expenditures made
during such period plus (B) the aggregate amount of federal, state, local
and foreign taxes paid by the Holding Company and its Subsidiaries during
such period to (ii) the sum of (w) cash interest payable by the Holding
Company and its Subsidiaries on Consolidated Indebtedness during such
period, plus (x) cash rentals payable under Capital Leases during such
period, plus (y) principal amounts of Consolidated Funded Debt and Current
Debt payable by the Holding Company and its Subsidiaries during such
period, plus (z) the aggregate purchase price paid by the Holding Company
and its Subsidiaries during such period to purchase Common Stock of the
Holding Company of not less than the ratio set forth below for such period
(provided that if such four fiscal quarter period includes either or both
of the fiscal quarters ending on March 31, 1996 or June 30, 1996, (i)
Capital Expenditures for such four fiscal quarter period shall be the
lesser of (A) the product of actual Capital Expenditures made during such
period since the Closing Date multiplied by a fraction the numerator of
which is four and the denominator of which is the number of fiscal quarters
that have elapsed since the Closing Date and (B) $14,000,000, (ii) interest
expense for such four fiscal quarter period shall be the product of the
actual amount of interest expense payable during such period since the
Closing Date multiplied by a fraction the numerator of which is four and
the denominator of which is the number of fiscal quarters that have elapsed
since the Closing Date and (iii) aggregate taxes paid during such four
fiscal quarter period shall be the product of the actual taxes paid during
such period since the Closing Date multiplied by a fraction the numerator
of which is four and the denominator of which is the number of fiscal
quarters have elapsed since the Closing):
<PAGE>
Four Fiscal Quarters Ending Ratio
12/31/96 .............................. 1.01
3/31/97 ............................... 1.01
6/30/97 ............................... 1.01
9/30/97 ............................... 1.01
12/31/97 .............................. 1.01
3/31/98 ............................... 1.01
6/30/98 ............................... 1.01
9/30/98 ............................... 1.01
12/31/98 .............................. 1.01
3/31/99 and the last day of
each fiscal quarter thereafter ........ 1.15x
(b) Consolidated Indebtedness Ratio. Maintain at the end of each
fiscal quarter of the Holding Company specified below in this section
14.7(b) a Consolidated Indebtedness Ratio for such date of not more than
the ratio set forth below for such period:
Four Fiscal Quarters Ending Ratio
9/30/96 ............................... 5.50x
12/31/96 .............................. 5.50x
3/31/97 ............................... 5.25x
6/30/97 ............................... 5.25x
9/30/97 ............................... 4.75x
12/31/97 .............................. 4.75x
3/31/98 ............................... 4.25x
6/30/98 ............................... 4.25x
9/30/98 ............................... 4.25x
12/31/98 .............................. 4.25x
3/31/99 and the last day of
each fiscal quarter thereafter ........ 3.75x
(c) Senior Debt to EBITDA Ratio. Maintain at the end of each fiscal quarter
of the Holding Company specified below in this section 14.7(c) a ratio of (i)
Consolidated Senior Debt outstanding on the last day of such fiscal quarter to
(ii) Consolidated EBITDA for the most recently completed four fiscal quarters of
the Holding Company (provided that, if such four fiscal quarter period includes
any or all of the fiscal quarters ending on December 31, 1995, March 31, 1996 or
June 30, 1996, Consolidated EBITDA shall be calculated by using Pro Forma EBITDA
for each such fiscal quarter in such four fiscal quarter period), of not more
than the ratio set forth below for such period:
<PAGE>
Four Fiscal Quarters Ending Ratio
9/30/96 ............................... 4.00x
12/31/96 .............................. 4.00x
3/31/97 ............................... 4.00x
6/30/97 ............................... 4.00x
9/30/97 ............................... 3.50x
12/31/97 .............................. 3.50x
3/31/98 ............................... 3.00x
6/30/98 ............................... 3.00x
9/30/98 ............................... 3.00x
12/31/98 .............................. 2.75x
3/31/99 and the last day of
each fiscal quarter thereafter ........ 2.50x
(d) Net Worth. Maintain at all times an excess of Consolidated Total Assets
over Consolidated Total Liabilities of not less than (i) $34,000,000 plus (ii)
50% of positive Consolidated Net Income (without adjustment for any loss) during
the period after June 30, 1996 to and including each date of determination
computed on a cumulative basis for said entire period.
14.8. Limitation on Investments. Neither Company will, and neither Company
will permit any of their respective Subsidiaries to, directly or indirectly,
make or hold any Investment in any Person other than:
(a) Investments by the Holding Company, the Operating Company and their
respective Subsidiaries in their Subsidiaries outstanding on the date hereof and
additional Investments in Wholly-Owned Subsidiaries in an aggregate amount
invested from the date hereof not to exceed $6,000,000 (provided that, not more
than an aggregate amount of $4,000,000, may be invested from the date hereof in
Foreign Subsidiaries);
(b) (i) loans to employees of the Holding Company and its Subsidiaries in
connection with purchases of stock of the Holding Company pursuant to the PSC
Stock Option Plans in an aggregate principal amount not to exceed $1,000,000 at
any time outstanding and (ii) loans and advances to employees in the ordinary
course of business of the Holding Company, the Operating Company and their
respective Subsidiaries as presently conducted in an aggregate principal amount
not to exceed $1,000,000 at any time outstanding;
(c) Investments by the Holding Company, the Operating Company and their
respective Subsidiaries in Cash Equivalents;
(d) Investments by the Holding Company, the Operating Company and their
respective Subsidiaries in Hedge Agreements permitted under section 14.11(c);
<PAGE>
(e) Investments consisting of intercompany debt permitted by section 14.5
(b);
(f) Investments (i) existing on the date hereof and described on Exhibit
5.9 attached hereto or (ii) otherwise disclosed on such Exhibit 5.9; and
(g) other Investments in an aggregate amount invested not to exceed
$3,000,000; provided that with respect to Investments made under this clause
(g); (i) any newly acquired or created Subsidiary of the Holding Company, the
Operating Company or any of their respective Subsidiaries shall be a
Wholly-Owned Subsidiary Guarantor, (ii) immediately before and after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing or would result therefrom; and (iii) any business acquired or
invested in pursuant to this clause (g) shall be in the same general line of
business as the Holding Company, the Operating Company or any of
their respective Subsidiaries.
14.9. Limitation on Liens. Neither Company will, and neither Company will
permit any of their respective Subsidiaries to, create or suffer to exist any
Lien in respect of any property of any character (whether owned on the date
hereof or hereafter acquired) other than:
(a) any Lien created pursuant to the Bank Credit Documents securing
Funded Debt or Current Debt or other obligations of the Companies under the
Bank Credit Agreement or any Guarantee thereof by any Subsidiary, in each
case to the extent such Funded Debt or Current Debt or Guaranty is
permitted under section 14.5;
(b) Permitted Liens;
(c) any Lien existing on the date hereof and referred to on Exhibit
5.9 attached hereto;
(d) purchase money Liens upon or in real property or equipment
acquired or held by the Holding Company, the Operating Company or any of
their respective Subsidiaries in the ordinary course of business to secure
the purchase price of such property or equipment or to secure Funded Debt
and/or Current Debt incurred solely for the purpose of financing the
acquisition, construction or improvement of any such property or equipment
to be subject to such Liens, or Liens existing on any such property or
equipment at the time of acquisition (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase price),
or extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount; provided that (i) no such Lien shall extend to or
cover any property other than the property or equipment being acquired,
constructed or improved, and no such extension, renewal or replacement
<PAGE>
shall extend to or cover any property not theretofore subject to the Lien
being extended, renewed or replaced and (ii) any Funded Debt and/or Current
Debt secured by Liens permitted by this clause (d) shall be permitted under
section 14.5(a)(v);
(e) Liens arising in connection with Capital Leases permitted under
section 14.5(a)(v); provided that no such Lien shall extend to or cover any
properties or assets other than the properties and assets subject to such
Capital Leases; and
(f) the replacement, extension or renewal of any Lien permitted by
clauses (c) through (e) above upon or in the same property theretofore
subject thereto or the replacement, extension or renewal (without increase
in the amount or change in any direct or contingent obligor) of the Funded
Debt and/or Current Debt secured thereby.
In no event shall there be any Liens securing the Seller Notes.
14.10. Limitation on Transactions with Affiliates. Neither Company will,
and neither Company will permit any of their respective Subsidiaries to, engage
in any transaction (including, without limitation, the purchase, sale or
exchange of any properties and assets or the rendering of any services) with an
Affiliate of either Company or of any of their respective Subsidiaries on terms
less favorable to either Company or any such Subsidiary in any material respect
than would be obtainable at the time in comparable transactions with a Person
not such an Affiliate.
14.11. Limitation on Rental Obligations; Capital Expenditures; Hedge
Agreements. Neither Company will, and neither Company will permit any of their
respective Subsidiaries to:
(a) create, incur, assume or suffer to exist any obligations as lessee (i)
for the rental or hire of real or personal property in connection with any sale
and leaseback transaction or (ii) for the rental or hire of other real or
personal property of any kind under leases or agreements to lease including
Capital Leases having an original term of one year or more that would cause the
Consolidated Rental Obligations in respect of all such obligations to exceed
$4,000,000 payable in any period of 12 consecutive months; or
(b) make any Capital Expenditures in any period set forth below that would
cause the aggregate of all such Capital Expenditures made by the Companies and
their respective Subsidiaries in such period to exceed the amount set forth
below for such period:
<PAGE>
Fiscal Quarter Ending Amount
Closing Date through 12/31/96 .............. $8,000,000
Fiscal year ending 12/31/97 ................ 14,000,000
Fiscal year ending 12/31/98 ................ 17,000,000
Fiscal year ending 12/31/99 ................ 20,000,000
Fiscal year ending 12/31/2000 .............. 21,000,000
Fiscal year ending 12/31/2001
and each fiscal year ending thereafter ..... 17,000,000
; or
(c) engage in any transaction involving commodity options or futures
contracts or any similar speculative transactions except for the Hedge
Agreements permitted under Section 5.01(p) of the Bank Credit Agreement.
14.12. Limitation on Issuance of Shares of Subsidiaries. The Holding
Company will not permit any of its Subsidiaries to (a) issue, sell or otherwise
dispose of any Shares (or any securities convertible into or exercisable or
exchangeable for Shares) of such Subsidiary except to either Company or
(b) except pursuant to the consummation of a transaction permitted under section
14.15, sell, transfer or otherwise dispose of any Shares (or any securities
convertible into or exercisable or exchangeable for Shares) of any other
Subsidiary of either Company except to either Company. Each Company will not, in
any event, permit any Subsidiary of such Company to have outstanding any
Preferred Shares. The Holding Company shall at all times remain the sole owner
of all outstanding shares of capital stock of the Operating Company and all
options or warrants to acquire the same.
14.13. Limitation on Subsidiary's Consolidation or Merger. The Holding
Company will not permit any of its Subsidiaries to consolidate with or merge
into any other Person, provided that (a) any Subsidiary (other than the
Operating Company) may consolidate with or merge into any Wholly-Owned
Subsidiary Guarantor if the resulting or surviving Person of such consolidation
or merger is a Wholly-Owned Subsidiary Guarantor and is not a Foreign
Subsidiary, (b) any Foreign Subsidiary may consolidate with or merge into any
other Foreign Subsidiary if the resulting or surviving Person of such
consolidation or merger is a Wholly-Owned Subsidiary and (c) any Subsidiary
(other than the Operating Company) may merge into the Holding Company if the
Holding Company is the surviving Person of such merger; provided, further, that
in each case on the date of such consolidation or merger and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing.
<PAGE>
14.14. Limitation on Holding Company's Consolidation or Merger. The Holding
Company will not consolidate with or merge into any other Person, provided that
any Subsidiary (other than the Operating Company) may merge into the Holding
Company if the Holding Company is the surviving Person of such merger and if on
the date of such merger and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing.
14.15. Limitation on Disposition of Property. Neither Company will, and
neither Company will permit any of their respective Subsidiaries to, directly or
indirectly, sell, lease or otherwise dispose of (including by way of merger,
consolidation or other business combination) any of their respective properties
and assets (or any right, title or interest therein), whether real, personal or
mixed, tangible or intangible, including, without limitation, Shares, securities
or Indebtedness of any Subsidiaries of either Company, except for:
(a) sales by the Companies and their respective Subsidiaries of
inventory in the ordinary course of business consistent with prudent
business practice; and
(b) other sales by the Companies and their respective Subsidiaries of
properties and assets for consideration in any fiscal year in an aggregate
amount not to exceed $2,000,000, provided that in the case of this section
14.15(b), on the date of each such disposition and after giving effect
thereto, (i) no Default or Event of Default shall have occurred and be
continuing and (ii) the Companies shall be permitted to become liable in
respect of at least $1 of additional Funded Debt or Current Debt under
section 14.5(a)(v); and
(c) sales by the Companies and their respective Subsidiaries of
properties and assets in excess of the limitations set forth in section
14.15(b), provided that in the case of this section 14.15(c), on the date
of each such disposition and after giving effect thereto, (i) no Default or
Event of Default shall have occurred and be continuing, (ii) the Companies
shall be permitted to become liable in respect of at least $1 of additional
Funded Debt or Current Debt under section 14.5(a)(v), and (iii) the
aggregate fair market value (determined in each case as of the date of
disposition) of all properties and assets disposed of pursuant to section
14.15(b) and this section 14.15(c) by the Companies and their respective
Subsidiaries (A) since the beginning of the then current fiscal year of the
Holding Company is less than 10% of Consolidated Total Assets as at the
last day of the most recently completed fiscal year of the Holding Company
and (B) since the Closing Date is less than 30% of Consolidated Total
Assets as at the last day of the most recently completed fiscal year of the
Holding Company.
<PAGE>
A disposition of (x) property made by any Subsidiary to either Company or (y)
obsolete assets in the ordinary course of business consistent with prudent
business practice shall be disregarded for purposes of this section 14.15.
14.16. Modification of Certain Documents, Agreements and Instruments.
Neither Company will, and neither Company will permit any of their respective
Subsidiaries to:
(a) file any resolution of its board of directors (or other governing
body) with the Secretary of State of the jurisdiction of its organization
if such resolution is related to the issuance of Preferred Shares or if the
effect thereof is, or could reasonably be expected to be, adverse to the
interests of any holder of any of the Securities;
(b) have a fiscal year which ends on any date other than the last day
of December; or
(c) amend, modify, supplement or waive any term, condition or
provision of its Organizational Documents or any of the agreements,
documents or instruments referred to in section 4.3, including, without
limitation, the Acquisition Documents and the Bank Credit Documents, or any
Refinancing Agreement or enter into any Refinancing Agreement or any other
agreement, document or instrument or transaction, if the effect thereof is,
or could reasonably be expected to be, adverse to the interests of any
holder of any of the Securities or to impose restrictions upon the right
and obligation of the Companies to make payments on the Notes or to pay the
Put Price under section 12 that are more restrictive in any material
respect than those set forth in its Organizational Documents or such other
agreements, documents and instruments as in effect on the Closing Date.
Without limiting the generality of the foregoing, neither Company will, and
neither Company will permit any of their respective Subsidiaries to, amend,
supplement, modify or waive any term of the Bank Credit Documents or any
Refinancing Agreement or enter into any Refinancing Agreement if the effect
of any such amendment, supplement, modification, waiver or entering into
would be that, after giving effect thereto, (i) any of the terms of the
Superior Indebtedness relating to the amount of or timing of any payment
(or prepayment) of the principal of, premium, if any, or interest on any
Superior Indebtedness differs from the terms of the Superior Indebtedness
prior to giving effect thereto, (ii) the rate of interest payable on any of
the Superior Indebtedness increases, (iii) the aggregate amount of Superior
Indebtedness increases to an amount greater than the amount of Superior
Indebtedness permitted under the definition of Superior Indebtedness, or
(iv) any of the terms and provisions of any covenant or agreement, the
breach of which constitutes or would constitute a Material Default,
changes.
<PAGE>
14.17. Further Assurances; Release of Note Guarantees.
(a) From time to time hereafter, the Companies will execute and
deliver, or will cause to be executed and delivered, such additional
agreements, documents and instruments and will take all such other actions
as any holder or holders of the Notes may reasonably request for the
purpose of implementing or effectuating the provisions of the Operative
Documents.
(b) Without limiting the generality of the foregoing, in the event
that either Company at any time or from time to time shall elect to
organize or acquire any Subsidiary (subject to the limitations set forth in
section 14.18), then and in each such case such Company will promptly (but
in any event not later than 20 days prior to consummating any such
transaction) notify each holder of the Notes and, not later than the date
upon which such transaction is consummated, will cause to be executed and
delivered, to the holder or holders of the Notes, one or more Note
Guarantees executed by such Subsidiary.
(c) In the event of a sale or other disposition to an unaffiliated
third party of all or substantially all of the assets of a Subsidiary that
has executed a Note Guarantee, such Subsidiary or the corporation acquiring
such assets, as applicable, will be released and relieved of any
obligations under the applicable Note Guarantee, provided that such sale or
other disposition is permitted under this Agreement and the Other
Securities Purchase Agreements, including, without limitation, section
14.15 hereof and thereof.
14.18. Additional Subsidiaries. Notwithstanding anything to the contrary
set forth herein, without the prior written consent of the Required Holders of
the Notes, neither Company shall organize or acquire any Subsidiary unless at
the time of any such organization or acquisition such Subsidiary shall execute
and deliver to each holder of any Notes a Note Guarantee.
14.19 Limitation on Tax Consolidation. Neither Company will, and neither
Company will permit any of their respective Subsidiaries to, become a party to a
consolidated or combined income tax return with any Person other than the
Companies and their respective Subsidiaries.
15. Definitions. Note: Bracketed items are cross-references to the section or
sections of this Agreement in which the specified definitions are used; they
appear for purpose of convenience only and do not affect the meaning of such
definitions.
15.1. Definitions of Capitalized Terms. The terms defined in this section
15.1, whenever used in this Agreement, shall, unless the context otherwise
requires, have the following respective meanings:
"Accrued Bankruptcy Interest" shall have the meaning specified in section
10.
<PAGE>
"Acquisition", "Acquisition Agreement", "Acquisition Corp." and
"Acquisition Documents" shall have the respective meanings specified in section
4.3.
"Affiliate" of any Person shall mean any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
first-mentioned Person, or any individual, in the case of a Person who is an
individual, who has a relationship by blood, marriage or adoption to such
first-mentioned Person not more remote than first cousin, and, without limiting
the generality of the foregoing, shall include (a) any Person beneficially
owning or holding 5% or more of any class of Voting Stock or other Shares of
such first-mentioned Person or (b) any Person of which such first-mentioned
Person owns or holds 5% or more of any class of Voting Stock or other Shares;
provided that, for purposes hereof, in no event shall you or any other
institutional holder of Securities be deemed to be an Affiliate of either
Company. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the 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 Stock or by
contract or otherwise.
"Bank Credit Agreement", "Bank Credit Documents" and "Banks" shall have the
respective meanings specified in section 4.3.
"Bankruptcy Code" shall have the meaning specified in section 10.
"Business" shall have the meaning specified in section 5.4.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day which shall be in Boston, Massachusetts or New York, New York a legal
holiday or a day on which banking institutions therein are authorized by law to
close.
"Capital Expenditures" of any Person shall mean any payment made, directly
or indirectly, by such Person for the purpose of acquiring or constructing fixed
assets, real property or improvements or equipment which, in accordance with
GAAP, would be added as a debit to the fixed asset account of such Person,
including, without limitation, any payment made under any Capital Lease or any
conditional sale or other title retention agreement.
"Capital Lease" shall mean any lease or similar arrangement which is of
such a nature that payment obligations of the lessee or obligor thereunder are
required to be capitalized and shown as liabilities upon a balance sheet of such
lessee or obligor prepared in accordance with GAAP or for which the amount of
the asset and liability thereunder as if so capitalized should be disclosed in a
note to such balance sheet.
"Cash Equivalents" shall mean any of the following, to the extent owned by
the Holding Company or any of its Subsidiaries free and clear of all Liens other
<PAGE>
than Liens created under the Bank Credit Documents: (a) readily marketable
direct obligations of the government of the United States of America or any
agency or instrumentality thereof or obligations unconditionally guaranteed by
the full faith and credit of the government of the United States of America
having a maturity not later than 360 days from the date of issuance thereof, (b)
insured certificates of deposit of or time deposits having a maturity not later
than 360 days from the date of issuance thereof with any commercial bank that is
a member of the Federal Reserve System, issues (or the parent of which issues)
commercial paper rated as described in clause (c), is organized under the laws
of the United States of America or any state thereof and has combined capital
and surplus of at least $1 billion or (c) commercial paper having a maturity not
later than 180 days from the date of issuance thereof in an aggregate amount of
no more than $2,500,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any state of the United States of
America and rated at least "Prime-1" (or the then equivalent grade) by Moody's
Investors Service, Inc. or "A-1" (or the then equivalent grade) by Standard &
Poor's Ratings Group.
"Closing" and "Closing Date" shall have the respective meanings specified
in section 3.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency from time to time administering the Securities Act and/or the
Exchange Act.
"Common Stock" shall mean the Common Stock, $0.01 par value, of the Holding
Company as constituted on the Closing Date and any Shares into which such Common
Stock shall have been changed or any Shares resulting from any reclassification
of the Common Stock.
"Companies" shall mean the Holding Company and the Operating Company
collectively.
"Consolidated Indebtedness Ratio" shall mean, at any date, the ratio of
Consolidated Indebtedness on the last day of the most recently completed fiscal
quarter of the Holding Company to Consolidated EBITDA for the most recently
completed four fiscal quarters of the Holding Company (provided that, if such
four fiscal quarter period includes any or all of the fiscal quarters ending on
December 31, 1995, March 31, 1996 or June 30, 1996, Consolidated EBITDA shall be
calculated by using the Pro Forma EBITDA for each such fiscal quarter in such
four fiscal quarter period).
"Consolidated EBITDA" [14.7], "Consolidated Funded Debt"
[14.7],"Consolidated Indebtedness" [14.7], "Consolidated Interest Charges"
[14.7], "Consolidated Interest Expense" [14.7], "Consolidated Net Income"
<PAGE>
[14.7], "Consolidated Rental Obligations" [14.7, 14.11] "Consolidated Senior
Debt" [14.7], "Consolidated Total Assets" [14.7, 14.15] and "Consolidated Total
Liabilities" [14.7] shall mean the EBITDA, Funded Debt, Indebtedness, Interest
Charges, Interest Expense, Net Income, Rental Obligations, Senior Debt, Total
Assets and Total Liabilities, as the case may be, of the Holding Company and its
Subsidiaries (whether or not ordinarily consolidated in consolidated financial
statements of the Holding Company and Subsidiaries), all consolidated in
accordance with GAAP, and after giving appropriate effect to outside minority
interests, if any, in Subsidiaries, provided that in determining Consolidated
Net Income there shall be excluded (a) the Net Income of any Person (other than
a Subsidiary of the Holding Company) in which the Holding Company or any
Subsidiary of the Holding Company has an ownership interest, except to the
extent that any such Net Income has been actually received by the Holding
Company or such Subsidiary in the form of dividends or similar distributions,
(b) any undistributed Net Income of a Subsidiary of the Holding Company which
for any reason is unavailable for distribution to the Holding Company or any
other Subsidiary of the Holding Company, (c) the Net Income of any Person
accrued prior to the date it becomes a Subsidiary of the Holding Company or is
merged into or consolidated with the Holding Company or a Subsidiary of the
Holding Company, (d) in the case of a successor to the Holding Company by
consolidation, merger or transfer of assets, the Net Income of such successor
accrued prior to such consolidation, merger or transfer, (e) any deferred or
other credit representing the excess of the equity in any Subsidiary of the
Holding Company at the date of acquisition thereof over the cost of the
investment in such Subsidiary and (f) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of income accrued during the same period.
"Current Debt" of any Person shall mean, at any date, without duplication,
(a) all Indebtedness for borrowed money or in respect of Capital Leases or the
deferred purchase price of property (including, without limitation, Indebtedness
of the kind referred to in clauses (b), (c), (d) and (e) of the definition of
Indebtedness), whether or not interest bearing, of such Person at such date
which would, in accordance with GAAP, be classified as short-term Indebtedness
at such date, but specifically excluding the current maturities of such Person's
Funded Debt, (b) all Guarantees by such Person at such date of Current Debt of
others and (c) the aggregate amount which is due on or before the expiration of
one year from such date in respect of any Redeemable Shares of such Person.
"Current Market Price" shall have the meaning specified in section 12.
"Default" shall mean any condition or event which constitutes or, after
notice or lapse of time or both, would constitute an Event of Default.
"EBITDA" of any Person shall mean, for any period, the Net Income of such
Person for such period after restoring thereto amounts deducted for (a) Interest
Charges, (b) taxes in respect of income and profits, and (c) amortization and
<PAGE>
depreciation, in each case determined in accordance with GAAP, excluding, in the
case of the fiscal quarter in which the Acquisition is consummated, any
restructuring charge taken by the Holding Company and its Subsidiaries in
connection with the Acquisition.
"Environmental Laws" shall mean any law, statute, rule, regulation or other
governmental standard or requirement relating or pertaining to (a) the
generation, manufacture, management, handling, use, sale, transportation,
treatment, storage, disposal, delivery, discharge, release or emission of any
waste, pollutant or toxic, hazardous or other substance, or (b) any other act,
omission or condition affecting or involving the environment or air or water
pollution or soil or groundwater contamination.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and rulings thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) that, together with either Company, would be treated as a single
employer under section 4001(b) of ERISA, or that is a member of a group of which
either Company is a member and that is a controlled group within the meaning of
section 4971(e)(2)(B) of the Code.
"Event of Default" shall have the meaning specified in section 16.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
"Fair Value" shall have the meaning specified in section 12.
"Foreign Subsidiary" shall mean each of the following: (a) each Subsidiary
of the Holding Company identified as such on Exhibit 5.2 attached hereto and (b)
each Subsidiary of the Holding Company which is organized under the laws of a
jurisdiction other than the United States of America or any state thereof.
"Funded Debt" of any Person shall mean, at any date, without duplication,
(a) all Indebtedness for borrowed money or in respect of Capital Leases or the
deferred purchase price of property (including, without limitation, Indebtedness
of the kind referred to in clauses (b), (c), (d) and (e) of the definition of
Indebtedness), whether or not interest-bearing, of such Person which would, in
accordance with GAAP, be classified as long-term Indebtedness at such date, but
in any event including all such Indebtedness, whether secured or unsecured, of
such Person which matures (or which, pursuant to the terms of a revolving credit
agreement or otherwise, is directly or indirectly renewable or extendible at the
option of such Person for a period ending) more than one year after the date of
the creation thereof, notwithstanding the fact that payments in respect thereof
<PAGE>
(whether installment, serial maturity or sinking fund payments or otherwise) are
required to be made by such Person not more than one year after the date as of
which the amount of Funded Debt is being determined, other than any amount
thereof which is at the time included in Current Debt of such Person, (b) all
Guarantees by such Person at such date of Funded Debt of others and (c) the
aggregate amount which is due more than one year from such date in respect of
any Redeemable Shares of such Person.
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States from time to time, consistently applied.
"Guarantee" of any Person shall mean, at any date, any obligation of such
Person at such date guaranteeing, directly or indirectly, any Indebtedness,
liability or other obligation of any other Person in any manner, but in any
event including all endorsements (other than for collection or deposit in the
ordinary course of business), all discounts with recourse and all obligations
incurred through an agreement, contingent or otherwise, (a) to purchase the
obligations of any other Person or any security therefor or to advance or supply
funds for the payment or purchase of such obligations, or (b) to purchase, sell
or lease (as lessee or lessor) property, products, materials or supplies or to
purchase or sell transportation or services, primarily for the purpose of
enabling the obligor to make payment of such obligations or to assure the owner
of such obligations against loss, regardless of the delivery or non-delivery of
the property, products, materials or supplies or the furnishing or nonfurnishing
of the transportation or services, or (c) to provide funds for the payment of,
or obligating such Person to make, any loan, advance, capital contribution or
other investment in the obligor for the purpose of assuring a minimum equity,
asset base, working capital or other balance sheet condition for any date or to
provide funds for the payment of any obligation, dividend or stock liquidation
payment, or otherwise to supply funds to or in any manner invest in the obligor.
The amount of any Guarantee shall be equal to the amount of all Indebtedness,
liabilities and other obligations directly or indirectly guaranteed thereby.
"Hedge Agreements" shall mean interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements of the Companies and
their respective Subsidiaries.
"Holding Company" shall mean PSC Inc., a New York corporation, and any
successor thereto.
"Indebtedness" of any Person shall mean, at any date, all indebtedness,
liabilities and other obligations of such Person at such date (other than items
of shareholders' equity) which would, in accordance with GAAP, be classified as
liabilities of such Person, but in any event including (without duplication):
(a) all Guarantees of such Person;
<PAGE>
(b) all indebtedness, liabilities and other obligations secured by any
Lien in respect of property owned by such Person, whether or not such
Person has assumed or become liable for the payment of such obligations;
(c) all indebtedness, liabilities and other obligations of such Person
arising under any conditional sale or other title retention agreement,
whether or not the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property;
(d) the amount of the obligation required to be recorded by the lessee
in respect of any Capital Lease under which such Person is lessee; and
(e) all indebtedness, liabilities and other obligations arising in
connection with letters of credit, bankers acceptances or other credit
enhancement facilities and Hedge Agreements.
"Indemnified Costs" and "Indemnitee" shall have the respective meanings
specified in section 21.
"Indemnified Person" shall have the meaning specified in section 11.5.
"Interest Charges" of any Person shall mean, for any period, the aggregate
amount of all interest paid, payable or guaranteed during such period by such
Person in respect of Funded Debt and Current Debt, including, without
limitation, Rental Obligations on Capital Leases, determined in accordance with
GAAP.
"Interest Expense" of any Person shall mean, for any period, Interest
Charges of such Person for such period net of interest income for such period,
whether paid or accrued, and including, without limitation, (a) commissions,
discounts and other fees and charges payable in connection with letters of
credit and (b) the net payment, if any, payable in connection with Hedge
Agreements less the net credit, if any, received in connection with Hedge
Agreements.
"Investment" of any Person shall mean any investment made by such Person in
any other Person by stock purchase, capital contribution, loan, advance,
acquisition of Indebtedness, Guarantee or otherwise.
"Licenses" shall mean certificates of public convenience and necessity,
franchises, licenses and other permits and authorizations from governmental
authorities.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, lien (statutory or otherwise), preference, priority, security
interest, chattel mortgage or other charge or encumbrance of any kind, or any
other type of preferential arrangement, including, without limitation, the lien
<PAGE>
or retained security title of a conditional vendor and any easement, right of
way or other encumbrance on title to real property and any lease having
substantially the same effect as any of the foregoing.
"Make Whole Amount" shall mean, at any date, with respect to any prepayment
or payment (whether on account of acceleration or otherwise) of any Notes (but
excluding any prepayment of Notes pursuant to section 9.3), if the Treasury Rate
plus 200 basis points at such date is lower than 11.25%, the excess of (x) the
present value of the principal and interest payments on and in respect of the
Notes being prepaid or paid, as the case may be, that would otherwise become due
and payable (without giving effect to such prepayment or payment) (including the
final payment on the maturity date of the Notes), discounted at a rate which is
equal to the Treasury Rate plus 200 basis points over (y) the principal amount
of the Notes being prepaid or paid, as the case may be, at par. If the Treasury
Rate plus 200 basis points at the date of such prepayment or payment is equal to
or higher than 11.25% per annum, the Make Whole Amount is zero.
"Material Adverse Change" shall mean a material adverse change in or effect
upon any of (a) the condition (financial or otherwise), business, performance,
operations, properties, profits or prospects of the Operating Company and its
Subsidiaries taken as one enterprise, the Holding Company and its Subsidiaries
taken as one enterprise or any of the material assets or liabilities acquired or
assumed pursuant to the Acquisition Agreement, (b) the legality, validity or
enforceability of this Agreement, the Securities or any of the other Operative
Documents, (c) the rights and remedies of any holder of Securities with respect
to the Securities or (d) the ability of the Holding Company, the Operating
Company or any of the other Material Subsidiaries to perform its obligations
under any of the Operative Documents and/or to comply with any of the terms
thereof applicable to it.
"Material Default" shall have the meaning specified in section 10.
"Material Subsidiary" shall mean, at any date of determination, (a) the
Operating Company and (b) any other Subsidiary which, in the case of this clause
(b), individually or together with its Subsidiaries, (i) accounted for 5% or
more of the consolidated gross revenues of the Holding Company and its
Subsidiaries, determined in accordance with GAAP, for the then most recently
completed period of four consecutive fiscal quarters of the Holding Company or
(ii) owns (or own) properties and assets (whether real, personal or mixed,
tangible or intangible) which have an aggregate fair market value equal to 5% or
more of the aggregate fair market value of the properties and assets owned by
the Holding Company and its Subsidiaries, determined in accordance with GAAP, as
at the end of the then most recently completed fiscal quarter of the Holding
Company.
"Merger" and "Merger Agreement" shall have the respective meanings
specified in section 4.3.
<PAGE>
"Multiemployer Plan" shall mean any Plan that is a "multiemployer plan" as
defined in section 4001(a)(3) of ERISA.
"Net Income" of any Person shall mean, for any period, the net income (or
net loss), excluding all extraordinary, unusual, nonrecurring and/or
nonoperating items, of such Person for such period, determined in accordance
with GAAP.
"Note Guarantees" shall have the meaning specified in section 1.
"Notes" shall have the meaning specified in section 1.
"Obligors" shall have the meaning specified in section 10.
"Officers' Certificate" shall mean a certificate signed on behalf of each
Company by its Chief Executive Officer, its President or one of its Vice
Presidents and its Chief Financial Officer, Treasurer or one of its Assistant
Treasurers.
"Operating Company" shall mean SpectraScan, Inc., a Delaware corporation,
and any successor thereto.
"Operative Documents" shall mean this Agreement, the Other Securities
Purchase Agreements, the Securities, and each of the other agreements, documents
and instruments executed in connection herewith and therewith, each as it may
from time to time be amended, modified or supplemented.
"Organizational Documents" of any Person shall mean such Person's charter
and by-laws, partnership agreement, operating agreement, trust agreement, as
applicable, and/or any other similar agreement, document or instrument.
"Other Securities Purchase Agreements" and "Other Purchasers" shall have
the respective meanings specified in section 1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permissible Securities" shall have the meaning specified in section 10.
"Permitted Liens" shall mean such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of business securing obligations that are not
overdue for a period of more than 30 days; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
<PAGE>
public or statutory obligations; and (d) easements, rights of way and other
encumbrances on title to real property that do not render title to the property
encumbered thereby unmarketable or materially adversely affect the use of such
property for its present purposes.
"Person" shall mean an individual, a corporation, an association, a
joint-stock company, a business trust or other similar organization, a
partnership, a limited liability company, a joint venture, a trust, an
unincorporated organization or a government or any agency, instrumentality or
political subdivision thereof.
"Plan" shall mean an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by either Company or any ERISA Affiliate
or with respect to which either Company or any ERISA Affiliate may have any
liability.
"Preferred Shares", as applied to any Person, shall mean Shares of such
Person which shall be entitled to preference or priority over any other Shares
of such Person in respect of either the payment of dividends or the distribution
of assets upon liquidation.
"Pro Forma EBITDA" shall mean, for the fiscal quarters of the Holding
Company ending on December 31, 1995, March 31, 1996 and June 30, 1996, the
amount listed on Exhibit 15.1 attached hereto for such fiscal quarter.
"Proprietary Rights" shall mean any patents, registered and common law
trademarks, service marks, trade names, copyrights, licenses and other similar
rights (including, without limitation, know-how, trade secrets and other
confidential information) and applications for each of the foregoing, if any.
"PSC Stock Option Plans" shall mean the 1987 Stock Option Plan and the 1994
Stock Option Plan of the Holding Company.
"Publicly Traded" shall have the meaning specified in section 12.
"Put Closing Date", "Put Event", "Put Notice", "Put Price" and "Put
Securities" shall have the respective meanings specified in section 12.
"Redeemable" shall mean, with respect to any shares of any Person, each
share of such Person that is (a) redeemable, payable or required to be purchased
or otherwise retired or extinguished, or convertible into Funded Debt or Current
Debt of such Person, (i) at a fixed or determinable date, whether by operation
of any sinking fund or otherwise, (ii) at the option of any Person other than
such Person or (iii) upon the occurrence of a condition not solely within the
control of such Person or (b) convertible into other Redeemable shares.
"Refinancing Agreement" shall have the meaning specified in section 10.
<PAGE>
"Registrable Shares" shall mean the Underlying Securities, except that, as
to any particular Registrable Shares, such securities, once issued, will cease
to be Registrable Shares when (a) a registration statement covering such
securities has been declared effective and such securities have been disposed of
pursuant to an effective registration statement or (b) such securities are sold
to the public in accordance with Rule 144 (or any similar provision then in
force) under the Securities Act. A Person shall be deemed to be a "holder of
Registrable Shares" for the purposes of section 11 if such Person is the holder
of any Warrants and/or any Underlying Securities.
"Registration Expenses" shall mean all fees, expenses and disbursements
related to any registration, qualification or compliance pursuant to section 11,
including, without limitation, all registration, filing, rating and listing
fees, blue sky fees and expenses, printing expenses, reasonable fees and
disbursements of counsel (including, without limitation, the fees, expenses and
disbursements of counsel for the holder or holders of the Registrable Shares),
and expenses of any special audits incident to or required by any registration,
qualification or compliance, except that Registration Expenses shall not include
any underwriters' discounts or commissions attributable to any Registrable
Shares registered and sold pursuant to any such registration.
"Rental Obligations" of any Person shall mean, for any period, all rents
and other amounts (including as such, all payments which such Person is
obligated to make to the lessor on termination of any lease and/or on surrender
of the leased property other than payments for which such Person is contingently
liable on account of early termination or breach of such lease) paid, payable or
guaranteed during such period by such Person, as lessee or sublessee under any
lease, including, without limitation, any amount required to be paid by such
Person (whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes, utilities and similar charges,
determined in accordance with GAAP. Whenever it is necessary to determine the
amount of Rental Obligations for any period, to the extent that such Rental
Obligations are not definitely determinable by the terms of the lease, the
Rental Obligations not so definitely determinable shall be estimated in good
faith and in such reasonable manner as the Chief Financial Officer of the
Holding Company may determine (as evidenced by a certificate of the Chief
Financial Officer promptly delivered to the holder or holders of the Notes).
"Required Holders" as applied to describe the requisite holder or holders
of any class of the Securities, shall mean, at any date, the holder or holders
of 75% or more in interest of such class of Securities at the time outstanding
(excluding all Securities at the time owned by either Company or any Affiliate
of either Company).
"Restricted Payment" as applied to any Person shall mean:
(a) any dividend or other distribution, direct or indirect, on account
of any Shares of such Person now or hereafter outstanding (including,
without limitation, Preferred Shares) or any securities convertible into or
<PAGE>
exercisable or exchangeable for such Shares or any rights, options or
warrants to acquire any such Shares, except (i) any such dividend or
distribution payable to the Holding Company, the Operating Company and/or
any Wholly-Owned Subsidiary Guarantor and (ii) a pro rata distribution
payable to all of the stockholders of the Holding Company solely in shares
of Common Stock of the Holding Company and as a result of which there is no
change in the relative ownership interest of any stockholder in the Holding
Company or any of such stockholder's rights; and
(b) any redemption, retirement, purchase or other acquisition, direct
or indirect, of any Shares of such Person now or hereafter outstanding
(including, without limitation, Preferred Shares) or any securities
convertible into or exercisable or exchangeable for such Shares or any
rights, options or warrants to acquire any such Shares;
provided that, notwithstanding the foregoing, the term "Restricted Payment"
shall not include any dividend or other distribution paid on, or any redemption,
retirement, purchase or other acquisition of, or other payment in respect of,
any of the Securities.
"Scanning" shall have the meaning specified in section 4.3.
"Scanning Shares" shall have the meaning specified in section 4.3.
"Securities" shall mean the Notes, the Warrants and, unless the context
clearly requires otherwise, the Underlying Securities, each of which is a
"Security".
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Seller Notes" shall have the meaning specified in section 4.3.
"Sellers" shall have the meaning specified in section 4.3.
"Senior Debt" of any Person shall mean at any date, all Indebtedness of
such Person outstanding on such date under the Bank Credit Documents or any
Refinancing Agreement and any Hedge Agreements.
"Shares" of any Person shall include any and all shares of capital stock,
partnership interests, membership interests, or other shares, interests,
participations or other equivalents (however designated and of any class) in the
capital of, or other ownership interests in, such Person, and, as applied to the
Holding Company, includes Common Stock.
<PAGE>
"Solvent" as applied to any Person at any date shall mean that on and as of
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities on and as of any date shall be computed as the
amount that, in the light of all the facts and circumstances existing on and as
of such date, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Source" shall have the meaning specified in section 26.
"Special Prepayment Premium" shall mean the premium payable concurrently
with each prepayment of Notes pursuant to section 9.3 (such premium being a
percentage of the principal amount so prepaid) applicable in accordance with the
following table depending upon the 12-month period in which such prepayment
occurs:
12-Month Period
Ending June 30, Premium
1997 ........................... 5%
1998 ........................... 5%
1999 ........................... 5%
2000 ........................... 4%
2001 ........................... 3%
2002 ........................... 2%
2003 ........................... 1%
2004 and thereafter ............ 0%
"Spectra-Physics" shall have the meaning specified in section 4.3.
"Spectra SA" shall have the meaning specified in section 4.3.
"Stock/Asset Purchase" shall have the meaning specified in section 4.3.
"Subordinated Indebtedness" shall have the meaning specified in section 10.
"Subsidiary" of any Person at any date shall mean (a) any other Person a
majority (by number of votes) of the Voting Stock of which is owned by such
first-mentioned Person and/or by one or more other Subsidiaries of such
first-mentioned Person and (b) any other Person with respect to which such
<PAGE>
first-mentioned Person and/or any one or more other Subsidiaries of such
first-mentioned Person (i) is entitled to more than 50% of such Person's profits
or losses or more than 50% of such Person's assets on liquidation or (ii) holds
an equity interest in such Person of more than 50%. As used herein, unless the
context clearly required otherwise, the term "Subsidiary" refers to a Subsidiary
of the Holding Company.
"Superior Indebtedness" shall have the meaning specified in section 10.
"Total Assets" of any Person shall mean, at any date, the net book value of
the assets of such Person as would be shown on a balance sheet of such Person
prepared in accordance with GAAP.
"Total Liabilities" of any Person shall mean, at any date, the total amount
of the liabilities of such Person as would be shown on a balance sheet of such
Person prepared in accordance with GAAP.
"Treasury Rate" at any time with respect to any Notes being prepaid or paid
(whether on account of acceleration or otherwise), as the case may be, shall
mean and shall be determined by reference to the applicable display on Bloomberg
Financial Markets Service as of 10:00 A.M., Boston time, on the second Business
Day prior to the date fixed for such prepayment or payment (or, if such display
is no longer available, any publicly available source of similar market data),
and shall be the yield on actively traded United States Treasury securities
adjusted to a maturity equal to the then remaining Weighted Average Life to
Maturity of the Notes then being prepaid or paid (whether on account of
acceleration or otherwise) (the "Remaining Life"). If the Remaining Life is not
equal to the maturity of a United States Treasury security for which a yield is
given, the Treasury Rate shall be obtained by linear interpolation (calculated
to the nearest one-twelfth of a year) from the weekly average yields of the two
closest United States Treasury securities for which such yields are given,
except that if the Remaining Life is less than one year, the average yield on
actively traded United States Treasury securities adjusted to a constant
maturity of one year shall be used. The Treasury Rate shall be computed to the
fifth decimal place (one-thousandth of a percentage point) and then rounded to
the fourth decimal place (one-hundredth of a percentage point).
"TxCom" shall have the meaning specified in section 4.3.
"TxCom Shares" shall have the meaning specified in section 4.3.
"Underlying Securities" shall mean any Shares (or Other Securities (as
defined in the Warrants)) issued or issuable, as applicable upon exercise of any
Warrants, each of which is an "Underlying Security".
"Voting Stock", when used with reference to any Person, shall mean Shares
(however designated) of such Person having ordinary voting power for the
<PAGE>
election of a majority of the members of the board of directors (or other
governing body) of such Person, other than Shares having such power only by
reason of the happening of a contingency.
"Warrants" shall have the meaning specified in section 1.
"Weighted Average Life to Maturity" of any Indebtedness or obligation shall
mean, at any date, the number of years obtained by dividing the then Remaining
Dollar-years of such Indebtedness or obligation by the then outstanding
principal amount of such Indebtedness or obligation. For purposes of this
definition, the "Remaining Dollar-years" of any Indebtedness or obligation shall
mean, at any date, the total of the products obtained by multiplying (a) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payment, including payment at final maturity, in respect thereof,
by (b) the number of years (calculated to the nearest one-twelfth) which will
elapse between such date and the making of such payment.
"Wholly-Owned Subsidiary" shall mean any Subsidiary all of the outstanding
Shares of which, other than directors' qualifying Shares, shall at the time be
owned by the Holding Company and/or by one or more other Wholly-Owned
Subsidiaries and the accounts of which are consolidated with those of the
Holding Company in accordance with GAAP.
"Wholly-Owned Subsidiary Guarantor" shall mean any Wholly-Owned Subsidiary
which has delivered to each holder of any Notes a valid, binding and enforceable
Note Guarantee.
"Withdrawal Liability" shall have the meaning given such term under Part 1
of Subtitle E of Title IV of ERISA.
15.2. Other Definitions. The terms defined in this section 15.2, whenever
used in this Agreement, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified.
"this Agreement" (and similar references to any of the other Operative
Documents) shall mean, and the words "herein" (and "therein"), "hereof" (and
"thereof"), "hereunder" (and "thereunder") and words of similar import shall
refer to, such instruments as they may from time to time be amended, modified or
supplemented.
a "class" of Securities shall refer to the Notes, the Warrants and/or the
Underlying Securities, as the case may be, each of which is a separate class.
"corporation" shall include an association, joint stock company, business
trust or other similar organization.
<PAGE>
"premium" when used in conjunction with references to principal of and
interest on the Notes, shall mean any amount due upon any payment or prepayment
of any of the Notes, other than principal and interest and shall include the
Make Whole Amount and the Special Prepayment Premium.
"qualification" or "compliance" as used in section 11 refer to the
qualification or compliance of all Registrable Shares included in any
registration pursuant to section 11 under all applicable blue sky or other state
securities laws.
"register", "registered" and "registration" as used in section 11 refer to
a registration effected by filing a registration statement in compliance with
the Securities Act to permit the sale and disposition of the Registrable Shares
and any amendment filed or required to be filed to permit any such disposition.
15.3. Accounting Terms and Principles; Laws.
(a) All accounting terms used herein which are not expressly defined
in this Agreement shall have the respective meanings given to them in
accordance with GAAP, all computations made pursuant to this Agreement
shall be made in accordance with GAAP and all financial statements shall be
prepared in accordance with GAAP.
(b) All references herein to laws, statutes, rules and regulations
shall, unless the context clearly requires otherwise, be deemed to refer to
any law, statute, rule, regulation and any other governmental restriction,
standard and/or requirement promulgated, issued and/or enforced by any
domestic or foreign federal, state or local government, governmental
agency, authority, court, instrumentality or regulatory body, including,
without limitation, those of the United States of America or any state
thereof or the District of Columbia.
16. Remedies.
16.1. Events of Default Defined; Acceleration of Maturity. If any one or
more of the following events ("Events of Default") shall occur (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:
(a) if default shall be made in the due and punctual payment of all or
any part of the principal of, or premium (if any) on, any Note when and as
the same shall become due and payable, whether at the stated maturity
thereof, by notice of or demand for prepayment, or otherwise;
<PAGE>
(b) if default shall be made in the due and punctual payment of any
interest on any Note when and as such interest shall become due and payable
and such default shall have continued for a period of five Business Days;
(c) if default shall be made in the performance or observance of any
covenant, agreement or condition contained in sections 7(g), 8, 9.7, 12,
13, 14.2(b) or 14.5 to 14.19, inclusive;
(d) if default shall be made in the performance or observance of any
other of the covenants, agreements or conditions contained in this
Agreement or any of the other Operative Documents and such default shall
have continued for a period of 30 days after the earlier to occur of (i)
either Company's obtaining actual knowledge of such default or (ii) either
Company's receipt of written notice of such default;
(e) if the Holding Company or any Material Subsidiary of the Holding
Company shall make a general assignment for the benefit of creditors, or
shall not pay its debts as they become due, or shall admit in writing its
inability to pay its debts as they become due, or shall file a voluntary
petition in bankruptcy, or shall be adjudicated bankrupt or insolvent, or
shall file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, or shall
file any answer admitting or not contesting the material allegations of a
petition filed against it in any such proceeding, or shall seek or consent
to or acquiesce in the appointment of any trustee, custodian, receiver,
liquidator or fiscal agent for it or for all or any substantial part of its
properties, or shall (or its directors or stockholders shall) take any
action looking to its dissolution or liquidation;
(f) if, within 30 days after the commencement of an action against the
Holding Company or any Material Subsidiary of the Holding Company seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such action shall not have been dismissed or all orders or
proceedings thereunder affecting the operations or the business of the
Holding Company or such Material Subsidiary stayed, or if the stay of any
such order or proceeding shall thereafter be set aside, or if, within 30
days after the appointment without the consent or acquiescence of the
Holding Company or such Material Subsidiary of any trustee, custodian,
receiver, liquidator or fiscal agent for the Holding Company or any
Material Subsidiary of the Holding Company or for all or any substantial
part of their respective properties, such appointment shall not have been
vacated;
(g) if, under the provisions of any law for the relief or aid of
debtors, any court or governmental agency of competent jurisdiction shall
<PAGE>
assume custody or control of the Holding Company or of any Material
Subsidiary of the Holding Company or of all or any substantial part of
their respective properties and such custody or control shall not be
terminated or stayed within 30 days from the date of assumption of such
custody or control;
(h) if (i) the Holding Company or any Subsidiary of the Holding
Company shall fail to (A) make any payment due on any Indebtedness (other
than the Notes and other than the Indebtedness under the Bank Credit
Documents (or any Refinancing Agreement)) or other obligation (including
any in respect of any lease or any Shares upon the exercise by any Person
of any put or call option or other similar right of redemption or
repurchase with regard to such Shares in accordance with the terms of such
option or right), if the aggregate outstanding amount thereof (and of any
other Indebtedness or other obligation as to which the Holding Company or
any Subsidiary is in default) exceeds $2,000,000 or (B) perform, observe or
discharge any covenant, condition or obligation in any agreement, document
or instrument evidencing, securing or relating to such Indebtedness or
other obligation, if the effect of any such failure of the character
described in this clause (i) is to cause, or permit any other Person to
cause, any payment in respect thereof in an aggregate amount of $2,000,000
or more to become due and payable, or (ii) any such Indebtedness or other
obligation or any Indebtedness or other obligation under the Bank Credit
Documents (or any Refinancing Agreement) in aggregate amount of $2,000,000
or more shall be accelerated or shall become due and payable by its terms
and shall not be paid or extended;
(i) if a final judgment for the payment of money which, together with
all other outstanding final judgments for the payment of money against the
Holding Company and/or any of its Subsidiaries, exceeds an aggregate of
$2,000,000 shall be rendered by a court of record against the Holding
Company or any Subsidiary, and the Holding Company or such Subsidiary shall
not discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereof within 30 days from the date
of entry thereof and within such period of 30 days, or such longer period
during which execution of such judgment shall have been stayed, move to
vacate such judgment or appeal therefrom and cause the execution thereof to
be stayed pending determination of such motion or during such appeal;
(j) if any representation or warranty made by or on behalf of the
Holding Company or any Subsidiary of the Holding Company in this Agreement
or in any of the other Operative Documents or in any agreement, document or
instrument delivered under or pursuant to any provision hereof or thereof
shall prove to have been materially false or incorrect on the date as of
which made;
<PAGE>
(k) if, at any time, this Agreement or any of the other Operative
Documents shall for any reason (other than the scheduled termination
thereof in accordance with its terms) expire, fail to be in full force and
effect or be disaffirmed, repudiated, cancelled, terminated or declared to
be unenforceable, null and void;
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under section
4042 of ERISA to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified either Company or any ERISA Affiliate that a
Plan may become a subject of any such proceedings, (iii) the aggregate
"amount of unfunded benefit liabilities" (within the meaning of section
4001(a)(18) of ERISA) under all Plans, determined in accordance with Title
IV of ERISA, shall exceed $250,000, (iv) either Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) either
Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or
(vi) either Company or any Subsidiary of either Company establishes or
amends any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that would increase the liability of either
Company or any Subsidiary of either Company thereunder; and any such event
or events described in clauses (i) through (vi) above, either individually
or together with any other such event or events, has resulted in, or could
reasonably be expected to result in a Material Adverse Change; or
(m) if (i) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Commission under the Exchange Act), directly or indirectly, of Voting Stock
of the Holding Company (or other securities convertible into such Voting
Stock) representing 30% or more of the combined voting power of all Voting
Stock of the Holding Company; (ii) during any period of up to 24
consecutive months, commencing before or after the date of this Agreement,
individuals who at the beginning of such 24-month period were directors of
the Holding Company shall cease for any reason to constitute a majority of
the board of directors of the Holding Company; or (iii) any Person or two
or more Persons acting in concert shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, the power to
exercise, directly or indirectly, a controlling influence over the
management or policies of the Holding Company;
<PAGE>
then, in the case of an Event of Default of the character described in
subdivisions (a), (b), (c), (d), (h), (i), (j), (k), (l) or (m) of this section
16.1 and at the option of the holder or holders of 25% or more in aggregate
principal amount of the Notes at the time outstanding (excluding any Notes at
the time owned by either Company or any Affiliate of either Company), exercised
by written notice to the Operating Company, the principal of all Notes shall
forthwith become due and payable, together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Operating Company shall forthwith upon any
such acceleration pay to the holder or holders of all the Notes then outstanding
(i) the entire principal of and interest accrued on the Notes, and (ii) in
addition, to the extent permitted by applicable law, an amount equal to the Make
Whole Amount as liquidated damages and not as a penalty; provided that, in the
case of an Event of Default of the character described in subdivisions (a) or
(b) of this section 16.1 and irrespective of whether all of the Notes have been
declared due and payable by the holder or holders of 25% or more in aggregate
principal amount of the Notes at the time outstanding, any holder of Notes who
or which has not consented to any waiver with respect to such Event of Default
may, at the option of such holder, by written notice to the Operating Company,
declare all Notes then held by such holder to be, and such Notes shall thereupon
become, forthwith due and payable, together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Operating Company shall forthwith upon any
such acceleration pay to such holder (i) the entire principal of and interest
accrued on such Notes, and (ii) in addition, to the extent permitted by
applicable law, an amount equal to the Make Whole Amount as liquidated damages
and not as a penalty; provided, further, that, in the case of an Event of
Default of the character described in subdivisions (e), (f) or (g) of this
section 16.1, the principal of all Notes shall forthwith become due and payable,
together with interest accrued thereon (including any interest accruing after
the commencement of any action or proceeding under the federal bankruptcy laws,
as now or hereafter constituted, or any other applicable domestic or foreign
federal or state bankruptcy, insolvency or other similar law, and any other
interest that would have accrued but for the commencement of such proceeding,
whether or not any such interest is allowed as an enforceable claim in such
proceeding), without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, and the Operating Company shall
forthwith upon any such acceleration pay to the holder or holders of all the
Notes then outstanding (i) the entire principal of and interest accrued on the
Notes, and (ii) in addition, to the extent permitted by applicable law, an
amount equal to the Make Whole Amount as liquidated damages and not as a
penalty.
Notwithstanding the foregoing provisions, at any time after the occurrence
of any Event of Default and of notice thereof, if any, by any holder or holders
of Notes and before any judgment, decree or order for payment of the money due
has been obtained by or on behalf of any holder or holders of the Notes, the
Required Holders of the Notes by written notice to the Operating Company, may
rescind and annul such Event of Default and/or notice of such Event of Default
and the consequences thereof with respect to all of the Notes (including any
Notes which were accelerated pursuant to the first proviso in the preceding
<PAGE>
paragraph by any holder or holders on account of an Event of Default of the
character described in subdivision (a) or (b) of this section 16.1) if:
(1) the Operating Company has paid a sum sufficient to pay
(A) all overdue installments of interest on all Notes at the rate
specified in the Notes;
(B) the principal of (and premium, if any, on) any Notes which have
become due otherwise than by such Event of Default or notice thereof and
interest thereon at the rate specified in such Notes; and
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate specified in such Notes; and
(2) all Defaults and Events of Default, other than the non-payment of the
principal of Notes which have become due solely by such acceleration, have been
cured or waived as provided in section 19.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
16.2. Suits for Enforcement, etc. Subject to the provisions of section 10,
in case any one or more of the Events of Default specified in section 16.1 shall
have occurred, and irrespective of whether any Notes have become or have been
declared immediately due and payable under section 16.1, the holder of any Note
may proceed to protect and enforce its rights either by suit in equity or by
action at law, or both. The Companies stipulate that the remedies at law of the
holder or holders of the Securities in the event of any default or threatened
default by either Company in the performance of or compliance with any covenant
or agreement in this Agreement or any of the other Operative Documents 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
thereof, whether by an injunction against a violation thereof or otherwise.
Without limiting the generality of the foregoing (and without derogating from
any provision contained in this Agreement or any of the other Operative
Documents), upon the occurrence and during the continuance of an Event of
Default, the Required Holders of each class of Securities shall have the right
to apply for and have a receiver appointed for each of the Companies and their
respective Subsidiaries, or any one or more of them, by a court of competent
jurisdiction in any action taken by any such holders to enforce their respective
rights and remedies hereunder and under the other Operative Documents in order
to manage, protect and preserve the assets of the Companies and their respective
Subsidiaries and continue the operation of the business of the Companies and
their respective Subsidiaries, or to sell or dispose of the assets of the
Companies and their respective Subsidiaries, and to collect all revenues and
profits thereof and apply the same to the payment of all expenses and other
<PAGE>
charges of such receivership, including the compensation of the receiver, and
the Companies hereby consent to such appointment without regard to the existence
of any misfeasance or malfeasance or the presence of any defenses that would
otherwise be available to such application.
16.3. Remedies Cumulative. No remedy conferred in this Agreement or in any
of the other Operative Documents upon the holder of any Security is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
thereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
16.4. Remedies Not Waived. No course of dealing between either Company and
any of their respective Subsidiaries, on the one hand, and any holder of any
Security, on the other hand, and no delay by any such holder in exercising any
rights hereunder or under any of the other Operative Documents shall operate as
a waiver of any rights of any such holder.
16.5. Application of Payments. In case any one or more of the Events of
Default specified in section 16.1 shall have occurred, all amounts to be applied
to the prepayment or payment of any Notes, shall be applied, after the payment
of all related costs and expenses incurred by the holders of the Notes
(including, without limitation, reasonable compensation to any and all trustees,
liquidators, receivers or similar officials and reasonable fees, expenses and
disbursements of counsel) in such order of priority as is determined by the
Required Holders of the Notes.
17. Registration, Transfer and Exchange of Securities. Securities issued
hereunder shall be issued in registered form. The Companies shall keep at their
principal executive office (which is now located at the address set forth at the
beginning of this Agreement), registers in which they shall provide for the
registration and transfer of the Securities. The name and address of each holder
of the Securities shall be registered in such registers. The Companies shall
give to any institutional holder of any Security promptly (but in any event
within 10 days) following request therefor, a complete and correct copy of the
names and addresses of all registered holders of the Securities and the amount
and kind of Securities held by each. Whenever any Security or Securities shall
be surrendered for transfer or exchange, the applicable Company at its expense
will execute and deliver in exchange therefor a new Security or Securities (in
such denominations and registered in such name or names as may be requested by
the holder of the surrendered Security or Securities), in the same aggregate
unpaid principal amount (in the case of the Notes) or exercisable for the same
aggregate number of Shares (in the case of any Warrants) or in the same
aggregate number of Shares (in the case of any Underlying Security), as
applicable, as that of the Security or Securities so surrendered. The Companies
may treat the Person in whose name any Security is registered as the owner of
such Security for all purposes.
<PAGE>
18. Replacement of Securities. Upon receipt by the Companies of reasonably
satisfactory evidence of the loss, theft, destruction or mutilation of any Note
or Warrant and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnity, and (in the case of mutilation) upon surrender of such
Note or Warrant, the applicable Company at its expense will execute and deliver
in lieu of such Note or Warrant a new Note or Warrant of like tenor and, in the
case of any new Note, dated so as not to result in any loss of interest. Your
unsecured agreement to indemnify and/or affidavit and that of any other
institutional holder shall constitute satisfactory indemnity and/or satisfactory
evidence of loss, theft or destruction for the purpose of this section 18.
19. Amendment and Waiver.
(a) Any term of this Agreement and, unless explicitly provided
otherwise therein, of any of the other Operative Documents may, with the
consent of the Companies, be amended, or compliance therewith may be
waived, in writing only, by the Required Holders of each class of
Securities entitled to the benefits of such term, provided that (i) without
the consent of the holders of all of the Notes at the time outstanding, no
such amendment or waiver shall (A) change the amount of the principal of or
any rate of interest on or the amount of any premium payable with respect
to any of the Notes or change the payment terms of any of the Notes, or,
except as provided in the Notes, subordinate the obligation of the Obligors
to pay any amount due on the Notes to any other obligation, or (B) change
the percentage of holders of Notes required to approve any such amendment,
effectuate any such waiver or accelerate payment of the Notes; (ii) without
the consent of the holders of all of the Warrants and Underlying Securities
at the time outstanding, no such amendment or waiver shall (A) modify any
of the provisions of section 11 or section 12, or (B) change the percentage
of holders of the Warrants and Underlying Securities required to approve
any such amendment or effect any such waiver; and (iii) no such amendment
or waiver shall extend to or affect any obligation not expressly amended or
waived or impair any right consequent thereon. Executed or true and correct
copies of any amendment, waiver or consent effected pursuant to this
section 19 shall be delivered by the Companies to each holder of Securities
forthwith (but in any event not later than five Business Days) following
the effective date thereof.
(b) The Companies will not, directly or indirectly, request or
negotiate for, or offer or pay any remuneration or grant any security as an
inducement for, any proposed amendment or waiver of any of the provisions
of this Agreement or any of the other Operative Documents unless each
holder of the Securities (irrespective of the kind and amount of Securities
then owned by it) shall be informed thereof by the Companies and, if such
holder is entitled to the benefit of any such provision proposed to be
amended or waived, shall be afforded the opportunity of considering the
same, shall be supplied by the Companies with sufficient information to
<PAGE>
enable it to make an informed decision with respect thereto and shall be
offered and paid such remuneration and granted such security on the same
terms.
(c) In determining whether the requisite holders of Securities have
given any authorization, consent or waiver under this section 19, any
Securities owned by either Company or any of their respective Affiliates
shall be disregarded and deemed not to be outstanding.
20. Method of Payment of Securities. Irrespective of any provision hereof or of
the other Operative Documents to the contrary, so long as you or any other
institutional holder shall hold any Security, the Companies will make all
payments on such Security to you or such other institutional holder by the
method and at the address for such purpose specified in Schedule I attached
hereto or by such other method or at such other address as you or such
institutional holder may designate in writing (given as provided in section 23),
without requiring any presentation or surrender of such Security, except that if
any Security shall be paid, prepaid and/or repurchased in full, such Security
shall be surrendered to the applicable Company promptly following such payment,
prepayment or repurchase and cancelled.
21. Expenses; Indemnity. Whether or not the transactions contemplated by any of
the Operative Documents shall be consummated, the Companies, jointly and
severally, will pay or cause to be paid (or reimbursed, as the case may be) and
will defend, indemnify and hold you (and each other holder of any of the
Securities) and each of your (and such other holder's) directors, officers,
employees, agents, advisors and Affiliates (each, an "Indemnitee") harmless (on
an after tax basis) in respect of all costs, losses, expenses (including,
without limitation, the reasonable fees, costs, expenses and disbursements of
counsel) and damages (collectively, "Indemnified Costs") incurred by or asserted
against any Indemnitee in connection with the negotiation, execution, delivery,
performance and/or enforcement of this Agreement or any of the other Operative
Documents (including, without limitation, so-called work- outs and/or
restructurings and all amendments, waivers and consents hereunder and
thereunder, whether or not effected) and/or the consummation of the transactions
contemplated hereby and thereby or which may otherwise be related in any way to
this Agreement or any other Operative Documents or such transactions or such
Indemnitee's relationship to either Company or any of their respective
Affiliates or any of their respective properties and assets, including, without
limitation, any and all Indemnified Costs related in any way to the requirements
of any Environmental Laws (as the same may be amended, modified or supplemented
from time to time) or to any environmental investigation, assessment, site
monitoring, containment, clean up, remediation, removal, restoration, reporting
and sampling, whether or not consented to, or requested or approved by, any
Indemnitee, and whether or not such Indemnified Cost is attributable to an event
or condition originating from any properties or assets of either Company or any
of their respective Subsidiaries or any other properties previously or hereafter
owned, leased, occupied or operated by either Company or any of their respective
<PAGE>
Subsidiaries. Notwithstanding the foregoing, the Companies shall have any
obligation to an Indemnitee under this section 21 with respect to any
Indemnified Cost which is finally determined by a court of competent
jurisdiction to have arisen solely and directly as a result of the willful
misconduct or bad faith of such Indemnitee.
22. Taxes. The Companies jointly and severally will pay all taxes and fees
(including interest and penalties), including, without limitation, all issuance
and documentary stamp and similar taxes, which may be payable in respect of the
execution and delivery of this Agreement and each of the other Operative
Documents.
23. Communications. All communications provided for herein and, unless
explicitly provided otherwise therein, in any of the other Operative Documents
shall be in writing and sent (a) by telecopy if the sender on the same day sends
a confirming copy of such communication by a recognized overnight delivery
service (charges prepaid), (b) by a recognized overnight delivery service
(charges prepaid), or (c) by messenger. Any such communication must be sent (i)
if to either Company (or any Subsidiary of either Company), to such Company (or
such Subsidiary) at:
PSC Inc.
675 Basket Road
Webster, New York 14580
Attention: William J. Woodard
Telecopy No.: (716) 265-6409
with a copy (which shall not constitute notice) to:
Boylan, Brown, Code, Fowler, Vigdor & Wilson, LLP
2400 Chase Square
Rochester, New York 14604
Attention: Martin S. Weingarten, Esq.
Telecopy No.: (716) 232-3528
or at such other address (or telecopy number) as may be furnished in writing by
the Companies to each holder of any Security and (ii) if to you, at your address
for such purpose set forth in Schedule I attached hereto, with a copy (which
shall not constitute notice) to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Frank B. Porter, Jr., Esq.
Telecopy No.: (617) 248-4000
<PAGE>
and if to any other holder of any Security, at the address of such holder as it
appears on the applicable register maintained pursuant to section 17, or at such
other address as may be furnished in writing by you or by any other holder to
the Companies. Communications under this section 23 shall be deemed given only
when actually received.
24. Survival of Agreements, Representations and Warranties, etc. All agreements,
representations and warranties contained herein and in the other Operative
Documents shall be deemed to have been relied upon by you and shall survive the
execution and delivery of this Agreement and each of the other Operative
Documents, the issue, sale and delivery of the Securities and payment therefor
and any disposition of the Securities by you, whether or not any investigation
at any time is made by you or on your behalf. All indemnification provisions,
including, without limitation, those contained in sections 11.5, 21 and 22,
shall survive the date upon which none of the Securities shall be outstanding
and the termination of this Agreement and each of the other Operative Documents.
25. Successors and Assigns; Rights of Other Holders. This Agreement and, unless
explicitly provided otherwise therein, each of the other Operative Documents
shall bind and inure to the benefit of and be enforceable by the Companies and
you, successors to each Company and your successors and assigns, and, in
addition, shall inure to the benefit of and be enforceable by each holder from
time to time of any Securities who, upon acceptance thereof, shall, without
further action, be entitled to enforce the applicable provisions and enjoy the
applicable benefits hereof and thereof. The Companies may not assign any of
their respective rights or obligations hereunder or under any of the other
Operative Documents without the written consent of the Required Holders of each
class of Securities then outstanding.
26. Purchase for Investment; ERISA.
(a) You represent and warrant (i) that you have been furnished with
all information that you have requested for the purpose of evaluating your
proposed acquisition of the Securities to be issued to you pursuant hereto
and (ii) that you will acquire such Securities for your own account for
investment and not for distribution in any manner that would violate
applicable securities laws, but without prejudice to your rights to dispose
of such Securities or a portion thereof to a transferee or transferees, in
accordance with such laws if at some future time you deem it advisable to
do so. The acquisition of such Securities by you at the Closing shall
constitute your confirmation of the foregoing representations and
warranties. You understand that such Securities are being sold to you in a
transaction which is exempt from the registration requirements of the
Securities Act, and that, in making the representations and warranties
contained in section 5.16, the Companies are relying, to the extent
applicable, upon your representations and warranties contained herein.
<PAGE>
(b) You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used
by you to pay the purchase price of the Securities to be purchased by you
hereunder:
(i) the Source is an "insurance company general account" as
defined in Section V(e) of Prohibited Transaction Exemption ("PTE")
95- 60 (issued July 12, 1995) and, except as you have disclosed to the
Companies in writing pursuant to this section (i), the amount of
reserves and liabilities for the general account contract(s) held by
or on behalf of any employee benefit plan or group of plans maintained
by the same employer or employee organization do not exceed 10% of the
total reserves and liabilities of the general account (exclusive of
separate account liabilities) plus surplus as set forth in the NAIC
Annual Statement filed with the state of domicile of the insurer; or
(ii) the Source is a separate account of an insurance company
maintained by you in which an employee benefit plan (or its related
trust) has an interest, which separate account is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account; or
(iii) the Source is either (A) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (B) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
to the Companies in writing pursuant to this section (iii), no
employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or collective
investment fund; or
(iv) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning
of Part V of the QPAM Exemption), no employee benefit plan's assets
that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained
by the same employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person
<PAGE>
controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in either Company and (A) the identity of such QPAM and
(B) the names of all employee benefit plans whose assets are included
in such investment fund have been disclosed to the Companies in
writing pursuant to this section (iv); or
(v) the Source is a governmental plan; or
(vi) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Companies in
writing pursuant to this section (vi); or
(vii) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this section 26(b), the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA, and
the term "QPAM Exemption" means PTE 84-14 (issued March 13, 1984).
27. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and,
unless explicitly provided otherwise therein, each of the other Operative
Documents, including the validity hereof and thereof and the rights and
obligations of the parties hereunder and thereunder, and all amendments and
supplements hereof and thereof and all waivers and consents hereunder and
thereunder, shall be construed in accordance with and governed by the domestic
substantive laws of the State of New York without giving effect to any choice of
law or conflicts of law provision or rule that would cause the application of
the domestic substantive laws of any other jurisdiction. Each Company, to the
extent that it may lawfully do so, hereby consents to service of process, and to
be sued, in the State of New York and in The Commonwealth of Massachusetts and
consents to the jurisdiction of the courts of the State of New York and of The
Commonwealth of Massachusetts and of the United States District Courts for the
Southern District of New York and for the District of Massachusetts, as well as
to the jurisdiction of all courts to which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding arising out of
any of its obligations hereunder or thereunder or with respect to the
transactions contemplated hereby or thereby, and expressly waives any and all
objections it may have as to venue in any such courts. Each Company further
agrees that a summons and complaint commencing an action or proceeding in any of
such courts shall be properly served and shall confer personal jurisdiction if
served personally or by certified mail to it at its address set forth in section
23 or as otherwise provided under the laws of the State of New York or The
Commonwealth of Massachusetts, as the case may be. Notwithstanding the
foregoing, each Company agrees that nothing contained in this section 27 shall
<PAGE>
preclude the institution of any such suit, action or other proceeding in any
jurisdiction other than the State of New York or The Commonwealth of
Massachusetts. EACH COMPANY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN
ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH COMPANY IN
RESPECT OF ITS OBLIGATIONS HEREUNDER OR THEREUNDER OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
28. Rule 144A. Each Company will take, or will cause to be taken, such action as
any holder of Securities may reasonably request from time to time to facilitate
any sale or disposition by any such holder of any Securities without
registration under the Securities Act and/or any applicable securities laws
within the limitation of the exemptions provided by any rule or regulation
thereunder, including, without limitation, Rule 144A under the Securities Act.
29. Miscellaneous. The headings in this Agreement and in each of the other
Operative Documents are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof or thereof. This Agreement (together with
the other Operative Documents) embodies the entire agreement and understanding
among you and the Companies and supersedes all prior agreements and
understandings relating to the subject matter hereof. Each covenant contained
herein and in each of the other Operative Documents shall be construed (absent
an express provision to the contrary) as being independent of each other
covenant contained herein and therein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. If any provision in this Agreement or in any
of the other Operative Documents refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable, whether such action is taken directly or indirectly by such
Person, whether or not expressly specified in such provision. In case any
provision in this Agreement or any of the other Operative Documents shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
This Agreement and, unless explicitly provided otherwise therein, each of the
other Operative Documents, may be executed in any number of counterparts and by
the parties hereto or thereto, as the case may be, on separate counterparts but
all such counterparts shall together constitute but one and the same instrument.
[The remainder of this page is intentionally left blank.]
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal among you and the Companies. Please
then return one of such counterparts to the Companies.
Very truly yours,
PSC INC.
By: _____________________________
(Title)
SPECTRASCAN, INC.
By: _____________________________
(Title)
The foregoing Agreement is hereby
agreed to as of the date thereof.
[THE FOLLOWING ARE THE SIGNATURE
BLOCKS FOR EACH OF THE PURCHASERS
WHICH WILL APPEAR IN THE APPLICABLE
SECURITIES PURCHASE AGREEMENT
BETWEEN THE COMPANIES AND EACH
SUCH PURCHASER.]
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: ______________________________
(Title)
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By: ______________________________
(Title)
<PAGE>
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: ______________________________
(Title)
LINCOLN NATIONAL INCOME FUND, INC.
By: ______________________________
(Title)
SECURITY-CONNECTICUT LIFE
INSURANCE COMPANY
By: Lincoln Investment Management, Inc.
Its Attorney-In-Fact
By: __________________________
(Title)
SECURITY-CONNECTICUT CORPORATION
By: Lincoln Investment Management, Inc.
Its Attorney-In-Fact
By: __________________________
(Title)
<PAGE>
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: ______________________________
(Title)
EXHIBIT 10.2
EXECUTION COPY
$100,000,000
CREDIT AGREEMENT
Dated as of July 12, 1996
Among
PSC ACQUISITION, INC.
as Borrower
and
PSC INC.
as Guarantor
and
THE INITIAL LENDERS
NAMED HEREIN
as Initial Lenders
FLEET BANK
as Initial Issuing Bank,
and
FLEET BANK
as Administrative Agent
<PAGE>
T A B L E O F C O N T E N T S
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms......................................... 2
1.02. Computation of Time Periods................................... 27
1.03. Accounting Terms.............................................. 27
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances.................................................. 27
2.02. Making the Advances........................................... 29
2.03. Issuance of and Drawings and
Reimbursement Under Letters of Credit ..................... 31
2.04. Repayment of Advances......................................... 33
2.05. Termination or Reduction of the Commitments................... 36
2.06. Prepayments................................................... 36
2.07. Interest...................................................... 39
<PAGE>
Section Page
2.08. Fees.......................................................... 40
2.09. Conversion of Advances........................................ 40
2.10. Increased Costs, Etc.......................................... 41
2.11. Payments and Computations..................................... 43
2.12. Taxes......................................................... 44
2.13. Sharing of Payments, Etc...................................... 46
2.14. Use of Proceeds............................................... 47
2.15. Defaulting Lenders............................................ 47
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Extension of Credit........... 49
3.02. Conditions Precedent to Each Borrowing and Issuance........... 57
3.03. Determinations Under Section 3.01............................. 58
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of PSC and the Borrower........ 58
<PAGE>
Section Page
ARTICLE V
COVENANTS OF PSC AND THE BORROWER
5.01. Affirmative Covenants......................................... 65
5.02. Negative Covenants............................................ 70
5.03. Reporting Requirements........................................ 77
5.04. Financial Covenants........................................... 81
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default............................................. 84
6.02. Actions in Respect of the Letters of Credit upon Default...... 88
ARTICLE VII
The Administrative Agent
7.01. Authorization and Action...................................... 88
7.02. Administrative Agent's Reliance, Etc.......................... 88
7.03. Fleet and Affiliates.......................................... 89
7.04. Lender Party Credit Decision.................................. 89
<PAGE>
Section Page
7.05. Indemnification............................................... 89
7.06. Successor Administrative Agents............................... 91
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc............................................... 92
8.02. Notices, Etc.................................................. 93
8.03. No Waiver; Remedies........................................... 93
8.04. Costs and Expenses............................................ 93
8.05. Right of Set-off.............................................. 95
8.06. Binding Effect................................................ 95
8.07. Assignments and Participations................................ 95
8.08. Execution in Counterparts..................................... 98
8.09. No Liability of the Issuing Bank.............................. 98
8.10. Confidentiality............................................... 99
8.11. Jurisdiction, Etc............................................. 99
8.12. Governing Law................................................. 99
8.13. Waiver of Jury Trial.......................................... 99
ARTICLE IX
<PAGE>
Section Page
PSC GUARANTY
9.01. PSC Guaranty..................................................100
9.02. Guaranty Absolute.............................................100
9.03. Waivers and Acknowledgments...................................101
9.04. Subrogation...................................................102
9.05. Continuing Guarantee; Assignments.............................102
<PAGE>
SCHEDULES
Schedule I ................... Commitments and Applicable Lending Offices
Schedule II .................. Foreign Subsidiaries
Schedule III ................. Pro Forma EBITDA
Schedule 3.01(g) ............. Disclosed Litigation
Schedule 3.01(k) ............. Hedge Agreements
Schedule 3.01(l)(vi) ......... States in which Loan Parties are
Qualified to do Business
Schedule 3.01(l)(xi) ......... Mortgages
Schedule 3.01 (l)(xvii) ...... Environmental Assessment Reports
Schedule 4.01(b) ............. Subsidiaries
Schedule 4.01(d) ............. Required Authorizations and Approvals
Schedule 4.01(n) ............. Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(w) ............. Open Tax Years
Schedule 4.01(dd) ............ Existing Debt (other than Surviving Debt)
Schedule 4.01(ee) ............ Surviving Debt
Schedule 4.01(ff) ............ Owned Real Estate
Schedule 4.01(gg) ............ Leased Real Estate
Schedule 4.01(hh) ............ Material Contracts
Schedule 4.01(ii) ............ Investments
Schedule 4.01(jj) ............ Intellectual Property
Schedule 5.02(a)(iii) ........ Liens
<PAGE>
EXHIBITS
Exhibit A-1 .................. Form of Term A Note
Exhibit A-2 .................. Form of Term B Note
Exhibit A-3 .................. Form of Working Capital Note
Exhibit B .................... Form of Notice of Borrowing
Exhibit C .................... Form of Assignment and Acceptance
Exhibit D .................... Form of Security Agreement
Exhibit E .................... Form of Intellectual Property Security Agreement
Exhibit F-1 .................. Form of New York Mortgage
Exhibit F-2 .................. Form of Oregon Deed of Trust
Exhibit G .................... Form of Subsidiary Guaranty
Exhibit H .................... Form of Assumption Agreement
Exhibit I .................... Form of Solvency Certificate
Exhibit J .................... Form of Opinion of Borrower's Counsel
Exhibit K .................... Form of Opinion of Local Counsel Opinion
Exhibit L .................... Form of Opinion of Intellectual Property Counsel
Exhibit M .................... Form of Borrowing Base Certificate
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of July 12, 1996 among PSC Acquisition, Inc., a
Delaware corporation ("PSC Acquisition" and, together with the Surviving
Corporation (as hereinafter defined) following the Merger (as hereinafter
defined), the "Borrower"), PSC Inc., a New York corporation ("PSC"), as
Guarantor, the banks, financial institutions and other institutional lenders
listed on the signature pages hereof as the Initial Lenders (the "Initial
Lenders"), the Initial Issuing Bank (as hereinafter defined) (the "Initial
Issuing Bank"), the Swing Line Bank (as hereinafter defined), Fleet Bank
("Fleet"), as administrative agent (together with any successor appointed
pursuant to Article VII, the "Administrative Agent") for the Lender Parties (as
hereinafter defined).
PRELIMINARY STATEMENTS:
(1) PSC Acquisition was organized by PSC to acquire certain assets and
businesses of Spectra-Physics, Inc., a Delaware corporation (the "Company"),
Spectra-Physics Scanning Systems, Inc., a Delaware corporation ("Scanning") and
T.X.C.O.M., S.A., a French corporation ("TxCom") and other related assets.
(2) Pursuant to the Asset and Stock Purchase Agreement dated May 20, 1996
(as amended, supplemented or otherwise modified in accordance with its terms, to
the extent permitted in accordance with the Loan Documents (as hereinafter
defined), the "Purchase Agreement") by and among PSC, Spectra-Physics Holdings,
S.A., a French corporation ("SP Holdings") and the Company, PSC has agreed to
purchase, both directly and through PSC Acquisition and other direct
wholly-owned Subsidiaries (as hereinafter defined) certain assets and businesses
of the Company. Simultaneously with such purchase, PSC Acquisition will
consummate a merger (the "Merger") with Scanning, in which Scanning will be the
surviving corporation (the "Surviving Corporation"). Upon the consummation of
the Merger, the name of the Surviving Corporation will be changed to
SpectraScan, Inc.
(3) The Borrower has requested that the Lender Parties lend to the Borrower
up to $92,500,000 of the total Commitments (as hereinafter defined) to pay to
the Company the cash consideration for the assets and businesses of the Company
that PSC and its direct wholly-owned Subsidiaries are purchasing, pay
transaction fees and expenses, and that, from time to time, the Lender Parties
lend the remaining balance of the total Commitments to the Borrower and issue
Letters of Credit for the benefit of the Borrower to provide working capital for
the Borrower and its Subsidiaries. The Lender Parties have indicated their
willingness to agree to lend such amounts on the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
<PAGE>
Article I
Definitions And Accounting Terms
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquired Assets and Liabilities" means the Scanning Shares, the US
Assets, the TxCom Assets and Liabilities and the International Assets and
Liabilities (each as defined in the Purchase Agreement).
"Acquisition" means the transactions contemplated by the Purchase
Agreement.
"Administrative Agent" has the meaning specified in the recital of
parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with Fleet at
its office at One East Avenue, Rochester, New York 14638, Account No.
1983580, Attention: Jeffrey Kenefick.
"Advance" means a Term A Advance, a Term B Advance, a Working Capital
Advance, a Swing Line Advance or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.
"Applicable Lending Office" means, with respect to each Lender Party,
such Lender Party's Domestic Lending Office in the case of a Prime Rate
Advance and such Lender Party's Eurodollar Lending Office in the case of a
Eurodollar Rate Advance.
"Applicable Margin" means at any time and from time to time (a) with
respect to the Term B Facility 1.75% per annum for Prime Rate Advances and
3.25% per annum for Eurodollar Rate Advances and (b) with respect to the
Term A Facility and the Working Capital Facility, (i) prior to July 1,
1997, 1.25% per annum for Prime Rate Advances and 2.75% per annum for
Eurodollar Rate Advances and (ii) from and after July 1, 1997, a percentage
per annum determined by reference to the Total Debt Ratio as set forth
below:
<PAGE>
Term A Facility and
Working Capital Term A Facility and Working
Total Debt Facility Capital Facility
Ratio Prime Rate Advances Eurodollar Rate Advances
Level I:
a ratio greater than 1.25% 2.75%
3.5:1
Level II:
a ratio of
3.5:1 or less
but at least 3.0:1 1.00% 2.50%
Level III:
a ratio of less than
3.0:1 but at least 2.5:1 .75% 2.25%
Level IV:
a ratio of less than
2.5:1 .50% 2.00%
The Applicable Margin for each Prime Rate Advance shall be determined by
reference to the ratio in effect from time to time and the Applicable
Margin for each Eurodollar Rate Advance shall be determined by reference to
the ratio in effect on the first day of each Interest Period for such
Advance; provided, however, that (A) no change in the Applicable Margin
shall be effective until three Business Days after the date on which the
Administrative Agent receives financial statements pursuant to
Section 5.03(c) or (d) and a certificate of the chief financial officer of
PSC demonstrating such ratio and (B) if PSC has not submitted to the
Administrative Agent the information described in clause (A) of this
proviso as and when required under Section 5.03(c) or (d), as the case may
be, the Applicable Margin shall be at Level I for so long as such
information has not been received by the Administrative Agent.
"Appropriate Lender" means, at any time, with respect to (a) any of
the Term A Facility, the Term B Facility or the Working Capital Facility, a
Lender that has a Commitment with respect to such Facility at such time,
(b) the Letter of Credit Facility, (i) the Issuing Bank and (ii) if the
other Working Capital Lenders have made Letter of Credit Advances pursuant
to Section 2.03(c) that are outstanding at such time, each such other
Working Capital Lender and (c) the Swing Line Facility, (i) the Swing Line
Bank and (ii) if the other Working Capital Lenders have made Swing Line
Advances pursuant to Section 2.02(b) that are outstanding at such time,
each such other Working Capital Lender.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender Party and an Eligible Assignee, and accepted by the
Administrative Agent, in accordance with Section 8.07 and in substantially
the form of Exhibit C hereto.
<PAGE>
"Assumption Agreement" has the meaning specified in Section
3.01(l)(xiv).
"Available Amount" of any Letter of Credit means, at any time, the
maximum amount available to be drawn under such Letter of Credit at such
time (assuming compliance at such time with all conditions to drawing).
"Bank Hedge Agreement" means any interest rate Hedge Agreement
required or permitted under Article V that is entered into by and between
the Borrower and any Lender Party.
"Bond Trustee" means The Oregon Bank in its capacity as trustee under
the IRB Documents.
"Borrower" has the meaning specified in the recital of parties to this
Agreement.
"Borrower's Account" means the account of the Borrower maintained by
the Borrower with M&T at its office at 44 Exchange Street, Rochester, New
York 14614, Account No. 15976632.
"Borrowing" means, a Term A Borrowing, a Term B Borrowing, a Working
Capital Borrowing or a Swing Line Borrowing.
"Borrowing Base" on any date means the sum of (x) 80% of the value of
the Eligible Receivables arising out of sales to account debtors within the
United States and (y) 60% of the value of the Eligible Receivables arising
out of sales to account debtors outside the United States, in each case as
set forth in the most recent Borrowing Base Certificate delivered to the
Administrative Agent pursuant to the terms of this Agreement on or prior to
such date.
"Borrowing Base Certificate" means a certificate in substantially the
form of Exhibit M hereto, duly certified by the chief financial officer of
the Borrower.
"Borrowing Base Deficiency" means, at any time, the failure of (a) the
Borrowing Base at such time to equal or exceed (b) the sum of (i) the
aggregate principal amount of the Working Capital Advances, the Letter of
Credit Advances and the Swing Line Advances outstanding at such time plus
(ii) the aggregate Available Amount under all Letters of Credit outstanding
at such time.
"Business Day" means a day of the year on which banks are not required
or authorized by law to close in Rochester, New York and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings are
carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period, the sum
of all expenditures made, directly or indirectly, by such Person or any of
<PAGE>
its Subsidiaries during such period for equipment, fixed assets, real
property or improvements, or for replacements or substitutions therefor or
additions thereto, that have been or should be, in accordance with GAAP,
reflected as additions to property, plant or equipment on a Consolidated
balance sheet of such Person.
"Capitalized Leases" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
"Cash Equivalents" means any of the following, to the extent owned by
the Borrower or any of its Subsidiaries free and clear of all Liens other
than Liens created under the Collateral Documents: (a) readily marketable
direct obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the
full faith and credit of the Government of the United States having a
maturity of not greater than 360 days from the date of issuance thereof,
(b) insured certificates of deposit of or time deposits having a maturity
of not greater than 360 days from the date of issuance thereof with any
commercial bank that is a Lender Party or a member of the Federal Reserve
System, issues (or the parent of which issues) commercial paper rated as
described in clause (c), is organized under the laws of the United States
or any State thereof and has combined capital and surplus of at least $1
billion or (c) commercial paper having a maturity of not greater than 180
days from the date of issuance thereof in an aggregate amount of no more
than $2,500,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any State of the United States and
rated at least "Prime-1" (or the then equivalent grade) by Moody's
Investors Service, Inc. or "A-1" (or the then equivalent grade) by
Standard & Poor's Ratings Group.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the U.S. Environmental
Protection Agency.
"Co-Arrangers" means Fleet and M&T.
"Collateral" means all "Collateral" referred to in the Collateral
Documents and all other property that is or is intended to be subject to
any Lien in favor of the Administrative Agent for the benefit of the
Secured Parties.
"COMIDA" means the County of Monroe Industrial Development Agency.
"Collateral Documents" means the Security Agreement, the Intellectual
Property Security Agreement, the Mortgages, and any other agreement that
creates or purports to create a Lien in favor of the Administrative Agent
for the benefit of the Secured Parties.
"Commitment" means a Term A Commitment, a Term B Commitment, a Working
Capital Commitment or a Letter of Credit Commitment.
<PAGE>
"Commitment Fee Percentage" means at any time and from time to time
(a) prior to July 1, 1997, 0.50% per annum and (b) from and after July 1,
1997 a percentage per annum determined by reference to the Total Debt Ratio
as set forth below:
Total Debt Ratio Commitment Fee Percentage
Level I: ....................................... .50
a ratio of greater
than 3.5:1
Level II: ...................................... .50
a ratio of 3.5:1
or less but at least
3.0:1
Level III: ..................................... .375
a ratio of less than
3.0:1 but at least 2.5:1
Level IV: ...................................... .375
a ratio of less
than 2.5:1
; provided, however, that (A) no change in the Commitment Fee Percentage
shall be effective until three Business Days after the date on which the
Administrative Agent receives financial statements pursuant to Section
5.03(c) or (d) and a certificate of the chief financial officer of PSC
demonstrating such ratio and (B) if PSC has not submitted to the
Administrative Agent the information described in clause (A) of this
proviso as and when required under Section 5.03(c) or (d), as the case may
be, the Commitment Fee Percentage shall be at Level I for so long as such
information has not been received by the Administrative Agent.
"Company" has the meaning specified in the Preliminary Statements.
"Confidential Information" means information that the Borrower
furnishes to the Administrative Agent or any Lender Party in a writing
designated as confidential, but does not include any such information that
is or becomes generally available to the public other than as a result of a
breach by the Administrative Agent or any Lender Party of its obligations
hereunder or that is or becomes available to the Administrative Agent or
such Lender Party from a source other than the Borrower that is not, to the
best of the Administrative Agent's or such Lender Party's knowledge, acting
in violation of a confidentiality agreement with the Borrower.
"Consolidated" refers to the consolidation of accounts, in accordance
with GAAP, of PSC and all of its Subsidiaries.
<PAGE>
"Conversion," "Convert" and "Converted" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to
Section 2.09 or 2.10.
"Current Assets" of any Person means all assets of such Person that
would, in accordance with GAAP, be classified as current assets of a
company conducting a business the same as or similar to that of such
Person, after deducting adequate reserves in each case in which a reserve
is proper in accordance with GAAP.
"Current Liabilities" of any Person means (a) all Debt of such Person
except Funded Debt that by its terms is payable on demand or matures within
one year after the date of determination (excluding any Debt renewable or
extendible, at the option of such Person, to a date more than one year from
such date or arising under a revolving credit or similar agreement that
obligates the lender or lenders to extend credit during a period of more
than one year from such date), (b) all amounts of Funded Debt of such
Person required to be paid or prepaid within one year after such date and
(c) all other items (including taxes accrued as estimated) that in
accordance with GAAP would be classified as current liabilities of such
Person.
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all Obligations of such Person for
the deferred purchase price of property or services (other than trade
payables not overdue by more than 60 days incurred in the ordinary course
of such Person's business and trade payables that are being contested in
good faith), (c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all Obligations of such Person
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), (e)
all Obligations of such Person as lessee under Capitalized Leases, (f) all
Obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, (g) all Obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in
respect of any capital stock of or other ownership or profit interest in
such Person or any other Person or any warrants, rights or options to
acquire such capital stock, valued, in the case of Redeemable Preferred
Stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (h) all Obligations of such
Person in respect of Hedge Agreements, (i) all Debt of others referred to
in clauses (a) through (h) above or clause (j) below guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly
or indirectly by such Person through an agreement (i) to pay or purchase
such Debt or to advance or supply funds for the payment or purchase of such
Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against
loss, (iii) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or
(iv) otherwise to assure a creditor against loss, and (j) all Debt referred
to in clauses (a) through (i) above of another Person secured by (or for
which the holder of such Debt has an existing right, contingent or
otherwise, to be
<PAGE>
secured by) any Lien on property (including, without limitation, accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Debt.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"Defaulted Advance" means, with respect to any Lender Party at any
time, the portion of any Advance required to be made by such Lender Party
to the Borrower pursuant to Section 2.01 or 2.02 at or prior to such time
which has not been made by such Lender Party or by the Administrative Agent
for the account of such Lender Party pursuant to Section 2.02(e) as of such
time. In the event that a portion of a Defaulted Advance shall be deemed
made pursuant to Section 2.15(a), the remaining portion of such Defaulted
Advance shall be considered a Defaulted Advance originally required to be
made pursuant to Section 2.01 on the same date as the Defaulted Advance so
deemed made in part.
"Defaulted Amount" means, with respect to any Lender Party at any
time, any amount required to be paid by such Lender Party to the
Administrative Agent or any other Lender Party hereunder or under any other
Loan Document at or prior to such time which has not been so paid as of
such time, including, without limitation, any amount required to be paid by
such Lender Party to (a) the Swing Line Bank pursuant to Section 2.02(b) to
purchase a portion of a Swing Line Advance made by the Swing Line Bank, (b)
the Issuing Bank pursuant to Section 2.03(c) to purchase a portion of a
Letter of Credit Advance made by the Issuing Bank, (c) the Administrative
Agent pursuant to Section 2.02(e) to reimburse the Administrative Agent for
the amount of any Advance made by the Administrative Agent for the account
of such Lender Party, (d) any other Lender Party pursuant to Section 2.13
to purchase any participation in Advances owing to such other Lender Party
and (e) the Administrative Agent or the Issuing Bank pursuant to Section
7.05 to reimburse the Administrative Agent or the Issuing Bank for such
Lender Party's ratable share of any amount required to be paid by the
Lender Parties to the Administrative Agent or the Issuing Bank as provided
therein. In the event that a portion of a Defaulted Amount shall be deemed
paid pursuant to Section 2.15(b), the remaining portion of such Defaulted
Amount shall be considered a Defaulted Amount originally required to be
paid hereunder or under any other Loan Document on the same date as the
Defaulted Amount so deemed paid in part.
"Defaulting Lender" means, at any time, any Lender Party that, at such
time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take
any action or be the subject of any action or proceeding of a type
described in Section 6.01(f).
"Disclosed Litigation" has the meaning specified in Section 3.01(g).
"Domestic Lending Office" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
<PAGE>
pursuant to which it became a Lender Party, as the case may be, or such
other office of such Lender Party as such Lender Party may from time to
time specify to the Borrower and the Administrative Agent.
"EBITDA" means, for any period, the sum, determined on a Consolidated
basis, of (a) net income (or net loss), (b) interest expense, (c) income
tax expense, (d) depreciation expense and (e) amortization expense in each
case of PSC and its Subsidiaries, determined in accordance with GAAP for
such period (excluding, in the case of the Fiscal Quarter in which the
consummation of the Acquisition occurs, any restructuring charge taken by
PSC and its Subsidiaries, in respect of the Acquisition).
"Eligible Assignee" means (a) with respect to any Facility (other than
the Letter of Credit Facility), (i) a Lender; (ii) an Affiliate of a
Lender; (iii) a commercial bank organized under the laws of the United
States, or any State thereof, and having total assets in excess of
$500,000,000; (iv) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having total
assets in excess of $500,000,000; (v) a commercial bank organized under the
laws of any other country that is a member of the OECD or has concluded
special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow or of the Cayman
Islands, or a political subdivision of any such country, and having total
assets in excess of $500,000,000, so long as such bank is acting through a
branch or agency located in the United States; (vi) the central bank of any
country that is a member of the OECD; (vii) a finance company, insurance
company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing
or otherwise investing in commercial loans in the ordinary course of its
business and having total assets in excess of $500,000,000; and (viii) any
other Person approved by the Administrative Agent and the Borrower, such
approval not to be unreasonably withheld or delayed, and (b) with respect
to the Letter of Credit Facility, a Person that is an Eligible Assignee
under subclause (iii) or (v) of clause (a) of this definition and is
approved by the Administrative Agent and the Borrower, such approval not to
be unreasonably withheld or delayed; provided, however, that neither any
Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible
Assignee under this definition.
"Eligible Receivables" means only such Receivables of PSC and its
Subsidiaries as the Administrative Agent, in its reasonable judgment, shall
from time to time elect to consider Eligible Receivables for purposes of
this Agreement. The value of such Receivables shall be determined by the
Administrative Agent in its reasonable judgment taking into consideration,
among other factors, their book value determined in accordance with GAAP.
By way of example only, and without limiting the discretion of the
Administrative Agent to consider any Receivables not to be Eligible
Receivables, the Administrative Agent may consider any of the following
classes of Receivables not to be Eligible Receivables:
(a) Receivables that do not arise out of sales of goods or
rendering of services in the ordinary course of the Borrower's
business;
<PAGE>
(b) Receivables on terms other than those normal or customary in
the Borrower's business;
(c) Receivables owing from any Person that is an Affiliate of the
Borrower;
(d) In the case of Lazerdata Holdings Inc. and its Subsidiaries
Receivables more than 180 days past original invoice date or more than
60 days past the date due and, in the case of PSC and its other
Subsidiaries, Receivables more than 150 days past original invoice
date or more than 60 days past the date due;
(e) Receivables owing from any Person from which an aggregate
amount of more than 50% of the Receivables owing is more than 60 days
past due;
(f) Receivables owing from any Person that shall take or be the
subject of any action or proceeding of a type described in
Section 6.01(f);
(g) Receivables (i) owing from any Person that is also a supplier
to or creditor of the Borrower unless such Person has waived any right
of set-off in a reasonably manner acceptable to the Administrative
Agent or (ii) representing any manufacturer's or supplier's credits,
discounts, incentive plans or similar arrangements entitling the
Borrower to discounts on future purchase therefrom;
(h) Receivables arising out of sales on a bill-and-hold,
guaranteed sale, sale-or-return, sale on approval or consignment basis
or subject to any right of return, set-off or charge-back;
(i) Receivables owing from an account debtor that is an agency,
department or instrumentality of the United States or any State
thereof unless the Borrower shall have satisfied the requirements of
the Assignment of Claims Act of 1940, as amended, and any similar
State legislation and the Administrative Agent is satisfied as to the
absence of set-offs, counterclaims and other defenses on the part of
such account debtor;
(j) Receivables the full and timely payment of which the
Administrative Agent in its reasonable judgment, after consultation
with the Borrower, believes to be doubtful; and
(k) Receivables in respect of which the Security Agreement, after
giving effect to the related filings of financing statements that have
then been made, if any, does not or has ceased to create a valid and
perfected first priority lien or security interest in favor of the
Secured Parties securing the Secured Obligations.
"Environmental Action" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or
potential
<PAGE>
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or
Hazardous Material or arising from alleged injury or threat to public
health and safety or the environment, including, without limitation, (a) by
any governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental
or regulatory authority or third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or agency interpretation, policy or guidance
relating to pollution or protection of the environment or natural
resources, including, without limitation, those relating to the use,
handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental
Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of any Loan Party, or under
common control with any Loan Party, within the meaning of Section 414 of
the Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been
waived by the PBGC, or (ii) the requirements of subsection (1) of Section
4043(b) of ERISA (without regard to subsection (2) of such Section) are met
with respect to a contributing sponsor, as defined in Section 4001(a)(13)
of ERISA, of a Plan, and an event described in paragraph (9), (10), (11),
(12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur
with respect to such Plan within the following 30 days; (b) the application
for a minimum funding waiver with respect to a Plan; (c) the provision by
the administrator of any Plan of a notice of intent to terminate such Plan,
pursuant to Section 4041(a)(2) of ERISA (including any such notice with
respect to a plan amendment referred to in Section 4041(e) of ERISA); (d)
the cessation of operations at a facility of any Loan Party or any ERISA
Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)
the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer,
as defined in Section 4001(a)(2) of ERISA; (f) the conditions for
imposition of a lien under Section 302(f) of ERISA shall have been met with
respect to any Plan; (g) the adoption of an amendment to a Plan requiring
the provision of security to such Plan pursuant to Section 307 of ERISA; or
(h) the institution by the PBGC of proceedings to terminate a Plan pursuant
to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the
termination of, or the appointment of a trustee to administer, such Plan.
<PAGE>
"Escrow Agreement" has the meaning specified in the Purchase
Agreement.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Lender Party,
the office of such Lender Party specified as its "Eurodollar Lending
Office" opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender Party (or, if no such
office is specified, its Domestic Lending Office), or such other office of
such Lender Party as such Lender Party may from time to time specify to the
Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing, an interest rate per
annum equal to the rate per annum obtained by dividing (a) the rate per
annum at which deposits in U.S. dollars are offered by Fleet in London,
England to prime banks in the London interbank market at 11:00 A.M. (London
time) two Business Days before the first day of such Interest Period in an
amount substantially equal to Fleet's Eurodollar Rate Advance comprising
part of such Borrowing to be outstanding during such Interest Period (or,
if Fleet shall not have such a Eurodollar Rate Advance, $1,000,000) and for
a period equal to such Interest Period by (b) a percentage equal to 100%
minus the Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means, an Advance that bears interest as
provided in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the
reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation,
any emergency, supplemental or other marginal reserve requirement) for a
member bank of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities
(or with respect to any other category of liabilities that includes
deposits by reference to which the interest rate on Eurodollar Rate
Advances is determined) having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Cash Flow" means for any period the sum of (i) EBITDA of PSC
and its Subsidiaries for such period plus (ii) the aggregate amount of all
non-cash charges deducted in arriving at EBITDA plus (iii) if there was a
net increase in Consolidated Current Liabilities of PSC and its
Subsidiaries during such period, the amount of such net increase plus
(iv) if there was a net decrease in Consolidated Current Assets (excluding
cash and Cash Equivalents) of PSC and its Subsidiaries during such period
<PAGE>
the amount of such net decrease less (v) the aggregate amount of mandatory
prepayments or repayments of principal made by PSC and its Subsidiaries on
any Funded Debt of PSC and its Subsidiaries during such period less (vi)
Capital Expenditures of PSC and its Subsidiaries less (vii) the aggregate
amount of all federal, state, local and foreign taxes paid by PSC and its
Subsidiaries during such period less (viii) the aggregate amount of
interest paid on any Funded Debt of PSC and its Subsidiaries during such
periods less (ix) the aggregate amount of all non-cash credits included in
arriving at such EBITDA less (x) if there was a net decrease in
Consolidated Current Liabilities of PSC and its Subsidiaries during such
period, the amount of such net decrease less (xi) if there was a net
increase in Consolidated Current Assets (excluding cash and Cash
Equivalents) of PSC and its Subsidiaries during such period the amount of
such increase.
"Existing Debt" means Debt of TxCom, Scanning and its Subsidiaries
outstanding immediately before giving effect to the Acquisition.
"Extraordinary Receipt" means any cash received by or paid to or for
the account of any Person not in the ordinary course of business,
including, without limitation, tax refunds, pension plan reversions,
proceeds of insurance (other than proceeds of business interruption
insurance to the extent such proceeds constitute compensation for lost
earnings), condemnation awards (and payments in lieu thereof) and indemnity
payments; provided, however, that an Extraordinary Receipt shall not
include cash receipts received from proceeds of insurance, condemnation
awards (or payments in lieu thereof) or indemnity payments to the extent
that such proceeds, awards or payments (A) in respect of loss or damage to
equipment, fixed assets or real property are applied (or in respect of
which expenditures were previously incurred) to replace or repair the
equipment, fixed assets or real property in respect of which such proceeds
were received in accordance with the terms of the Loan Documents, so long
as such application is made within 6 months after the occurrence of such
damage or loss or (B) are received by any Person in respect of any third
party claim against such Person and applied to pay (or to reimburse such
Person for its prior payment of) such claim and the costs and expenses of
such Person with respect thereto.
"Facility" means the Term A Facility, the Term B Facility, the Working
Capital Facility, the Swing Line Facility or the Letter of Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by
the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Fiscal Year" means a fiscal year of PSC and its Consolidated
Subsidiaries ending on December 31 in any calendar year.
<PAGE>
"Foreign Sales Agreements" has the meaning specified in the Purchase
Agreement.
"Foreign Subsidiary" means each of the following: (A) each Subsidiary
of PSC identified as such on Schedule II annexed hereto and (B) each
Subsidiary of PSC which is organized under the laws of a jurisdiction other
than the United States of America or any state thereof.
"Funded Debt" of any Person means Debt in respect of the Advances, in
the case of the Borrower, and all other Debt of such Person that by its
terms matures more than one year after the date of determination or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year after such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
after such date.
"GAAP" has the meaning specified in Section 1.03.
"Guaranteed Obligations" has the meaning specified in Section 9.01.
"Guarantors" means PSC and the Subsidiary Guarantors.
"Hazardous Materials" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas and
(b) any other chemicals, materials or substances designated, classified or
regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements.
"Hedge Bank" means any Lender Party in its capacity as a party to a
Bank Hedge Agreement.
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Information Memorandum" means the information memorandum dated June,
1996 used by the Co-Arrangers in connection with the syndication of the
Commitments.
"Initial Extension of Credit" means the earlier to occur of the
initial Borrowing and the initial issuance of a Letter of Credit hereunder.
"Initial Issuing Bank" means Fleet.
"Initial Lenders" has the meaning specified in the recital of parties
to this Agreement.
<PAGE>
"Insufficiency" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
ERISA.
"Intellectual Property Security Agreement" has the meaning specified
in Section 3.01(l)(x).
"Interest Expense" means, with respect to any Person for any period,
interest expense on all Debt of such Person for such period net of interest
income for such period, whether paid or accrued, determined on a
Consolidated basis for such Person and its Subsidiaries and in accordance
with GAAP, and including, without limitation, (a) in the case of PSC,
interest expense in respect of Debt resulting from Advances, (b) the
interest component of all obligations under Capitalized Leases, (c)
commissions, discounts and other fees and charges payable in connection
with letters of credit (including, without limitation, Letters of Credit),
(d) the net payment, if any, payable in connection with Hedge Agreements
less the net credit, if any, received in connection with Hedge Agreements
and (e) in the case of the Borrower, all fees paid by such Person pursuant
to Section 2.08(a).
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Prime Rate
Advance into such Eurodollar Rate Advance, and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six
months, as the Borrower may, upon notice received by the Administrative
Agent not later than 11:00 A.M. (Rochester, New York time) on the third
Business Day prior to the first day of such Interest Period, select;
provided, however, that:
(a) the Borrower may not select any Interest Period with respect
to any Eurodollar Rate Advance under a Facility that ends after any
principal repayment installment date for such Facility unless, after
giving effect to such selection, the aggregate principal amount of
Prime Rate Advances and of Eurodollar Rate Advances having Interest
Periods that end on or prior to such principal repayment installment
date for such Facility shall be at least equal to the aggregate
principal amount of Advances under such Facility due and payable on or
prior to such date;
(b) Interest Periods commencing on the same date for Eurodollar
Rate Advances comprising part of the same Borrowing shall be of the
same duration;
(c) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would cause
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and
<PAGE>
(d) whenever the first day of any Interest Period occurs on a day
of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Investment" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock or other ownership
or profit interest, warrants, rights, options, obligations or other
securities of such Person, any capital contribution to such Person or any
other investment in such Person, including, without limitation, any
arrangement pursuant to which the investor incurs Debt of the types
referred to in clause (i) or (j) of the definition of "Debt" in respect of
such Person.
"IRB Documents" means (i) the Installment Sale Agreement between the
Oregon Economic Development Commission, acting for itself and on behalf of
the Department of Economic Development, and as designee of the State
Treasurer (collectively, the "OEDC") (as such interest of OEDC was assigned
to the Bond Trustee by assignment dated January 1, 1981), and
Spectra-Physics, Inc. dated January 1, 1981, (ii) the Assignment of Rights
Under Installment Sale Agreement dated December 21, 1990 by
Spectra-Physics, Inc. to Scanning, (iii) all financing statements filed
naming the OEDC as secured party and Spectra-Physics, Inc. as debtor, or
naming the OEDC as debtor and Bank of America Oregon as secured party, (iv)
the Guaranty Agreement dated July 1, 1979 between the OEDC and
Spectra-Physics, Inc. and (v) the Indenture of Trust dated as of July 1,
1979 between the OEDC and the Bond Trustee.
"IRB Notices" has the meaning specified in Section 3.01(l)(xiv).
"IRB Property" means the real estate in Eugene, Oregon, that is more
particularly described on Schedule 4.01(ff).
"Issuing Bank" means the Initial Issuing Bank and each Eligible
Assignee to which the Letter of Credit Commitment hereunder has been
assigned pursuant to Section 8.07.
"L/C Cash Collateral Account" has the meaning specified in the
Security Agreement.
"L/C Related Documents" has the meaning specified in Section
2.04(e)(ii).
"Lender Party" means any Lender, the Issuing Bank or the Swing Line
Bank.
"Lenders" means the Initial Lenders and each Person that shall become
a Lender hereunder pursuant to Section 8.07.
<PAGE>
"Letter of Credit" has the meaning specified in Section 2.01(e).
"Letter of Credit Advance" means an advance made by the Issuing Bank
or any Working Capital Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in Section
2.03(a)(E).
"Letter of Credit Commitment" means, with respect to the Issuing Bank,
the amount set forth opposite the Issuing Bank's name on Schedule I hereto
under the caption "Letter of Credit Commitment" or, if the Issuing Bank has
entered into one or more Assignments and Acceptances, set forth for the
Issuing Bank in the Register maintained by the Administrative Agent
pursuant to Section 8.07(d) as the Issuing Bank's "Letter of Credit
Commitment," as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
"Letter of Credit Facility" means, at any time, an amount equal to the
amount of the Issuing Bank's Letter of Credit Commitment at such time, as
such amount may be reduced at or prior to such time pursuant to Section
2.05.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"Loan Documents" means (a) for purposes of this Agreement and the
Notes and any amendment or modification hereof or thereof and for all other
purposes other than for purposes of the Subsidiary Guaranty and the
Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the
Subsidiary Guaranty, (iv) the Collateral Documents, (v) each Letter of
Credit Agreement and (vi) the Assumption Agreement and (b) for purposes of
the Subsidiary Guaranty and the Collateral Documents, (i) this Agreement,
(ii) the Notes, (iii) the Subsidiary Guaranty, (iv) the Collateral
Documents, (v) each Letter of Credit Agreement, (vi) the Assumption
Agreement and (vii) each Bank Hedge Agreement, in each case as amended or
otherwise modified from time to time.
"Loan Parties" means the Borrower and the Guarantors.
"M&T" means Manufacturers and Traders Trust Company.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change in (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party and its Subsidiaries (taken as a
whole), (b) the ability of the Borrower or any Guarantor to perform its
obligations under the Loan Documents or (c) any aspect of the Transaction.
<PAGE>
"Material Adverse Effect" has the meaning specified in Section
3.01(g).
"Material Contract" means, with respect to any Person, each contract
listed on Schedule 4.01(hh), each contract which is a replacement or a
substitute for any contract listed on Schedule 4.01(hh) and each other
contract to which such Person is a party which is material to the business,
condition (financial or otherwise), operations, performance, properties or
prospects of such Person.
"Merger" has the meaning specified in the Preliminary Statements.
"Merger Agreement" means the Plan and Agreement of Merger dated July
__, 1996 adopted by the Board of Directors of Scanning and the Board of
Directors of PSC Acquisition.
"Mortgage" means the New York Mortgage, the Oregon Deed of Trust and
each other mortgage delivered pursuant to Section 5.01(o) or Section
5.01(s), in each case as amended, supplemented or otherwise modified from
time to time.
"Mortgage Policy" has the meaning specified in Section 3.01(l)(xi)(B).
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any
of the preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Loan Party or any ERISA Affiliate and at least one Person other than the
Loan Parties and the ERISA Affiliates or (b) was so maintained and in
respect of which any Loan Party or any ERISA Affiliate could have liability
under Section 4064 or 4069 of ERISA in the event such plan has been or were
to be terminated.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any asset or the sale or issuance of any Debt or
capital stock or other ownership or profit interest, any securities
convertible into or exchangeable for capital stock or other ownership or
profit interest or any warrants, rights, options or other securities to
acquire capital stock or other ownership or profit interest by any Person
(other than the sale of shares of common stock of PSC to employees of PSC
pursuant to the exercise of stock options received by such employees in
connection with the PSC Stock Option Plans and the sale or issuance of
shares of Common Stock of PSC upon the exercise by the holders of the
Subordinated Notes of the Warrants), or any Extraordinary Receipt received
by or paid to or for the account of any Person, the aggregate amount of
cash received from time to time (whether as initial consideration or
through payment or disposition of deferred consideration) by or on behalf
of such Person in connection with such transaction after deducting
therefrom only (without duplication) (a) reasonable and customary brokerage
commissions, underwriting
<PAGE>
fees and discounts, legal fees, finder's fees and other similar fees and
commissions and (b) the amount of taxes payable in connection with or as a
result of such transaction and (c) the amount of any Debt secured by a Lien
on such asset that, by the terms of such transaction, is required to be
repaid upon such disposition, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such
cash, actually paid to a Person that is not an Affiliate of such Person or
any Loan Party or any Affiliate of any Loan Party and are properly
attributable to such transaction or to the asset that is the subject
thereof.
"New York Mortgage" has the meaning specified in Section 3.01(l)(xi).
"New York Tax Agreement" means the Payment in Lieu of Tax Agreement
dated November 1, 1993 between COMIDA and PSC.
"Nonratable Assignment" means an assignment by a Lender Party pursuant
to Section 8.07(a) of a portion of its rights and obligations under this
Agreement, other than an assignment of a uniform, and not a varying,
percentage of all of the rights and obligations of such Lender Party under
and in respect of all of the Facilities (other than the Letter of Credit
Facility and the Swing Line Facility).
"Note" means a Term A Note, a Term B Note or a Working Capital Note.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Issuance" has the meaning specified in Section 2.03(a).
"Notice of Renewal" has the meaning specified in Section 2.01(e).
"Notice of Swing Line Borrowing" has the meaning specified in Section
2.02(b).
"Notice of Termination" has the meaning specified in Section 2.01(e).
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(f). Without limiting the generality
of the foregoing, the Obligations of the Loan Parties under the Loan
Documents include (a) the obligation to pay principal, interest, Letter of
Credit commissions, charges, expenses, fees, attorneys' fees and
disbursements, indemnities and other amounts payable by any Loan Party
under any Loan Document and (b) the obligation of any Loan Party to
reimburse any amount in respect of any of the foregoing that any Lender
Party, in its sole discretion, may elect to pay or advance on behalf of
such Loan Party.
<PAGE>
"OECD" means the Organization for Economic Cooperation and
Development.
"Open Year" has the meaning specified in Section 4.01(w).
"Oregon Deed of Trust" has the meaning specified in Section
3.01(l)(xi).
"Other Taxes" has the meaning specified in Section 2.12(b).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Encumbrances" has the meaning specified in the Mortgages.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced: (a) Liens for taxes, assessments and governmental
charges or levies not yet due and payable; (b) Liens imposed by law, such
as materialmen's, mechanics', carriers', workmen's and repairmen's Liens
and other similar Liens arising in the ordinary course of business securing
obligations that are not overdue for a period of more than 30 days;
(c) pledges or deposits to secure obligations under workers' compensation
laws or similar legislation or to secure public or statutory obligations;
and (d) Permitted Encumbrances.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pre-Commitment Information" has the meaning specified in Section
3.01(j).
"Preferred Stock" means, with respect to any corporation, capital
stock issued by such corporation that is entitled to a preference or
priority over any other capital stock issued by such corporation upon any
distribution of such corporation's assets, whether by dividend or upon
liquidation.
"Prime Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
higher of:
(a) the rate of interest announced publicly by Fleet in
Rochester, New York from time to time, as Fleet's prime rate; or
(b) 1/2 of one percent per annum above the Federal Funds Rate.
"Prime Rate Advance" means an Advance that bears interest as provided
in Section 2.07(a)(i).
<PAGE>
"Pro Forma EBITDA" means for each fiscal quarter ending on September
30, 1995, December 31, 1995, March 31, 1996 and June 30, 1996 the amount
listed on Schedule III for such fiscal quarter.
"Pro Rata Share" of any amount means, with respect to any Working
Capital Lender at any time, the product of such amount times a fraction the
numerator of which is the amount of such Lender's Working Capital
Commitment at such time and the denominator of which is the Working Capital
Facility at such time.
"PSC" has the meaning specified in the recital of parties to this
Agreement.
"PSC Guaranty" has the meaning specified in Section 9.01.
"PSC Stock Option Plans" means the 1987 Stock Option Plan of PSC and
the 1994 Stock Option Plan of PSC.
"Purchase Agreement" has the meaning specified in the Preliminary
Statements.
"Receivables" means all Receivables referred to in Section 1(c) of the
Security Agreement.
"Redeemable" means, with respect to any capital stock or other
ownership or profit interest, Debt or other right or Obligation, any such
right or Obligation that (a) the issuer has undertaken to redeem at a fixed
or determinable date or dates, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the
control of the issuer or (b) is redeemable at the option of the holder.
"Reduction Amount" has the meaning specified in Section 2.06(b)(vi).
"Register" has the meaning specified in Section 8.07(d).
"Registration Rights Agreement" has the meaning specified in the
Purchase Agreement.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Related Documents" means the Purchase Agreement, the Merger
Agreement, the Subordinated Debt Documents, the Seller Note, the Foreign
Sales Agreements, the Escrow Agreement, the TxCom Agreement, the
Registration Rights Agreement, the Transition Services Agreement and the
New York Tax Agreement.
"Required Lenders" means at any time Lenders owed or holding at least
66-2/3% of the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and (b) the aggregate Available Amount of all
Letters of Credit outstanding at such time, or, if no
<PAGE>
such principal amount and no Letters of Credit are outstanding at such
time, Lenders holding at least 66-2/3% of the aggregate of the Term A
Commitments, Term B Commitments and Working Capital Commitments owed or
holding at least 66-2/3% of the sum of (w) the aggregate principal amount
of the Advances outstanding at such time, (x) the aggregate Available
Amount of all Letters of Credit outstanding at such time, (y) the aggregate
unused Commitments under the Term A and Term B Facilities at such time and
(z) the aggregate Unused Working Capital Commitments at such time;
provided, however, that if any Lender shall be a Defaulting Lender at such
time, there shall be excluded from the determination of Required Lenders at
such time (A) the aggregate principal amount of the Advances owing to such
Lender (in its capacity as a Lender) and outstanding at such time, (B) such
Lender's Pro Rata Share of the aggregate Available Amount of all Letters of
Credit issued by such Lender and outstanding at such time, (C) the
aggregate unused Term A Commitments and Term B Commitments of such Lender
at such time and (D) the Unused Working Capital Commitment of such Lender
at such time. For purposes of this definition, the aggregate principal
amount of Swing Line Advances owing to the Swing Line Bank and of Letter of
Credit Advances owing to the Issuing Bank and the Available Amount of each
Letter of Credit shall be considered to be owed to the Working Capital
Lenders ratably in accordance with their respective Working Capital
Commitments.
"Responsible Officer" means any officer of any Loan Party or any of
its Subsidiaries.
"Secured Obligations" has the meaning specified in the Security
Agreement.
"Secured Parties" means the Administrative Agent, the Lender Parties,
and the Hedge Banks and the other Persons the Obligations owing to which
are or are purported to be secured by the Collateral under the terms of the
Collateral Documents.
"Securities Purchase Agreements" means each Securities Purchase
Agreement dated July __, 1996 between the Surviving Corporation, PSC and a
purchaser of the Subordinated Notes, pursuant to which the Subordinated
Notes are issued.
"Security Agreement" has the meaning specified in Section 3.01(l)(ix).
"Seller Note" means the promissory note dated July __, 1996 made by
PSC Acquisition to the Company.
"Senior Debt" means Debt incurred by the Borrower pursuant to the Loan
Documents and the Hedge Agreements.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Loan Party or any ERISA Affiliate and no Person other than the Loan Parties
and the ERISA Affiliates or (b) was so maintained and in respect of which
any Loan Party or any ERISA Affiliate could have liability under Section
4069 of ERISA in the event such plan has been or were to be terminated.
<PAGE>
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of
such Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay such debts and liabilities as they mature and
(d) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
"SP Holdings" has the meaning specified in the Preliminary Statements.
"Standby Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Facility, other than a Trade Letter of Credit.
"Subordinated Debt" means the Subordinated Notes and any other Debt of
the Borrower that is subordinated to the Obligations of the Borrower under
the Loan Documents on, and that otherwise contains, terms and conditions
reasonably satisfactory to the Required Lenders.
"Subordinated Debt Documents" means the Securities Purchase Agreements
and all other agreements, indentures and instruments pursuant to which
Subordinated Debt is issued.
"Subordinated Notes" means the subordinated notes of the Borrower in
an aggregate principal amount of $30,000,000 issued pursuant to the
Securities Purchase Agreements.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency), (b) the interest in the capital or
profits of such partnership, joint venture or limited liability company or
(c) the beneficial interest in such trust or estate is at the time directly
or indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Subsidiary Guarantors" means each direct or indirect Subsidiary of
PSC (other than any Foreign Subsidiary).
"Subsidiary Guaranty" has the meaning specified Section 3.01(l)(xii).
"Surviving Corporation" has the meaning specified in the Preliminary
Statements.
<PAGE>
"Surviving Debt" has the meaning specified in Section 3.01(e).
"Swing Line Advance" means an advance made by (a) the Swing Line Bank
pursuant to Section 2.01(d) or (b) any Working Capital Lender pursuant to
Section 2.02(b).
"Swing Line Bank" means Fleet.
"Swing Line Borrowing" means a borrowing consisting of a Swing Line
Advance made by the Swing Line Bank.
"Swing Line Facility" has the meaning specified in Section 2.01(d).
"Tax Certificate" has the meaning specified in Section 5.03(p).
"Taxes" has the meaning specified in Section 2.12(a).
"Term A Advance" has the meaning specified in Section 2.01(a).
"Term A Borrowing" means a borrowing consisting of simultaneous Term A
Advances of the same Type made by the Term A Lenders.
"Term A Commitment" means, with respect to any Term A Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term A Commitment" or, if such Lender has entered into
one or more Assignments and Acceptances, set forth for such Lender in the
Register maintained by the Administrative Agent pursuant to Section 8.07(d)
as such Lender's "Term A Commitment," as such amount may be reduced at or
prior to such time pursuant to Section 2.05.
"Term A Facility" means, at any time, the aggregate amount of the
Term A Lenders' Term Commitments at such time.
"Term A Lender" means any Lender that has a Term A Commitment.
"Term A Note" means a promissory note of the Borrower payable to the
order of any Term A Lender, in substantially the form of Exhibit A-1
hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from the Term A Advance made by such Lender.
"Term B Advance" has the meaning specified in Section 2.01(b).
"Term B Borrowing" means a borrowing consisting of simultaneous Term B
Advances of the same Type made by the Term B Lenders.
"Term B Commitment" means, with respect to any Term B Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term B Commitment" or, if such Lender has entered into
one or more Assignments and Acceptances
<PAGE>
set forth for such Lender in the Register maintained by the Administrative
Agent pursuant to Section 8.07(d) as such Lender's "Term B Commitment," as
such amount may be reduced at or prior to such time pursuant to Section
2.04.
"Term B Facility" means, at any time, the aggregate amount of the Term
B Lenders' Term B Commitments at such time.
"Term B Lender" means any Lender that has a Term B Commitment.
"Term B Note" means a promissory note of the Borrower payable to the
order of any Term B Lender, in substantially the form of Exhibit A-2
hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from the Term B Advance made by such Lender.
"Term Facilities" means the Term A Facility and the Term B Facility.
"Termination Date" means the earlier of December 31, 2002 and the date
of termination in whole of the Term A Commitments, the Term B Commitments,
the Letter of Credit Commitments and the Working Capital Commitments
pursuant to Section 2.05 or 6.01.
"Total Debt Ratio" means, at any date, the ratio of the aggregate
amount of Debt of PSC and its Subsidiaries on the last day of the most
recently completed fiscal quarter of PSC to Consolidated EBITDA for the
most recently completed four fiscal quarters of PSC; provided, however,
that if such four fiscal quarter period includes any or all of the fiscal
quarters ending on September 30, 1995, December 31, 1995, March 31, 1996 or
June 30, 1996, Consolidated EBITDA shall be calculated by using the Pro
Forma EBITDA for each such fiscal quarter in such four fiscal quarter
period; provided, further, that for purposes solely of calculating the
aggregate amount of Debt outstanding, the Working Capital Advances shall be
deemed to be outstanding in an aggregate principal amount equal to the
average principal amount outstanding over the previous two full fiscal
quarters.
"Trade Letter of Credit" means any Letter of Credit that is issued
under the Letter of Credit Facility for the benefit of a supplier of
Inventory to the Borrower or any of its Subsidiaries to effect payment for
such Inventory, the conditions to drawing under which include the
presentation to the Issuing Bank of negotiable bills of lading, invoices
and related documents sufficient, in the judgment of the Issuing Bank, to
create a valid and perfected lien on or security interest in such
Inventory, bills of lading, invoices and related documents in favor of the
Issuing Bank.
"Transaction" means the Acquisition, the Merger, the Securities
Purchase Agreements and the Loan Documents and the transactions
contemplated thereby.
"Transition Services Agreement" has the meaning specified in the
Purchase Agreement.
"TxCom" means T.X.C.O.M., S.A., a French corporation.
<PAGE>
"TxCom Agreement" has the meaning specified in the Purchase Agreement.
"Type" refers to the distinction between Advances bearing interest at
the Prime Rate and Advances bearing interest at the Eurodollar Rate.
"Unused Working Capital Commitment" means, with respect to any Working
Capital Lender at any time, (a) such Lender's Working Capital Commitment at
such time minus (b) the sum of (i) the aggregate principal amount of all
Working Capital Advances, Swing Line Advances and Letter of Credit Advances
made by such Lender (in its capacity as a Lender) and outstanding at such
time, plus (ii) such Lender's Pro Rata Share of (A) the aggregate Available
Amount of all Letters of Credit outstanding at such time, (B) the aggregate
principal amount of all Letter of Credit Advances made by the Issuing Bank
pursuant to Section 2.03(c) and outstanding at such time and (C) the
aggregate principal amount of all Swing Line Advances made by the Swing
Line Bank pursuant to Section 2.01(d) and outstanding at such time.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
"Warrants" means the warrants to purchase 975,000 shares of common
stock of PSC issued pursuant to the Securities Purchase Agreements.
"Welfare Plan" means a welfare plan, as defined in Section 3(1) of
ERISA, that is maintained for employees of any Loan Party or in respect of
which any Loan Party could have liability.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
"Working Capital Advance" has the meaning specified in
Section 2.01(c).
"Working Capital Borrowing" means a borrowing consisting of
simultaneous Working Capital Advances of the same Type made by the Working
Capital Lenders.
"Working Capital Commitment" means, with respect to any Working
Capital Lender at any time, the amount set forth opposite such Lender's
name on Schedule I hereto under the caption "Working Capital Commitment"
or, if such Lender has entered into one or more Assignments and
Acceptances, set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(d) as such Lender's "Working
Capital Commitment," as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
<PAGE>
"Working Capital Facility" means, at any time, the aggregate amount of
the Working Capital Lenders' Working Capital Commitments at such time.
"Working Capital Lender" means any Lender that has a Working Capital
Commitment.
"Working Capital Note" means a promissory note of the Borrower payable
to the order of any Working Capital Lender, in substantially the form of
Exhibit A-3 hereto, evidencing the aggregate indebtedness of the Borrower
to such Lender resulting from the Working Capital Advances made by such
Lender.
"Working Capital Termination Date" means the earlier of June 30, 2001
and the date of the termination in whole of the Term Commitments, the
letter of Credit Commitments and the Working Capital Commitments pursuant
to Section 2.05 or 6.01.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding."
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of
the financial statements referred to in Section 4.01(f)(ii) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) The Term A Advances. Each Term A Lender
severally agrees, on the terms and conditions hereinafter set forth, to make a
single advance (a "Term A Advance") to the Borrower on any Business Day during
the period from the date hereof until July 30, 1996 in an amount not to exceed
such Lender's Term A Commitment at such time. The Term A Borrowing shall consist
of Term A Advances made simultaneously by the Term A Lenders ratably according
to their Term A Commitments. Amounts borrowed under this Section 2.01(a) and
repaid or prepaid may not be reborrowed.
(b) The Term B Advances. Each Term B Lender severally agrees, on the terms
and conditions hereinafter set forth, to make a single advance (a "Term B
Advance") to the Borrower on any Business Day during the period from the date
hereof until July 30, 1996 in an amount not to exceed such Lender's Term B
Commitment at such time. The Term B Borrowing shall consist of Term B Advances
made simultaneously by the Term B Lenders ratably according to their Term B
Commitments. Amounts borrowed under this Section 2.01(b) and repaid or prepaid
may not be reborrowed.
<PAGE>
(c) The Working Capital Advances. Each Working Capital Lender severally
agrees, on the terms and conditions hereinafter set forth, to make advances
(each a "Working Capital Advance") to the Borrower from time to time on any
Business Day during the period from the date hereof until the Working Capital
Termination Date in an amount for each such Advance not to exceed such Lender's
Unused Working Capital Commitment at such time. Each Working Capital Borrowing
shall be in an aggregate amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof (other than a Borrowing the proceeds of which shall
be used solely to repay or prepay in full outstanding Swing Line Advances or
outstanding Letter of Credit Advances) and shall consist of Working Capital
Advances made simultaneously by the Working Capital Lenders ratably according to
their Working Capital Commitments. Within the limits of each Working Capital
Lender's Unused Working Capital Commitment in effect from time to time, the
Borrower may borrow under this Section 2.01(c), prepay pursuant to Section
2.06(a) and reborrow under this Section 2.01(c).
(d) The Swing Line Advances. The Borrower may request the Swing Line Bank
to make, and the Swing Line Bank may, if in its sole discretion it elects to do
so, make, on the terms and conditions hereinafter set forth, Swing Line Advances
to the Borrower from time to time on any Business Day during the period from the
date hereof until the Working Capital Termination Date (i) in an aggregate
amount not to exceed at any time outstanding $5,000,000 (the "Swing Line
Facility") and (ii) in an amount for each such Swing Line Borrowing not to
exceed the aggregate of the Unused Working Capital Commitments of the Working
Capital Lenders at such time. No Swing Line Advance shall be used for the
purpose of funding the payment of principal of any other Swing Line Advance.
Each Swing Line Borrowing shall be made as a Base Rate Advance. Within the
limits of the Swing Line Facility and within the limits referred to in clause
(ii) above, so long as the Swing Line Bank, in its sole discretion, elects to
make Swing Line Advances, the Borrower may borrow under this Section 2.01(d),
repay pursuant to Section 2.04(d) or prepay pursuant to Section 2.06(a) and
reborrow under this Section 2.01(d).
(e) Letters of Credit. The Issuing Bank agrees, on the terms and conditions
hereinafter set forth, to issue letters of credit (the "Letters of Credit") for
the account of the Borrower from time to time on any Business Day during the
period from the date hereof until 60 days before the Working Capital Termination
Date (i) in an aggregate Available Amount for all Letters of Credit not to
exceed at any time the Issuing Bank's Letter of Credit Commitment at such time
and (ii) in an Available Amount for each such Letter of Credit not to exceed an
amount equal to the Unused Working Capital Commitments of the Working Capital
Lenders at such time. No Letter of Credit shall have an expiration date
(including all rights of the Borrower or the beneficiary to require renewal)
later than the earlier of 60 days before the Working Capital Termination Date
and (A) in the case of a Standby Letter of Credit one year after the date of
issuance thereof, but may by its terms be renewable annually upon notice (a
"Notice of Renewal") given to the Issuing Bank and the Administrative Agent on
or prior to any date for notice of renewal set forth in such Letter of Credit
but in any event at least three Business Days prior to the date of the proposed
renewal of such Standby Letter of Credit and upon fulfillment of the applicable
conditions set forth in Article III unless such Issuing Bank has notified the
Borrower (with a copy to the Administrative Agent) on or prior to the date for
notice of termination set forth in such Letter of Credit but in any event at
least 30 Business Days prior to the date of automatic renewal of its election
not to renew such Standby Letter of Credit (a "Notice of Termination")) and
<PAGE>
(B) in the case of a Trade Letter of Credit, 180 days after the date of issuance
thereof; provided that the terms of each Standby Letter of Credit that is
automatically renewable annually shall (x) require the Issuing Bank that issued
such Standby Letter of Credit to give the beneficiary named in such Standby
Letter of Credit notice of any Notice of Termination, (y) permit such
beneficiary, upon receipt of such notice, to draw under such Standby Letter of
Credit prior to the date such Standby Letter of Credit otherwise would have been
automatically renewed and (z) not permit the expiration date (after giving
effect to any renewal) of such Standby Letter of Credit in any event to be
extended to a date later than 60 days before the Working Capital Termination
Date. If either a Notice of Renewal is not given by the Borrower or a Notice of
Termination is given by the Issuing Bank pursuant to the immediately preceding
sentence, such Standby Letter of Credit shall expire on the date on which it
otherwise would have been automatically renewed; provided, however, that even in
the absence of receipt of a Notice of Renewal the Issuing Bank may in its
discretion, unless instructed to the contrary by the Administrative Agent or the
Borrower, deem that a Notice of Renewal had been timely delivered and in such
case, a Notice of Renewal shall be deemed to have been so delivered for all
purposes under this Agreement. Within the limits of the Letter of Credit
Facility, and subject to the limits referred to above, the Borrower may request
the issuance of Letters of Credit under this Section 2.01(e), repay any Letter
of Credit Advances resulting from drawings thereunder pursuant to
Section 2.03(c) and request the issuance of additional Letters of Credit under
this Section 2.01(e).
SECTION 2.02. Making the Advances. (a) Except as otherwise provided in
Section 2.02(b) or 2.03, each Borrowing shall be made on notice, given not later
than 11:00 A.M. (Boston, Massachusetts time) on the third Business Day prior to
the date of the proposed Borrowing in the case of a Borrowing consisting of
Eurodollar Rate Advances, or the first Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Prime Rate Advances,
by the Borrower to the Administrative Agent, which shall give to each
Appropriate Lender prompt notice thereof by telex or telecopier. Each such
notice of a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed
immediately in writing, or telex or telecopier, in substantially the form of
Exhibit B hereto, specifying therein the requested (i) date of such Borrowing,
(ii) Facility under which such Borrowing is to be made, (iii) Type of Advances
comprising such Borrowing, (iv) aggregate amount of such Borrowing and (v) in
the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest
Period for each such Advance. Each Appropriate Lender shall, before 11:00 A.M.
(Rochester, New York time) on the date of such Borrowing, make available for the
account of its Applicable Lending Office to the Administrative Agent at the
Administrative Agent's Account, in same day funds, such Lender's ratable portion
of such Borrowing in accordance with the respective Commitments under the
applicable Facility of such Lender and the other Appropriate Lenders. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower by crediting the Borrower's Account;
provided, however, that, in the case of any Working Capital Borrowing, the
Administrative Agent shall first make a portion of such funds equal to the
aggregate principal amount of any Swing Line Advances and Letter of Credit
Advances made by the Swing Line Bank or the Issuing Bank, as the case may be,
and by any other Working Capital Lender and outstanding on the date of such
Working Capital Borrowing, plus interest accrued and unpaid thereon to and as of
such date, available to the Swing Line Bank or the Issuing Bank, as the case may
be, and such other Working Capital Lenders for repayment of such Swing Line
Advances and Letter of Credit Advances.
<PAGE>
(b) Each Swing Line Borrowing shall be made on notice, given not later than
11:00 A.M. (Rochester, New York time) on the date of the proposed Swing Line
Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent.
Each such notice of a Swing Line Borrowing (a "Notice of Swing Line Borrowing")
shall be by telephone, confirmed immediately in writing, or telex or telecopier,
specifying therein the requested (i) date of such Borrowing, (ii) amount of such
Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later
than the seventh day after the requested date of such Borrowing). If, in its
sole discretion, it elects to make the requested Swing Line Advance, the Swing
Line Bank will make the amount thereof available to the Administrative Agent at
the Administrative Agent's Account, in same day funds. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Administrative Agent will make such funds
available to the Borrower by crediting the Borrower's Account. Upon written
demand by the Swing Line Bank, with a copy of such demand to the Administrative
Agent, each other Working Capital Lender shall purchase from the Swing Line
Bank, and the Swing Line Bank shall sell and assign to each such other Working
Capital Lender, such other Lender's Pro Rata Share of such outstanding Swing
Line Advance as of the date of such demand, by making available for the account
of its Applicable Lending Office to the Administrative Agent for the account of
the Swing Line Bank, by deposit to the Administrative Agent's Account, in same
day funds, an amount equal to the portion of the outstanding principal amount of
such Swing Line Advance to be purchased by such Lender. The Borrower hereby
agrees to each such sale and assignment. Each Working Capital Lender agrees to
purchase its Pro Rata Share of an outstanding Swing Line Advance on (i) the
Business Day on which demand therefor is made by the Swing Line Bank, provided
that notice of such demand is given not later than 11:00 A.M. (Rochester, New
York time) on such Business Day or (ii) the first Business Day next succeeding
such demand if notice of such demand is given after such time. Upon any such
assignment by the Swing Line Bank to any other Working Capital Lender of a
portion of a Swing Line Advance, the Swing Line Bank represents and warrants to
such other Lender that the Swing Line Bank is the legal and beneficial owner of
such interest being assigned by it, but makes no other representation or
warranty and assumes no responsibility with respect to such Swing Line Advance,
the Loan Documents or any Loan Party. If and to the extent that any Working
Capital Lender shall not have so made the amount of such Swing Line Advance
available to the Administrative Agent, such Working Capital Lender agrees to pay
to the Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Swing Line Bank
until the date such amount is paid to the Administrative Agent, at the Federal
Funds Rate. If such Lender shall pay to the Administrative Agent such amount for
the account of the Swing Line Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Swing Line Advance made by such Lender
on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Swing Line Advance made by the Swing Line Bank shall be
reduced by such amount on such Business Day.
(c) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances for the initial
Borrowing hereunder or for any Borrowing if the aggregate amount of such
Borrowing is less than $1,000,000 or if the obligation of the Appropriate
Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to
Section 2.09 or Section 2.10 and (ii) the Term A Advances may not be outstanding
as part of more than 5 separate Borrowings, the Term B Advances may not be
<PAGE>
outstanding as part of more than 5 separate Borrowings and the Working Capital
Advances made on any date may not be outstanding as part of more than 10
separate Borrowings.
(d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall be
irrevocable and binding on the Borrower. In the case of any Borrowing that the
related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each Appropriate Lender against any loss,
cost or expense incurred by such Lender as a result of any failure to fulfill on
or before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss (including loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.
(e) Unless the Administrative Agent shall have received notice from an
Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) or (b) of this Section 2.02 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay or pay to the Administrative Agent
forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid or paid to the Administrative Agent, at (i) in the
case of the Borrower, the interest rate applicable at such time under Section
2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall pay to the Administrative Agent
such corresponding amount, such amount so paid shall constitute such Lender's
Advance as part of such Borrowing for all purposes.
(f) The failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 11:00 A.M. (Rochester, New York time) on the fifth
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank, which shall give to the
Administrative Agent and each Working Capital Lender prompt notice thereof by
telex or telecopier. Each such notice of issuance of a Letter of Credit (a
"Notice of Issuance") shall be by telephone, confirmed immediately in writing,
or telex or telecopier, specifying therein the requested (A) date of such
issuance (which shall be a Business Day), (B) Available Amount of such Letter of
Credit, (C) expiration date of such Letter of Credit, (D)name and address of the
beneficiary of such Letter of Credit and (E) form of such Letter of Credit, and
shall be accompanied by such application and agreement for letter of credit as
<PAGE>
the Issuing Bank may specify to the Borrower for use in connection with such
requested Letter of Credit (a "Letter of Credit Agreement"). If the requested
form of such Letter of Credit is acceptable to the Issuing Bank in its sole
discretion, the Issuing Bank will, upon fulfillment of the applicable conditions
set forth in Article III, make such Letter of Credit available to the Borrower
at its office referred to in Section 8.02 or as otherwise agreed with the
Borrower in connection with such issuance. In the event and to the extent that
the provisions of any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern.
(b) Letter of Credit Reports. The Issuing Bank shall furnish (A) to the
Administrative Agent on the first Business Day of each week a written report
summarizing issuance and expiration dates of Letters of Credit issued during the
previous week and drawings during such week under all Letters of Credit, (B) to
each Working Capital Lender on the first Business Day of each month a written
report summarizing issuance and expiration dates of Letters of Credit issued
during the preceding month and drawings during such month under all Letters of
Credit and (C) to the Administrative Agent and each Working Capital Lender on
the first Business Day of each calendar quarter a written report setting forth
the average daily aggregate Available Amount during the preceding calendar
quarter of all Letters of Credit.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Letter of Credit Advance, which
shall be a Prime Rate Advance, in the amount of such draft. Upon written demand
by the Issuing Bank, with a copy of such demand to the Administrative Agent,
each Working Capital Lender shall purchase from the Issuing Bank, and the
Issuing Bank shall sell and assign to each such Working Capital Lender, such
Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of the
date of such purchase, by making available for the account of its Applicable
Lending Office to the Administrative Agent for the account of the Issuing Bank,
by deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Letter of
Credit Advance to be purchased by such Lender. Promptly after receipt thereof,
the Administrative Agent shall transfer such funds to the Issuing Bank. The
Borrower hereby agrees to each such sale and assignment. Each Working Capital
Lender agrees to purchase its Pro Rata Share of an outstanding Letter of Credit
Advance on (i) the Business Day on which demand therefor is made by the Issuing
Bank, provided notice of such demand is given not later than 11:00 A.M.
(Rochester, New York time) on such Business Day or (ii) the first Business Day
next succeeding such demand if notice of such demand is given after such time.
Upon any such assignment by the Issuing Bank to any other Working Capital Lender
of a portion of a Letter of Credit Advance, the Issuing Bank represents and
warrants to such other Lender that the Issuing Bank is the legal and beneficial
owner of such interest being assigned by it, free and clear of any liens, but
makes no other representation or warranty and assumes no responsibility with
respect to such Letter of Credit Advance, the Loan Documents or any Loan Party.
If and to the extent that any Working Capital Lender shall not have so made the
amount of such Letter of Credit Advance available to the Administrative Agent,
such Working Capital Lender agrees to pay to the Administrative Agent forthwith
on demand such amount together with interest thereon, for each day from the date
of demand by the Issuing Bank until the date such amount is paid to the
Administrative Agent, at the Federal Funds Rate for its account or the account
<PAGE>
of the Issuing Bank, as applicable. If such Lender shall pay to the
Administrative Agent such amount for the account of the Issuing Bank on any
Business Day, such amount so paid in respect of principal shall constitute a
Letter of Credit Advance made by such Lender on such Business Day for purposes
of this Agreement, and the outstanding principal amount of the Letter of Credit
Advance made by the Issuing Bank shall be reduced by such amount on such
Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of any Lender to
make the Letter of Credit Advance to be made by it on the date specified in
Section 2.03(c) shall not relieve any other Lender of its obligation hereunder
to make its Letter of Credit Advance on such date, but no Lender shall be
responsible for the failure of any other Lender to make the Letter of Credit
Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances. (a) Term A Advances. The Borrower
shall repay to the Administrative Agent for the ratable account of the Term A
Lenders the aggregate outstanding principal amount of the Term A Advances on the
following dates in the amounts indicated (which amounts shall be reduced as a
result of the application of prepayments in accordance with the order of
priority set forth in Section 2.06):
Date Amount
- - ---- ------
March 31, 1997 ........................................ $2,000,000
June 30, 1997 ......................................... $2,000,000
September 30, 1997 .................................... $2,000,000
December 31, 1997 ..................................... $2,000,000
March 31, 1998 ........................................ $2,500,000
June 30, 1998 ......................................... $2,500,000
September 30, 1998 .................................... $2,500,000
December 30, 1998 ..................................... $2,500,000
March 31, 1999 ........................................ $3,000,000
June 30, 1999 ......................................... $3,000,000
September 30, 1999 .................................... $3,000,000
December 31, 1999 ..................................... $3,000,000
March 31, 2000 ........................................ $3,500,000
June 30, 2000 ......................................... $3,500,000
September 30, 2000 .................................... $3,500,000
December 30, 2000 ..................................... $3,500,000
March 31, 2001 ........................................ $4,500,000
June 30, 2001 ......................................... $6,500,000
<PAGE>
provided, however, that the final principal installment shall be repaid on the
Working Capital Termination Date and in any event shall be in an amount equal to
the aggregate principal amount of the Term A Advances outstanding on such date.
(b) Term B Advances. The Borrower shall repay to the Administrative Agent
for the ratable account of the Term B Lenders the aggregate outstanding
principal amount of the Term B Advances on the following dates in the amounts
indicated (which amounts shall be reduced as a result of the application of
prepayments in accordance with the order of priority set forth in Section 2.06):
Date Amount
- - ---- ------
March 31, 1997 ........................................ $ 250,000
June 30, 1997 ......................................... $ 250,000
September 30, 1997 .................................... $ 250,000
December 31, 1997 ..................................... $ 250,000
March 31, 1998 ........................................ $ 250,000
June 30, 1998 ......................................... $ 250,000
September 30, 1998 .................................... $ 250,000
December 31, 1998 ..................................... $ 250,000
March 31, 1999 ........................................ $ 250,000
June 30, 1999 ......................................... $ 250,000
September 30, 1999 .................................... $ 250,000
December 31, 1999 ..................................... $ 250,000
March 31, 2000 ........................................ $ 250,000
June 30, 2000 ......................................... $ 250,000
September 30, 2000 .................................... $ 250,000
December 31, 2000 ..................................... $ 250,000
March 31, 2001 ........................................ $2,625,000
June 30, 2001 ......................................... $2,625,000
September 30, 2001 .................................... $2,625,000
December 31, 2001 ..................................... $2,625,000
March 31, 2002 ........................................ $2,625,000
June 30, 2002 ......................................... $2,625,000
September 30, 2002 .................................... $2,625,000
December 31, 2002 ..................................... $2,625,000
<PAGE>
provided, however, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the Term B Advances outstanding on such date.
(c) Working Capital Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Working Capital Lenders on
the Working Capital Termination Date the aggregate outstanding principal amount
of the Working Capital Advances then outstanding.
(d) Swing Line Advances. The Borrower shall repay to the Administrative
Agent for the account of each Swing Line Bank and each other Working Capital
Lender that has made a Swing Line Advance the outstanding principal amount of
each Swing Line Advance made by each of them on the earlier of the maturity date
specified in the applicable Notice of Swing Line Borrowing (which maturity shall
be no later than the seventh day after the requested date of such Borrowing) and
the Working Capital Termination Date.
(e) Letter of Credit Advances. (i) The Borrower shall repay to the
Administrative Agent for the account of the Issuing Bank and each other Working
Capital Lender that has made a Letter of Credit Advance on the earlier of demand
and the Working Capital Termination Date the outstanding principal amount of
each Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any Letter of
Credit Agreement and any other agreement or instrument relating to any Letter of
Credit shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement, such Letter of Credit Agreement and
such other agreement or instrument under all circumstances, including, without
limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan Document, any
Letter of Credit Agreement, any Letter of Credit or any other agreement or
instrument relating thereto (all of the foregoing being, collectively, the
"L/C Related Documents");
(B) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower in respect of
any L/C Related Document or any other amendment or waiver of or any consent
to departure from all or any of the L/C Related Documents;
(C) the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank or any other Person,
whether in connection with the transactions contemplated by the L/C Related
Documents or any unrelated transaction;
<PAGE>
(D) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
or
(E) any exchange, release or non-perfection of any Collateral or other
collateral, or any release or amendment or waiver of or consent to
departure from the Guaranty or any other guarantee, for all or any of the
Obligations of the Borrower in respect of the L/C Related Documents.
SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional.
The Borrower may, upon at least three Business Days' notice to the
Administrative Agent, terminate in whole or reduce in part the unused portions
of the Term A Commitments, the Term B Commitments, the Letter of Credit Facility
and the Unused Working Capital Commitments; provided, however, that each partial
reduction of a Facility (i) shall be in an aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and (ii) shall be made ratably
among the Appropriate Lenders in accordance with their Commitments with respect
to such Facility.
(b) Mandatory. (i) On the date of the Term A Borrowing, after giving effect
to such Term A Borrowing, and from time to time thereafter upon each repayment
or prepayment of the Term A Advances, the aggregate Term A Commitments of the
Term A Lenders shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate Term A
Commitments immediately prior to such reduction exceed the aggregate unpaid
principal amount of the Term A Advances then outstanding.
(ii) On the date of the Term B Borrowing, after giving effect to such
Term B Borrowing, and from time to time thereafter upon each repayment or
prepayment of the Term B Advances, the aggregate Term B Commitments of the
Term B Lenders shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate Term B
Commitments immediately prior to such reduction exceed the aggregate unpaid
principal amount of the Term B Advances then outstanding.
(iii) On and after the date that all Term A Advances and Term B Advances
have been repaid in full, the Working Capital Facility shall be automatically
and permanently reduced on each date on which prepayment thereof is required to
be made pursuant to Section 2.06(b)(i), (ii) or (iii) in an amount equal to the
applicable Reduction Amount, provided that each such reduction of the Working
Capital Facility shall be made ratably among the Working Capital Lenders in
accordance with their Working Capital Commitments.
(iv) The Letter of Credit Facility shall be permanently reduced from time
to time on the date of each reduction in the Working Capital Facility by the
amount, if any, by which the amount of the Letter of Credit Facility exceeds the
Working Capital Facility after giving effect to such reduction of the Working
Capital Facility.
SECTION 2.06. Prepayments. (a) Optional. The Borrower may, upon at least
one Business Day's notice in the case of Prime Rate Advances and three Business
<PAGE>
Days' notice in the case of Eurodollar Rate Advances, in each case to the
Administrative Agent stating the proposed date and aggregate principal amount of
the prepayment, and if such notice is given the Borrower shall, prepay the
outstanding aggregate principal amount of the Advances comprising part of the
same Borrowing in whole or ratably in part, together with (i) accrued interest
to the date of such prepayment on the aggregate principal amount prepaid;
provided, however, that (x) each partial prepayment shall be in an aggregate
principal amount of $1,000,000 or an integral multiple of $100,000 in excess
thereof and (y) no such prepayment of a Eurodollar Rate Advance shall be made
other than on the last day of an Interest Period therefor. Each such prepayment
of the Term Facilities shall be applied ratably to the Term A Facility and the
Term B Facility and to the principal repayment installments of each of the Term
A Facility and Term B Facility in inverse order of maturity; provided, however,
that if any of the Lenders under either the Term A Facility or the Term B
Facility elects to refuse its ratable share of any such prepayment, in
accordance with the procedures described in Section 2.06(c), the ratable share
of such Lender shall be applied to the Advances of the Lenders under such Term
Facility and to the principal repayment installments thereof in inverse order of
maturity, or if all Lenders in such Term Facility elect to refuse their ratable
share, to the Advances of the Lenders under the other Term Facility and to the
principal repayment installments thereof in inverse order of maturity.
(b) Mandatory. (i) The Borrower shall, on the fifth day following the date
the Lender Parties have received or are required to have received (pursuant to
Section 5.03(d)) the audited financials of PSC for each fiscal year of the
Borrower, prepay an aggregate principal amount of the Advances comprising part
of the same Borrowings equal to (x) if the Total Debt Ratio is 3.50:1 or more,
75% of Excess Cash Flow for such Fiscal Year, (y) if the Total Debt Ratio is
less than 3.50:1 but more than 2.49:1, 50%, and (z) at all other times, 0% of
Excess Cash Flow for such fiscal year. Each such prepayment shall be applied
first ratably to the Term A Facility, and the Term B Facility, and to the
installments thereof in inverse order of maturity and second to the Working
Capital Facility as set forth in clause (vi) below.
(ii) PSC and the Borrower shall, on the date of receipt of the Net Cash
Proceeds by any Loan Party or any of its Subsidiaries from (A) the sale, lease,
transfer or other disposition of any assets of any Loan Party or any of its
Subsidiaries (other than any sale, lease, transfer or other disposition of
assets pursuant to clause (i) of Section 5.02(e)), (B) the incurrence or
issuance by any Loan Party or any of its Subsidiaries of any Debt (other than
Debt incurred or issued pursuant to clause Section 5.02(b)), (C) the sale or
issuance by any Loan Party (other than PSC) or any of the other Subsidiaries of
any PSC capital stock or other ownership or profit interest, any securities
convertible into or exchangeable for capital stock or other ownership or profit
interest or any warrants, rights or options to acquire capital stock or other
ownership or profit interest and (D) any Extraordinary Receipt received by or
paid to or for the account of any Loan Party or any of its Subsidiaries and not
otherwise included in clause (A), (B) or (C) above, prepay an aggregate
principal amount of the Advances comprising part of the same Borrowings equal to
the amount of such Net Cash Proceeds. Each such prepayment shall be applied
first, ratably to the Term A Facility and the Term B Facility and to the
installments thereof in inverse order of maturity and second to the Working
Capital Facility as set forth in clause (vi) below.
<PAGE>
(iii) PSC and the Borrower shall, on the date of receipt of the Net Cash
Proceeds by any Loan Party or any of its Subsidiaries from the sale or issuance
by PSC of any capital stock or other ownership or profit interest, any
securities convertible into or exchangeable for capital stock or other ownership
or profit interest, or any warrants, rights or options to acquire capital stock
or other ownership or profit interest, prepay an aggregate principal of the
Advances comprising part of the same Borrowings equal to (x) if the Total Debt
Ratio is 3.5:1 or more, 100% of the amount of such Net Cash Proceeds to the
extent, and only to the extent, that such Net Cash Proceeds are necessary to
reduce the Total Debt Ratio to less than 3.5:1 and (y) if the Total Debt Ratio
is less than 3.5:1, 0% of such Net Cash Proceeds.
(iv) The Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Working Capital Advances comprising part of the same
Borrowings, and the Letter of Credit Advances and the Swing Line Advances equal
to the amount by which (A) the sum of the aggregate principal amount of (x) the
Working Capital Advances and (y) the Letter of Credit Advances and (z) the Swing
Line Advances then outstanding plus the aggregate Available Amount of all
Letters of Credit then outstanding exceeds (B) the lesser of the Working Capital
Facility and the Borrowing Base on such Business Day.
(v) The Borrower shall, on each Business Day, pay to the Administrative
Agent for deposit in the L/C Cash Collateral Account an amount sufficient to
cause the aggregate amount on deposit in such Account to equal the amount by
which the aggregate Available Amount of all Letters of Credit then outstanding
exceeds the Letter of Credit Facility on such Business Day.
(vi) Prepayments of the Working Capital Facility made pursuant to clause
(i), (ii) or (iii) above shall be first applied to prepay Letter of Credit
Advances then outstanding until such Advances are paid in full, second applied
to prepay Swing Line Advances then outstanding until such Advances are paid in
full, third applied to prepay Working Capital Advances then outstanding
comprising part of the same Borrowings until such Advances are paid in full, and
fourth deposited in the L/C Cash Collateral Account to cash collateralize 100%
of the Available Amount of the Letters of Credit then outstanding; and, in the
case of prepayments of the Working Capital Facility required pursuant to clause
(i) or (ii) above, the amount remaining (if any) after the prepayment in full of
the Advances then outstanding and the 100% cash collateralization of the
aggregate Available Amount of Letters of Credit then outstanding (the sum of
such prepayment amounts, cash collateralization amounts and remaining amount
being referred to herein as the "Reduction Amount") may be retained by the
Borrower and the Working Capital Facility shall be permanently reduced as set
forth in Section 2.05(b)(iii). Upon the drawing of any Letter of Credit for
which funds are on deposit in the L/C Cash Collateral Account, such funds shall
be applied to reimburse the Issuing Bank or the Working Capital Lenders, as
applicable.
(vii) All prepayments under this subsection (b) shall be made together with
accrued interest to the date of such prepayment on the principal amount prepaid.
(c) Application of Prepayments to the Term A Facility and the Term B
Facility. Upon receipt of any amounts to be applied to the prepayment in respect
of the Term A Facility and the Term B Facility pursuant to this Section 2.06,
<PAGE>
the Administrative Agent shall apply such amounts to the prepayment of the Term
A Advances and Term B Advance ratably; provided however, that if within five
Business Days of receiving notice from the Administrative Agent of a prepayment,
any Term A Lender or any Term B Lender notifies the Administrative Agent that it
elects to refuse to accept the prepayment of its Term A Advances or its Term B
Advances, as the case may be, the Administrative Agent shall apply the portion
of such prepayment that would have been allocated to the repayment of such
Lender's Term A Advances or the Term B Advances, as the case may be, to the
prepayment of the Advances of the other Lenders under the same Term Facility and
to the principal repayment installments thereof in inverse order of maturity or,
if all Lenders under such Term Facility elect to refuse their ratable share of
such prepayment, to the Advances of the Lenders under the other Term Facility
and to the principal repayment installments thereof in inverse order of
maturity. If any Term A Lender or Term B Lender shall not give notice to the
Administrative Agent within such five Business Day period, the Administrative
Agent shall assume that such Lender shall have accepted such prepayment.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower shall pay
interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i) Prime Rate Advances. During such periods as such Advance is a
Prime Rate Advance, a rate per annum equal at all times to the sum of (A)
the Prime Rate in effect from time to time plus (B) the Applicable Margin
in effect from time to time, payable in arrears monthly on the last day of
each month during such periods and on the date such Prime Rate Advance
shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such Advance is
a Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (A) the Eurodollar Rate for
such Interest Period for such Advance plus (B) the Applicable Margin in
effect on the first day of such Interest Period, payable in arrears on the
last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on each day that occurs during such
Interest Period every three months from the first day of such Interest
Period and on the date such Eurodollar Rate Advance shall be Converted or
paid in full.
(b) Default Interest. Upon the occurrence and during the continuance of a
Default, the Borrower shall pay interest on (i) the unpaid principal amount of
each Advance owing to each Lender, payable in arrears on the dates referred to
in clause (a)(i) or (a)(ii) above and on demand, at a rate per annum equal at
all times to 2% per annum above the rate per annum required to be paid on such
Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest
extent permitted by law, the amount of any interest, fee or other amount payable
hereunder that is not paid when due, from the date such amount shall be due
until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid, in the case
of interest, on the Type of Advance on which such interest has accrued pursuant
to clause (a)(i) or (a)(ii) above, and, in all other cases, on Prime Rate
Advances pursuant to clause (a)(i) above.
<PAGE>
(c) Notice of Interest Rate. Promptly after receipt of a Notice of
Borrowing pursuant to Section 2.02(a), the Administrative Agent shall give
notice to the Borrower and each Appropriate Lender of the applicable interest
rate determined by the Administrative Agent for purposes of clause (a)(i) or
(ii).
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay to the
Administrative Agent for the account of the Lenders a commitment fee, from the
date hereof in the case of each Initial Lender and from the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender until the Termination Date, payable in arrears
on the date of the initial Borrowing hereunder, thereafter quarterly on the last
Business Day of each March, June, September, and December, commencing September
30, 1996, and on the Termination Date, at a rate per annum equal to the
Commitment Fee Percentage on the average daily unused portion of each
Appropriate Lender's Term A Commitment and Term B Commitment and on the sum of
the average daily Unused Working Capital Commitment of such Lender plus its Pro
Rata Share of the average daily outstanding Swing Line Advances during such
quarter; provided, however, that any commitment fee accrued with respect to any
of the Commitments of a Defaulting Lender during the period prior to the time
such Lender became a Defaulting Lender and unpaid at such time shall not be
payable by the Borrower so long as such Lender shall be a Defaulting Lender
except to the extent that such commitment fee shall otherwise have been due and
payable by the Borrower prior to such time; and provided further that no
commitment fee shall accrue on any of the Commitments of a Defaulting Lender so
long as such Lender shall be a Defaulting Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the
Administrative Agent for the account of each Working Capital Lender a
commission, payable in arrears quarterly on the last Business Day of each March,
June, September and December, commencing September 30, 1996, and on the earliest
to occur of the full drawing expiration, termination or cancellation of any such
Letter of Credit and on the Termination Date, on such Lender's Pro-Rata Share of
the average daily aggregate Available Amount during such quarter of all Letters
of Credit outstanding from time to time at the rate per annum equal to the
Applicable Margin then in effect for Eurodollar Advances under the Working
Capital Facility.
(ii) The Borrower shall pay to the Issuing Bank, for its own account, such
commissions, issuance fees, fronting fees, transfer fees and other fees and
charges in connection with the issuance or administration of each Letter of
Credit as the Borrower and the Issuing Bank shall agree.
(c) Administrative Agent's Fees. The Borrower shall pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.
SECTION 2.09. Conversion of Advances. (a) Optional. The Borrower may on any
Business Day, upon notice given to the Administrative Agent not later than
11:00 A.M. (Rochester, New York time) on the third Business Day prior to the
date of the proposed Conversion and subject to the provisions of Sections 2.07
and 2.10, Convert all or any portion of the Advances of one Type comprising the
<PAGE>
same Borrowing into Advances of the other Type; provided, however, that any
Conversion of Eurodollar Rate Advances into Prime Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances,
any Conversion of Prime Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified in Section 2.02(c), no
Conversion of any Advances shall result in more separate Borrowings than
permitted under Section 2.02(c) and each Conversion of Advances comprising part
of the same Borrowing under any Facility shall be made ratably among the
Appropriate Lenders in accordance with their Commitments under such Facility.
Each such notice of Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Advances to be Converted and
(iii) if such Conversion is into Eurodollar Rate Advances, the duration of the
initial Interest Period for such Advances. Each notice of Conversion shall be
irrevocable and binding on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000, such Advances shall
automatically Convert into Prime Rate Advances.
(ii) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Prime
Rate Advance.
(iii) Upon the occurrence and during the continuance of any Default, (x)
each Eurodollar Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Prime Rate Advance and (y) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) the
introduction of or any change (other than any change by way of imposition or
increase of) reserve requirements included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender Party of agreeing to make or of making,
funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of
issuing or maintaining Letters of Credit or of agreeing to make or of making or
maintaining Letter of Credit Advances (excluding for purposes of this Section
2.10 any such increased costs resulting from (A) Taxes or Other Taxes (as to
which Section 2.12 shall govern) and (B) changes in the basis of taxation of
overall net income or overall gross income by the United States or by the
foreign jurisdiction or state under the laws of which such Lender Party is
organized or has its Applicable Lending Office or any political subdivision
thereof), then the Borrower shall from time to time, upon demand by such Lender
Party (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender Party additional amounts
sufficient to compensate such Lender Party for such increased cost; provided,
however, that a Lender Party claiming additional amounts under this Section
2.10(a) agrees to use reasonable efforts (consistent with its internal policy
<PAGE>
and legal and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the need for, or
reduce the amount of, such increased cost that may thereafter accrue and would
not, in the reasonable judgment of such Lender Party, be otherwise
disadvantageous to such Lender Party. A certificate as to the amount of such
increased cost, submitted to the Borrower by such Lender Party, shall be
conclusive and binding for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
amount of capital required or reasonably expected to be maintained by any Lender
Party or any corporation controlling such Lender Party as a result of or based
upon the existence of such Lender Party's commitment to lend or to issue Letters
of Credit hereunder and other commitments of such type or the issuance or
maintenance of the Letters of Credit (or similar contingent obligations), then,
upon demand by such Lender Party (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to the Administrative Agent for
the account of such Lender Party, from time to time as specified by such Lender
Party, additional amounts sufficient to compensate such Lender Party in the
light of such circumstances, to the extent that such Lender Party reasonably
determines such increase in capital to be allocable to the existence of such
Lender Party's commitment to lend or to issue Letters of Credit hereunder or to
the issuance or maintenance of any Letters of Credit. A certificate as to such
amounts submitted to the Borrower by such Lender Party shall be conclusive and
binding for all purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any Facility,
Lenders owed at least 66-2/3% of the then aggregate unpaid principal amount
thereof notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Lenders of making, funding or maintaining their Eurodollar Rate Advances for
such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Appropriate Lenders, whereupon (i) each such Eurodollar Rate
Advance under any Facility will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Prime Rate Advance and
(ii) the obligation of the Appropriate Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the Administrative Agent
shall notify the Borrower that such Lenders have determined that the
circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, upon such
demand, Convert into a Prime Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist; provided, however, that, before making any such
<PAGE>
demand, such Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Eurodollar Lending Office if the making of such a designation would allow such
Lender or its Eurodollar Lending Office to continue to perform its obligations
to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar
Rate Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.
SECTION 2.11. Payments and Computations. (a) The Borrower shall make each
payment hereunder and under the Notes, irrespective of any right of counterclaim
or set-off (except as otherwise provided in Section 2.15), not later than 11:00
A.M. (Rochester, New York time) on the day when due in U.S. dollars to the
Administrative Agent at the Administrative Agent's Account in same day funds.
The Administrative Agent will promptly thereafter cause like funds to be
distributed (i) if such payment by the Borrower is in respect of principal,
interest, commitment fees or any other Obligation then payable hereunder and
under the Notes to more than one Lender Party, to such Lender Parties for the
account of their respective Applicable Lending Offices ratably in accordance
with the amounts of such respective Obligations then payable to such Lender
Parties and (ii) if such payment by the Borrower is in respect of any Obligation
then payable hereunder to one Lender Party, to such Lender Party for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to
Section 8.07(d), from and after the effective date of such Assignment and
Acceptance, the Administrative Agent shall make all payments hereunder and under
the Notes in respect of the interest assigned thereby to the Lender Party
assignee thereunder, and the parties to such Assignment and Acceptance shall
make all appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.
(b) If the Administrative Agent receives funds for application to the
Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent may, but shall not
be obligated to, elect to distribute such funds to each Lender Party ratably in
accordance with such Lender Party's proportionate share of the principal amount
of all outstanding Advances and the Available Amount of all Letters of Credit
then outstanding, in repayment or prepayment of such of the outstanding Advances
or other Obligations owed to such Lender Party, and for application to such
principal installments, as the Administrative Agent shall direct.
(c) The Borrower hereby authorizes each Lender Party, if and to the extent
payment owed to such Lender Party is not made when due hereunder or, in the case
of a Lender, under the Note held by such Lender, to charge from time to time
against any or all of the Borrower's accounts with such Lender Party any amount
so due.
(d) All computations of interest, fees and Letter of Credit commissions
shall be made by the Administrative Agent on the basis of a year of 360 days, in
each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest, fees or
commissions are payable. Each determination by the Administrative Agent of
<PAGE>
an interest rate, fee or commission hereunder shall be conclusive and binding
for all purposes, absent manifest error.
(e) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(f) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to any Lender Party
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount equal to the amount then due such Lender Party. If
and to the extent the Borrower shall not have so made such payment in full to
the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower hereunder or
under the Notes shall be made, in accordance with Section 2.11, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender Party and the Administrative
Agent, net income taxes that are imposed by the United States and net income
taxes (or franchise taxes imposed in lieu thereof) that are imposed on such
Lender Party or the Administrative Agent by the state or foreign jurisdiction
under the laws of which such Lender Party or the Administrative Agent (as the
case may be) is organized or any political subdivision thereof and, in the case
of each Lender Party, net income taxes (or franchise taxes imposed in lieu
thereof) that are imposed on such Lender Party by the state or foreign
jurisdiction of such Lender Party's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities in respect of payments hereunder or under
the Notes being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender Party or the Administrative Agent, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.12) such Lender Party or the Administrative Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
<PAGE>
(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, performing under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender Party and the Administrative
Agent for the full amount of Taxes and Other Taxes, and for the full amount of
taxes imposed by any jurisdiction on amounts payable under this Section 2.12,
imposed on or paid by such Lender Party or the Administrative Agent (as the case
may be) and any liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date such Lender Party or the Administrative
Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Administrative Agent, at its address referred to in
Section 8.02, the original receipt of payment thereof or a certified copy of
such receipt. In the case of any payment hereunder or under the Notes by or on
behalf of the Borrower through an account or branch outside the United States or
by or on behalf of the Borrower by a payor that is not a United States person,
if the Borrower determines that no Taxes are payable in respect thereof, the
Borrower shall furnish, or shall cause such payor to furnish, to the
Administrative Agent, at such address, an opinion of counsel acceptable to the
Administrative Agent stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e), the terms "United States"
and "United States person" shall have the meanings specified in Section 7701 of
the Internal Revenue Code.
(e) Each Lender Party organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution and delivery
of this Agreement in the case of each Initial Lender or Initial Issuing Bank, as
the case may be, and on the date of the Assignment and Acceptance pursuant to
which it became a Lender Party in the case of each other Lender Party, and from
time to time thereafter as requested in writing by the Borrower or the
Administrative Agent (but only so long thereafter as such Lender Party remains
lawfully able to do so), provide each of the Administrative Agent and the
Borrower with two original Internal Revenue Service forms 1001 or 4224, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that such Lender is exempt from or entitled to a reduced
rate of United States withholding tax on payments pursuant to this Agreement or
the Notes. If the forms provided by a Lender Party at the time such Lender Party
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes unless and until such Lender Party provides the
appropriate form certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate only shall be considered excluded from Taxes for periods
governed by such form; provided, however, that, if at the date of the Assignment
and Acceptance pursuant to which a Lender Party becomes a party to this
Agreement, the Lender Party assignor was entitled to payments under
subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender Party assignee on such date. If any form
or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
<PAGE>
Lender Party reasonably considers to be confidential, the Lender Party
shall give notice thereof to the Borrower and shall not be obligated to include
in such form or document such confidential information.
(f) For any period with respect to which a Lender Party has failed to
provide the Borrower with the appropriate form described in subsection (e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e)), such Lender Party shall not be entitled
to indemnification under subsection (a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
Lender Party become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as such Lender Party
shall reasonably request to assist such Lender Party to recover such Taxes.
(g) Any Lender Party claiming any additional amounts payable pursuant to
this Section 2.12 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurodollar Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender Party, be
otherwise disadvantageous to such Lender Party.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party shall obtain at
any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) (a) on account of Obligations due and
payable to such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Lender Party at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time obtained by all the Lender Parties at such time or (b) on account
of Obligations owing (but not due and payable) to such Lender Party hereunder
and under the Notes at such time in excess of its ratable share (according to
the proportion of (i) the amount of such Obligations owing to such Lender Party
at such time to (ii) the aggregate amount of the Obligations owing (but not due
and payable) to all Lender Parties hereunder and under the Notes at such time)
of payments on account of the Obligations owing (but not due and payable) to all
Lender Parties hereunder and under the Notes at such time obtained by all of the
Lender Parties at such time, such Lender Party shall forthwith purchase from the
other Lender Parties such participations in the Obligations due and payable or
owing to them, as the case may be, as shall be necessary to cause such
purchasing Lender Party to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender Party, such purchase from each
other Lender Party shall be rescinded and such other Lender Party shall repay to
the purchasing Lender Party the purchase price to the extent of such Lender
Party's ratable share (according to the proportion of (i) the purchase price
paid to such Lender Party to (ii) the aggregate purchase price paid to all
Lender Parties) of such recovery together with an amount equal to such Lender
Party's ratable share (according to the proportion of (i) the amount of such
other Lender Party's required repayment to (ii) the total amount so recovered
from the purchasing Lender Party) of any interest or other amount paid or
payable by the purchasing Lender Party in respect of the total amount so
<PAGE>
The Borrower agrees that any Lender Party so purchasing a participation from
another Lender Party pursuant to this Section 2.13 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender Party
were the direct creditor of the Borrower in the amount of such participation.
SECTION 2.14. Use of Proceeds. The proceeds of the Advances and issuances
of Letters of Credit shall be available (and the Borrower agrees that it shall
use such proceeds and Letters of Credit) solely to pay to the Company and the
other owners of the Acquired Assets and Liabilities the consideration to be
received by them from PSC and PSC Acquisition pursuant to the Purchase
Agreement, pay transaction fees and expenses and provide working capital for PSC
and its Subsidiaries.
SECTION 2.15. Defaulting Lenders. (a) In the event that, at any one time,
(i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender
shall owe a Defaulted Advance to the Borrower and (iii) the Borrower shall be
required to make any payment hereunder or under any other Loan Document to or
for the account of such Defaulting Lender, then the Borrower may, so long as no
Default shall occur or be continuing at such time and to the fullest extent
permitted by applicable law, set off and otherwise apply the Obligation of the
Borrower to make such payment to or for the account of such Defaulting Lender
against the obligation of such Defaulting Lender to make such Defaulted Advance.
In the event that, on any date, the Borrower shall so set off and otherwise
apply its obligation to make any such payment against the obligation of such
Defaulting Lender to make any such Defaulted Advance on or prior to such date,
the amount so set off and otherwise applied by the Borrower shall constitute for
all purposes of this Agreement and the other Loan Documents an Advance by such
Defaulting Lender made on the date under the Facility pursuant to which such
Defaulted Advance was originally required to have been made pursuant to
Section 2.01. Such Advance shall be a Prime Rate Advance and shall be
considered, for all purposes of this Agreement, to comprise part of the
Borrowing in connection with which such Defaulted Advance was originally
required to have been made pursuant to Section 2.01, even if the other Advances
comprising such Borrowing shall be Eurodollar Rate Advances on the date such
Advance is deemed to be made pursuant to this subsection (a). The Borrower shall
notify the Administrative Agent at any time the Borrower exercises its right of
set-off pursuant to this subsection (a) and shall set forth in such notice (A)
the name of the Defaulting Lender and the Defaulted Advance required to be made
by such Defaulting Lender and (B) the amount set off and otherwise applied in
respect of such Defaulted Advance pursuant to this subsection (a). Any portion
of such payment otherwise required to be made by the Borrower to or for the
account of such Defaulting Lender which is paid by the Borrower, after giving
effect to the amount set off and otherwise applied by the Borrower pursuant to
this subsection (a), shall be applied by the Administrative Agent as specified
in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
the Administrative Agent or any of the other Lender Parties and (iii) the
Borrower shall make any payment hereunder or under any other Loan Document to
the Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Lender
Parties and to the fullest extent permitted by applicable law, apply at such
<PAGE>
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Administrative Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Administrative Agent shall constitute for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance with the respective portions of such Defaulted Amounts payable at
such time to the Administrative Agent and such other Lender Parties and, if the
amount of such payment made by the Borrower shall at such time be insufficient
to pay all Defaulted Amounts owing at such time to the Administrative Agent and
the other Lender Parties, in the following order of priority:
(i) first, to the Administrative Agent for any Defaulted Amount then
owing to the Administrative Agent; and
(ii) second, to the Lender Parties for any Defaulted Amounts then
owing to such Lender Parties, ratably in accordance with such respective
Defaulted Amounts then owing to such Lender Parties.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) the Borrower, the Administrative Agent or any
other Lender Party shall be required to pay or distribute any amount hereunder
or under any other Loan Document to or for the account of such Defaulting
Lender, then the Borrower or such other Lender Party shall pay such amount to
the Administrative Agent to be held by the Administrative Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with Fleet, in the name and under the control of the Administrative Agent, but
subject to the provisions of this subsection (c). The terms applicable to such
account, including the rate of interest payable with respect to the credit
balance of such account from time to time, shall be Fleet's standard terms
applicable to escrow accounts maintained with it. Any interest credited to such
account from time to time shall be held by the Administrative Agent in escrow
under, and applied by the Administrative Agent from time to time in accordance
with the provisions of, this subsection (c). The Administrative Agent shall, to
the fullest extent permitted by applicable law, apply all funds so held in
escrow from time to time to the extent necessary to make any Advances required
to be made by such Defaulting Lender and to pay any amount payable by such
Defaulting Lender hereunder and under the other Loan Documents to the
Administrative Agent or any other Lender Party, as and when such Advances or
amounts are required to be made or paid and, if the amount so held in escrow
shall at any time be insufficient to make and pay all such Advances and amounts
required to be made or paid at such time, in the following order of priority:
<PAGE>
(i) first, to the Administrative Agent for any amount then due and
payable by such Defaulting Lender to the Administrative Agent hereunder;
(ii) second, to the Lender Parties for any amount then due and payable
by such Defaulting Lender to such Lender Parties hereunder, ratably in
accordance with such respective amounts then due and payable to such Lender
Parties; and
(iii) third, to the Borrower for any Advance then required to be made
by such Defaulting Lender pursuant to a Commitment of such Defaulting
Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under this
Section 2.15 are in addition to other rights and remedies that the Borrower
may have against such Defaulting Lender with respect to any Defaulted
Advance and that the Administrative Agent or any Lender Party may have
against such Defaulting Lender with respect to any Defaulted Amount.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Extension of Credit. The
obligation of each Lender to make an Advance or of the Issuing Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:
(a) The Acquisition shall have been consummated substantially in
accordance with the terms of the Purchase Agreement, without any waiver or
amendment not consented to by the Lender Parties of any term, provision or
condition set forth therein, and in compliance with all applicable laws and
all necessary approvals; the Merger shall have been consummated
substantially in accordance with the terms of the Merger Agreement, without
any waiver or amendment not consented to by the Lender Parties of any term,
provision or condition set forth therein, and the Lender Parties shall be
satisfied that any applicable state takeover law and any supermajority
provisions in the charter of Scanning are not applicable to the Merger or
that any conditions to avoiding such restrictions have been satisfied.
<PAGE>
(b) Each of the Merger Agreement and the Purchase Agreement shall be
in full force and effect.
(c) The Lender Parties shall be reasonably satisfied with the
corporate and legal structure and capitalization of each Loan Party and
each of its Subsidiaries, including the terms and conditions of the
charter, bylaws and each class of capital stock of each Loan Party and each
such Subsidiary and of each agreement or instrument relating to such
structure or capitalization.
(d) The Borrower shall have received at least $30,000,000 in gross
cash proceeds from the sale of the Subordinated Notes and the principal
amount of the Seller Note shall not be in excess of $5,000,000.
(e) The Lender Parties shall be satisfied that all Existing Debt,
other than the Debt identified on Schedule 3.01(e) (the "Surviving Debt"),
has been prepaid, redeemed or defeased in full or otherwise satisfied and
extinguished and that all such Surviving Debt shall be on terms and
conditions satisfactory to the Lender Parties.
(f) There shall have occurred no material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of (i) either PSC and its Subsidiaries, taken as a
whole, since December 31, 1995, or (ii) PSC Acquisition, on an individual
basis, or (iii) either Scanning and its Subsidiaries taken as a whole, or
the Acquired Assets and Liabilities, since December 31, 1995.
(g) Other than the litigation described in Schedule 3.01(g) (the
"Disclosed Litigation"), there shall exist no action, suit, investigation,
litigation or proceeding pending or threatened in any court or before any
arbitrator or governmental or regulatory agency or authority that (i) could
reasonably be expected to (A) have a material adverse effect on the
business, condition (financial or otherwise), operations, performance,
properties or prospects of PSC and its Subsidiaries, taken as a whole, PSC
Acquisition, on an individual basis, the Company and its Subsidiaries,
taken as a whole, or any of the Acquired Assets and Liabilities,
(B) materially adversely affect the ability of the Borrower or any
Guarantor to perform its obligations under the Loan Documents or
(C) materially adversely affect the rights and remedies of the
Administrative Agent and the Lender Parties under the Loan Documents or
(ii) purports to materially adversely affect any aspect of the Transaction
or the Facilities (collectively, a "Material Adverse Effect"); and there
shall have been no material adverse change in the status, or financial
effect on the Borrower or any of its Subsidiaries or Scanning or any of its
Subsidiaries, of the Disclosed Litigation from that described on Schedule
3.01(g).
(h) All governmental and third party consents and approvals necessary
in connection with each aspect of the Purchase Agreement, the Acquisition,
the Merger, the Securities Purchase Agreements and the Facilities shall
have been obtained (without the imposition of any conditions that are not
acceptable to the Initial Lenders) and shall remain in effect; all
applicable waiting periods shall have expired without any adverse action
<PAGE>
being taken by any competent authority; and no law or regulation shall be
applicable in the reasonable judgment of the Lender Parties that restrains,
prevents or imposes materially adverse conditions upon any aspect of the
Purchase Agreement, the Acquisition, the Merger, the Securities Purchase
Agreements or the Facilities.
(i) The Lender Parties shall have completed a due diligence
investigation of PSC, and its Subsidiaries and Scanning in scope, and with
results, reasonably satisfactory to the Lender Parties, and nothing shall
have come to the attention of the Lender Parties during the course of such
due diligence investigation to lead them to believe (i) that the
Information Memorandum was or has become misleading, incorrect or
incomplete in any material respect, (ii) that, following the consummation
of the Acquisition, the Borrower and its Subsidiaries would not have good
and marketable title to all material assets of Scanning and its
Subsidiaries reflected in the Information Memorandum and (iii) that the
Acquisition will have a Material Adverse Effect; without limiting the
generality of the foregoing, the Lender Parties shall have been given such
access to the management, records, books of account, contracts and
properties of PSC, its Subsidiaries and Scanning as they shall have
requested.
(j) All of the information provided by or on behalf of PSC or any of
its Subsidiaries or by or on behalf of the Company or any of its
Subsidiaries to the Administrative Agent and the Lender Parties prior to
their commitment in respect of the Facilities (the "Pre-Commitment
Information") shall be true and correct in all material aspects, and no
development or change shall have occurred, and no additional information
shall have come to the attention of the Administrative Agent or the
Lenders, that (i) has resulted in or could reasonably be expected to result
in a material change in, or material deviation from, the Pre-Commitment
Information or (ii) has had or could reasonably be expected to have a
Material Adverse Effect.
(k) The Borrower shall have paid all accrued fees and expenses of the
Administrative Agent and the Lender Parties (including the accrued fees and
expenses of counsel to the Administrative Agent and M&T).
(l) The Administrative Agent shall have received on or before the day
of the Initial Extension of Credit the following, each dated such day
(unless otherwise specified), in form and substance satisfactory to the
Administrative Agent (unless otherwise specified) and (except for the
Notes) in sufficient copies for each Lender Party:
(i) The Notes payable to the order of the Lenders.
(ii) Certified copies of (A) the resolutions of the Board of
Directors of the Borrower, Scanning, PSC and each other Loan Party
approving the Acquisition, the Merger, this Agreement, the Notes, each
other Loan Document and each Related Document to which it is or is to
be a party, and of all documents evidencing other necessary corporate
action and governmental and other third party approvals and consents,
if any, with respect to the Acquisition, the Merger, this Agreement,
the Notes, each other Loan Document and each Related Document and (B)
the resolution of the Board of Directors of COMIDA approving the New
York Mortgage.
<PAGE>
(iii) (A) A copy of the charter of the Borrower, Scanning, the
Company and each other Loan Party and each amendment thereto,
certified (as of a date reasonably near the date of the Initial
Extension of Credit) by the Secretary of State of the jurisdiction of
its incorporation as being a true and correct copy thereof and (B) a
copy of the organizational documents of COMIDA and each amendment
thereto, certified (as of a date reasonably near the date of the
Initial Extension of Credit) by the appropriate agency of the State of
New York as being a true and correct copy thereof.
(iv) A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation, dated within 7 days of the date of
the Initial Extension of Credit, listing the charter of the Borrower,
PSC, Scanning, the Company and each other Loan Party and each
amendment thereto on file in his office and certifying that (A) such
amendments are the only amendments to the Borrower's, PSC's,
Scanning's or such other Loan Party's charter on file in his office,
(B) the Borrower, PSC, Scanning and each other Loan Party have paid
all franchise taxes to the date of such certificate and (C) the
Borrower, PSC, Scanning and each other Loan Party are duly
incorporated and in good standing under the laws of the State of the
jurisdiction of its incorporation.
(v) A copy of a certificate of the Secretary of State of each
State listed on Schedule 3.01(l)(vi), dated reasonably near the date
of the Initial Extension of Credit, stating that PSC and Scanning are
duly qualified and in good standing as foreign corporations in such
State and have filed all annual reports required to be filed to the
date of such certificate.
(vi) Copies of a certificate of merger or other confirmation from
the Secretary of State of the State of Delaware of the consummation of
the Merger.
(vii) A certificate of the Borrower, PSC, Scanning and each other
Loan Party signed on behalf of the Borrower, PSC, Scanning and such
other Loan Party by its President or a Vice President and its
Secretary or any Assistant Secretary, dated the date of the Initial
Extension of Credit (the statements made in which certificate shall be
true on and as of the date of the Initial Extension of Credit),
certifying as to (A) the absence of any amendments to the charter of
the Borrower, PSC, Scanning or such other Loan Party since the date of
the Secretary of State's certificate referred to in
Section 3.01(l)(iv), (B) a true and correct copy of the bylaws of the
Borrower, PSC, Scanning and such other Loan Party as in effect on the
date of the Initial Extension of Credit, (C) the due incorporation and
good standing of each of the Borrower, PSC, Scanning and such other
Loan Party as a corporation organized under the laws of the
jurisdiction of its incorporation, and the absence of any proceeding
for the dissolution or liquidation of the Borrower, PSC, Scanning or
<PAGE>
such other Loan Party, (D) the truth of the representations and
warranties contained in the Loan Documents as though made on and as of
the date of the Initial Extension of Credit and (E) the absence of any
event occurring and continuing, or resulting from the Initial
Extension of Credit, that constitutes a Default.
(viii) A certificate of the Secretary or an Assistant Secretary
of the Borrower, PSC, Scanning and each other Loan Party certifying
the names and true signatures of the officers of the Borrower, PSC,
Scanning and such other Loan Party authorized to sign this Agreement,
the Notes, each other Loan Document and each Related Document to which
they are or are to be parties and the other documents to be delivered
hereunder and thereunder.
(ix) A security agreement in substantially the form of Exhibit D
(together with each other security agreement delivered pursuant to
Section 5.01(o), in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms, the "Security
Agreement"), duly executed by the Borrower, PSC and each Subsidiary
Guarantor, together with:
(A) certificates representing the Pledged Shares
referred to therein accompanied by undated stock powers
executed in blank and instruments evidencing the Pledged
Debt referred to therein indorsed in blank,
(B) acknowledgment copies or stamped receipt copies of
proper financing statements, duly filed on or before the day
of the Initial Extension of Credit (or other confirmation
reasonably satisfactory to the Administrative Agent of such
filing) under the Uniform Commercial Code of all
jurisdictions that the Administrative Agent may deem
necessary or desirable in order to perfect and protect the
first priority liens and security interests created under
the Security Agreement, covering the Collateral described in
the Security Agreement,
(C) completed requests for information, dated on or
before the date of the Initial Extension of Credit, listing
the financing statements referred to in clause (B) above and
all other effective financing statements filed in the
jurisdictions referred to in clause (B) above that name the
Borrower, the Company or any other Loan Party as debtor,
together with copies of such other financing statements,
(D) evidence of the completion of all other recordings
and filings of or with respect to the Security Agreement
that the Administrative Agent may deem necessary or
reasonably desirable in order to perfect and protect the
Liens created thereby,
(E) evidence of the insurance required by the terms of
the Security Agreement,
<PAGE>
(F) copies of the Assigned Agreements referred to in
the Security Agreement, together with a consent to such
assignment, in substantially the form of Exhibit C to the
Security Agreement, duly executed by each party to such
Assigned Agreements other than the Borrower, and
(G) evidence that all other action that the
Administrative Agent may deem necessary or reasonably
desirable in order to perfect and protect the first priority
liens and security interests created under the Security
Agreement has been taken.
(x) An intellectual property security agreement in substantially
the form of Exhibit E (together with each other intellectual property
security agreement delivered pursuant to Section 5.01(o), in each case
as amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Intellectual Property Security
Agreement"), duly executed by the Borrower, PSC and each Subsidiary
Guarantor, together with evidence that all action that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the first priority liens and security interests
created under the Intellectual Property Security Agreement has been
taken.
(xi) (A) Deed of trust, trust deed, mortgage, leasehold mortgage
and leasehold deed of trust in substantially the form of Exhibit F-1
and covering the properties listed on Schedule 3.01(l)(xi) and located
in the State of New York (as amended, supplemented or otherwise
modified from time to time, the "New York Mortgage"), duly executed by
PSC, and a deed of trust, trust deed, mortgage, leasehold mortgage and
leasehold deed of trust in substantially the form of Exhibit F-2 and
covering the properties listed on Schedule 3.10(l)(xi) and located in
the State of Oregon (as amended, supplemented or otherwise modified
from time to time, the "Oregon Deed of Trust"), duly executed by the
Borrower, together with:
(A) evidence that counterparts of the Mortgages have been
duly recorded on or before the day of the Initial Extension of
Credit in all filing or recording offices that the Administrative
Agent may deem necessary or desirable in order to create a valid
first and subsisting Lien on the property described therein in
favor of the Secured Parties and that all filing and recording
taxes and fees have been paid,
(B) fully paid American Land Title Association Lender's
Extended Coverage title insurance policies (the "Mortgage
Policies") in form and substance, with endorsements and in amount
acceptable to the Administrative Agent, issued, coinsured and
reinsured by title insurers acceptable to the Administrative
Agent, insuring the Mortgages to be valid first and subsisting
Liens on the property described therein, free and clear of all
defects (including, but not limited to, mechanics' and
materialmen's Liens) and encumbrances, excepting only Permitted
<PAGE>
Encumbrances, and providing for such other affirmative insurance
(including endorsements for future advances under the Loan
Documents and for mechanics' and materialmen's Liens) and such
coinsurance and direct access reinsurance as the Administrative
Agent may deem necessary or desirable,
(C) American Land Title Association form surveys, dated no
more than 30 days before the day of the Initial Extension of
Credit, certified to the Administrative Agent and the issuer of
the Mortgage Policies in a manner reasonably satisfactory to the
Administrative Agent by a land surveyor duly registered and
licensed in the States in which the property described in such
surveys is located and acceptable to the Administrative Agent,
showing all buildings and other improvements, any off-site
improvements, the location of any easements, parking spaces,
rights of way, building set-back lines and other dimensional
regulations and the absence of encroachments, either by such
improvements or on to such property, and other defects, other
than encroachments and other defects reasonably acceptable to the
Administrative Agent,
(D) such consents and agreements of lessors and other third
parties, and such estoppel letters and other confirmations, as
the Administrative Agent may deem necessary or desirable,
(E) evidence of the insurance required by the terms of the
Mortgages,
(F) signed copies of proper financing statements for filing
under the Uniform Commercial Code of all jurisdictions that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the first priority liens and security
interests created under the Mortgages in fixtures, and
(G) evidence that all other action that the Administrative
Agent may deem necessary or desirable in order to create valid
first and subsisting Liens on the property described in the
Mortgages has been taken.
hereafter amended, the "Subsidiary Guaranty," duly executed by each
Subsidiary Guarantor.
(xiii) An assumption agreement in substantially the form of
Exhibit H (the "Assumption Agreement"), duly executed by the Surviving
Corporation.
(xiv) (A) Certified copies of each of the Related Documents, in
each case duly executed by the parties thereto and in form and
substance reasonably satisfactory to the Lender Parties, together with
all agreements, instruments and other documents delivered in
connection therewith, and a certificate of PSC to the effect that the
<PAGE>
aggregate amount of transaction fees payable pursuant to the
Transaction does not exceed the amount previously disclosed in the
Pre-Commitment Information and (B) certified copies of notices (the
"IRB Notices"), in form and substance reasonably acceptable to the
Administrative Agent, of the redemption on January 1, 1997 of the
industrial revenue bonds issued pursuant to the IRB Documents.
(xv) Such financial, business and other information regarding
each Loan Party and its Subsidiaries as the Lender Parties shall have
reasonably requested, including, without limitation, information as to
possible contingent liabilities, tax matters, environmental matters,
obligations under Plans, Multiemployer Plans and Welfare Plans,
collective bargaining agreements and other arrangements with
employees, audited annual financial statements dated December 31,
1995, interim financial statements dated the end of the most recent
fiscal quarter for which financial statements are available (or, in
the event the Lender Parties' due diligence review reveals material
changes since such financial statements, as of a later date within
45 days of the day of the Initial Extension of Credit), pro forma
financial statements as to the Borrower and forecasts prepared by
management of PSC, in form and substance reasonably satisfactory to
the Lender Parties.
(xvi) Certificates, in substantially the form of Exhibit I,
attesting to the Solvency of each Loan Party after giving effect to
the Acquisition, the Merger and the other transactions contemplated
hereby, from its chief financial officer.
(xvii) The environmental assessment reports listed on Schedule
3.01(l)(xvii).
(xviii) Evidence of insurance naming the Administrative Agent as
insured and loss payee with such responsible and reputable insurance
companies or associations, and in such amounts and covering such
risks, as is reasonably satisfactory to the Lender Parties, including,
without limitation, business interruption insurance.
(xix) Certified copies of each employment agreement and other
compensation arrangement with each executive officer of any Loan Party
or any of its Subsidiaries.
(xx) Certified copies of all Material Contracts of each Loan
Party and its Subsidiaries.
(xxi) A special warranty deed from the Company to Scanning, in
form and substance satisfactory to the Administrative Agent, conveying
to Scanning (i) all the Company's present right, title and interest in
and to the IRB Property and (ii) all right, title and interest that
the Company may thereafter acquire in and to the IRB Property.
(xxii) Borrowing Base Certificate.
1<PAGE>
(xxiii) (A) A favorable opinion of Boylan, Brown, Code, Fowler,
Vigdor & Wilson, counsel for the Borrower, in substantially the form
of Exhibit J hereto and as to such other matters as any Lender Party
through the Administrative Agent may reasonably request, (B) a
favorable opinion of Fried, Frank, Harris, Shriver & Jacobson,
intellectual property counsel to the Loan Parties, in form and
substance reasonably satisfactory to the Lender Parties, (C) a letter
from Dechert Price & Rhoads, counsel for SP Holdings and the Company,
authorizing the Lender Parties and the Administrative Agent to rely on
their opinion delivered pursuant to the Purchase Agreement and (D) a
favorable opinion of Gates & Adams, counsel for COMIDA, in form and
substance reasonably satisfactory to the Lender Parties.
(xxiv) A favorable opinion of Stoel, Rives local counsel to the
Lender Parties in Oregon in substantially the form of Exhibit K hereto
and as to such other matters as any Lender Party through the
Administrative Agent may reasonably request.
(xxv) A favorable opinion of Pennie & Edmonds, intellectual
property counsel to the Lender Parties, in substantially the form of
Exhibit L hereto and as to such other matters as any Lender Party
through the Administrative Agent may reasonably request.
(xxvi) A favorable opinion of Shearman & Sterling, counsel for
the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent.
(m) PSC shall have paid in full all amounts due to M&T under the terms
of the $20,000,000 Amended and Restated Credit Facility Agreement dated as
of September 28, 1995, provided to PSC by M&T and shall have terminated the
commitment, and all other obligations, of M&T thereunder.
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance. The
obligation of each Appropriate Lender to make an Advance (other than a Letter of
Credit Advance made by the Issuing Bank or a Working Capital Lender pursuant to
Section 2.03(c) and a Swing Line Advance made by a Working Capital Lender
pursuant to Section 2.02(b) on the occasion of each Borrowing (including the
Initial Extension of Credit), and the obligation of the Issuing Bank to issue a
Letter of Credit (including the initial issuance) or renew a Letter of Credit,
and the right of the Borrower to request a Swing Line Borrowing or the issuance
or renewal of a Letter of Credit shall be subject to the further conditions
precedent that on the date of such Borrowing or issuance or renewal (a) the
following statements shall be true and the Administrative Agent shall have
received for the account of such Lender Party or the Issuing Bank a certificate
signed by a duly authorized officer of the Borrower, dated the date of such
Borrowing or issuance or renewal, stating that (and each of the giving of the
applicable Notice of Borrowing, Notice of Swing Line Borrowing or Notice of
Issuance or Notice of Renewal and the acceptance by the Borrower of the proceeds
of such Borrowing or of such Letter of Credit or the renewal of such Letter of
Credit shall constitute a representation and warranty by the Borrower that both
on the date of such notice and on the date of such Borrowing or issuance or
renewal such statements are true):
<PAGE>
(i) the representations and warranties contained in each Loan Document
are correct on and as of such date, before and after giving effect to such
Borrowing or issuance or renewal and to the application of the proceeds
therefrom, as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result from
such Borrowing or issuance or renewal or from the application of the
proceeds therefrom, that constitutes a Default; and
(iii) for each Working Capital Advance or Swing Line Advance made by
the Swing Line Bank or issuance or renewal of any Letter of Credit, the
Borrowing Base exceeds the aggregate principal amount of the Working
Capital Advances plus Swing Line Advances plus Letter of Credit Advances to
be outstanding plus the aggregate Available Amount of all Letters of Credit
then outstanding after giving effect to such Advance or issuance or
renewal, respectively;
and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Appropriate Lender through the Administrative Agent
may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party's ratable portion of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of PSC and the Borrower. Each
of PSC and the Borrower represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed could not
reasonably be expected to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority (including, without limitation, all
governmental licenses, permits and other approvals) to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted. All of the outstanding capital stock of the
Borrower has been validly issued, is
<PAGE>
fully paid and non-assessable and is owned by PSC free and clear of all
Liens, except those created under the Collateral Documents.
(b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
list of all Subsidiaries of each Loan Party, showing as of the date hereof
(as to each such Subsidiary) the jurisdiction of its incorporation, the
number of shares of each class of capital stock authorized, and the number
outstanding, on the date hereof and the percentage of the outstanding
shares of each such class owned (directly or indirectly) by such Loan Party
and the number of shares covered by all outstanding options, warrants,
rights of conversion or purchase and similar rights at the date hereof. All
of the outstanding capital stock of all of such Subsidiaries has been
validly issued, is fully paid and non-assessable and is owned by such Loan
Party or one or more of its Subsidiaries free and clear of all Liens,
except those created under the Loan Documents. Each such Subsidiary (i) is
a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, (ii) is duly qualified
and in good standing as a foreign corporation in each other jurisdiction in
which it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure to so
qualify or be licensed could not reasonably be expected to have a Material
Adverse Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses, permits and
other approvals) to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted.
(c) The execution, delivery and performance by each Loan Party of this
Agreement, the Notes, each other Loan Document and each Related Document to
which it is or is to be a party, and the consummation of the Merger and the
other transactions contemplated hereby, are within such Loan Party's
corporate powers, have been duly authorized by all necessary corporate
action, and do not (i) contravene such Loan Party's charter or bylaws,
(ii)violate any law (including, without limitation, the Securities
Exchange Act of 1934 and the Racketeer Influenced and Corrupt Organizations
Chapter of the Organized Crime Control Act of 1970), rule, regulation
(including, without limitation, Regulation X of the Board of Governors of
the Federal Reserve System), order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in the breach of, or
constitute a default under, any material contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument binding on or
affecting any Loan Party, any of its Subsidiaries or any of their
properties or (iv) except for the Liens created under the Loan Documents,
result in or require the creation or imposition of any Lien upon or with
respect to any of the properties of any Loan Party or any of its
Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of
any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or in breach of any such contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument, the
violation or breach of which could reasonably be expected to have a
Material Adverse Effect.
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for (i) the due execution, delivery, recordation,
<PAGE>
filing or performance by any Loan Party of this Agreement, the Notes, any
other Loan Document or any Related Document to which it is or is to be a
party, or for the consummation of the Acquisition, the Merger or the other
transactions contemplated hereby, (ii) the grant by any Loan Party of the
Liens granted by it pursuant to the Collateral Documents, (iii) the
perfection or maintenance of the Liens created by the Collateral Documents
(including the first priority nature thereof) or (iv)the exercise by the
Administrative Agent or any Lender Party of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant to the
Collateral Documents, except for the authorizations, approvals, actions,
notices and filings listed on Schedule 4.01(d), all of which have been duly
obtained, taken, given or made and are in full force and effect. All
applicable waiting periods in connection with the Acquisition, the Merger
and the other transactions contemplated hereby have expired without any
action having been taken by any competent authority restraining, preventing
or imposing materially adverse conditions upon the Acquisition, the Merger
or the rights of the Loan Parties or their Subsidiaries freely to transfer
or otherwise dispose of, or to create any Lien on, any properties now owned
or hereafter acquired by any of them.
(e) This Agreement has been, and each of the Notes, each other Loan
Document and each Related Document when delivered hereunder will have been,
duly executed and delivered by each Loan Party thereto. This Agreement is,
and each of the Notes, each other Loan Document and each Related Document
when delivered hereunder will be, the legal, valid and binding obligation
of each Loan Party thereto, enforceable against such Loan Party in
accordance with its terms.
(f) (i) The Consolidated and consolidating balance sheets of the
Company and its Subsidiaries as at December 31, 1995, and the related
Consolidated and consolidating statements of income and Consolidated
statement of cash flows of the Company and its Subsidiaries for the fiscal
year then ended, accompanied by (in the case of such consolidated financial
statements) an opinion of Coopers & Lybrand, independent public
accountants, and the Consolidated balance sheet of the Company and its
Subsidiaries as at March 31, 1996, and the related Consolidated statement
of income and Consolidated statement of cash flows of the Company and its
Subsidiaries for the three months then ended, duly certified by the chief
executive officer or the chief financial officer of the Company, copies of
which have been furnished to each Lender Party, fairly present, subject, in
the case of said balance sheet as at March 31, 1996, and said statements of
income and cash flows for the three months then ended, to year-end audit
adjustments, the Consolidated (and, with respect to the balance sheets
dated December 31, 1995, consolidating) financial condition of the Company
and its Subsidiaries as at such dates and the Consolidated (and, with
respect to the statements of income dated December 31, 1995, consolidating)
results of the operations of the Company and its Subsidiaries for the
period ended on such date, all in accordance with generally accepted
accounting principles applied on a consistent basis, and since December 31,
1995, there has been no Material Adverse Change.
(ii) The Consolidated and consolidating balance sheets of PSC and its
Subsidiaries as at December 31, 1995, and the related Consolidated and
consolidating statements of income and Consolidated statement of cash flows
<PAGE>
of PSC and its Subsidiaries for the fiscal year then ended, accompanied by
(in the case such Consolidated financial statements) an opinion of Arthur
Anderson, independent public accountants, and the Consolidated balance
sheet of PSC and its Subsidiaries as at March 31, 1996, and the related
Consolidated statement of income and Consolidated statement of cash flows
of PSC and its Subsidiaries for the three months then ended, duly certified
by the chief financial officer of PSC, copies of which have been furnished
to each Lender Party, fairly present, subject, in the case of said balance
sheets as at March 31, 1996, and said statements of income and cash flows
for the three months then ended, to year-end audit adjustments, the
Consolidated (and, with respect to the balance sheets dated December 31,
1995, consolidating) financial condition of PSC and its Subsidiaries as at
such dates and the Consolidated (and, with respect to the statements of
income dated December 31, 1995, consolidating) results of the operations of
PSC and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles applied on a
consistent basis, and since December 31, 1995, there has been no Material
Adverse Change.
(g) The Consolidated pro forma balance sheet of PSC and its
Subsidiaries as at March 31, 1996, and the related Consolidated pro forma
statement of income and cash flows of PSC and its Subsidiaries for the
three months then ended, certified by the chief financial officer of PSC,
copies of which have been furnished to each Lender Party, fairly present
the Consolidated pro forma financial condition of PSC and its Subsidiaries
as at such date and the Consolidated pro forma results of operations of PSC
and its Subsidiaries for the period ended on such date, in each case giving
effect to the Acquisition and the other transactions contemplated hereby,
all in accordance with GAAP.
(h) The Consolidated forecasted balance sheets, income statements and
cash flows statements of PSC and its Subsidiaries delivered to the Lender
Parties pursuant to Section 3.01(l)(xv) or 5.03 were prepared in good faith
on the basis of the assumptions stated therein, which assumptions were fair
in the light of conditions existing at the time of delivery of such
forecasts, and represented, at the time of delivery, PSC's best estimate of
its future financial performance.
(i) Neither the Information Memorandum nor any other information,
exhibit or report furnished by any Loan Party to the Administrative Agent
or any Lender Party in connection with the negotiation of the Loan
Documents or pursuant to the terms of the Loan Documents contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements made therein not misleading.
(j) Other than the Disclosed Litigation, there is no action, suit,
investigation, litigation or proceeding affecting any Loan Party or any of
its Subsidiaries, including any Environmental Action, pending or threatened
before any court, governmental agency or arbitrator that could reasonably
be expected to have a Material Adverse Effect, and there has been no
material adverse change in the status, or financial effect on any Loan
Party or any of its Subsidiaries, of the Disclosed Litigation from that
described on Schedule 3.01(g).
<PAGE>
(k) No proceeds of any Advance or drawings under any Letter of Credit
will be used to acquire any equity security of a class that is registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
(l) Each of PSC and the Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock,
and no proceeds of any Advance or drawings under any Letter of Credit will
be used to purchase or carry any Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock.
(m) Following application of the proceeds of each Advance or drawing
under each Letter of Credit, not more than 25 percent of the value of the
assets (either of PSC only or of PSC and its Subsidiaries on a Consolidated
basis) subject to the provisions of Section 5.02(a) or 5.02(e) or subject
to any restriction contained in any agreement or instrument between PSC and
any Lender Party or any Affiliate of any Lender Party relating to Debt and
within the scope of Section 6.01(e) will be Margin Stock.
(n) None of PSC, the Borrower or any of their ERISA Affiliates
maintains any Plans or Multiemployer Plans. Set forth on Schedule 4.01(n)
is a complete and accurate list of all Welfare Plans.
(o) Except as set forth in the financial statements referred to in
this Section 4.01 and in Section 5.03, the Loan Parties and their
respective Subsidiaries have no material liability with respect to
"expected post retirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106.
(p) Neither the business nor the properties of any Loan Party or any
of its Subsidiaries are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo,
act of God or of the public enemy or other casualty (whether or not covered
by insurance) that could reasonably be expected to have a Material Adverse
Effect.
(q) The operations and properties of each Loan Party and each of its
Subsidiaries comply in all known material respects with all applicable
Environmental Laws and Environmental Permits, all known past non-compliance
with such Environmental Laws and Environmental Permits has been resolved
without ongoing obligations or costs, and no circumstances exist that could
reasonably be expected to (i) form the basis of an Environmental Action
against any Loan Party or any of its Subsidiaries or any of their
properties that could reasonably be expected to have a Material Adverse
Effect or (ii) cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law.
(r) Except as disclosed in the environmental assessment reports listed
on Schedule 3.01(l)(xvii), none of the properties currently or formerly
owned or operated by any Loan Party or any of its Subsidiaries is listed or
proposed for listing on the NPL or on the CERCLIS or any analogous foreign,
<PAGE>
state or local list or is adjacent to any such property; there are no and,
to the best of its knowledge, never have been any underground or
aboveground storage tanks or any surface impoundments, septic tanks, pits,
sumps or lagoons in which Hazardous Materials are being or, to the best of
its knowledge, have been treated, stored or disposed on any property
currently owned or operated by any Loan Party or any of its Subsidiaries
or, to the best of its knowledge, on any property formerly owned or
operated by any Loan Party or any of its Subsidiaries; there is no asbestos
or asbestos-containing material on any property currently owned or operated
by any Loan Party or any of its Subsidiaries; and Hazardous Materials have
not been released, discharged or disposed of on any property currently
owned or operated by any Loan Party or any of its Subsidiaries or any
property formerly owned or operated by any Loan Party (other than Scanning)
or any of its Subsidiaries or any property, to the best of its knowledge,
any property formerly owned or operated by Scanning or any of its
Subsidiaries.
(s) Neither any Loan Party nor any of its Subsidiaries is undertaking,
and has not completed, either individually or together with other
potentially responsible parties, any investigation or assessment or
remedial or response action relating to any actual or threatened release,
discharge or disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any governmental
or regulatory authority or the requirements of any Environmental Law; and
all Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently owned or operated by any
Loan Party or any of its Subsidiaries or any property formerly owned or
operated by any Loan Party (other than Scanning) or any of its Subsidiaries
or, to the best of its knowledge, any property formerly owned or operated
by Scanning or any of its Subsidiaries have been disposed of in a manner
not reasonably expected to result in material liability to any Loan Party
or any of its Subsidiaries.
(t) Neither any Loan Party nor any of its Subsidiaries is a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction that could
reasonably be expected to have a Material Adverse Effect.
(u) The Collateral Documents create a valid and perfected first
priority security interest in the Collateral, securing the payment of the
Secured Obligations, and all filings and other actions necessary or
reasonably desirable to perfect and protect such security interest have
been duly taken. The Loan Parties are the legal and beneficial owners of
the Collateral free and clear of any Lien, except for the liens and
security interests created or permitted under the Loan Documents.
(v) Each Loan Party and each of its Subsidiaries has filed, has caused
to be filed or has been included in all tax returns (Federal, state, local
and foreign) required to be filed and has paid all taxes shown thereon to
be due, together with applicable interest and penalties.
<PAGE>
(w) Set forth on Schedule 4.01(w) hereto is a complete and accurate
list, as of the date hereof, of each taxable year of each Loan Party and
each of its Subsidiaries for which Federal income tax returns have been
filed and for which the expiration of the applicable statute of limitations
for assessment or collection has not occurred by reason of extension or
otherwise (an "Open Year").
(x) There is no unpaid amount, as of the date hereof, of adjustments
to the Federal income tax liability of each Loan Party and each of its
Subsidiaries proposed by the Internal Revenue Service with respect to Open
Years. No issues have been raised by the Internal Revenue Service in
respect of Open Years that, in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
(y) There is no unpaid amount, as of the date hereof, of adjustments
to the state, local and foreign tax liability of each Loan Party and its
Subsidiaries proposed by all state, local and foreign taxing authorities
(other than amounts arising from adjustments to Federal income tax
returns). No issues have been raised by such taxing authorities that, in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(z) The Merger will not be taxable to the Company or any of its
Subsidiaries or Affiliates.
(aa) No "ownership change" as defined in Section 382(g) of the
Internal Revenue Code, and no event that would result in the application of
the "separate return limitation year" or "consolidated return change of
ownership" limitations under the Federal income tax consolidated return
regulations, has occurred with respect to PSC.
(bb) Neither any Loan Party nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letters of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated hereby, will violate
any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(cc) Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(dd) Set forth on Schedule 4.01(dd) hereto is a complete and accurate
list of all Existing Debt (other than Surviving Debt), showing as of the
date hereof the principal amount outstanding thereunder.
(ee) Set forth on Schedule 4.01(ee) hereto is a complete and accurate
list of all Surviving Debt, showing as of the date hereof the principal
amount outstanding thereunder, the maturity date thereof and the
amortization schedule therefor.
(ff) Set forth on Schedule 4.01 (ff) hereto is a complete and accurate
list of all real property owned by any Loan Party or any of its
<PAGE>
Subsidiaries or in which any Loan Party has an interest as a contract
vendee, showing as of the date hereof the street address, county or other
relevant jurisdiction, state, record owner and book and estimated fair
value thereof. Each Loan Party or such Subsidiary has good, marketable and
insurable fee simple title to such real property, free and clear of all
Liens, other than Liens created or permitted by the Loan Documents.
(gg) Set forth on Schedule 4.01(gg) hereto is a complete and accurate
list of all leases of real property under which any Loan Party or any of
its Subsidiaries is the lessee, showing as of the date hereof the street
address, county or other relevant jurisdiction, state, lessor, lessee,
expiration date and annual rental cost thereof. To the best knowledge of
each Loan Party, each such lease is the legal, valid and binding obligation
of the lessor thereof, enforceable in accordance with its terms.
(hh) Set forth on Schedule 4.01(hh) hereto is a complete and accurate
list of all Material Contracts of each Loan Party and its Subsidiaries,
showing as of the date hereof the parties, subject matter and term thereof.
Except as could not reasonably be expected to have a Material Adverse
Effect, each such Material Contract has been duly authorized, executed and
delivered by all parties thereto, has not been amended or otherwise
modified, is in full force and effect and is binding upon and enforceable
against all parties thereto in accordance with its terms. There exists no
default under any Material Contract by PSC or any of its Subsidiaries party
thereto and to the best knowledge of each Loan Party, there exists no
default under any Material Contract by any other party thereto.
(ii) Set forth on Schedule 4.01(ii) hereto is a complete and accurate
list of all Investments held by any Loan Party or any of its Subsidiaries,
showing as of the date hereof the amount, obligor or issuer and maturity,
if any, thereof.
(jj) Set forth on Schedule 4.01(jj) hereto is a complete and accurate
list of all patents, trademarks, trade names, service marks and copyrights,
and all applications therefor and licenses thereof, of each Loan Party or
any of its Subsidiaries, showing as of the date hereof the jurisdiction in
which registered, the registration number, the date of registration and the
expiration date.
ARTICLE V
COVENANTS OF PSC AND THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, each of PSC and the Borrower will:
(a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries
to comply, in all material respects, with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation,
compliance with ERISA and Environmental Laws.
<PAGE>
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed upon it or
upon its property and (ii) all lawful claims that, if unpaid, might by law
become a Lien upon its property; provided, however, that each of PSC, the
Borrower and their respective Subsidiaries shall not be required to pay or
discharge any such tax, assessment, charge or claim that is being contested in
good faith and by proper proceedings and as to which appropriate reserves are
being maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
(c) Compliance with Environmental Laws. Comply, and cause each of its
Subsidiaries and all lessees and other Persons operating or occupying its
properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew and cause each of
its Subsidiaries to obtain and renew all Environmental Permits reasonably
necessary for its operations and properties; and conduct, and cause each of its
Subsidiaries to conduct, any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action necessary to remove and
clean up all Hazardous Materials from any of its properties, in accordance with
the requirements of all Environmental Laws; provided, however, that each of PSC,
the Borrower and their respective Subsidiaries shall not be required to
undertake any such cleanup, removal, remedial or other action to the extent that
its obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to such
circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries
to maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which PSC, the Borrower or such Subsidiary operates.
(e) Preservation of Corporate Existence, Etc. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its existence, legal
structure, legal name, rights (charter and statutory), permits, licenses,
approvals, privileges and franchises; provided, however, that the Borrower and
its Subsidiaries may consummate the Merger and any other merger or consolidation
permitted under Section 5.02(d) and provided further that none of PSC, the
Borrower or any of their respective Subsidiaries shall be required to preserve
any right, permit, license, approval, privilege or franchise if the Board of
Directors of PSC, the Borrower or such Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
PSC, the Borrower or such Subsidiary, as the case may be, and that the loss
thereof is not disadvantageous in any material respect to PSC, the Borrower,
such Subsidiary or the Lender Parties.
<PAGE>
(f) Visitation Rights. (i) At any reasonable time and from time to time,
upon reasonable notice, permit the Administrative Agent or any of the Lender
Parties or any agents or representatives thereof, to examine and make copies of
and abstracts from the records and books of account of, and visit the properties
of, PSC, the Borrower and their respective Subsidiaries, and to discuss the
affairs, finances and accounts of PSC, the Borrower and any of their respective
Subsidiaries with any of their officers or directors.
(ii) In the case of PSC, meet at least one each calendar year with
representatives of the Administrative Agent and the Lender Parties to discuss
the affairs, finances and accounts of PSC, the Borrower and any of their
respective Subsidiaries.
(iii) Permit the Administrative Agent and the Lenders to conduct no more
than one commercial finance examination of PSC and its Subsidiaries during each
calendar year.
(g) Preparation of Environmental Reports. At the reasonable request of the
Administrative Agent made upon reasonable cause, from time to time, provide to
the Lender Parties within 60 days after such request, at the expense of the
Borrower, an environmental site assessment report for any of its or its
Subsidiaries properties described in such request, prepared by an environmental
consulting firm acceptable to the Required Lenders, indicating the presence or
absence of Hazardous Materials and the estimated cost of any compliance, removal
or remedial action in connection with any Hazardous Materials on such
properties; without limiting the generality of the foregoing, if the Required
Lenders determines at any time that a material risk exists that any such report
will not be provided within the time referred to above, the Required Lenders may
retain an environmental consulting firm to prepare such report at the expense of
the Borrower, and each of PSC and the Borrower hereby grants and agrees to cause
any of its Subsidiaries that owns any property described in such request to
grant at the time of such request, to the Administrative Agent, the Lender
Parties, such firm and any agents or representatives thereof an irrevocable
non-exclusive license, subject to the rights of tenants, to enter onto their
respective properties to undertake such an assessment.
(h) Keeping of Books. Keep, and cause each of its Subsidiaries to keep,
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of PSC, the
Borrower and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time.
(i) Maintenance of Properties, Etc. Maintain and preserve, and cause each
of its Subsidiaries to maintain and preserve, all of its properties that are
reasonably necessary in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
(j) Compliance with Terms of Leaseholds. Make all payments and otherwise
perform all obligations in respect of all leases of real property to which PSC,
the Borrower or any of their respective Subsidiaries is a party, keep such
leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or cancelled,
notify the Administrative Agent of any default by any party with respect to such
leases and cooperate with the Administrative Agent in all respects to cure any
such default, and cause each of its Subsidiaries to do so except, in any case,
where the failure to do so, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
<PAGE>
(k) Performance of Related Documents. Perform and observe all of the terms
and provisions of each Related Document to be performed or observed by it,
maintain each such Related Document in full force and effect, enforce such
Related Document in accordance with its terms, take all such action to such end
as may be from time to time requested by the Administrative Agent and, upon
request of the Administrative Agent, make to each other party to each such
Related Document such demands and requests for information and reports or for
action as the Borrower is entitled to make under such Related Document.
(l) Performance of Material Contracts. Perform and observe all the terms
and provisions of each Material Contract to be performed or observed by it,
maintain each such Material Contract in full force and effect, and enforce each
such Material Contract in accordance with its terms.
(m) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates on terms that are fair and reasonable and
no less favorable to PSC, the Borrower or such Subsidiary than it would obtain
in a comparable arm's-length transaction with a Person not an Affiliate.
(n) Cash Concentration Accounts. In the case of PSC, maintain main cash
concentration accounts with one or more of the Lenders.
(o) Further Assurances. (i) Upon the request of the Administrative Agent
following the occurrence and during the continuance of a Default, and at the
expense of the Borrower, (A) within 10 days after such request, furnish to the
Administrative Agent a description of the real and personal properties of PSC,
the Borrower and their respective Subsidiaries in detail satisfactory to the
Administrative Agent, (B) within 15 days after such request, duly execute and
deliver to the Administrative Agent mortgages, pledges, assignments and other
security agreements, as specified by and in form and substance satisfactory to
the Administrative Agent, securing payment of all the Obligations of the Loan
Parties under the Loan Documents and constituting Liens on all such properties,
(C) within 30 days after such request, take whatever action (including, without
limitation, the recording of mortgages, the filing of Uniform Commercial Code
financing statements, the giving of notices and the endorsement of notices on
title documents) as may be necessary or reasonably advisable in the opinion of
the Administrative Agent to vest in the Administrative Agent (or in any
representative of the Administrative Agent designated by it) valid and
subsisting Liens on the properties purported to be subject to the security
agreements delivered pursuant to this Section 5.01(o), enforceable against all
third parties in accordance with their terms, (D) within 60 days after such
request, deliver to the Administrative Agent a signed copy of a favorable
opinion, addressed to the Administrative Agent, of counsel for the Loan Parties
reasonably acceptable to the Administrative Agent as to the matters contained in
clauses (A), (B) and (C) above, as to such security agreements being legal,
valid and binding obligations of the Loan Parties enforceable in accordance with
their terms and as to such other matters as the Administrative Agent may
reasonably request, (E) as promptly as practicable after such request, deliver
to the Administrative Agent surveys meeting the criteria specified in Section
<PAGE>
3.01(l)(xi)(C) and Mortgage Policies as to each parcel of real property subject
to such request, and (F) at any time and from time to time, promptly execute and
deliver any and all further instruments and documents and take all such other
action as the Administrative Agent may deem desirable in obtaining the full
benefits of, or in preserving the Liens of, such security agreements.
(ii) Upon the reasonable request of the Administrative Agent and at the
expense of the Borrower, within 30 days after such request, furnish to the
Administrative Agent an appraisal of each of the properties described in the
Mortgages complying with the requirements of the Federal Financial Institutions,
Reform, Recovery and Enforcement Act of 1989, which appraisals shall be from a
person acceptable to the Lender Parties and otherwise inform and substance
satisfactory to the Lender parties.
(iii) Upon the reasonable (in light of the circumstances existing at such
time) request of the Administrative Agent, and at the expense of the Borrower,
within 30 days a such request, (x) duly execute and deliver to the
Administrative Agent pledges, assignments and other security agreements, as
specified by and in form and substance satisfactory to the Administrative Agent,
constituting Liens on the shares of capital stock of any Foreign Subsidiary
under the laws of the jurisdiction of such Foreign Subsidiary's incorporation,
(y) take whatever further action as may be necessary or reasonably advisable in
the opinion of the Administrative Agent to vest in the Administrative Agent (or
any representative of the Administrative Agent designated by it) valid and
subsisting Liens on such shares of capital stock and (z) deliver to the
Administrative Agent a signed copy of a favorable opinion, addressed to the
Administrative Agent, of counsel for the Loan Parties in such jurisdiction
reasonably acceptable to the Administrative Agent as to the matters contained in
clauses (x) and (y) above, as to such security agreements being legal, valid and
binding obligations of the Loan Parties enforceable in accordance with their
terms and as to such other matters as the Administrative Agent may reasonably
request.
(p) Interest Rate Hedging. In the case of the Borrower, enter into prior to
September 30, 1996, and maintain at all times thereafter, interest rate Hedge
Agreements with Persons acceptable to the Administrative Agent, covering (i)
prior to June 30, 1998 a notional amount of not less than 50% of the initial
Borrowings hereunder and (ii) subsequent to June 30, 1998 a notional amount of
not less than 25% of the Advances outstanding on June 30, 1998 under all of the
Facilities. For purposes of calculating the aggregate principal amount of
Advances outstanding on June 30, 1998, the Working Capital Advances shall be
deemed to be outstanding in an aggregate principal amount equal to the average
principal amount of Working Capital Advances outstanding during the two fiscal
quarters ended on June 30, 1998.
(q) Termination of Financing Statements. Upon the request of the
Administrative Agent, and at the expense of the Borrower, within 10 days after
such request, furnish to the Administrative Agent proper termination statements
on Form UCC-3 covering such financing statements as the Administrative Agent may
reasonably request that were listed in the completed requests for information
referred to in Section 3.01(l)(ix)(C).
<PAGE>
(r) IRB Notices. In the case of PSC, cause the Company to deliver the IRB
Notices to the appropriate parties under the IRB Documents on the date of the
Initial Extension of Credit.
(s) IRB Mortgage. In the case of PSC, (i) use its best efforts to seek all
necessary consents from the Bond Trustee or any other Person, which consents are
necessary to permit the Administrative Agent to place a Lien on the Borrower's
interest as contract vendee under the IRB Documents and (ii) promptly upon
receipt of all such consents execute and deliver to the Administrative Agent a
mortgage, in form and substance satisfactory to the Administrative Agent,
together with fixture filings satisfying the requirements of Section
3.01(l)(xi)(f), granting to the Administrative Agent a first-priority security
interest in such contract vendee's interest subject only to the Permitted
Encumbrances described in the Oregon Deed of Trust.
(t) Foreign Subsidiaries. In the case of PSC, within 25 Business Days after
the date hereof, deliver evidence in form and substance satisfactory to the
Administrative Agent of the pledge to the Administrative Agent for its benefit
and the benefit of the Secured Parties, in accordance with the terms of the
Security Agreement, of the capital stock of PSC Asia Pacific Pty Limited, PSC
S.A.R.L., TxCom, PSC Srl, Photographic Sciences GmbH and Foreign Sales
Corporation.
SECTION 5.02. Negative Covenants. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, PSC and the Borrower will not, at any time, without
the consent of the Required Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or sign or file or suffer to exist, or permit any of its
Subsidiaries to sign or file or suffer to exist, under the Uniform
Commercial Code of any jurisdiction, a financing statement that names PSC
or the Borrower or any of their respective Subsidiaries as debtor, or sign
or suffer to exist, or permit any of its Subsidiaries to sign or suffer to
exist, any security agreement authorizing any secured party thereunder to
file such financing statement, or assign, or permit any of its Subsidiaries
to assign, any accounts or other right to receive income, excluding,
however, from the operation of the foregoing restrictions the following:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and described on
Schedule 5.02(a)(iii) hereto;
(iv) purchase money Liens upon or in real property or
equipment acquired or held by PSC, the Borrower or
any of their respective Subsidiaries in the ordinary
<PAGE>
course of business to secure the purchase price of such property or
equipment or to secure Debt incurred solely for the purpose of
financing the acquisition, construction or improvement of any such
property or equipment to be subject to such Liens, or Liens existing
on any such property or equipment at the time of acquisition (other
than any such Liens created in contemplation of such acquisition that
do not secure the purchase price), or extensions, renewals or
replacements of any of the foregoing for the same or a lesser amount;
provided, however, that no such Lien shall extend to or cover any
property other than the property or equipment being acquired,
constructed or improved, and no such extension, renewal or replacement
shall extend to or cover any property not theretofore subject to the
Lien being extended, renewed or replaced; and provided further that
the aggregate principal amount of the Debt secured by Liens permitted
by this clause (iv) shall not exceed the amount permitted under
Section 5.02(b)(iii)(B) at any time outstanding and that any such Debt
shall not otherwise be prohibited by the terms of the Loan Documents;
(v) Liens arising in connection with Capitalized Leases permitted
under Section 5.02(b)(iii)(C); provided that no such Lien shall extend
to or cover any Collateral or assets other than the assets subject to
such Capitalized Leases;
(vi) other Liens securing Debt outstanding in an aggregate
principal amount not to exceed $3,000,000, provided that no such Lien
shall extend to or cover any Collateral; and
(vii) the replacement, extension or renewal of any Lien permitted
by clauses (iii) through (vi) above upon or in the same property
theretofore subject thereto or the replacement, extension or renewal
(without increase in the amount or change in any direct or contingent
obligor) of the Debt secured thereby.
(b) Debt. Create, incur, assume or suffer to exist, or permit any of
its Subsidiaries to create, incur, assume or suffer to exist, any Debt
other than:
(i) in the case of the Borrower, Debt incurred pursuant to the
Hedge Agreements;
(ii) in the case of any of the Subsidiaries (other than the
Borrower and the Foreign Subsidiaries) of PSC, Debt owed to PSC or to
a wholly-owned Subsidiary of PSC (other than a Foreign Subsidiary),
provided that such Debt is evidenced by a promissory note and such
promissory note is pledged to the Secured Parties pursuant to the
terms of the Security Agreement; and
(iii) in the case of PSC, the Borrower and any of their
respective Subsidiaries,
(A) Debt under the Loan Documents,
<PAGE>
(B) Debt secured by Liens permitted by Section 5.02(a)(iv)
not to exceed in the aggregate $3,000,000 at any time
outstanding,
(C) Capitalized Leases not to exceed in the aggregate
$3,000,000 at any time outstanding,
(D) the Surviving Debt, and any Debt extending the maturity
of, or refunding or refinancing, in whole or in part, any
Surviving Debt, provided that the terms of any such extending,
refunding or refinancing Debt, and of any agreement entered into
and of any instrument issued in connection therewith, are
otherwise permitted by the Loan Documents and provided further
that the principal amount of such Surviving Debt shall not be
increased above the principal amount thereof outstanding
immediately prior to such extension, refunding or refinancing,
and the direct and contingent obligors therefor shall not be
changed, as a result of or in connection with such extension,
refunding or refinancing,
(E) Debt in respect of the Subordinated Debt and the Seller
Note; and
(F) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business;
(iv) in the case of PSC, Debt owed to the Borrower, provided that
such Debt is evidenced by a promissory note and such promissory note
is pledged to the Secured Parties pursuant to the terms of the
Security Agreement; and
(v) in the case of PSC and the Borrower, unsecured Debt incurred
in the ordinary course of business for the deferred purchase price of
property or services, maturing within one year from the date created,
and aggregating, on a Consolidated basis, not more than $3,000,000 at
any one time outstanding.
(c) Lease Obligations. Create, incur, assume or suffer to exist, or
permit any of their respective Subsidiaries to create, incur, assume or
suffer to exist, any obligations as lessee (i) for the rental or hire of
real or personal property in connection with any sale and leaseback
transaction, or (ii) for the rental or hire of other real or personal
property of any kind under leases or agreements to lease including
Capitalized Leases having an original term of one year or more that would
cause the direct and contingent liabilities of PSC and its Subsidiaries, on
a Consolidated basis, in respect of all such obligations to exceed
$3,000,000 payable in any period of 12 consecutive months.
(d) Mergers, Etc. Merge into or consolidate with any Person or permit
any Person to merge into it, or permit any of their respective Subsidiaries
to do so, except that (i) the Borrower and its Subsidiaries may consummate
the Merger, (ii) any Subsidiary of PSC
<PAGE>
(other than the Borrower) may merge into or consolidate with any other
Subsidiary of PSC (other than the Borrower or a Foreign Subsidiary) or PSC
provided that, in the case of any such merger or consolidation, the Person
formed by such merger or consolidation shall be either PSC or a
wholly-owned Subsidiary of PSC, (iii) any of the Borrower's Subsidiaries
may merge into PSC; (iv) any Foreign Subsidiary may merge into or
consolidate with any other Foreign Subsidiary, provided that, in the case
of such merger or consolidation, the Person formed by such merger or
consolidation shall be a wholly-owned Subsidiary of PSC; and (v) PSC may
merge into or consolidate with any other Person in a merger permitted by
Section 5.01(f)(i) or (vii), provided that, in the case of such merger or
consolidation, PSC or such Subsidiary shall be the surviving corporation;
provided, however, that in each case, immediately after giving effect
thereto, no event shall occur and be continuing that constitutes a Default
and, in the case of any merger or consolidation to which the Borrower or
PSC is a party, the Borrower or PSC, as the case may be, is the surviving
corporation.
(e) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose
of, or permit any of their respective Subsidiaries to sell, lease, transfer
or otherwise dispose of, any assets or grant any option or other right to
purchase, lease or otherwise acquire any assets, except:
(i) sales of Inventory in the ordinary course of its business,
(ii) in a transaction authorized by subsection (d) of this
Section,
(iii) sales of assets for cash and for fair value in an aggregate
amount not to exceed $1,000,000 in any Fiscal Year,
(iv) the sale of any asset by PSC or any of its Subsidiaries
(other than a bulk sale of inventory and a sale of Receivables other
than delinquent accounts for collection purposes only) so long as (A)
the purchase price paid to PSC, or such Subsidiary for such asset
shall be no less than the fair market value of such asset at the time
of such sale, (B) the purchase price for such asset shall be paid to
PSC or such Subsidiary solely in cash and (C) the aggregate purchase
price paid to PSC and all of its Subsidiaries for such asset and all
other assets sold by PSC and its Subsidiaries during the same Fiscal
Year pursuant to this clause (iv) shall not exceed $1,000,000, and
(v) so long as no Default shall occur and be continuing, the
grant of any option or other right to purchase any asset in a
transaction which would be permitted under the provisions of
clause (iv) above,
provided that in the case of sales of assets pursuant to clause (iv) above,
PSC and the Borrower shall, on the date of receipt by PSC, the Borrower or
any of their respective Subsidiaries of the Net Cash Proceeds from such
sale, prepay the Advances pursuant to, and in the amount and order of
priority set forth in, Section 2.06(b)(ii), as specified therein.
<PAGE>
(f) Investments in Other Persons. Make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person other than:
(i) Investments by PSC and its Subsidiaries in their Subsidiaries
outstanding on the date hereof and additional investments in wholly-owned
Subsidiaries in an aggregate amount invested from the date hereof not to
exceed $5,000,000; provided, however, that no more than an aggregate amount
equal to $3,000,000 can be invested from the date hereof in Foreign
Subsidiaries; provided, further, that with respect to Investments in any
newly acquired or created wholly-owned Subsidiary, such Subsidiary shall
become a Subsidiary Guarantor pursuant to the terms of the Subsidiary
Guaranty and an additional grantor pursuant to the terms of the Security
Agreement and Intellectual Property Security Agreement;
(ii) (A) loans to employees of PSC and its Subsidiaries in connection
with purchases of stock of PSC pursuant to the PSC Stock Option Plan in an
aggregate principal amount not to exceed $1,000,000 at any time outstanding
and (B) loans and advances to employees in the ordinary course of the
business of PSC, the Borrower and their respective Subsidiaries as
presently conducted in an aggregate principal amount not to exceed $500,000
at any time outstanding;
(iii) Investments by PSC, the Borrower and their respective
Subsidiaries in Cash Equivalents;
(iv) Investments by the PSC, the Borrower and their respective
Subsidiaries Hedge Agreements permitted under Section 5.01(p);
(v) Investments consisting of intercompany Debt permitted under
Section 5.02(b)(ii);
(vi) Investments (A) existing on the date hereof and described on
Schedule 4.01(ii) hereto or (B) otherwise disclosed on such Schedule; and
(vii) other Investments in an aggregate amount invested not to exceed
$3,000,000 in Persons other than wholly-owned Subsidiaries; provided that,
(1) any such Investments in any newly acquired or created Subsidiary of
PSC, the Borrower or any of their respective Subsidiaries shall become a
Subsidiary Guarantor pursuant to the terms of the Subsidiary Guaranty and a
collateral grantor pursuant to the terms of the Security Agreement and
Intellectual Property Security Agreement, (2) immediately before and after
giving effect thereto, no Default shall have occurred and be continuing or
would result therefrom; and (3) any business acquired or invested in
pursuant to this clause (vii) shall be in the same line of business as the
business of PSC, the Borrower or any of their respective Subsidiaries.
<PAGE>
(g) Dividends, Etc. Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its capital stock or
any warrants, rights or options to acquire such capital stock, now or
hereafter outstanding, return any capital to its stockholders as such, make
any distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such or issue or sell any
capital stock or any warrants, rights or options to acquire such capital
stock, or permit any of its Subsidiaries to do any of the foregoing or
permit any of its Subsidiaries to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of the Borrower or any
warrants, rights or options to acquire such capital stock or to issue or
sell any capital stock or any warrants, rights or options to acquire such
capital stock, except that, (i) PSC may declare and pay dividends and
distributions payable only in common stock of PSC, (ii) a Foreign
Subsidiary may declare and pay dividends and distributions to PSC, provided
that the Secured Parties shall have a perfected first priority security
interest in the property comprising such dividends or distribution and
(iii) PSC may acquire shares of its common stock for an aggregate purchase
price during the period from the date hereof through the Termination Date
not to exceed $3,000,000, provided that, at the time of such acquisition
and immediately after giving effect thereto, (x) the excess of Consolidated
total assets over Consolidated total liabilities shall not be less than
$44,000,000 and (y) no Default shall have occurred and be continuing.
(h) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business as
carried on at the date hereof.
(i) Charter Amendments. Amend, or permit any of its Subsidiaries to
amend, its certificate of incorporation or bylaws, other than any amendment
that could not reasonably be expected to have a Material Adverse Effect.
(j) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (i) accounting policies or
reporting practices, except as required or permitted by generally accepted
accounting principles or (ii) the Fiscal Year.
(k) Prepayments, Etc. of Debt. Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or
make any payment in violation of any subordination terms of, any Debt,
other than (i) the prepayment of the Advances in accordance with the terms
of this Agreement and (ii) regularly scheduled or required repayments or
redemptions of Surviving Debt, or amend, modify or change in any manner any
term or condition of any Surviving Debt, the Subordinated Debt or the
Seller Note, or permit any of its Subsidiaries to do any of the foregoing
other than to prepay any Debt payable to the Borrower.
(l) Amendment, Etc. of Related Documents. Cancel or terminate any
Related Document or consent to or accept any cancellation or termination
thereof, amend, modify or change in any manner any term or condition of any
Related Document or give any consent, waiver or approval thereunder, waive
any default under or any breach of any term or condition of any Related
Document, agree in any manner to any other amendment, modification or
change of any term or condition of any Related Document or take any other
action in connection with any Related Document that would materially impair
the value of the interest or rights of PSC or the Borrower thereunder or
that would materially impair the rights or interests of the Administrative
Agent or any Lender Party, or permit any of its Subsidiaries to do any of
the foregoing.
<PAGE>
(m) Amendment, Etc. of Material Contracts. Cancel or terminate any
Material Contract or consent to or accept any cancellation or termination
thereof, amend or otherwise modify any Material Contract or give any
consent, waiver or approval thereunder, waive any default under or breach
of any Material Contract, agree in any manner to any other amendment,
modification or change of any term or condition of any Material Contract or
take any other action in connection with any Material Contract that would
materially impair the value of the interest or rights of the Borrower
thereunder or that would materially impair the interest or rights of the
Administrative Agent or any Lender Party, or permit any of its Subsidiaries
to do any of the foregoing.
(n) Negative Pledge. Enter into or suffer to exist, or permit any of
its Subsidiaries to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any
of its property or assets other than (i) in favor of the Secured Parties or
(ii) in connection with (A) any Surviving Debt and any Debt outstanding on
the date such Subsidiary first becomes a Subsidiary or (B) any Debt
permitted by Section 5.02(b)(iii)(F) hereof.
(o) Partnerships, New Subsidiaries. (i) Become a general partner in
any general or limited partnership or joint venture, or permit any of its
Subsidiaries to do so, other than any Subsidiary the sole assets of which
consist of its interest in such partnership or joint venture or (ii) create
any new Subsidiaries unless such newly created Subsidiary shall become a
Subsidiary Guarantor pursuant to the terms of the Subsidiary Guaranty and
an additional grantor pursuant to the terms of the Security Agreement and
the Intellectual Property Security Agreement.
(p) Speculative Transactions. Engage, or permit any of its
Subsidiaries to engage, in any transaction involving commodity options or
futures contracts or any similar speculative transactions except for Hedge
Agreements permitted under Section 5.02(p).
(q) Capital Expenditures. Make, or permit any of its Subsidiaries to
make, any Capital Expenditures that would cause the aggregate of all such
Capital Expenditures made by PSC, the Borrower and its Subsidiaries in any
period set forth below to exceed the amount set forth below for such period
<PAGE>
Period Amount
Effective Date through 12/31/9 .......................... $ 7,000,000
Fiscal Year Ending 12/31/97 ............................. $12,000,000
Fiscal Year Ending 12/31/98 ............................. $15,000,000
Fiscal Year Ending 12/31/99 ............................. $18,000,000
Fiscal Year Ending 12/31/2000 ........................... $19,000,000
Fiscal Year Ending 12/31/2001 ........................... $15,000,000
1/1/2002 through 6/30/2002 .............................. $ 7,500,000
SECTION 5.03. Reporting Requirements. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, PSC and the Borrower will furnish to the Lender
Parties:
(a) Default Notice. As soon as possible and in any event within two
Business Days after obtaining knowledge of the occurrence of each Default
or any event, development or occurrence reasonably likely to have a
Material Adverse Effect continuing on the date of such statement, a
statement of the chief financial officer of PSC setting forth details of
such Default and the action that PSC has taken and proposes to take with
respect thereto.
(b) Monthly Financials. As soon as available and in any event within
45 days after the end of each month, a Consolidated balance sheet of PSC
and its Subsidiaries as of the end of such month and Consolidated statement
of income and a Consolidated statement of cash flows of PSC and its
Subsidiaries for the period commencing at the end of the previous month and
ending with the end of such month and Consolidated statement of income and
a Consolidated statement of cash flows of PSC and its Subsidiaries for the
period commencing at the end of the previous Fiscal Year and ending with
the end of such month, duly certified by the chief financial officer of
PSC.
(c) Quarterly Financials. As soon as available and in any event within
45 days after the end of each of the first three quarters of each Fiscal
Year, Consolidated balance sheet of PSC and its Subsidiaries as of the end
of such quarter and Consolidated statement of income and a Consolidated
statement of cash flows of PSC and its Subsidiaries for the period
commencing at the end of the previous fiscal quarter and ending with the
end of such fiscal quarter and Consolidated statement of income and a
Consolidated statement of cash flows of PSC and its Subsidiaries for the
period commencing at the end of the previous Fiscal Year and ending with
the end of such quarter, setting forth in each case in comparative form the
<PAGE>
corresponding figures for the corresponding period of the preceding Fiscal
Year and the corresponding figures from the budgets for such period and for
the Fiscal Year which includes such period, all in reasonable detail and
duly certified (subject to year-end audit adjustments) by the chief
financial officer of PSC as having been prepared in accordance with GAAP,
together with (i) a certificate of said officer stating that no Default has
occurred and is continuing or, if a Default has occurred and is continuing,
a statement as to the nature thereof and the action that PSC has taken and
proposes to take with respect thereto and (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by PSC in
determining compliance with the covenants contained in Sections 5.04(a)
through (d), provided that in the event of any change in GAAP used in the
preparation of such financial statements, PSC shall also provide, if
necessary for the determination of compliance with Section 5.04, a
statement of reconciliation conforming such financial statements to GAAP.
(d) Annual Financials. As soon as available and in any event within 90
days after the end of each Fiscal Year, a copy of the annual audit report
for such year for PSC and its Subsidiaries, including therein Consolidated
and consolidating balance sheets of PSC and its Subsidiaries as of the end
of such Fiscal Year and Consolidated and consolidating statements of income
and a Consolidated statement of cash flows of PSC and its Subsidiaries for
such Fiscal Year, in each case setting forth in comparative form the
corresponding figures for the prior Fiscal Year and the corresponding
figures from the budget for such Fiscal Year and in each case accompanied
(in the case of such Consolidated financial statements) by an opinion
acceptable to the Required Lenders of Arthur Anderson LLP or other
independent public accountants of recognized standing acceptable to the
Required Lenders, together with (i) a letter of such accounting firm to the
Lender Parties stating that in the course of the regular audit of the
business of PSC and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with generally accepted auditing standards,
such accounting firm has obtained no knowledge that a Default has occurred
and is continuing, or if, in the opinion of such accounting firm, a Default
has occurred and is continuing, a statement as to the nature thereof, (ii)
a schedule in form satisfactory to the Administrative Agent of the
computations used by such accountants in determining, as of the end of such
Fiscal Year, compliance with the covenants contained in Sections 5.04(a)
through (d), provided that in the event of any change in GAAP used in the
preparation of such financial statements, PSC shall also provide, if
necessary for the determination of compliance with Section 5.04, a
statement of reconciliation conforming such financial statements to GAAP
and (iii) a certificate of the chief financial officer of PSC stating that
no Default has occurred and is continuing or, if a default has occurred and
is continuing, a statement as to the nature thereof and the action that PSC
has taken and proposes to take with respect thereto.
(e) Annual Forecasts. As soon as available and in any event no later
than 30 days after the end of each Fiscal Year, forecasts prepared by
management of PSC, in form reasonably satisfactory to the Administrative
Agent, of balance sheets, income statements and cash flow statements on a
quarterly basis for the Fiscal Year following such Fiscal Year then ended.
<PAGE>
(f) ERISA Events and ERISA Reports. Promptly and in any event within
10 days after any Loan Party or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred, a statement of the chief financial
officer of PSC describing such ERISA Event and the action, if any, that
such Loan Party or such ERISA Affiliate has taken and proposes to take with
respect thereto and (ii) on the date any records, documents or other
information must be furnished to the PBGC with respect to any Plan pursuant
to Section 4010 of ERISA, a copy of such records, documents and
information.
(g) Plan Terminations. Promptly and in any event within five Business
Days after receipt thereof by any Loan Party or any ERISA Affiliate, copies
of each notice from the PBGC stating its intention to terminate any Plan or
to have a trustee appointed to administer any Plan.
(h) Actuarial Reports. Promptly upon receipt thereof by any Loan Party
or any ERISA Affiliate, a copy of the annual actuarial valuation report for
each Plan the funded current liability percentage (as defined in Section
302(d)(8) of ERISA) of which is less than 90% or the unfunded current
liability of which exceeds $250,000.
(i) Plan Annual Reports. Promptly and in any event within 30 days
after the filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
with respect to each Plan.
(j) Multiemployer Plan Notices. Promptly and in any event within five
Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, copies of each notice
concerning (i) the imposition of Withdrawal Liability by any such
Multiemployer Plan, (ii) the reorganization or termination, within the
meaning of Title IV of ERISA, of any such Multiemployer Plan or (iii) the
amount of liability incurred, or that may be incurred, by such Loan Party
or any ERISA Affiliate in connection with any event described in clause (i)
or (ii).
(k) Litigation. Promptly after the commencement thereof, notice of all
actions, suits, investigations, litigation and proceedings before any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting any Loan Party or any of
its Subsidiaries of the type described in Section 4.01(j), and promptly
after the occurrence thereof, notice of any material adverse change in the
status or the financial effect on any Loan Party or any of its Subsidiaries
of the Disclosed Litigation from that described on Schedule 3.01(g).
(l) Securities Reports. Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports that any
Loan Party or any of its Subsidiaries sends to its stockholders, and copies
of all regular, periodic and special reports, and all registration
statements, that any Loan Party or any of its Subsidiaries files with the
Securities and Exchange Commission or any governmental authority that may
be substituted therefor, or with any national securities exchange.
<PAGE>
(m) Creditor Reports. Promptly after the furnishing thereof, copies of
any statement or report furnished to any other holder of the securities of
any Loan Party or of any of its Subsidiaries pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required
to be furnished to the Lender Parties pursuant to any other clause of this
Section 5.03.
(n) Agreement Notices. Promptly upon receipt thereof, copies of all
notices, requests and other documents received by any Loan Party or any of
its Subsidiaries under or pursuant to any Related Document or Material
Contract or indenture, loan or credit or similar agreement regarding or
related to any breach or default by any party thereto or any other event
that could materially impair the value of the interests or the rights of
any Loan Party or otherwise have a Material Adverse Effect and copies of
any amendment, modification or waiver of any provision of any Related
Agreement or Material Contract or indenture, loan or credit or similar
agreement and, from time to time upon request by the Administrative Agent,
such information and reports regarding the Related Documents and the
Material Contracts as the Administrative Agent may reasonably request.
(o) Revenue Administrative Agent Reports. Within 10 days after
receipt, copies of all Revenue Administrative Agent Reports (Internal
Revenue Service Form 886), or other written proposals of the Internal
Revenue Service, that propose, determine or otherwise set forth positive
adjustments to the Federal income tax liability of the affiliated group
(within the meaning of Section 1504(a)(1) of the Internal Revenue Code) of
which PSC is a member aggregating $1,000,000 or more.
(p) Tax Certificates. Promptly, and in any event within five Business
Days after the due date (with extensions) for filing the final Federal
income tax return in respect of each taxable year, a certificate (a "Tax
Certificate"), signed by the President or the chief financial officer of
PSC, stating that the common parent of the affiliated group (within the
meaning of Section 1504(a)(1) of the Internal Revenue Code) of which PSC is
a member has paid to the Internal Revenue Service or other taxing
authority, or to PSC, the full amount that such affiliated group is
required to pay in respect of Federal income tax for such year and that PSC
and its Subsidiaries have received any amounts payable to them, and have
not paid amounts in respect of taxes (Federal, state, local or foreign) in
excess of the amount they are required to pay, under the Tax Agreements in
respect of such taxable year.
(q) Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or of any
noncompliance by any Loan Party or any of its Subsidiaries with any
Environmental Law or Environmental Permit that (i) could reasonably be
expected to have a Material Adverse Effect or (ii) cause any property
described in the Mortgages to be subject to any restrictions on ownership,
occupancy, use or transferability under any Environmental Law.
(r) Real Property. As soon as available and in any event within 30
days after the end of each Fiscal Year, a report supplementing
Schedules 4.01(ff) and 4.01(gg) hereto, including an identification of all
real and leased property disposed of by PSC or any of its Subsidiaries
<PAGE>
during such Fiscal Year, a list and description (including the street
address, county or other relevant jurisdiction, state, record owner, book
value thereof, and in the case of leases of property, lessor, lessee,
expiration date and annual rental cost thereof) of all real property
acquired or leased during such Fiscal Year and a description of such other
changes in the information included in such Schedules as may be necessary
for such Schedules to be accurate and complete.
(s) Insurance. As soon as available and in any event within 30 days
after the end of each Fiscal Year, a report summarizing the insurance
coverage (specifying type, amount and carrier) in effect for the each Loan
Party and its Subsidiaries and containing such additional information as
any Lender Party (through the Administrative Agent) may reasonably specify.
(t) Borrowing Base Certificate. As soon as available and in any event
within 10 Business Days after the end of each month, a Borrowing Base
Certificate, as at the end of the previous month, certified by the chief
financial officer of the Borrower.
(u) Management Letters. As soon as available and in any event within
10 Business Days after the receipt thereof, copies of any "management
letter" or similar letter received by the Borrower, PSC or the board of
directors (or committee thereof) of either such Person from its independent
public accountants.
(v) Other Information. Such other information respecting the business,
condition (financial or otherwise), operations, performance, properties or
prospects of any Loan Party or any of its Subsidiaries as any Lender Party
(through the Administrative Agent) may from time to time reasonably
request.
SECTION 5.04. Financial Covenants. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, PSC will:
(a) Fixed Charge Coverage Ratio. Maintain at the end of each fiscal quarter
of PSC a ratio of (i) Consolidated EBITDA for the most recently completed four
fiscal quarters of PSC (provided however that if such four fiscal quarter period
includes any or all of the fiscal quarters ending on September 30, 1995,
December 31, 1995, March 31, 1996 or June 30, 1996, Consolidated EBITDA shall be
calculated by using the Pro Forma EBITDA for each such fiscal quarter in such
four fiscal quarter period) less Capital Expenditures made during such period,
less the aggregate amount of federal, state, local and foreign taxes paid by PSC
and its Subsidiaries during such period to the (ii) sum of (w) cash interest
payable by PSC and its Subsidiaries on all Debt during such period plus (x) cash
rentals payable under Capitalized Leased during such period plus (y) principal
amounts of all Funded Debt payable, in each case, by PSC and its Subsidiaries
during such period plus (z) the aggregate purchase price paid by PSC and its
Subsidiaries during such period to purchase capital stock of PSC as permitted by
Section 5.02(g), of not less than the ratio set forth below for such period
(provided, however, that if such four fiscal quarter period includes any or all
of the fiscal quarters ending on September 30, 1995, December 31, 1995,
<PAGE>
March 31, 1996 or June 30, 1996, (i) Capital Expenditures for such four fiscal
quarter period shall be the lesser of (A) the product of actual Capital
Expenditures made during such period multiplied by a fraction the numerator of
which is four and the denominator of which is the number of fiscal quarters that
have elapsed since the Closing Date and (B) $12,000,000, (ii) interest expense
for such four fiscal quarter period shall be the product of the actual amount of
interest expense payable during such period since the Closing Date multiplied by
a fraction the numerator of which is four and the denominator of which is
the number of fiscal quarters that have elapsed since the Closing Date and
(iii) aggregate taxes paid during such four fiscal quarter period shall be
the product of the actual taxes paid during such period since the Closing
Date multiplied by a fraction the numerator of which is four and the
denominator of which is the number of fiscal quarters which have elapsed
since the Closing):
Four Fiscal Quarters Ending In Ratio
12/31/96 ................ 1.15x
3/31/97 ................ 1.15x
6/30/97 ................ 1.15x
9/30/97 ................ 1.15x
12/31/97 ................ 1.15x
3/31/98 ................ 1.15x
6/30/98 ................ 1.15x
9/30/98 ................ 1.15x
12/31/98 ................ 1.15x
3/31/99 and each period thereafter . 1.25x
(b) Total Debt to EBITDA Ratio. Maintain at the end of each fiscal
quarter of PSC a Total Debt Ratio for such date of not more than the amount
set forth below for such period;
Four Fiscal Quarters Ending In Ratio
Effective date to 12/31/96 ...... 5.0x
3/31/97 ............... 4.75x
6/30/97 ............... 4.75x
9/30/97 ............... 4.25x
<PAGE>
12/31/97 ............... 4.25x
3/31/98 ............... 3.75x
6/30/98 ............... 3.75x
9/30/98 ............... 3.75x
12/31/98 ............... 3.75x
3/31/98 and thereafter ........ 3.25x
(c) Senior Debt to EBITDA Ratio. Maintain at the end of each fiscal
quarter of PSC a ratio of Senior Debt of PSC and its Subsidiaries
outstanding on the last day of such fiscal quarter to Consolidated EBITDA
for the most recently completed four fiscal quarters of PSC (provided,
however, that (i) if such four fiscal quarter period includes any or all of
the fiscal quarters ending on September 30, 1995, December 31, 1995, March
31, 1996 or June 30, 1996, Consolidated EBITDA shall be calculated by using
the Pro Forma EBITDA for each such fiscal quarter in such four fiscal
quarter period, and (ii) for purposes of calculating the aggregate
principal amount of Senior Debt outstanding on the last day of any fiscal
quarter, the aggregate principal amount of Working Capital Advances shall
be deemed to be outstanding in a aggregate principal amount equal to the
average principal amount of Working Capital Advances outstanding during the
two fiscal quarters ended on such last day) of not more than the ratio set
forth below for such period:
Four Fiscal Quarters Ending In Ratio
Effective Date to 12/31/96 ...... 3.75x
3/31/97 ............... 3.50x
6/30/97 ............... 3.50x
9/30/97 ............... 3.0x
12/31/97 ............... 3.0x
3/31/98 ............... 2.50x
6/30/98 ............... 2.50x
9/30/98 ............... 2.50x
12/31/98 ............... 2.25x
3/31/99 and thereafter ........ 2.0x
(d) Interest Coverage Ratio. Maintain as of the end of each fiscal
quarter of PSC a ratio of (i) Consolidated EBITDA for the most recently
completed four fiscal quarters of PSC (provided, however, that if such four
fiscal quarter period includes any or all of the
<PAGE>
fiscal quarters ending on September 30, 1995, December 31, 1995, March 31,
1996 or June 30, 1996, Consolidated EBITDA shall be calculated by using the
Pro Forma EBITDA for each such fiscal quarter in such four fiscal quarter
period) to (ii) Interest Expense of PSC and its Subsidiaries for such
period of not less than the ratio set forth below for such period
(provided, however, that if such four fiscal quarter period includes any or
all of the fiscal quarters ending on September 30, 1995, December 31, 1995,
March 31, 1996 or June 30, 1996, Interest Expense for such four fiscal
quarter period shall be actual Interest Expense during such period since
the Closing Date multiplied by a fraction the numerator of which is four
and the denominator of which is the number of fiscal quarters that have
elapsed since the Closing Date):
Four Fiscal Quarters Ending In Ratio
Effective Date to 12/31/96 ........ 2.0x
3/31/97 ................. 2.50x
6/30/97 ................. 2.50x
9/30/97 ................. 2.50x
12/31/97 ................. 2.50x
3/31/98 ................. 3.0x
6/30/98 ................. 3.0x
9/30/98 ................. 3.0x
12/30/98 ................. 3.0x
3/31/99 and thereafter .......... 3.50x
(e) Net Worth. Maintain at all times an excess of Consolidated total assets
over Consolidated total liabilities, in each case, of the Borrower and its
Subsidiaries of not less than (i) $34,000,000 plus (ii) 75% of Consolidated net
income of PSC and its Subsidiaries for during the period after June 30, 1996 to
and including each date of determination computed on a cumulative basis for
said entire period.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) (i) the Borrower shall fail to pay any principal of any Advance when
the same shall become due and payable or (ii) the Borrower shall fail to pay any
interest on any
<PAGE>
Advance, or any Loan Party shall fail to make any other payment under any
Loan Document, in each case under this clause (ii) within two Business Days
after the same becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any of
its officers) under or in connection with any Loan Document shall prove to
have been incorrect in any material respect when made or confirmed; or
(c) the Borrower shall fail to perform or observe any term, covenant
or agreement contained in Section 2.14, 5.01(e), (f), (g), (m), (o) or (p),
5.02, 5.03 or 5.04; or
(d) any Loan Party shall fail to perform any other term, covenant or
agreement contained in any Loan Document on its part to be performed or
observed if such failure shall remain unremedied for 10 days after the
earlier of the date on which (A) a Responsible Officer of any Loan Party
becomes aware of such failure or (B) written notice thereof shall have been
given to the Borrower by the Administrative Agent or any Lender Party; or
(e) any Loan Party or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on or any other amount payable in respect
of any Debt that is outstanding in a principal or notional amount of at
least $1,000,000 either individually or in the aggregate (but excluding
Debt outstanding hereunder) of such Loan Party or such Subsidiary (as the
case may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt, in each case if the effect of such
event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt or otherwise to cause, or to permit the holder
thereof to cause, such Debt to mature; or any such Debt shall be declared
to be due and payable or required to be prepaid or redeemed (other than by
a regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt
shall be required to be made, in each case prior to the stated maturity
thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
any Loan Party or any of its Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or for
any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that is being
diligently contested by it in good faith, either such proceeding shall
remain undismissed or unstayed for a period of 30 days or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur; or any Loan Party or any of its Subsidiaries
<PAGE>
shall take any corporate action to authorize any of the actions set forth
above in this subsection (f); or
(g) any judgment or order for the payment of money in excess of
$1,000,000 shall be rendered against any Loan Party or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(h) any non-monetary judgment or order shall be rendered against any
Loan Party or any of its Subsidiaries that is reasonably likely to have a
Material Adverse Effect, and there shall be any period of 10 consecutive
days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(i) any provision of any Loan Document after delivery thereof pursuant
to Section 3.01 or 5.01(o) shall for any reason cease to be valid and
binding on or enforceable against any Loan Party to it, or any such Loan
Party shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to Section
3.01 or 5.01(o) shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected first priority lien on and
security interest in the Collateral purported to be covered thereby; or
(k) (i) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of Voting Stock of PSC (or other securities
convertible into such Voting Stock) representing 30% or more of the
combined voting power of all Voting Stock of PSC; (ii) during any period of
up to 24 consecutive months, commencing before or after the date of this
Agreement, individuals who at the beginning of such 24-month period were
directors of PSC (together with any other director whose election to the
Board of Directors of PSC (or whose nomination by the Board of Directors
for election by the stockholders of PSC) was approved by a vote of at least
a majority of the directors then in office who either were directors at the
beginning of such period or whose election was previously so approved)
shall cease for any reason to constitute a majority of the board of
directors of PSC; or (iii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation, will result in its
or their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of PSC; or
(l) any ERISA Event shall have occurred with respect to a Plan and the
sum (determined as of the date of occurrence of such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans
with respect to which an ERISA Event shall have occurred and then exist (or
the liability of the Loan Parties and the ERISA Affiliates related to such
ERISA Event) exceeds $1,000,000; or
<PAGE>
(m) any Loan Party 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 in an amount that, when aggregated
with all other amounts required to be paid to Multiemployer Plans by the
Loan Parties and the ERISA Affiliates as Withdrawal Liability (determined
as of the date of such notification), exceeds $1,000,000 or requires
payments exceeding $250,000 per annum; or
(n) any Loan Party 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, and as a result of such reorganization or termination the aggregate
annual contributions of the Loan Parties and the ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated
have been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or
termination occurs by an amount exceeding $1,000,000; or
(o) there shall occur in the reasonable judgment of the Required
Lenders any Material Adverse Change; or
(p) any Borrowing Base Deficiency shall occur; or
(q) on or before December 30, 1996 (i) the Borrower shall not have
good, marketable and insurable fee simple title to the IRB Property, free
and clear of all Liens, other than the Permitted Encumbrances (which shall
not include any Liens arising under the IRB Documents) as set forth in the
Oregon Deed of Trust or (ii) the Administrative Agent shall not have
received a Mortgage Policy on the IRB Property that complies in all
respects with the provisions of Section 3.01 (l)(xi)(B), provided that such
Mortgage Policy shall insure that the Lien created by the Oregon Deed of
Trust is subject only to Permitted Encumbrances (which shall not include
any Liens arising under the IRB Documents);
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each Appropriate Lender (other than the Commitment in
respect of Letter of Credit Advances by the Issuing Bank or a Working Capital
Lender pursuant to Section 2.03(c)) and Swing Line Advances by a Working Capital
Lender pursuant to Section 2.02(b) and of the Issuing Bank to issue Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and (ii)
shall at the request, or may with the consent, of the Required Lenders, (A) by
notice to the Borrower, declare the Notes, all interest thereon and all other
amounts payable under this Agreement and the other Loan Documents to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower and (B) by notice to each party required under the terms
of any agreement in support of which a Standby Letter of Credit is issued,
request that all Obligations under such agreement be declared to be due and
payable; provided, however, that in the event of an actual or deemed entry of an
order for relief with respect to any Loan Party or any of its Subsidiaries under
<PAGE>
the Federal Bankruptcy Code, (x) the obligation of each Lender to make Advances
(other than Letter of Credit Advances by the Issuing Bank or a Working Capital
Lender pursuant to Section 2.03(c) and Swing Line Advances by a Working Capital
Lender pursuant to Section 2.02(b) and of the Issuing Bank to issue Letters of
Credit shall automatically be terminated and (y) the Notes, all such interest
and all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If
any Event of Default shall have occurred and be continuing, the Administrative
Agent may, or shall at the request of the Required Lenders, irrespective of
whether it is taking any of the actions described in Section 6.01 or otherwise,
make demand upon the Borrower to, and forthwith upon such demand the Borrower
will, pay to the Administrative Agent on behalf of the Lender Parties in same
day funds at the Administrative Agent's office designated in such demand, for
deposit in the L/C Cash Collateral Account, an amount equal to the aggregate
Available Amount of all Letters of Credit then outstanding. If at any time the
Administrative Agent determines that any funds held in the L/C Cash Collateral
Account are subject to any right or claim of any Person other than the
Administrative Agent and the Lender Parties or that the total amount of such
funds is less than the aggregate Available Amount of all Letters of Credit, the
Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Administrative Agent determines to be free
and clear of any such right and claim.
ARTICLE VII
The Administrative Agent
SECTION 7.01. Authorization and Action. Each Lender Party (in its
capacities as a Lender, the Swing Line Bank (if applicable) the Issuing Bank (if
applicable) and a potential Hedge Bank) hereby appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to the Administrative Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto.
As to any matters not expressly provided for by the Loan Documents (including,
without limitation, enforcement or collection of the Notes), the Administrative
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding upon all Lender Parties and all
holders of Notes; provided, however, that the Administrative Agent shall not be
required to take any action that exposes the Administrative Agent to personal
liability or that is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender Party prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
<PAGE>
SECTION 7.02. Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (a) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07;
(b) may consult with legal counsel (including counsel for any Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender Party and shall not be responsible to
any Lender Party for any statements, warranties or representations (whether
written or oral) made in or in connection with the Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Loan Document on the part of
any Loan Party or to inspect the property (including the books and records) of
any Loan Party; (e) shall not be responsible to any Lender Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
SECTION 7.03. Fleet and Affiliates. With respect to its Commitments, the
Advances made by it and the Notes issued to it, Fleet shall have the same rights
and powers under the Loan Documents as any other Lender Party and may exercise
the same as though it were not the Administrative Agent; and the term "Lender
Party" or "Lenders Parties" shall, unless otherwise expressly indicated, include
Fleet in its individual capacity. Fleet and its affiliates may accept deposits
from, lend money to, act as trustee under indentures of, accept investment
banking engagements from and generally engage in any kind of business with, any
Loan Party, any of its Subsidiaries and any Person who may do business with or
own securities of any Loan Party or any such Subsidiary, all as if Fleet were
not the Administrative Agent and without any duty to account therefor to the
Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party acknowledges
that it has, independently and without reliance upon the Administrative Agent or
any other Lender Party and based on the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender Party and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
SECTION 7.05. Indemnification. (a) Each Lender Party severally agrees to
indemnify the Administrative Agent (to the extent not promptly reimbursed by the
<PAGE>
Borrower) from and against such Lender Party's ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Administrative Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by the Administrative Agent under
the Loan Documents; provided, however, that no Lender Party shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender Party agrees to reimburse the
Administrative Agent promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Borrower under Section 8.04, to the extent that the Administrative Agent
is not promptly reimbursed for such costs and expenses by the Borrower. For
purposes of this Section 7.05(a), the Lender Parties' respective ratable shares
of any amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of the Advances outstanding at such time and owing to
the respective Lender Parties, (b) their respective Pro Rata Shares of the
aggregate Available Amount of all Letters of Credit outstanding at such time,
(c) the aggregate unused portions of their respective Term A Commitments and
Term B Commitments at such time and (d) their respective Unused Working Capital
Commitments at such time; provided that the aggregate principal amount of Swing
Line Advances owing to the Swing Line Bank and of Letter of Credit Advances
owing to the Issuing Bank shall be considered to be owed to the Working Capital
Lenders ratably in accordance with their respective Working Capital Commitments.
In the event that any Defaulted Advance shall be owing by any Defaulting Lender
at any time, such Lender Party's Commitment with respect to the Facility under
which such Defaulted Advance was required to have been made shall be considered
to be unused for purposes of this Section 7.05(a) to the extent of the amount of
such Defaulted Advance. The failure of any Lender Party to reimburse the
Administrative Agent promptly upon demand for its ratable share of any amount
required to be paid by the Lender Party to the Administrative Agent as provided
herein shall not relieve any other Lender Party of its obligation hereunder to
reimburse the Administrative Agent for its ratable share of such amount, but no
Lender Party shall be responsible for the failure of any other Lender Party to
reimburse the Administrative Agent for such other Lender Party's ratable share
of such amount. Without prejudice to the survival of any other agreement of any
Lender Party hereunder, the agreement and obligations of each Lender Party
contained in this Section 7.05(a) shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.
(b) Each Lender Party severally agrees to indemnify the Issuing Bank (to
the extent not promptly reimbursed by the Borrower) from and against such Lender
Party's ratable share (determined as provided below) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Issuing Bank in any way relating to or
arising out of the Loan Documents or any action taken or omitted by the Issuing
Bank under the Loan Documents; provided, however, that no Lender Party shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Issuing Bank's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender Party agrees to reimburse the Issuing
Bank promptly upon demand for its ratable share of any costs and expenses
<PAGE>
(including, without limitation, fees and expenses of counsel) payable by the
Borrower under Section 8.04, to the extent that the Issuing Bank is not promptly
reimbursed for such costs and expenses by the Borrower. For purposes of this
Section 7.05(b), the Lender Parties' respective ratable shares of any amount
shall be determined, at any time, according to the sum of (a) the aggregate
principal amount of the Advances outstanding at such time and owing to the
respective Lender Parties, (b) their respective Pro Rata Shares of the aggregate
Available Amount of all Letters of Credit outstanding at such time, (c) the
aggregate unused portions of their respective Term A Commitments and Term B
Commitments at such time plus (d) their respective Unused Working Capital
Commitments at such time; provided that the aggregate principal amount of Swing
Line Advances owing to the Swing Line Bank and of Letter of Credit Advances
owing to the Issuing Bank shall be considered to be owed to the Working Capital
Lenders ratably in accordance with their respective Working Capital Commitments.
In the event that any Defaulted Advance shall be owing by any Defaulting Lender
at any time, such Lender Party's Commitment with respect to the Facility under
which such Defaulted Advance was required to have been made shall be considered
to be unused for purposes of this Section 7.05(b) to the extent of the amount of
such Defaulted Advance. The failure of any Lender Party to reimburse the Issuing
Bank promptly upon demand for its ratable share of any amount required to be
paid by the Lender Parties to the Issuing Bank as provided herein shall not
relieve any other Lender Party of its obligation hereunder to reimburse the
Issuing Bank for its ratable share of such amount, but no Lender Party shall be
responsible for the failure of any other Lender Party to reimburse the Issuing
Bank for such other Lender Party's ratable share of such amount. Without
prejudice to the survival of any other agreement of any Lender Party hereunder,
the agreement and obligations of each Lender Party contained in this
Section 7.05(b) shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Administrative Agents. The Administrative Agent may
resign as to any or all of the Facilities at any time by giving written notice
thereof to the Lender Parties and the Borrower and may be removed as to all of
the Facilities at any time with or without cause by the Required Lenders. Upon
any such resignation or removal, the Required Lenders shall have the right to
appoint a successor Administrative Agent as to such of the Facilities as to
which the Administrative Agent has resigned or been removed. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lender Parties, appoint a successor Administrative
Agent, which shall be a commercial bank organized under the laws of the United
States or of any State thereof and having a combined capital and surplus of at
least $250,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent as to all of the Facilities
and upon the execution and filing or recording of such financing statements, or
amendments thereto, and such amendments or supplements to the Mortgages, and
such other instruments or notices, as may be necessary or desirable, or as the
Required Lenders may request, in order to continue the perfection of the Liens
granted or purported to be granted by the Collateral Documents, such successor
Administrative Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged from its duties and
obligations under the Loan Documents. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent as to less
<PAGE>
than all of the Facilities and upon the execution and filing or recording of
such financing statements, or amendments thereto, and such amendments or
supplements to the Mortgages, and such other instruments or notices, as may be
necessary or desirable, or as the Required Lenders may request, in order to
continue the perfection of the Liens granted or purported to be granted by the
Collateral Documents, such successor Administrative Agent shall succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Administrative Agent as to such Facilities, other than with respect
to funds transfers and other similar aspects of the administration of Borrowings
under such Facilities, issuances of Letters of Credit (notwithstanding any
resignation as Administrative Agent with respect to the Letter of Credit
Facility) and payments by the Borrower in respect of such Facilities, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement as to such Facilities, other than as aforesaid.
After any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent as to all of the Facilities, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent as to any Facilities under this
Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Notes or any other Loan Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed (or, in the case of the Collateral
Documents, consented to) by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that (a) no amendment, waiver or
consent shall, unless in writing and signed by all of the Lenders (other than
any Lender Party that is, at such time, a Defaulting Lender), do any of the
following at any time: (i) waive any of the conditions specified in Section 3.01
or, in the case of the Initial Extension of Credit, Section 3.02, (ii) change
the number of Lenders or the percentage of (x) the Commitments, (y) the
aggregate unpaid principal amount of the Advances or (z) the aggregate Available
Amount of outstanding Letters of Credit that, in each case, shall be required
for the Lenders or any of them to take any action hereunder, (iii) reduce or
limit the obligations of the Guarantor under Section 1 of the Guaranty or
otherwise limit the Guarantor's liability with respect to the Obligations owing
to the Administrative Agent and the Lender Parties, (iv) release any material
portion of the Collateral in any transaction or series of related transactions
or permit the creation, incurrence, assumption or existence of any Lien on any
material portion of the Collateral in any transaction or series of related
transactions to secure any Obligations other than Obligations owing to the
Secured Parties under the Loan Documents and other than Debt owing to any other
Person, provided that, in the case of any Lien on any material portion of the
Collateral to secure Debt owing to any other Person, (A) the Borrower shall, on
the date such Debt shall be incurred or issued, prepay the Advances pursuant to,
and in the order of priority set forth in, Section 2.06(b)(ii) in an aggregate
principal amount equal to the amount of such Net Cash Proceeds to the extent
required to do so under Section 2.06(b)(ii), (B) such Lien shall be subordinated
to the Liens created under the Loan Documents on terms acceptable to the
Required Lenders and (C) the Required Lenders shall otherwise permit the
creation, incurrence, assumption or existence of such Lien and, to the extent
<PAGE>
not otherwise permitted under Section 5.02(b), of such Debt, (v) amend this
Section 8.01, or (vi) limit the liability of any Loan Party under any of the
Loan Documents and (b) no amendment, waiver or consent shall, unless in writing
and signed by the Required Lenders and each Lender that has a Commitment under
the Term A Facility, Term B Facility or Working Capital Facility if affected by
such amendment, waiver or consent, (i) increase the Commitments of such Lender
or subject such Lender to any additional obligations, (ii) reduce the principal
of, or interest on, the Notes held by such Lender or any fees or other amounts
payable hereunder to such Lender, (iii) postpone any date fixed for any payment
of principal of, or interest on, the Notes held by such Lender or any fees or
other amounts payable hereunder to such Lender or (iv) change the order of
application of any prepayment set forth in Section 2.06 in any manner that
materially affects such Lender; provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Swing Line Bank or the
Issuing Bank, as the case may be, in addition to the Lenders required above to
take such action, affect the rights or obligations of the Swing Line Bank or the
Issuing Bank, as the case may be, under this Agreement; and provided further
that no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement.
SECTION 8.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
the Borrower, at its address at 675 Basket Road, Webster, New York 14580,
Attention: William J. Woodard; if to PSC, at its address at 675 Basket Road,
Webster, New York 14580, Attention: William J. Woodard; if to any Initial Lender
or the Initial Issuing Bank, at its Domestic Lending Office specified opposite
its name on Schedule I hereto; if to any other Lender Party, at its Domestic
Lending Office specified in the Assignment and Acceptance pursuant to which it
became a Lender Party; and if to the Administrative Agent, at its address at One
East Avenue, Rochester, New York 14638, Attention: Jeffrey Kenefick; or, as to
the Borrower or the Administrative Agent, at such other address as shall be
designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and the Administrative Agent. All such notices
and communications shall, when mailed by certified mail, return receipt
requested; telegraphed, telecopied or telexed, be effective 3 days after
mailing, upon delivery to the telegraph company, upon transmission by telecopier
or upon confirmation by telex answerback, respectively, except that notices and
communications to the Administrative Agent pursuant to Article II, III or VII
shall not be effective until received by the Administrative Agent. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or the Notes or of any Exhibit hereto to be executed
and delivered hereunder shall be effective as delivery of a manually executed
counterpart thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender
Party or the Administrative Agent to exercise, and no delay in exercising, any
right hereunder or under any Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
<PAGE>
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand
(i) all costs and expenses of the Administrative Agent and the Co-Arrangers in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents (including, without limitation,
(A)all due diligence, collateral review, syndication, (including printing,
distribution and bank meetings) transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses, and (B) the reasonable fees and expenses of counsel for the
Administrative Agent and the Co-Arrangers with respect thereto, with respect to
advising the Administrative Agent as to its rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under the Loan
Documents, with respect to negotiations with any Loan Party or with other
creditors of any Loan Party or any of its Subsidiaries arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors' rights
generally and any proceeding ancillary thereto) and (ii) all costs and expenses
of the Administrative Agent and the Lender Parties in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation,
any bankruptcy, insolvency or other similar proceeding affecting creditors'
rights generally (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent and each Lender Party with
respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the Administrative
Agent, the Co-Arrangers, each Lender Party and each of their Affiliates and
their officers, directors, employees, agents and advisors (each, an "Indemnified
Party") from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of, or in
connection with the preparation for a defense of, any investigation, litigation
or proceeding arising out of, related to or in connection with (i) the
Facilities, the actual or proposed use of the proceeds of the Advances or the
Letters of Credit by the Borrower or any of its subsidiaries or other affiliates
and any of the other transaction contemplated by the Loan Documents, (ii) any
acquisition or proposed acquisition or similar business combination or proposed
business combination by PSC or the Borrower or any of their subsidiaries or
affiliates of all or any portion of the shares of capital stock or substantially
all of the property and assets of any other person, (iii) the Facilities and any
use made or proposed to be made with the proceeds thereof or (iv) the actual or
alleged presence of Hazardous Materials on any property of any Loan Party or any
of its Subsidiaries or any Environmental Action relating in any way to any Loan
Party or any of its Subsidiaries, in each case whether or not such
investigation, litigation or proceeding is brought by any Loan Party, its
directors, shareholders or creditors or an Indemnified Party or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated, except to the extent such claim, damage,
loss, liability or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct. The Borrower also agrees not to assert
any claim against the Administrative Agent, any Lender Party or any of their
Affiliates, or any of their respective officers, directors, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Facilities, the
actual or proposed use of the proceeds of the Advances or the Letters of Credit,
the Loan Documents or any of the transactions contemplated thereby.
<PAGE>
(c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made by the Borrower to or for the account of a Lender Party other
than on the last day of the Interest Period for such Advance, as a result of a
payment or Conversion pursuant to Section 2.09(b)(i) or 2.10(d), acceleration of
the maturity of the Notes pursuant to Section 6.01 or for any other reason, or
by an Eligible Assignee to a Lender Party other than on the last day of the
Interest Period for such Advance upon an assignment of rights and obligations
under this Agreement pursuant to Section 8.07 as a result of a demand by the
Borrower pursuant to Section 8.07(a), the Borrower shall, upon demand by such
Lender Party (with a copy of such demand to the Administrative Agent), pay to
the Administrative Agent for the account of such Lender Party any amounts
required to compensate such Lender Party for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment, including,
without limitation, any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender Party to fund or maintain such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or other
amounts payable by it under any Loan Document, including, without limitation,
fees and expenses of counsel and indemnities, such amount may be paid on behalf
of such Loan Party by the Administrative Agent or any Lender Party, in its sole
discretion.
(e) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of the Borrower contained in Sections 2.10 and 2.12 and this Section 8.04 shall
survive the payment in full of principal, interest and all other amounts payable
hereunder and under any of the other Loan Documents.
<PAGE>
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the Obligations of the Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender Party, irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender Party and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent and when
the Administrative Agent shall have been notified by each Initial Lender and the
Initial Issuing Bank that such Initial Lender and the Initial Issuing Bank has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Administrative Agent and each Lender Party and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment or Commitments, the Advances owing to it and the Note or Notes held
by it); provided, however, that (i) each such assignment shall be of a uniform,
and not a varying, percentage of all rights and obligations under and in respect
of one or more Facilities, (ii) except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Lender or an assignment of all
of a Lender's rights and obligations under this Agreement, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000, (iii)
each such assignment shall be to an Eligible Assignee, (iv) no such assignments
shall be permitted without the consent of the Administrative Agent until the
Administrative Agent shall have notified the Lender Parties that syndication of
the Commitments hereunder has been completed, (V) no such assignment shall be
permitted if, immediately after giving effect thereto, the Borrower would be
required to make payments to or on behalf of the assignee Lender Party pursuant
to Section 2.10(a) or (b) and the assignor Lender Party was not at the time of
such assignment, entitled to receive any payment pursuant to Section 2.10(a) or
(b), and (vi) the parties to each such assignment shall execute and deliver to
the Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000.
(b) Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the
case may be, hereunder and (y) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's or Issuing Bank's rights and obligations under this Agreement, such
Lender or Issuing Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the Lender
Party assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
<PAGE>
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to the
Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender or
Issuing Bank, as the case may be.
(d) The Administrative Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lender Parties and the Commitment under each Facility of, and principal amount
of the Advances owing under each Facility to, each Lender Party from time to
time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lender Parties may treat each Person whose name is
recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender Party at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. In the case of any assignment by a Lender, within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the surrendered
Note or Notes a new Note to the order of such Eligible Assignee in an amount
equal to the Commitment assumed by it under a Facility pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
hereunder under such Facility, a new Note to the order of the assigning Lender
in an amount equal to the Commitment retained by it hereunder. Such new Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A-1, A-2 or A-3 hereto, as the case may be.
<PAGE>
(f) The Issuing Bank may assign to an Eligible Assignee all of its
rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time; provided, however, that (i) each such assignment
shall be to an Eligible Assignee and (ii) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance,
together with a processing and recordation fee of $3,000.
(g) Each Lender Party may sell participations to one or more Persons
(other than any Loan Party or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitments, the Advances owing
to it and the Note or Notes (if any) held by it); provided, however, that
(i) such Lender Party's obligations under this Agreement (including,
without limitation, its Commitments) shall remain unchanged, (ii) such
Lender Party shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) such Lender Party shall
remain the holder of any such Note for all purposes of this Agreement, (iv)
the Borrower, the Administrative Agent and the other Lender Parties shall
continue to deal solely and directly with such Lender Party in connection
with such Lender Party's rights and obligations under this Agreement and
(v) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of any Loan Document, or
any consent to any departure by any Loan Party therefrom, except to the
extent that such amendment, waiver or consent would reduce the principal
of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation,
postpone any date fixed for any payment of principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to
the extent subject to such participation, or release all or substantially
all of the Collateral.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 8.07, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower furnished to such
Lender Party by or on behalf of the Borrower; provided, however, that,
prior to any such disclosure, the assignee or participant or proposed
assignee or participant shall agree to preserve the confidentiality of any
Confidential Information received by it from such Lender Party.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and the Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
SECTION 8.08. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
<PAGE>
SECTION 8.09. No Liability of the Issuing Bank. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrower shall have
a claim against the Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) the Issuing Bank's
willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a
Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
SECTION 8.10. Confidentiality. Neither the Administrative Agent nor any
Lender Party shall disclose any Confidential Information to any Person without
the consent of the Borrower, other than (a) to the Administrative Agent's or
such Lender Party's Affiliates and their officers, directors, employees, agents
and advisors and to actual or prospective Eligible Assignees and participants,
and then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process and (c) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking.
SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Loan Documents in the
courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the other Loan
<PAGE>
Documents to which it is a party in any New York State or federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
SECTION 8.12. Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of New York.
SECTION 8.13. Waiver of Jury Trial. Each of the Borrower, the
Administrative Agent and the Lender Parties irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Loan
Documents, the Advances or the actions of the Administrative Agent or any Lender
Party in the negotiation, administration, performance or enforcement thereof.
ARTICLE IX
PSC GUARANTY
SECTION 9.01. PSC Guaranty. PSC unconditionally and irrevocably guarantees
(the undertaking by PSC under this Article IX being the "PSC Guaranty") the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of each other Loan Party now or hereafter existing
under the Loan Documents, whether for principal, interest, fees, commissions,
expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and
agrees to pay any and all expenses (including, without limitation, reasonable
fees and expenses of counsel) incurred by the Administrative Agent or any other
Secured Party in enforcing any rights under this PSC Guaranty. Without limiting
the generality of the foregoing, PSC's liability shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be owed by any
other Loan Party to the Administrative Agent or any other Secured Party under
the Loan Documents but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving such other Loan Party.
SECTION 9.02. Guaranty Absolute. PSC guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any other Secured Party with respect thereto. The
Obligations of PSC under this PSC Guaranty are independent of the Guaranteed
Obligations or any other Obligations of any Loan Party under the Loan Documents,
and a separate action or actions may be brought and prosecuted against PSC to
enforce this PSC Guaranty, irrespective of whether any action is brought against
any other Loan Party or whether any other Loan Party is joined in any such
action or actions. The liability of PSC under this PSC Guaranty shall be
absolute, unconditional and irrevocable irrespective of, and PSC hereby
irrevocably waives any defenses it may now or hereafter have in any way relating
to, any and all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
other agreement or instrument relating thereto;
<PAGE>
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any Loan Party under the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document
(including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Loan Party or any
of its Subsidiaries or otherwise);
(c) any taking, exchange, release or nonperfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure
from any other guarantee, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any Loan Party under the Loan Documents, or any
other property and assets of any other Loan Party or any of its
Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any other Loan Party or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to any Loan Party any
information relating to the financial condition, operations, properties or
prospects of any other Loan Party now or hereafter known to such Secured
Party; or
(g) any other circumstance (including, without limitation, any statute
of limitations or any existence of or reliance on any representation by the
Administrative Agent or any other Secured Party) that might otherwise
constitute a defense available to, or a discharge of, any other Loan Party,
PSC or any other guarantor or surety.
This PSC Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Administrative Agent or any other
Secured Party or by any other Person upon the insolvency, bankruptcy or
reorganization of any other Loan Party or otherwise, all as though such payment
had not been made.
SECTION 9.03. Waivers and Acknowledgments. (a) PSC hereby unconditionally
and irrevocably waives promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this PSC Guaranty,
and any requirement that the PSC Guaranty or any other Secured Party protect,
secure, perfect or insure any Lien or any property or assets subject thereto or
exhaust any right or take any action against any other Loan Party or any other
Person or any Collateral.
(b) PSC hereby unconditionally and irrevocably waives any duty on the part
of the Administrative Agent or any other Secured Party to disclose to PSC any
matter, fact or thing relating to the business, operation or condition of any
other Loan Party or any of its Subsidiaries or its property and assets now or
hereafter known by the Administrative Agent or such Secured Party.
<PAGE>
(c) PSC hereby unconditionally waives any right to revoke this PSC
Guaranty, and acknowledges that this PSC Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
(d) PSC acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements contemplated by the Loan Documents and
that the waivers set forth in this Section 9.03 are knowingly made in
contemplation of such benefits.
SECTION 9.04. Subrogation. PSC hereby unconditionally and irrevocably
agrees not to exercise any rights that it may now have or may hereafter acquire
against any other Loan Party or any other insider guarantor that arise from the
existence, payment, performance or enforcement of the Obligations of PSC under
this PSC Guaranty or under any other Loan Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of the
Administrative Agent or any other Secured Party against such other Loan Party or
any other insider guarantor or any Collateral, whether or not such claim, remedy
or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from such other Loan Party or
any other insider guarantor, directly or indirectly, in cash or other property
or by setoff or in any other manner, payment or security on account of such
claim, remedy or right, until such time as all of the Guaranteed Obligations and
all other amounts payable under this PSC Guarantee shall have been paid in full
in cash, all of the Letters of Credit shall have expired, terminated or been
cancelled and the Commitments shall have expired or terminated. If any amount
shall be paid to PSC in violation of the immediately preceding sentence at any
time prior to the latest of (a) the payment in full in cash of all of the
Guaranteed Obligations and all other amounts payable under this PSC Guaranty,
(b) the full drawing, termination, expiration or cancellation of all Letters of
Credit and, (c) the Termination Date, such amount shall be held in trust for the
benefit of the Administrative Agent and the other Secured Parties and shall
forthwith be paid to the Administrative Agent to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this PSC Guaranty,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed Obligations or other
amounts payable under this PSC Guaranty thereafter arising. If (i) PSC shall pay
to the Administrative Agent all or any part of the Guaranteed Obligations, (ii)
all of the Guaranteed Obligations and all other amounts payable under this PSC
Guaranty shall have been paid in full in cash, (iii) all of the Letters of
Credit shall have expired, terminated or been cancelled, (iv) the Termination
Date shall have occurred, and (v) the Working Capital Termination Date shall
have occurred, the Administrative Agent and the other Secured Parties will, at
PSC's request and expense, execute and deliver to PSC appropriate documents,
without recourse and without representation or warranty, necessary to evidence
the transfer of subrogation to PSC of an interest in the Guaranteed Obligations
resulting from the payment made by PSC.
SECTION 9.05. Continuing Guarantee; Assignments. This PSC Guaranty is a
continuing guaranty and shall (a) remain in full force and effect until the
latest of (i) the payment in full in cash of all of the Guaranteed Obligations
<PAGE>
and all other amounts payable under this PSC Guaranty, (ii) the full drawing,
termination, expiration or cancellation of all Letters of Credit, and (iii) the
Termination Date, (b) be binding upon PSC, its successors and assigns and (c)
inure to the benefit of, and be enforceable by, the Administrative Agent and the
other Secured Parties and their respective successors, transferees and assigns.
Without limiting the generality of clause (c) of the immediately preceding
sentence, any Lender Party may assign or otherwise transfer all or any portion
of its rights and obligations under this Agreement (including, without
limitation, all or any portion of its Commitment or Commitments, the Advances
owing to it and the Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Lender Party under this Article VI or otherwise, in each case as
provided in Section 8.07.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
PSC ACQUISITION INC.
By /s/ William J. Woodard
William J. Woodard
Title: VP - Finance
PSC INC.
By /s/ William J. Woodard
William J. Woodard
Title: VP - Finance
FLEET BANK, as Administrative Agent
By /s/ Jeff Kenefick
Jeff Kenefick
Title: Assistant VP
FLEET BANK, as Initial Issuing Bank
By /s/ Jeff Kenefick
Jeff Kenefick
Title: Assistant VP
<PAGE>
Initial Lenders
CORESTATES BANK, N.A.
By /s/ Brian M. Haley
Brian M. Haley
Title: Vice President
FLEET BANK
By /s/ Jeff Kenefick
Jeff Kenefick
Title: Assistant VP
KEY BANK NATIONAL ASSOCIATION
By /s/ Lawrence A. Mack
Lawrence A. Mack
Title: Vice President
MANUFACTURERS & TRADERS
TRUST COMPANY
By /s/ Philip M. Smith
Philip M. Smith
Title:Regional Senior VP
PILGRIM AMERICA PRIME RATE TRUST
By /s/ Howard Tiffen
Howard Tiffen
Title:Senior Vice President
SUMITOMO BANK
By /s/ Brian M. Smith & James Drum
Brian M. Smith & James Drum
Title:Sr. VP Regional Mgr (East)
& VP NY Office
<PAGE>
FORM OF TERM A NOTE
PROMISSORY NOTE
$ Dated: July __, 1996
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FOR VALUE RECEIVED, the undersigned, PSC Acquisition, Inc., a Delaware
corporation (together with the Surviving Corporation (as defined in the Credit
Agreement referred to below), the "Borrower"), HEREBY PROMISES TO PAY to the
order of Fleet Bank (the "Lender") for the account of its Applicable Lending
Office (as defined in the Credit Agreement referred to below) the principal
amount of the Term A Advance (as defined below) owing to the Lender by the
Borrower pursuant to the Credit Agreement, dated as of July __, 1996 (as
amended, supplemented or otherwise modified, the "Credit Agreement"; terms
defined therein being used herein as therein defined) among the Borrower, the
Lender and certain other lender parties thereto, Fleet Bank, as Initial Issuing
Bank, and Fleet Bank, as Administrative Agent for the Lender and such other
lender parties, on the dates and in the amounts specified in the Credit
Agreement.
The Borrower promises to pay interest on the unpaid principal amount of the
Term A Advance from the date of such Term A Advance until such principal amount
is paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Fleet Bank, as Administrative Agent, at One East Avenue,
Rochester, N.Y. 14638, Account No. 1983580, in same day funds. The Term A
Advance owing to the Lender by the Borrower and the maturity thereof, and all
payments made on account of principal thereof, shall be recorded by the Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto, which
is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of a single term advance (the "Term A Advance") by
the Lender to the Borrower in an amount not to exceed the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from such Term
A Advance being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified. The obligations
of the Borrower under this Promissory Note, and the obligations of the other
Loan Parties under the Loan Documents, are secured by the Collateral as provided
in the Loan Documents.
This Promissory Note shall be governed by and construed in accordance with
the laws of the State of New York.
PSC ACQUISITION, INC.
By
Name:
Title:
<PAGE>
Term Advances And Payments Of Principal
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Amount Of
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Date Term Advance Or Prepaid Balance Made By
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<PAGE>
FORM OF TERM B NOTE
Promissory Note
$ Dated: July __, 1996
-----------------------------
FOR VALUE RECEIVED, the undersigned, PSC Acquisition, Inc., a Delaware
corporation (together with the Surviving Corporation (as defined in the Credit
Agreement referred to below), the "Borrower"), HEREBY PROMISES TO PAY to the
order of Pilgrim America Prime Rate Trust (the "Lender") for the account of its
Applicable Lending Office (as defined in the Credit Agreement referred to below)
the principal amount of the Term B Advance (as defined below) owing to the
Lender by the Borrower pursuant to the Credit Agreement, dated as of July __,
1996 (as amended, supplemented or otherwise modified, the "Credit Agreement";
terms defined therein being used herein as therein defined) among the Borrower,
the Lender and certain other lender parties thereto, Fleet Bank, as Initial
Issuing Bank, and Fleet Bank, as Administrative Agent for the Lender and such
other lender parties, on the dates and in the amounts specified in the Credit
Agreement.
The Borrower promises to pay interest on the unpaid principal amount of the
Term B Advance from the date of such Term B Advance until such principal amount
is paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Fleet Bank, as Administrative Agent, at One East Avenue,
Rochester, N.Y. 14638, Account No. 1983580, in same day funds. The Term B
Advance owing to the Lender by the Borrower and the maturity thereof, and all
payments made on account of principal thereof, shall be recorded by the Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto, which
is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of a single term advance (the "Term B Advance") by
the Lender to the Borrower in an amount not to exceed the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from such Term
B Advance being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified. The obligations
of the Borrower under this Promissory Note, and the obligations of the other
Loan Parties under the Loan Documents, are secured by the Collateral as provided
in the Loan Documents.
This Promissory Note shall be governed by and construed in accordance with
the laws of the State of New York.
PSC ACQUISITION, INC.
By
Name:
Title:
<PAGE>
Term Advances And Payments Of Principal
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Date Term Advance Or Prepaid Balance Made By
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<PAGE>
FORM OF TERM WORKING
CAPITAL ADVANCE
Promissory Note
$ Dated: July __, 1996
--------------------
FOR VALUE RECEIVED, the undersigned, PSC Acquisition, INC., a Delaware
corporation (together with the Surviving Corporation (as defined in the Credit
Agreement referred to below), the "Borrower"), HEREBY PROMISES TO PAY to the
order of Manufacturers & Traders Trust Company (the "Lender") for the account of
its Applicable Lending Office (as defined in the Credit Agreement referred to
below) the aggregate principal amount of the Working Capital Advances (as
defined below) owing to the Lender by the Borrower pursuant to the Credit
Agreement, dated as of July __, 1996 (as amended, supplemented or otherwise
modified, the "Credit Agreement"; terms defined therein being used herein as
therein defined) among the Borrower, the Lender and certain other lender parties
thereto, Fleet Bank, as Initial Issuing Bank, and Fleet Bank, as Administrative
Agent for the Lender and such other lender parties, on the Working Capital
Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Working Capital Advance from the date of such Working Capital Advance until
such principal amount is paid in full, at such interest rates, and payable at
such times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Fleet Bank, as Administrative Agent, at One East Avenue,
Rochester, N.Y. 14638, Account No. 1983580, in same day funds. Each Working
Capital Advance owing to the Lender by the Borrower and the maturity thereof,
and all payments made on account of principal thereof, shall be recorded by the
Lender and, prior to any transfer hereof, endorsed on the grid attached hereto,
which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of working capital advances (the "Working Capital
Advances") by the Lender to the Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Working
Capital Advance being evidenced by this Promissory Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified. The
obligations of the Borrower under this Promissory Note, and the obligations of
the other Loan Parties under the Loan Documents, are secured by the Collateral
referred to in the Collateral Documents.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
PSC ACQUISITION, INC.
By
Name:
Title:
<PAGE>
Working Capital Advances And Payments Of Principal
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Date Amount Of Amount Of
Working Capital Principal Paid Unpaid Principal Notation
Advance Or Prepaid Balance Made By
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Exhibit 10.3
REGISTRATION RIGHTS and HOLDBACK AGREEMENT
This is a REGISTRATION RIGHTS AND HOLDBACK AGREEMENT, (the "Agreement")
dated as of July 12, 1996, by and between SPECTRA-PHYSICS, INC., a Delaware
corporation ("SPI") and PSC Inc., a New York corporation ("PSC").
WHEREAS, SPI, PSC and Spectra-Physics Holding, S.A., a French corporation,
have entered into an Asset and Stock Purchase Agreement (the "Purchase
Agreement"), dated May 20, 1996 pursuant to which SPI will receive 977,135
shares of Buyer's common stock, par value $.01 per share; and
WHEREAS, PSC wishes to grant to SPI registration rights for the shares of
common stock of PSC that SPI acquired pursuant to the Purchase Agreement, and
SPI is willing to agree to certain restrictions on the sale of such shares;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereby agree as follows:
1. Definitions.
As used herein, the following terms have the following respective meanings:
"Common Stock" means the common stock, par value $.01 per share, of PSC.
"Covered Shares" means the Registrable Securities of SPI included in a
registration statement pursuant to the terms hereof.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended.
"Indemnified Party" has the meaning given to that term in Section 6 hereof.
"Indemnifying Party" has the meaning given to that term in Section 6
hereof.
<PAGE>
"Lock-up Period" means the period beginning on the date hereof and ending
on the date that is the earlier of (i) one year from the date hereof or (ii) 180
days from the date of the consummation of the first public offering of equity
securities by PSC after the date hereof.
"Piggyback Registration" has the meaning given to that term in Section 3
hereof.
"Piggyback Registration Statement" means a registration statement of PSC
filed with the SEC on a form for which PSC then qualifies and which includes the
Registrable Securities to be registered for sale thereunder pursuant to Section
3 hereof, including post-effective amendments, in each case including the
prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Registrable Securities" means (i) the shares of Common Stock received by
SPI pursuant to the Purchase Agreement and (ii) any Common Stock issued or
issuable with respect to the Registrable Securities by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. Any Registrable Security will
cease to be a Registrable Security when (i) a registration statement covering
such Registrable Security has been declared effective by the SEC and it has been
disposed of pursuant to such effective registration statement, (ii) it is sold
under circumstances in which all of the applicable conditions of Rule 144 are
met, or (iii) it has been otherwise transferred, PSC has delivered a new
certificate or other evidence of ownership for it not bearing any restrictive
legend citing the absence of registration thereof and it may be resold without
subsequent registration under the Securities Act.
"Registration Expenses" has the meaning given to that term in Section 12
hereof.
"Registration Statement" means any Piggyback Registration Statement or any
Shelf Registration Statement.
"Sec" means the U.S Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
<PAGE>
"Securities Purchase Agreements" shall mean those certain Securities
Purchase Agreements dated as of the date hereof by and between SpectraScan,
Inc., a Delaware corporation, PSC and the institutional investors named therein,
as such Securities Purchase Agreements exist on the date hereof.
"Shelf Registration" means a registration effected pursuant to Section 2
hereof.
"Shelf Registration Statement" means a "shelf" registration statement of
PSC filed pursuant to the provisions of Section 2 hereof with the SEC which
covers all of the Registrable Securities on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the SEC,
and any amendments and supplements to such registration statement, including
post-effective amendments, in each case including the prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
All capitalized terms used herein that are not otherwise defined herein
shall have the meanings ascribed thereto in the Purchase Agreement.
2. Shelf Registration.
(a) On or before 90 days after the date hereof, PSC shall file with the SEC
a Shelf Registration Statement relating to the offer and sale of the Registrable
Securities by SPI from time to time in accordance with the methods of
distribution elected by SPI and set forth in such Shelf Registration Statement
and, thereafter, shall use its best efforts to cause such Shelf Registration
Statement to be declared effective under the Securities Act as promptly as is
practicable after the date of filing of such Registration Statement.
(b) PSC shall use its best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the prospectus forming a part thereof
to be useable by SPI for a period of three years from the date the Shelf
Registration Statement is declared effective or such shorter period that will
terminate when all Covered Shares have been sold pursuant to a Registration
Statement or otherwise cease to be Registrable Securities; provided that PSC's
obligation to keep the Shelf Registration Statement effective shall cease three
<PAGE>
months after such time as SPI owns less than 10% of the Registrable Securities
it owns on the date hereof unless the reason SPI's ownership of Registrable
Securities fell below the 10% level was due to the "cut-back" provision
contained in the last sentence of Section 3(b) hereof. PSC shall be deemed not
to have used its best efforts to keep the Shelf Registration Statement effective
during the requisite period if PSC voluntarily takes any action that would
result in SPI not being legally permitted to offer and sell any Registrable
Securities during that period unless (i) such action is required by applicable
law, (ii) upon the occurrence of any event that requires a supplement or
amendment to the Shelf Registration Statement as described in Section 5(f) and
such action is taken by PSC in good faith and for valid business reasons or
(iii) the continued effectiveness of the Shelf Registration Statement would
require PSC to disclose a material financing, acquisition or other corporate
transaction and the Board of Directors of PSC shall have determined in good
faith that such disclosure is not in the best interests of PSC and its
stockholders, and, in the case of clause (i) or (ii) above, PSC thereafter
promptly complies with the requirement of paragraph 5(f) below.
3. Piggy-back Registration.
(a) Subject to the provisions of this Section 3, if PSC at any time
proposes to register any of its equity securities (as defined in the Exchange
Act) under the Securities Act, whether or not for sale for its own account
(other than pursuant to Section 2 hereof or other than pursuant to Section 11.1
of the Securities Purchase Agreements), and the registration form to be used may
be used for the registration of Registrable Securities, PSC each such time will
give written notice of such proposed filing to SPI as soon as practicable (but
in no event less than twenty days before the anticipated filing date), and such
notice shall offer SPI the opportunity to include such number of Registrable
Securities in the registration as SPI may request (the "Piggyback
Registration"); provided that SPI notify PSC of the amount of Registrable
Securities to be registered not less than ten days before the anticipated filing
date.
(b) PSC shall use its best efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in the registration statement for such
offering on the same terms and conditions as any similar securities of PSC
included therein. Notwithstanding the foregoing, if the managing underwriter of
such registration advises PSC in writing (with a copy to SPI) that, in its
opinion, inclusion of the number of Registrable Securities requested to be
included in the registration would adversely affect the marketing of the
<PAGE>
securities to be sold by PSC in such offering, then PSC will include in such
registration only the number of Registrable Securities recommended by the
managing underwriter that may be included without adversely affecting the
marketing of the securities to be sold by PSC in such offering provided that, if
any securities are being offered for the account of any person other than PSC
and the holders of the Registrable Securities, the reduction in the number of
Registrable Securities included in such registration shall not represent a
greater percentage of the amount of Registrable Securities originally requested
to be registered and sold in such registration than the lowest such percentage
reduction imposed upon any other person.
4. Lock-up And Holdback Agreements.
(a) Spi Lock-up. (i) During the Lock-up Period, without PSC's prior written
consent, SPI agrees not to effect any public sale or distribution of any of the
Registrable Securities except pursuant to an available Piggyback Registration.
(ii) If PSC enters into an underwriting agreement in connection with a firm
underwritten offering of shares of its Common Stock, SPI will not, if requested
by the managing underwriter for such offering and PSC, effect any public sale or
distribution of Common Stock during the 10 days prior to, and during the 90-day
period beginning on, the effective date of such registration statement.
(b) Psc Holdback. If SPI enters into an underwriting agreement in
connection with a firm underwritten offering of shares of Registerable
Securities (other than in connection with a Piggyback Registration), PSC will
not, if requested by the managing underwriter for such offering and SPI, effect
any public sale or distribution of any Common Stock or securities convertible
into or exchangeable or exercisable for such Common Stock (other than pursuant
to a registration statement on Form S-8 or any successor form), during the 10
days before, and during the 90-day period beginning on, the effective date of
such registration statement.
<PAGE>
5. Registration Procedures.
Whenever SPI has requested that any Registrable Securities be registered
pursuant to Sections 2 or 3 hereof, PSC will use its reasonable best efforts to
effect the registration of such Registrable Securities in accordance with the
intended method of disposition thereof as promptly as practicable, and in
connection with any such registration, PSC will as expeditiously as possible
(Provided that nothing contained herein prohibits PSC from abandoning a
registration in which SPI has requested to participate pursuant to Section 3
hereof):
(a) with regard to a Piggyback Registration and, subject to the provisions
of Section 2, with regard to the Shelf Registration, prepare and file with the
SEC a Registration Statement and use its best efforts to cause such filed
Registration Statement to become effective; Provided that (i) before filing a
Registration Statement or prospectus or any amendments or supplements thereto,
PSC will furnish to one counsel selected by SPI copies of all such documents
proposed to be filed sufficiently in advance of filing to provide such counsel
with a reasonable opportunity to review such documents and comment thereon and
(ii), after the filing of the Registration Statement, PSC will promptly notify
SPI of any stop order issued or, to the knowledge of PSC, threatened by the SEC
and take all reasonable actions required to prevent the entry of such stop order
or to remove it if entered;
(b) prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may be
necessary to (i) keep the Registration Statement effective for a period which
will terminate when all Covered Shares have been sold and (ii) comply with the
provisions of the Securities Act with respect to the disposition of all Covered
Shares during such period in accordance with the intended methods of disposition
by SPI thereof set forth in the Registration Statement, including without
limitation, such amendments and supplements to the Shelf Registration Statement
and related prospectus as may be necessary to permit Covered Shares to be sold
pursuant thereto in an underwritten offering;
(c) furnish to SPI, before filing the Registration Statement, if requested,
copies of the Registration Statement as proposed to be filed, and thereafter
furnish to SPI such number of copies of the Registration Statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in the Registration Statement (including each
preliminary prospectus) and such other document as SPI may reasonably request in
order to facilitate the disposition of the Covered Shares owned by SPI;
<PAGE>
(d) use its best efforts to register or qualify the Covered Shares under
such other securities or blue sky laws of such jurisdictions in the United
States as SPI reasonably (in light of SPI's intended plan of distribution)
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable SPI to consummate the disposition in such
jurisdictions of its Covered Shares; provided that PSC will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction;
(e) use its best efforts to cause the Covered Shares to be registered with
or approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of PSC to enable SPI to
consummate the disposition of the Covered Shares;
(f) notify SPI of the occurrence of an event requiring the preparation of a
supplement or amendment to a Registration Statement or a prospectus contained
therein so that, as thereafter delivered to the purchasers of such Covered
Shares, a Registration Statement or such prospectus will not 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 and
promptly make available to SPI any such supplement or amendment;
(g) enter into customary agreements (including an underwriting agreement in
customary form if the distribution of the Covered Shares is otherwise to be made
in an underwritten offering) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Covered
Shares;
(h) make available for inspection by SPI, any underwriter participating in
any disposition pursuant to such Registration Statement and any attorney,
accountant or other professional retained by SPI or underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of PSC (collectively, the "Records") as are reasonably
necessary to enable them to exercise due diligence, and cause PSC's officers,
directors and employees to supply all information reasonably requested by any
such Inspectors in connection with the Registration Statement;
<PAGE>
(i) in the event an offering of Registrable Securities is pursuant to an
underwritten offering, use its best efforts to obtain a comfort letter or
comfort letters from PSC's independent public accountants in customary form and
covering such matters of the type customarily covered by comfort letters as the
managing underwriter reasonably requests;
(j) otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC, and make generally available to its security holders, as
soon as reasonably practicable, an earnings statement satisfying the provisions
of Section 11(a) of the Securities Act and covering a period of twelve months,
beginning within three months after the effective date of the registration
statement;
(k) use its best efforts to cause all Covered Shares to be listed on the
NASDAQ National Market or listed on each national securities exchange on which
the Common Stock is then listed; and
(l) provide a transfer agent and registrar for all of the Covered Shares
not later than the effective date of such Registration Statement.
<PAGE>
6. Indemnification.
(a) Indemnification by PSC. PSC agrees to indemnify and hold harmless SPI,
its officers, directors, employees and agents, and each Person, if any, who
controls SPI within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or prospectus relating to the Covered
Shares, in any amendment or supplement thereto, in any preliminary prospectus,
or arising out of or based upon any omission or any alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of, or are based upon, any such
untrue statement or omission or allegation thereof based upon information
furnished in writing to PSC by SPI or on SPI's behalf expressly for use therein.
(b) Indemnification By Spi. SPI agrees to indemnify and hold harmless PSC,
its directors and officers and each party, if any, who controls PSC within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from PSC to SPI, but only with
respect to information furnished in writing by SPI or on SPI's behalf expressly
for use in any Registration Statement or prospectus relating to the Covered
Shares, or any amendment or supplement thereto, or any preliminary prospectus.
(c) Conduct Of Indemnification Proceedings. If any action or proceeding
(including any governmental investigation) is brought or asserted against any
party entitled to indemnification under clauses (a) or (b) above (an
"Indemnified Party") in respect of which indemnity may be sought from any party
who has agreed to provide such indemnification (an "Indemnifying Party"), the
Indemnifying Party will assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and will assume the
payment of all expenses. Such Indemnified Party will have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel will be at the expense of such
Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees
<PAGE>
and expenses or (ii) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party has been advised by counsel that
there is a conflict of interest on the part of counsel employed by the
Indemnifying Party to represent such Indemnified Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party will not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party; it being understood, however,
that the Indemnifying Party will not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for all
such Indemnified Parties). The Indemnifying Party will not be liable for any
settlement of any such action or proceeding effected without its written
consent, but if settled with its written consent, or if there is a final
judgment for the plaintiff in any such action or proceeding, the Indemnifying
Party will indemnify and hold harmless such Indemnified Parties from and against
any loss or liability (to the extent stated above) by reason of such settlement
or judgment.
7. Contribution.
If for any reason the indemnification provided for in the preceding
Sections 6(a) and 6(b) is unavailable to an Indemnified Party as contemplated by
those sections, then the Indemnifying Party will contribute to the amount paid
or payable by the Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the Indemnified Party and the Indemnifying Party, but also
the relative fault of the Indemnified Party and the Indemnifying Party, as well
as any other relevant equitable considerations, Provided that SPI will not be
required to contribute in an amount greater than the difference between the net
proceeds received by SPI with respect to the sale of any Registrable Securities
and all amounts already contributed by SPI with respect to such claims.
8. Participation In Underwritten Registrations.
With regard to a Piggyback Registration, SPI may not participate in any
underwritten registration hereunder unless SPI (a) agrees to sell its securities
on the basis provided in any underwriting arrangements approved by the parties
entitled to approve such arrangements; and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
<PAGE>
arrangements and this Agreement. Notwithstanding the previous sentence, SPI
shall not be required to make any representations or warranties to, or make any
agreements with, PSC or any underwriter other than representations, warranties
or agreements customary for a non-controlling selling shareholder selling shares
under similar circumstances. In the event that the Covered Shares included in a
Shelf Registrations Statement are to be sold pursuant to an underwritten
offering the managing underwriter for such offering shall be a nationally
recognized investment banking firm selected by SPI and be reasonably acceptable
to PSC.
9. Rule 144.
PSC covenants that it will file any reports required to be filed by it
under the Securities Act and the Exchange Act so as to enable SPI to sell Common
Stock without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144. Upon the request of SPI, PSC will deliver to
SPI a written statement as to whether it has complied with such requirements.
10. Information.
PSC may require SPI to promptly furnish in writing to PSC such information
regarding the distribution of the Registrable Securities as it may from time to
time reasonably request and such other information as may be legally required or
reasonably requested in connection with such registration.
11. Amended Or Supplemented Prospectus.
SPI agrees that, upon receipt of any notice from PSC of the happening of
any event of the kind described in Section 5(f) hereof, SPI will forthwith
discontinue disposition of any Covered Shares pursuant to the Registration
Statement covering such Covered Shares until SPI's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5(f) hereof, and, if
<PAGE>
so directed by PSC, SPI will deliver to PSC all copies, other than permanent
file copies then in SPI's possession, of all prospectuses covering such Covered
Shares at the time of receipt of such notice, and shall not effect any
transaction with respect to any Covered Shares except pursuant to the
supplemented or amended prospectus. In the event PSC gives such notice, PSC will
extend the period during which such Registration Statement will be maintained
effective by the number of days during the period from and including the date of
the giving of notice pursuant to Section 5(f) hereof to the date when PSC makes
available to SPI a prospectus supplemented or amended to conform with the
requirements of Section 5(f) hereof.
12. Registration Expenses.
In connection with any Registration Statement filed pursuant to Section 2
or Section 3 hereof, PSC will pay all registration expenses (the "Registration
Expenses"), including but not limited to: (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws, subject
to the provisions of Section 5(d), (including reasonable fees and disbursements
of counsel in connection with blue sky qualifications of the Covered Shares),
(iii) printing expenses, (iv) internal expenses of PSC (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred in connection
with the listing of the Covered Shares, (vi) fees and disbursements of counsel
for PSC and customary fees and expenses for independent certified public
accountants retained by PSC (including the expenses of any comfort letters or
costs associated with the delivery by independent certified public accountants
of a comfort letter or comfort letters requested pursuant to Section 5(i)
hereof), (vii) the fees and expenses of any special experts retained by PSC in
connection with such registration, and (viii) reasonable fees and expenses of
one law firm (designated by SPI and reasonably acceptable to PSC) acting as
counsel for SPI in connection with the registration hereunder; provided,
however, PSC will not have any obligation to pay any underwriting fees,
discounts or commissions attributable to the sale of Covered Shares (which will
be the obligation of SPI) or, except as otherwise provided in clause (viii)
above, any out-of-pocket expenses of SPI (or any agents who manage its accounts)
or fees and disbursements of any counsel for any underwriter in any underwritten
offering.
<PAGE>
13. Registration Rights.
PSC agrees that it will not enter into any agreement or arrangements which
would grant any party a right to participate in any registration that is
superior to or in contravention of the rights to participate set forth in this
Agreement.
14. Parties In Interest.
All covenants and agreements contained in this Agreement by or on behalf of
either party hereto shall bind and inure to the benefit of the respective
successors and assigns of such party hereto, whether so expressed or not,
including subsequent holders of Registrable Securities.
15. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be mailed by first-class registered mail, postage prepaid,
or sent by recognized courier service addressed as follows:
(a) if to PSC:
PSC Inc.
675 Basket Road
Webster, NY 14580
Telephone: (716) 265-1600
Fax: (716) 265-6402
Attention: William J. Woodard, Vice-President -
Finance
with a copy to:
Boylan, Brown, Code, Fowler, Vigdor
& Wilson, LLP
2400 Chase Square
Rochester, NY 14604
Telephone: (716) 232-5300
Fax: (716) 232-3528
Attention: Martin S. Weingarten, Esq.
<PAGE>
(b) if to SPI:
Spectra-Physics, Inc.
108 Webster Building
3411 Silverside Road
Wilmington, DE 19810
Telephone: (302) 478-4600
Fax: (302) 478-8962
Attn: Ms. Barbara Schoenberg
with copies to:
Spectra-Physics AB
Box 5226
Sturegatan 32
Fourth Floor
S-102 45 Stockholm, Sweden
Telephone: 011-468-783-0725
Fax: 011-468-660-9226
Attn: Mr. Ulf Johansson
and
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esquire;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
16. Law Governing.
This agreement shall be governed by and construed in accordance with the
laws of the state of New York.
17. Entire Agreement.
This Agreement constitutes the entire Agreement of the parties with respect
to the subject mater hereof and may not be modified or amended except in
writing.
18. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together constitute one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
SPECTRA-PHYSICS, INC.
/s/ Lennart Rappe
By: Lennart Rappe
Title: Authorized Representative
PSC INC.
/s/ William J. Woodard
By: William J. Woodard
Title: Vice President - Finance
Exhibit 10.4
NON-COMPETE AGREEMENT
Agreement made this 12th day of July, 1996 by and between
Spectra-Physics AB, a Swedish corporation ("Spectra-Physics"), and PSC Inc., a
New York corporation ("Buyer").
Spectra-Physics, Inc., a Delaware corporation, Buyer, and
Spectra-Physics Holdings, S.A., a French corporation, have entered into an Asset
and Stock Purchase Agreement, dated May 20, 1996 (the "Agreement.") Capitalized
terms used and not defined herein shall have the meaning ascribed to them in the
Agreement.
Terms
In consideration of the covenants set forth herein, and intending to be
legally bound hereby, the parties agree as follows:
SECTION 1. Compensation. In consideration of Spectra- Physics' obligations
under this Agreement, Buyer shall pay Spectra-Physics the total sum of Five
Million Dollars ($US5,000,000) on the date hereof.
SECTION 2. Restrictive Covenant. In consideration of the payment
referred to in Section 1, Spectra-Physics agrees that for a period of three (3)
years from the Closing, it shall not, directly or indirectly through any
subsidiary or affiliate, own, manage, operate, join, control or participate in
the ownership, management, operation or control of any business which at any
relevant time during such period competes with the Business as conducted as of
the Closing Date in any part of the world.
Notwithstanding anything to the contrary contained in this Section 2,
Buyer hereby agrees that the foregoing covenant shall not be deemed breached as
a result of (A) the ownership by Spectra-Physics or any subsidiary of
Spectra-Physics of, in the aggregate, 10% or less of the outstanding capital
stock of any corporation whose securities are registered pursuant to Section 12
of the Securities and Exchange Act of 1934, as amended, or (B) the acquisition
by Spectra-Physics of any interest in any entity
<PAGE>
of which any line of business competes with the Business as conducted as of the
Closing Date, directly or indirectly, in any part of the world, if within 180
days thereafter, Spectra-Physics disposes of or enters into a definitive
agreement with an unaffiliated third party to dispose of such interest.
SECTION 3. Remedies. Spectra-Physics agrees that Buyer's remedies at
law for any breach by Spectra-Physics of the provisions of Section 2 hereof will
be inadequate, and that Buyer shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of Section 2 hereof and to enforce
specifically such terms and provision.
SECTION 4. Waiver of Breach. The waiver by Buyer of a breach of any
provision of this Agreement by Spectra-Physics shall not operate or be construed
as a waiver of any other or subsequent breach by Spectra-Physics of such or any
other provision.
SECTION 5. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or, if mailed, three business days after
being mailed by United States first-class, certified or registered mail, postage
prepaid, or, if sent by overnight delivery by a nationally recognized courier
such as Federal Express, one business day after deposit with such courier, or,
if sent by telecopy, upon confirmation of receipt, to the other party at the
following addresses (or at such other address as shall be given in writing by
any party to the other):
If to Spectra-Physics, to:
Spectra-Physics AB
Box 5226
Sturegatan 32
Fourth Floor
S-102 45 Stockholm, Sweden
Telephone: 011-468-663-1602
Fax: 011-468-660-9226
Attn: Mr. Ulf Johansson
With required copies to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Telephone: (215) 994-2971
Fax: (215) 994-2222
<PAGE>
Attention: Carmen J. Romano, Esquire
If to Buyer, to:
PSC Inc.
675 Basket Road
Webster, NY 14580
Telephone: (716) 265-1600
Fax: (716) 265-6402
Attention: William W. Woodard, Vice-President -
Finance
With required copies to:
Boylan, Brown, Code, Fowler, Vigdor
& Wilson, LLP
2400 Chase Square
Rochester, NY 14604
Telephone: (716) 232-5300
Fax: (716) 232-3528
Attention: Martin S. Weingarten, Esq.
SECTION 6. Severability. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
held invalid or unenforceable by a court of competent jurisdiction, the
remainder of this Agreement or the application of any such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each term and provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
If any of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to duration, scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be valid and
enforceable to the extent compatible with the applicable law or the
determination by a court of competent jurisdiction.
SECTION 7. Consent to Jurisdiction. Spectra-Physics and Buyer each
irrevocably submits to the jurisdiction of (a) the courts of the State of New
York, situated in the county of New York and (b) the United States District
Court for the Southern District of New York, for the purposes of any suit,
action or other proceeding arising out of or related to this Agreement.
Spectra-Physics and Buyer each hereby irrevocably consent to the service of
summons, complaint and any and all other process in any such action or
proceeding brought in such jurisdictions within the State of New York by
delivery of copies of such process to it, at its address specified in Section 5
of this
<PAGE>
Agreement or by certified mail to such address. Spectra-Physics and Buyer each
hereby waives any objection that it may have based upon lack of personal
jurisdiction, including, without limitation, any objection to the laying of
venue or based on grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any such action or proceeding in such jurisdiction.
SECTION 8. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York.
SECTION 9. Successors and Assigns. This Agreement, and all rights and
powers granted hereby, will bind and inure to the benefit of the parties hereto
and their respective successors and assigns. No party hereto may assign its
rights or delegate its duties and obligations under this Agreement without the
prior written consent of the other party hereto.
SECTION 10. Headings. The headings preceding the text of the sections
hereof are inserted solely for convenience of reference, and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
SECTION 11. Amendments. No amendment to this Agreement
shall be effective unless it shall be in writing and signed by
the party against which it is to be enforced.
SECTION 12. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and undertakings between the parties
hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written, with respect to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
SPECTRA-PHYSICS AB
By:/s/ Lennart Rappe
Lennart Rappe
Sr. VP & CFO
By:/s/ Lennart Rappe
Lennart Rappe
Authorized Representative
PSC Inc.
By: /s/ L. Michael Hone
L. Michael Hone
Title: President & CEO
Exhibit 10.5
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is dated as of July 12, 1996 (the "Agreement"), by
and among PSC Inc., a New York corporation ("PSC"), Spectra-Physics, Inc., a
Delaware corporation ("SPI") and The Chase Manhattan Bank, N.A., as escrow agent
(the "Escrow Agent").
Background
A. PSC, SPI and Spectra-Physics Holding S.A., a French corporation ("SP
Holding"), have entered into a certain Asset and Stock Purchase Agreement dated
May 20, 1996 (the "Purchase Agreement"). All capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the
Purchase Agreement.
B. Pursuant to Section 1.5(d) of the Purchase Agreement, PSC has agreed to
deposit the Escrowed Shares into escrow with the Escrow Agent as security for
certain indemnification obligations of SPI and SP Holding under the Purchase
Agreement.
C. A copy of the Purchase Agreement has been delivered to the Escrow Agent
and the Escrow Agent is willing to act as escrow agent hereunder.
Terms
In consideration of the mutual covenants and promises contained in this
Agreement and the Purchase Agreement and intending to be legally bound, the
parties hereto do hereby agree as follows:
1. ESTABLISHMENT OF ESCROW FUND. Concurrently with the execution hereof,
PSC has, in accordance with the Purchase Agreement, delivered to the Escrow
Agent certificates representing the Escrowed Shares, and SPI has delivered to
the Escrow Agent stock powers for such Escrowed Shares duly executed in blank.
The Escrow Agent hereby acknowledges receipt of the Escrowed Shares as more
fully described on the attached Schedule A. The Escrowed Shares, together with
any other shares of PSC or other securities or cash which may be held from time
to time by the Escrow Agent pursuant to the terms hereof, are herein referred to
as the "Escrow Fund". The Escrow Fund shall be held by the Escrow Agent in
accordance with the terms and conditions hereinafter set forth. The Escrow Agent
is hereby empowered to accept any securities into which the Escrowed Shares may
be converted by virtue of any merger or other reorganization during the term
<PAGE>
of the escrow and any such securities are herein also referred to as the
"Escrowed Shares". and any such securities are herein also referred to as
the "Escrowed Shares".
2. REPLACEMENT OF THE ESCROWED SHARES. At any time and from time to time
during the term of the escrow, SPI may direct the Escrow Agent to, and upon
receipt of such direction the Escrow Agent shall, transfer any or all of the
Escrowed Shares to SPI or as SPI may otherwise direct, provided that at the time
of such transfer SPI delivers to the Escrow Agent, in substitution therefor,
cash in an amount equal to the number of Escrowed Shares to be so transferred
multiplied by Nine and 50/100 dollars ($9.50) per share (appropriately adjusted
to reflect any stock splits or stock dividends by PSC) (the "Agreed Value").
3. INVESTMENTS.
3.1 The Escrow Agent shall invest any cash in the Escrow Fund at the
written direction of SPI in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, having the first or second highest rating obtainable
from either Standard & Poor's Corporation ("S&P") or Moody's Investors Service,
Inc. ("Moody's"); (iii) commercial paper having, at the time of acquisition, a
rating of A-1 or P-1 or better from either S&P or Moody's; (iv) certificates of
deposit or bankers' acceptances issued by any commercial bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia having combined capital and surplus of not less than $100,000,000,
provided that if such commercial bank is not organized under the laws of the
United States of America, it must be a member of the Federal Deposit Insurance
Corporation, (v) money market mutual funds registered under the Investment
Company Act of 1940 that invest primarily in investments described in clauses
(i), (ii) and (iii) above including any proprietary funds advised by the Escrow
Agent, or (vi) repurchase agreements secured by such investments.
3.2 Any interest or dividends earned on the Escrow Fund shall not be part
of the Escrow Fund and shall be paid to SPI by the Escrow Agent promptly after
receipt thereof by the Escrow Agent.
3.3 SPI shall furnish the Escrow Agent with such tax information or
documents as the Escrow Agent may reasonably require to comply with its
obligations under any tax law or regulation.
<PAGE>
4. RIGHTS AS TO ESCROWED SHARES. SPI shall, during all times any Escrowed
Shares are in the Escrow Fund, have the right:
4.1 to vote and otherwise exercise all other shareholder rights with
respect to the Escrowed Shares;
4.2 to receive and to exercise any right to acquire further PSC stock or
other securities distributed with respect to the Escrowed Shares; and
4.3 to receive any dividends or other distributions declared and paid on
the Escrowed Shares.
5. CLAIMS OF PSC AGAINST THE ESCROW FUND.
5.1 In the event PSC shall assert a claim for indemnification pursuant to
Article VIII of the Purchase Agreement (an "Indemnification Claim"), PSC shall
send written notice of the Indemnification Claim to the Escrow Agent and to SPI
in accordance with Section 10 hereof. Such notice shall state the basis for the
Indemnification Claim and the total amount claimed and show in reasonable detail
how such amount was computed. If SPI shall object to the Indemnification Claim
made by PSC hereunder, it shall give written notice of such objection to the
Escrow Agent and to PSC within thirty (30) days after PSC's mailing of its
notice. If no such objection to the Indemnification Claim shall have been so
sent to the Escrow Agent and to PSC within such thirty (30)-day period, then SPI
shall be deemed to have acknowledged the correctness and validity of the
Indemnification Claim for the full amount thereof, and the Escrow Agent shall,
in satisfaction of such Indemnification Claim (to the extent the Escrow Fund is
not exhausted), transfer to PSC out of the Escrow Fund (a) such number of
Escrowed Shares having a value equal to the amount of the Indemnification Claim
(such Escrowed Shares being valued at the Agreed Value), plus (b) to the extent
the Indemnification Claim exceeds the value of the Escrowed Shares, cash or
other property included in the Escrow Fund having a value equal to such excess.
5.2 In the event that SPI shall have made timely objection to PSC's
Indemnification Claim, and SPI and PSC shall have failed to resolve or
compromise the Indemnification Claim within thirty (30) days from the date on
which SPI shall have mailed notice of such objection, then the validity of the
<PAGE>
Indemnification Claim shall be settled by a court of competent jurisdiction or
in such other manner as PSC and SPI shall agree in writing. During the pendency
of the resolution of the objection to payment, the Escrow Agent shall have no
obligation to make any payment to either PSC or SPI. In the event that a court
of competent jurisdiction or other party designated by PSC and SPI finally
determines (all appeals from any such decision having been exhausted) that PSC
is entitled to any recovery by reason of its Indemnification Claim, the Escrow
Agent shall upon receipt of a signed statement executed by both PSC and SPI or
receipt of a final judicial order and affidavit from PSC stating that such order
is nonappealable, in satisfaction of such Indemnification Claim (to the extent
the Escrow Fund is not exhausted), thereupon transfer to PSC out of the Escrow
Fund (a) such number of Escrowed Shares having a value equal to the amount of
the such recovery (such Escrowed Shares being valued at the Agreed Value), plus
(b) to the extent the recovery exceeds the value of the Escrowed Shares, cash or
other property included in the Escrow Fund having a value equal to such excess.
5.3 Nothing in this Escrow Agreement shall limit PSC's right to
indemnification for any Damages not paid in full out of the Escrow Fund.
6. FIRST RELEASE OF THE ESCROW FUND.
6.1 On the First Release Date (as defined below), the Escrow Agent shall
transfer to SPI the entire balance of the Escrow Fund except (a) such number of
Escrowed Shares having a value equal to the Retention Value (as defined below)
(such Escrowed Shares being valued at the Agreed Value), plus (b) to the extent
the Retention Value exceeds the value of the Escrowed Shares, cash or other
property included in the Escrow Fund having a value equal to such excess.
6.2 As used herein, the term "First Release Date" shall mean the earlier of
the following dates: (i) the date six (6) months after the Closing Date, or (ii)
the first date on which PSC consummates a public offering of its equity
securities following the Closing Date.
6.3 As used herein, the term "Retention Value" shall mean (a) five hundred
thousand dollars ($500,000), plus (b) the amount of any Indemnification Claims
which remain outstanding on the First Release Date (as certified in good faith
by PSC in writing to the Escrow Agent and SPI, as an amount reasonably
calculated by PSC to be sufficient to satisfy such outstanding Indemnification
Claims (the "Certified Value")).
<PAGE>
6.4 On the date any Indemnification Claim outstanding on the First Release
Date is paid or decided or is otherwise resolved in accordance with Section 5
hereof, the Escrow Agent shall transfer to SPI, out of the Escrow Fund, Escrowed
Shares, cash or other property having a value equal to the amount, if any, by
which the Certified Value for such Indemnification Claim exceeds the amount, if
any, paid to PSC in accordance with Section 5 hereof in satisfaction of such
Indemnification Claim.
7. FINAL RELEASE OF THE ESCROW FUND.
7.1 On the date twelve (12) months after the Closing Date (the "Final
Release Date"), the Escrow Agent shall transfer to SPI the entire balance of the
Escrow Fund except (a) such number of Escrowed Shares having a value equal to
the Certified Value of any Indemnification Claims which remain outstanding on
the Final Release Date (such Escrowed Shares being valued at the Agreed Value),
plus (b) to the extent the Certified Value of such outstanding Indemnification
Claims exceeds the value of the Escrowed Shares (being valued at the Agreed
Value), cash or other property included in the Escrow Fund having a value equal
to such excess.
7.2 On the date any Indemnification Claim outstanding on the Final Release
Date is paid or decided or otherwise resolved in accordance with Section 5
hereof, the Escrow Agent shall transfer to SPI, out of the Escrow Fund, Escrowed
Shares, cash or other property having a value equal to the amount, if any, by
which the Certified Value for such Indemnification Claim exceeds the amount, if
any, paid to PSC in accordance with Section 5 hereof in satisfaction of such
Indemnification Claim.
8. TERMINATION OF ESCROW. The escrow provided for hereunder shall terminate
upon the earlier of the following dates: (i) the date on which the Escrow Fund
is exhausted, (ii) the first date after the Final Release Date on which no
Indemnification Claim remains outstanding, or (iii) the date on which both PSC
and SPI have notified the Escrow Agent that PSC and SPI have mutually agreed to
terminate the escrow. Upon termination of the escrow, the Escrow Agent shall
transfer to SPI any Escrowed Shares and cash or other property remaining in the
Escrow Fund, unless PSC and SPI otherwise direct the Escrow Agent in writing.
Upon such release of the Escrow Fund the Escrow Agent shall be irrevocably
discharged and released from any and all further responsibility or liability
with respect to the Escrow Fund.
<PAGE>
9. DUTIES OF ESCROW AGENT.
9.1 The acceptance by the Escrow Agent of its duties as such under this
Escrow Agreement is subject to the following terms and conditions, which all
parties to this Escrow Agreement hereby agree shall govern and control with
respect to the rights, duties, liabilities and immunities of the Escrow Agent.
(a) The duties and responsibilities of the Escrow Agent shall be limited to
those expressly set forth in this Escrow Agreement, and the Escrow Agent shall
not be subject to, nor obligated to recognize, any other agreements to which
PSC, SPI or both are parties. Reference in this Escrow Agreement to the Purchase
Agreement is for identification purposes only and its terms and conditions are
not thereby incorporated herein.
(b) The duties of the Escrow Agent are only such as are herein specifically
provided and such duties are purely ministerial in nature. The Escrow Agent's
primary duty shall be to keep custody of and safeguard the Escrow Fund during
the period of the escrow, to invest the Escrow Fund in accordance with the
instructions given pursuant to Section 3 of this Agreement and to make
disbursement from the Escrow Fund in accordance with Sections 5, 6 and 7 hereof.
(c) The Escrow Agent shall be under no obligation in respect of the Escrow Fund
other than to faithfully follow the instructions contained herein or delivered
to the Escrow Agent in accordance with the Escrow Agreement. The Escrow Agent
may rely and act upon any written notice, instruction, direction, request,
waiver, consent, receipt or other paper or document which it in good faith
believes to be genuine and what it purports to be and the Escrow Agent shall be
subject to no liability with respect to the form, execution or validity thereof.
(d) The Escrow Agent shall not be liable for any error of judgment, or for any
act done or step taken or omitted by it in good faith, or for any mistake of
fact or law, or for anything which it may in good faith do or refrain from doing
in connection herewith, except its own gross negligence or willful misconduct.
PSC and SPI, jointly and severally, shall defend, indemnify and hold the Escrow
Agent harmless from and against any and all claims, losses, damages, liabilities
and expenses, including reasonable attorney's fees, which may be imposed upon
the Escrow Agent or incurred by the Escrow Agent in connection with its
acceptance of the appointment as escrow agent hereunder or the performance of
its duties hereunder, unless the Escrow Agent is determined to have committed an
intentional wrongful act or to have been grossly negligent with respect to its
duties under this Escrow Agreement.
<PAGE>
(e) The Escrow Agent may consult with, and obtain advice from, legal counsel
(which may not be counsel for PSC or SPI) in the event of any dispute or
questions as to the construction of any of the provisions hereof or its duties
hereunder, and it shall incur no liability in acting in good faith in accordance
with the written opinion and instructions of such counsel. The fees for
consultation with such counsel shall be paid in accordance with Section 9.2
hereof.
9.2 The Escrow Agent shall be entitled to receive the aggregate sum of One
Thousand Five Hundred dollars ($1,500) per year as compensation for its services
as Escrow Agent hereunder, together with reasonable counsel fees (including the
allocated cost of in-house counsel) and other out-of-pocket expenses incurred by
the Escrow Agent in the performance of its duties. The compensation, counsel
fees, if any, and expenses so payable shall be paid by PSC to the Escrow Agent,
from time to time, upon the written request of the Escrow Agent.
9.3 The Escrow Agent hereby accepts its appointment and agrees to act as
Escrow Agent under the terms and conditions of this Agreement.
9.4 The Escrow Agent, or any successor to it hereafter appointed, may at
any time resign and be discharged of the duties and obligations created by this
Escrow Agreement by giving at least 30 days' prior written notice to PSC and
SPI. The Escrow Agent may be removed at any time upon 60 days' notice by an
instrument purportedly signed by an authorized representative of PSC and an
authorized representative of SPI. Any successor Escrow Agent shall be appointed
by PSC and approved by SPI. Any such successor escrow agent shall deliver to
both PSC and SPI a written instrument accepting such appointment hereunder and
thereupon it shall succeed to all of the rights and duties of the Escrow Agent
hereunder and shall take delivery of the Escrow Fund to hold and distribute in
accordance with the terms hereof. If no successor escrow agent shall have been
appointed within 30 days after PSC and SPI are notified of the Escrow Agent's
resignation or within 60 days after the Escrow Agent is notified of its removal,
the Escrow Agent shall deliver the Escrow Fund to an attorney jointly designated
by PSC and SPI who is not an employee, officer or director of PSC or SPI. Upon
the delivery of the Escrow Fund in accordance with this Section 9.4, the Escrow
Agent shall be discharged from any further duties hereunder.
<PAGE>
10. NOTICES. All notices, requests, demands, objections and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or, if mailed, three business days after
being mailed by United States first-class, certified or registered mail, postage
prepaid, or, if sent by overnight delivery by a nationally recognized courier
such as Federal Express, one business day after deposit with such courier, or,
if sent by telecopy, upon confirmation of receipt, to the other party at the
following addresses (or at such other address as shall be given in writing by
any party to the others):
If to SPI to:
Spectra-Physics, Inc.
108 Webster Building
3411 Silverside Road
Wilmington, DE 19810
Telephone: (302) 478-4600
Fax: (302) 478-8962
Attn: Ms. Barbara Schoenberg
With required copies to:
Spectra-Physics AB
Box 5226
Sturegatan 32
Fourth Floor
2-102 45 Stockholm, Sweden
Telephone: 011-468-783-0725
Fax: 011-468-660-9226
Attn: Mr. Ulf Johansson
and
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Telephone: (215) 994-2971
Fax: (215) 994-2222
Attn: Carmen J. Romano, Esq.
<PAGE>
If to PSC to:
PSC Inc.
675 Basket Road
Webster, New York 14580
Telephone: (716) 265-1600
Fax: (716) 265-6402
Attn: William J. Woodard, Vice President - Finance
With required copies to:
Boylan, Brown, Code, Fowler, Vigdor & Wilson, LLP
2400 Chase Square
Rochester, NY 14604
Telephone: (716) 232-5300
Fax: (716) 232-3528
Attn: Martin S. Weingarten, Esq.
If to the Escrow Agent:
Chase Manhattan Bank, N.A.
One Chase Square T-10
Rochester, New York 14643
Attn: Institutional Trust Department
11. BINDING EFFECT; THIRD PARTIES. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, representatives, successors and assigns. This
Agreement is not intended to confer any rights or remedies hereunder on any
other person other than the parties hereto.
12. AMENDMENTS. This Agreement may be amended or modified at any time or
from time to time in a writing executed by SPI, PSC and the Escrow Agent. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by each of the parties. No waiver of any of the provisions
of this Agreement shall be deemed to constitute a waiver of any other provision
hereof, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.
<PAGE>
13. GOVERNING LAW. This Escrow Agreement is made and shall be governed by,
construed and enforced in accordance with the laws of the State of New York,
exclusive of choice of laws provisions thereunder. The parties consent to the
personal jurisdiction of all courts of the State of New York to resolve all
disputes pertaining to this Escrow Agreement and any ancillary agreements
entered into pursuant hereto and agree that such jurisdiction shall be
exclusive. If any provision of this Escrow Agreement shall be prohibited or be
invalid under any law or regulation, that provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remaining
provisions of this Agreement.
14. ASSIGNMENT. This Escrow Agreement shall be binding upon and inure to
the benefit of the parties and their legal representatives, successors and
assigns.
15. COUNTERPARTS. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
SPECTRA-PHYSICS, INC.
By: /s/ John J. Carney
Title: President
PSC INC.
By: /s/ L. Michael Hone
Title: President & CEO
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Mary Pat Feeney
Title: Second Vice
President
