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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 29549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
OPTEK TECHNOLOGY, INC.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
683815
(CUSIP Number)
David P. Dekker
Household Commercial Financial Services, Inc.
2700 Sanders Road, Prospect Heights, Illinois 60070
(708) 564-5000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 27, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
13D, and is filing this schedule because of Rule 13d-1(b)(3) or
(4), check the following box [ ].
Check the following box if a fee is being paid with the statement
[ ]. (A fee is not required only if the reporting person: (1) has
a previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownership of five percent or less of such class.) (See
Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of
the Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 683815
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Household International, Inc. 36-3121988
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7 SOLE VOTING POWER
- -0-
8 SHARED VOTING POWER
3,150,000
9 SOLE DISPOSITIVE POWER
- -0-
10 SHARED DISPOSITIVE POWER
3,150,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,150,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.1%
14 TYPE OF REPORTING PERSON*
HC
SCHEDULE 13D
CUSIP No. 683815
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Household Commercial Financial Services, Inc. 36-3427357
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7 SOLE VOTING POWER
- -0-
8 SHARED VOTING POWER
3,150,000
9 SOLE DISPOSITIVE POWER
- -0-
10 SHARED DISPOSITIVE POWER
3,150,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,150,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.1%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP No. 683815
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HCFS Corporate Finance Venture, Inc. 36-3990749
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7 SOLE VOTING POWER
3,150,000
8 SHARED VOTING POWER
- -0-
9 SOLE DISPOSITIVE POWER
3,150,000
10 SHARED DISPOSITIVE POWER
- -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,150,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.1%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP No. 683815
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Virginia Financial Ventures, Inc. 54-1740145
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7 SOLE VOTING POWER
- -0-
8 SHARED VOTING POWER
3,150,000
9 SOLE DISPOSITIVE POWER
- -0-
10 SHARED DISPOSITIVE POWER
3,150,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,150,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.1%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP No. 683815
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dominion Capital, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7 SOLE VOTING POWER
- -0-
8 SHARED VOTING POWER
3,150,000
9 SOLE DISPOSITIVE POWER
- -0-
10 SHARED DISPOSITIVE POWER
3,150,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,150,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.1%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP No. 683815
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dominion Resources, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7 SOLE VOTING POWER
- -0-
8 SHARED VOTING POWER
3,150,000
9 SOLE DISPOSITIVE POWER
- -0-
10 SHARED DISPOSITIVE POWER
3,150,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,150,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.1%
14 TYPE OF REPORTING PERSON*
HC
SCHEDULE 13D
CUSIP No. 683815
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Source Financial LLP 36-3991240
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7 SOLE VOTING POWER
3,150,000
8 SHARED VOTING POWER
- -0-
9 SOLE DISPOSITIVE POWER
3,150,000
10 SHARED DISPOSITIVE POWER
- -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,150,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.1%
14 TYPE OF REPORTING PERSON*
PN
Household International, Inc., a Delaware corporation
("Household International"), and Household Commercial Financial
Services, Inc. ("Household"), a Delaware corporation and an
indirect, wholly-owned subsidiary of Household International,
hereby amend the Statement on Schedule 13D, dated July 14, 1988 as
amended January 31, 1991 (the "Statement"), with respect to the
shares of common stock, par value $0.01 (the "Shares"), of Optek
Technology, Inc., a Delaware corporation (the "Issuer"). HCFS
Corporate Finance Venture, Inc. ("HCFS"), a wholly-owned subsidiary
of Household, which holds a fifty percent general partnership
interest in First Source Financial LLP, an Illinois registered
limited liability partnership ("FSFLLP"), FSFLLP, Virginia
Financial Ventures, Inc. ("Virginia"), a Virginia corporation and
a wholly-owned subsidiary of Dominion Capital, Inc. ("Dominion"),
which holds a fifty percent general partnership interest in FSFLLP,
Dominion, a wholly owned subsidiary of Dominion Resources, Inc.
("Dominion Resources"), and Dominion Resources hereby join in this
Statement. A copy of the agreement between Household
International, Household, HCFS, FSFLLP, Virginia, Dominion and
Dominion Resources required by Rule 13d-1(f)(1)(iii) is attached
hereto as Exhibit 8. Unless otherwise indicated, capitalized terms
used below but not defined herein shall have the meanings assigned
to such terms in the Statement.
Item 1. Security and Issuer.
Item 1 of the Statement is not amended.
Item 2. Identity and Background.
Item 2 of the Statement is hereby amended as follows:
(a) Household International.
The present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted of each
executive officer and director of Household International are set
forth in Appendix A.
During the last five years, neither Household International
nor, to the best of its knowledge, any of the persons listed in
Appendix A has been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors) or has been a party to
a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violations with
respect to such laws.
To the best knowledge of Household International, except as
otherwise indicated in Appendix A, each of the persons listed in
Appendix A is a citizen of the United States of America.
(b) Household.
The present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted of each
executive officer and director of Household are set forth in
Appendix B.
During the last five years, neither Household nor, to the best
of its knowledge, any of the persons listed in Appendix B has been
convicted in any criminal proceeding (excluding traffic violations
or similar misdemeanors) or has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violations with respect to such
laws.
To the best knowledge of Household, except as otherwise
indicated in Appendix B, each of the persons listed in Appendix B
is a citizen of the United States of America.
(c) HCFS
HCFS's principal business is acting as the general partner of
FSFLLP. The address of HCFS's principal business and the address
of its principal office are 2700 Sanders Road, Prospect Heights,
Illinois 60070.
The present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted of each
executive officer and director of HCFS are set forth in Appendix C.
During the last five years, neither HCFS nor, to the best of
its knowledge, any of the persons listed in Appendix C has been
convicted in any criminal proceeding (excluding traffic violations
or similar misdemeanors) or has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violations with respect to such
laws.
To the best knowledge of HCFS, except as otherwise indicated
in Appendix C, each of the persons listed in Appendix C is a
citizen of the United States of America.
(d) FSFLLP.
FSFLLP's principal business is providing commercial financial
services. The address of FSFLLP's principal business and the
address of its principal office are 2700 Sanders Road, Prospect
Heights, Illinois 60070.
The present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted of each
executive officer and director of FSFLLP are set forth in Appendix
D.
During the last five years, neither FSFLLP nor, to the
best of its knowledge, any of the persons listed in Appendix D has
been convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violations with respect to
such laws.
To the best knowledge of FSFLLP, except as otherwise
indicated in Appendix D, each of the persons listed in
Appendix D is a citizen of the United States of America.
(e) Virginia
Virginia's principal business is acting as the general partner
of FSFLLP. The address of Virginia's principal business and the
address of its principal office are 901 East Byrd Street, Richmond,
Virginia 23219.
The present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted of each
executive officer and director of Virginia are set forth in
Appendix E.
During the last five years, neither Virginia nor, to the best
of its knowledge, any of the persons listed in Appendix E has been
convicted in any criminal proceeding (excluding traffic violations
or similar misdemeanors) or has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violations with respect to such
laws.
To the best knowledge of Virginia, except as otherwise
indicated in Appendix E, each of the persons listed in Appendix E
is a citizen of the United States of America.
(f) Dominion
Dominion is primarily engaged in financial and real estate
investment activities. The address of Dominion's principal
business and the address of its principal office are 901 East Byrd
Street, Richmond, Virginia 23219.
The present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted of each
executive officer and director of Dominion are set forth in
Appendix F.
During the last five years, neither Dominion nor, to the best
of its knowledge, any of the persons listed in Appendix F has been
convicted in any criminal proceeding (excluding traffic violations
or similar misdemeanors) or has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violations with respect to such
laws.
To the best knowledge of Dominion, except as otherwise
indicated in Appendix F, each of the persons listed in Appendix F
is a citizen of the United States of America.
(g) Dominion Resources
Dominion Resources is a holding company with utility and
non-utility subsidiaries. The address of Dominion Resources's
principal business and the address of its principal office are 901
East Byrd Street, Richmond, Virginia 23219.
The present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted of each
executive officer and director of Dominion Resources are set forth
in Appendix G.
During the last five years, neither Dominion Resources nor, to
the best of its knowledge, any of the persons listed in Appendix G
has been convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violations with respect to
such laws.
To the best knowledge of Dominion Resources, except as
otherwise indicated in Appendix G, each of the persons listed in
Appendix G is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 of the Statement is hereby amended as follows:
Pursuant to the Amended and Restated Secured Credit Agreement,
dated as of January 20, 1994 (the "Amended Secured Credit
Agreement"), between the Issuer and Household, Household agreed to
loan certain funds to the Issuer. Household agreed to make loans
to the Issuer on a revolving basis in amounts up to $28,300,000.
This indebtedness is evidenced by a Revolving Note in the form
attached as Exhibit A to the Amended Secured Credit Agreement.
Household agreed to make loans to the Issuer for working capital as
from time to time requested by Issuer in an amounts up to
$10,500,000. This indebtedness is evidenced by a Working Capital
Note in the form attached as Exhibit B to the Amended Secured
Credit Agreement. A copy of the Amended Secured Credit Agreement
is attached to this Statement as Exhibit 9. See item 6.
Pursuant to the Amended Secured Credit Agreement, the Issuer
issued to Household a Warrant (the "Warrant") to purchase at any
time on or before October 31, 1998 3,150,000 Shares at an exercise
price of $0.50 (as it may be adjusted from time to time pursuant to
the Warrant ("Exercise Price")). For a more detailed discussion of
the Warrant, see item 6. A copy of the Warrant is attached to this
Statement as Exhibit 12 and is incorporated by reference herein.
Household, HCFS, Dominion and Virginia entered into an Asset
Purchase Agreement, dated as of December 30, 1994, as amended by
the First Amendment to the Asset Purchase Agreement, dated as of
March 24, 1995 (as so amended the "Asset Purchase Agreement"). A
copy of the Asset Purchase Agreement is attached hereto as Exhibit
10. See item 6. A copy of the First Amendment to the Asset
Purchase Agreement is attached hereto as Exhibit 11. Pursuant to
the Asset Purchase Agreement, Household sold certain warrants,
including the Warrant, to FSFLLP. Household executed an Assignment
of the Warrant to FSFLLP on March 24, 1995 (the "Assignment"). A
copy of the Assignment is attached hereto as Exhibit 13. Pursuant
to an Escrow Agreement between HCFS, Virginia, FSFLLP, Citicorp
North America, Inc., as Agent, Financial Security Assurance, Inc.,
Citibank, N.A., CXC Incorporated, Household, Household Finance
Corporation, Dominion Resources and Dominion, dated March 24, 1995
(the "Escrow Agreement"), the Assignment became effective when each
party to the Escrow Agreement released certain agreements,
including the Assignment. The agreements were released from escrow
on March 27, 1995. A copy of the Escrow Agreement is attached
hereto as Exhibit 14.
The source of funds for the acquisition of Shares upon any
exercise of the Warrant will be working capital of FSFLLP.
Item 4. Purpose of Transaction.
Item 4 of the Statement is hereby amended as follows:
FSFLLP acquired the Warrant from Household for investment
purposes, and presently intends that any Shares acquired upon
conversion of the Warrant will be held for investment purposes.
Except for adjustments to the number of Shares issuable under the
Warrant, FSFLLP does not presently intend to acquire additional
Shares.
Other than as indicated above, neither FSFLLP, Household
International, HCFS, Household, Dominion, Virginia nor Dominion
Resources has any plans and none has made or received any proposals
which relate to or which would result in any of the following:
(a) the acquisition of additional securities of the Issuer, or
the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) any change in the present Board of Directors or
management of the Issuer, including any plans or proposals to
change the number or term of Directors or to fill any existing
vacancies on the Board of Directors;
(e) any material change in the present capitalization or
dividend policy of the Issuer;
(f) any other material change in the Issuer's business or
corporate structure;
(g) changes in the Issuer's charter or bylaws or other
actions which may impede the acquisition of control of the Issuer
by any person;
(h) causing a class of securities of the Issuer to be
delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a
registered national securities association;
(i) a class of equity securities of the Issuer becoming
eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934; or
(j) any actions similar to any of those enumerated above.
Item 5. Interests in Securities of Issuer.
Item 5 of the Statement is hereby amended as follows:
(a) As of the date hereof, FSFLLP, Household International,
Household, HCFS, Dominion Resources, Dominion and Virginia may be
deemed to beneficially own 3,150,000 Shares, which represent
approximately 49.1% of the sum of (i) the 3,266,195 Shares reported
by the Company to be outstanding as of January 27, 1995 according
to its Report on Form 10-Q for the fiscal quarter ended January 27,
1995 and (ii) the Shares issuable upon exercise of the Warrant.
FSFLLP does not currently own any Shares. FSFLLP has the right to
acquire all 3,150,000 Shares upon exercise of the Warrant.
(b) FSFLLP has the power to vote and dispose of all Shares
acquired upon exercise of the Warrant. Household International,
Household, HCFS, Dominion Resources, Dominion and Virginia have
shared power to vote and dispose of all Shares acquired upon
exercise of the Warrant.
(c) FSFLLP, Household International, Household, HCFS, Dominion
Resources, Dominion and Virginia have not, and to the best
knowledge of FSFLLP, Household International, Household, HCFS,
Dominion Resources, Dominion and Virginia none of the persons
listed in Appendices A through G hereto has effected any
transactions in Shares during the past 60 days.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
Item 6 of the Statement is hereby amended as follows:
(a) Amended Secured Credit Agreement.
Pursuant to the Amended Secured Credit Agreement, Household
agreed to loan certain funds to the Issuer. Household agreed to
make loans to the Issuer on a revolving basis in amounts up to
$28,300,000, as evidenced by a Revolving Note (the "Revolving
Loan") in the form attached as Exhibit A to the Amended Secured
Credit Agreement. Household agreed to make loans to the Issuer for
working capital as from time to time requested by Issuer in an
amounts up to $10,500,000, as evidenced by a Working Capital Note
(the "Working Capital Loan") in the form attached as Exhibit B to
the Amended Secured Credit Agreement.
The Secured Credit Agreement contains standard covenants,
including, without limitation, covenants which require the Issuer
to deliver certain information to Household on a periodic basis and
comply with certain financial ratios, and which prohibit certain
significant corporate transactions, including payment of dividends,
mergers, consolidations, and acquisitions or sales of all or
substantially all of the Issuer's (or its subsidiaries') assets.
Substantially all of the assets of the Issuer and its
subsidiaries are pledged to Household to secure the Borrower's
indebtedness to Household. The Secured Credit Agreement contains
standard events of default, including, without limitation, default
in certain payments to Household when due, certain events of
bankruptcy and certain changes in control of the Issuer of the
Borrower.
(b) Warrant.
Pursuant to the Warrant, Household has the right to purchase
at any time on or before October 31, 1998, 3,150,000 Shares at the
Exercise Price. The number of Shares subject to the Warrant and
the Exercise Price are subject to adjustment to reflect certain
events of dilution specified in the Warrant. Pursuant to the
Warrant, the holder of the Warrant may, on up to four separate
occasions, require the Issuer to register Shares issuable under the
Warrant under the Securities Act of 1933; provided, however, that
the Issuer shall not be required to register fewer than 200,000
Shares in any such registration.
From time to time prior to the later to occur of (1) October
31, 1998 and (2) payment in full of all Liabilities (as defined in
the Restated Secured Credit Agreement), the Issuer, upon written
notice to the Issuer by the holder of the Warrant, is required to
repurchase from the holder of the Warrant all or any portion of the
Warrant or all or any number of Shares received pursuant to
exercise of the Warrant for an amount determined by applying a
formula specified in the Warrant, which shall not exceed the fair
market value of the Shares to be repurchased and any Shares
issuable upon exercise of the Warrant to be repaid. The Issuer has
a similar right to repurchase issued Shares or Shares issuable upon
exercise of the Warrant.
(c) Asset Purchase Agreement
Pursuant to the Asset Purchase Agreement, Household agreed to
sell certain loans and warrants, including the Revolving Loan, the
Working Capital Loan and the Warrant, to FSFLLP. Household also
assigned its rights under related documents, including the Amended
Secured Credit Agreement and the Registration Rights Agreement to
FSFLLP.
(d) Escrow Agreement
Pursuant to the Escrow Agreement, the Assignment of the
Warrant from Household to FSFLLP became effective as of March 27,
1995.
Item 7. Materials to be filed as Exhibits.
Item 7 of the Statement is hereby amended as follows:
Exhibit 8 - Agreement among the Reporting Persons as to joint
filing of Schedule 13D, dated April 6, 1995.
Exhibit 9 - Amended and Restated Secured Credit Agreement,
dated as of January 20, 1994 between Optek Technology, Inc. and
Household Commercial Financial Services, Inc.
Exhibit 10 - Asset Purchase Agreement, dated as of December
30, 1994, by and among Household, HCFS Corporate Finance Venture,
Inc., Dominion Capital, Inc. and Virginia Financial Ventures, Inc.
Exhibit 11 - First Amendment to the Asset Purchase
Agreement, dated as of March 24, 1995.
Exhibit 12 - Warrant to Purchase Common Stock of Optek
Technology, Inc., dated as of January 20, 1994.
Exhibit 13 - Assignment of Warrant, dated as of March 24,
1995, but effective as of March 27, 1995.
Exhibit 14 - Escrow Agreement between HCFS Corporate
Finance Venture, Inc., Virginia Financial Venture, Inc., First
Source Financial LLP, Citicorp North America, Inc., as Agent,
Financial Security Assurance, Inc., Citibank, N.A., CXC
Incorporated, Household Commercial Financial Services, Inc.,
Household Finance Corporation, Dominion Resources, Inc. and
Dominion Capital, Inc.
Signature
After reasonable inquiry to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: April 6, 1995
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ JOHN W. BLENKE
_______________________
Name: John W. Blenke
Title: Secretary
Signature
After reasonable inquiry to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: April 6, 1995
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
By: /s/ D.P. DEKKER
_______________________
Name: D.P. Dekker
Title: Senior Vice President
Signature
After reasonable inquiry to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: April 6, 1995
HCFS CORPORATE FINANCE VENTURE, INC.
By: /s/ D.P. DEKKER
_______________________
Name: D.P. Dekker
Title: Senior Vice President
Signature
After reasonable inquiry to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: April 6, 1995
FIRST SOURCE FINANCIAL LLP
By: /s/ D.P. DEKKER
_______________________
Name: D.P. Dekker
Title: Vice President
Signature
After reasonable inquiry to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: April 6, 1995
VIRGINIA FINANCIAL VENTURES, INC.
By: /s/ HAYDEN D. McMILLIAN
_______________________
Name: Hayden D. McMillian
Title: Vice President
Signature
After reasonable inquiry to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: April 6, 1995
DOMINION CAPITAL, INC.
By: /s/ HAYDEN D. McMILLIAN
_______________________
Name: Hayden D. McMillian
Title: Vice President and Treasurer
Signature
After reasonable inquiry to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: April 6, 1995
DOMINION RESOURCES, INC.
By: /s/ DAVID L. HEAVENRIDGE
_______________________
Name: David L. Heavenridge
Title: Senior Vice President
APPENDIX A
DIRECTORS AND EXECUTIVE OFFICERS OF
HOUSEHOLD INTERNATIONAL, INC.
Name and Title; Principal Occupation or Employment:
William F. Aldinger, Director; President & Chief Executive Officer,
Household International, Inc.
Donald C. Clark, Director; Chairman of the Board, Household
International, Inc.
Robert J. Darnall, Director; President and Chief Executive Officer,
Inland Steel Industries, Inc. 30 West Monroe Street, Chicago,
Illinois 60603
Gary G. Dillon, Director; President and Chief Executive Officer,
Schwitzer, Inc., P.O. Box 15075, Asheville, North Carolina 28813
John A. Edwardson, Director; President, United Airlines, Inc.,
United Airlines World Headquarters, P.O. Box 66100, Chicago,
Illinois 60666
Mary J. Evans, Director; 920 Fifth Avenue, #14B, New York,
New York 10021
Cyrus F. Freidham, Jr., Director; Vice Chairman, Booz, Allen &
Hamilton, Inc., 225 West Wacker Drive, Suite 1700, Chicago,
Illinois 60606
Louis E. Levy, Director; 26 Farmstead Road, Short Hills,
New Jersey 07078
George A. Lorch, Director; Chairman & Chief Executive Officer,
Armstrong, World Industries, Inc., P.O. Box 3001, Lancaster,
Pennsylvania 17604
John D. Nichols, Director; Chairman and Chief Executive Officer,
Illinois Tool Works Inc., 3600 West Lake Avenue, Glenview, Illinois
60025
Gordon P. Osler, Director; TransCanada Pipelines, 55 Yonge Street,
8th Floor, Toronto, Ontario Canada M5E 1J4
James B. Pitblado, Director; BCE Place, 181 Bay Street, Suite 2370,
P.O. Box 875, Toronto, Ontario, M5J 2T3 Canada
Arthur E. Rasmussen, Director; P.O. Box 1, Walton, New York 13856
S. Jay Stewart, Director; Chairman & Chief Executive Officer,
Morton International, Inc., 100 North Riverside Plaza, Chicago,
Illinois 60606
Louis W. Sullivan, M.D., Director; President, Morehouse School of
Medicine, 720 Westview Drive, S.W., Atlanta, Georgia 30310
Raymond C. Tower, Director; 81 Indian Hill Road, Winnetka, Illinois
60093
Robert F. Elliott, Group Executive - U.S. Consumer Finance and
Canada, Household International, Inc.
Joseph W. Saunders, Group Executive - U.S. BankCard and Household
Retail Services, Inc., Household Credit services, Inc., 1441
Schilling Place, Salinas, California 93901
Richard H. Headlee, Chairman, Alexander Hamilton Life Insurance
Company of America, 33045 Hamilton Boulevard, Farmington Hills,
Michigan 48334
Glen O. Fick, Group Executive - Commercial Finance, Household
International, Inc.
Gary D. Gilmer, President & Chief Executive Officer, Alexander
Hamilton Life Insurance Company, 33045 Hamilton Boulevard,
Farmington Hills, Michigan 48334
David A. Schoenholz, Senior Vice President - Chief Financial
Officer, Household International, Inc.
Edgar D. Ancona, Vice President - Treasurer, Household
International, Inc.
David B. Barany, Vice President - Chief Information Officer,
Household International, Inc.
John W. Blenke, Assistant General Counsel and Secretary, Household
International, Inc.
Michael A. DeLuca, Vice President - Taxes, Household International,
Inc.
Colin P. Kelly, Vice President - Human Resources, Household
International, Inc.
Theresa F. Kendziorski, Vice President - Analysis and Projects,
Household International, Inc.
Richard J. Kolb, Vice President - Controller, Household
International, Inc.
Michael H. Morgan, Vice President - Corporate Communications,
Household International, Inc.
Randall L. Raup, Vice President - Strategy and Development,
Household International, Inc.
Kenneth H. Robin, Vice President - General Counsel, Household
International, Inc.
Except as otherwise noted, the business address of each of the
directors and executive officers listed above is 2700 Sanders Road,
Prospect Heights, Illinois 60070. With the exception of Messrs.
Osler and Pitblado, who are citizens of Canada, each of the
directors and executive officers listed above is a citizen of the
United States.
APPENDIX B
DIRECTORS AND EXECUTIVE OFFICERS OF
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
Name and Title; Principal Occupation or Employment:
G.O. Fick, Director; President
R.F. Elliott, Director; Group Executive-U.S. Consumer Finance
and Canada, Household International, Inc.
W.F. Aldinger, Director; President & Chief Executive Officer,
Household International, Inc.
D.P. Killion, Executive Vice President and President CFD
R.E. Walsh, Executive Vice President and President EFD
D.P. Dekker, Senior Vice President - Finance & Administration
J.E. Jones, Senior Vice President - Real Estate Asset Management
J.W. Wilson, Senior Vice President - Risk Asset Management
R.C. Mancini, Secretary & General Counsel
R.M. Coseo, Vice President
M.A. DeLuca, Vice President
A.F. DeMonte, Vice President
M.G. DiRe, Vice President
W.D. Evans, Vice President
G.L. Francis, Vice President
D.A. Friedrich, Vice President
L.C. Klug, Vice President
S.E. Malinowski, Vice President
P.J. Moss, Vice President
J.L. Muller, Vice President
V.S. Powell, Vice President
R.A. Reese, Vice President
T.P. Shanley, Vice President
W.J. Tame, Vice President
C.M. Korte, Controller
N.L. Mychko, Assistant Vice President (Treasury)
N.J. Bromley, Assistant Vice President & Assistant Secretary
L.J. Morris, Assistant Vice President & Assistant Secretary
E.A. Szarkowicz, Assistant Vice President & Assistant Secretary
T.A. Claeys, Assistant Vice President
S.P. Errandi, Assistant Vice President
J.D. Freko, Assistant Vice President
C.L. Gill, Assistant Vice President
J.M. Kohlway, Assistant Vice President
J.J. Russell, Assistant Vice President
F.R. Schimel, Assistant Vice President
J.B. Weatherstein, Assistant Vice President
C.J. Oeler, Assistant Secretary
R.S. Winder, Assistant Secretary
The business address of each of the directors and executive
officers listed above is 2700 Sanders Road, Prospect Heights,
Illinois 60070.
APPENDIX C
DIRECTORS AND EXECUTIVE OFFICERS OF
HCFS CORPORATE FINANCE VENTURE, INC.
Name and Title; Principal Occupation or Employment:
E.A. Szarkowicz, Director; Vice-President and Secretary
G.O. Fick, Director; President
D.P. Dekker, Director; Senior Vice President
D.P. Killion, Executive Vice President
C.M. Korte, Controller
The business address of each of the directors and executive
officers listed above is 2700 Sanders Road, Prospect
Heights, Illinois 60070.
APPENDIX D
EXECUTIVE OFFICERS OF
FIRST SOURCE FINANCIAL LLP
Name and Title; Principal Occupation or Employment:
D.P. Killion, President
R.M. Coseo, Vice President
D.P. Dekker, Vice President
A.F. DeMonte, Vice President
G.L. Francis, Vice President
E.A. Szarkowicz, Secretary
L.J. Morris, Assistant Secretary
C.M. Korte, Treasurer
The business address of each of the executive officers listed
above is 2700 Sanders Road, Prospect Heights, Illinois 60070.
APPENDIX E
DIRECTORS AND EXECUTIVE OFFICERS OF
VIRGINIA FINANCIAL VENTURES, INC.
Name and Title; Principal Occupation or Employment:
Thos. E. Capps, Director; Chairman and Chief Executive Officer,
Dominion Resources, Inc.
David L. Heavenridge, Director; President, Virginia Financial
Ventures, Inc.
Paul J. Bonavia, Director; Senior Vice President and General
Counsel, Dominion Resources, Inc.
Hayden D. McMillian, Vice President, Virginia Financial Ventures,
Inc.
Daniel A. Hillsman, Jr., Secretary, Virginia Financial Ventures,
Inc.
The business address of each of the directors and executive
officers listed above is 901 East Byrd Street, Richmond, Virginia
23219.
APPENDIX F
DIRECTORS AND EXECUTIVE OFFICERS OF
DOMINION CAPITAL, INC.
Name and Title; Principal Occupation or Employment:
Thos. E. Capps, Director; Chairman and Chief Executive Officer,
Dominion Resources, Inc.
Tyndall L. Baucom, Director; President and Chief Operating Officer,
Dominion Resources, Inc.
John W. Harris, Director; President and Managing Partner,
Harris Group, Rolanda Suite 175, 4201 Congress Street, Charlotte,
North Carolina
David L. Heavenridge, Director; President and Chief Executive
Officer, Dominion Capital, Inc.
William J. Hopke, Director; Senior Vice President, Dominion
Capital, Inc.
David A. Wollard, Director; President, Bank One Colorado
Corporation, Denver, Colorado, P.O. Box 17669, Denver, Colorado
80217-0069
David S. Brollier, Vice President, Dominion Capital, Inc.
Daniel A. Hillsman, Jr., Vice President - Administration, Dominion
Capital, Inc.
Hayden D. McMillian, Vice President and Treasurer, Dominion
Capital, Inc.
Mark P. Mikuta, Controller, Dominion Capital, Inc.
James L. Truehart, Vice President and Controller, Dominion
Resources, Inc.
Henry C. Riely, Corporate Secretary, Dominion Capital, Inc.
With the exception of Messrs. Harris and Wollard, the business
address of each of the directors and executive officers listed
above is 901 East Byrd Street, Richmond, Virginia 23219.
APPENDIX G
DIRECTORS AND EXECUTIVE OFFICERS OF
DOMINION RESOURCES, INC.
Name and Title; Principal Occupation or Employment:
John B. Adams, Jr., President and Chief Executive Officer, A. Smith
Bowman Distillery, Inc., One Bowman Drive, Fredericksburg, VA 22408
Thos. E. Capps, Director; Chairman and Chief Executive
Officer, Dominion Resources, Inc.
Tyndall L. Baucom, Director; President and Chief Operating Officer,
Dominion Resources, Inc.
John B. Bernhardt, Director; Managing Director, Bernhardt/Gibson
Financial Opportunities, 11817 Canon Boulevard, Suite 502, Newport
News, VA 23606
Dr. Benjamin J. Lambert, III, Director; Virginia State Senator and
Optometrist, 904 North First Street, Richmond, VA 23219
Richard L. Leatherwood, Director; 3805 Greenway, Baltimore, MD
21218
Harvey L. Lindsay, Jr., Director; Chairman and Chief Executive
Officer, Harvey Lindsay Commercial Real Estate, Dominion Tower,
Suite 1400, 999 Waterside Drive, Norfolk, VA , 23510
Kenneth A. Randall, Director; 6 Whittaker's Mill, Williamsburg, VA
23185
William T. Roos, Director; 2820 Build America Drive, Hampton, VA
23666
Frank S. Royal, M.D., Director; East End Medical Building, 1122
North 25th Street, Suite A, Richmond, VA 23223
Judith B. Sack, Director; Advisor, Morgan Stanley, 1251 Avenue of
the Americas, New York, NY 10020
Richard L. Sharp, Director; Chairman, President and Chief Executive
Officer, Circuit City Stores, Inc., 9950 Mayland Drive, Richmond,
VA 23233-1464
Dr. S. Dallas Simmons, Director; President, Virginia Union
University, 1500 North Lombardy Street, Richmond, VA 23220
Robert H. Spilman, Director; Chairman of the Board, Bassett
Furniture Industries, Inc., P.O. Box 626, Bassett, VA 24055
David L. Heavenridge, Senior Vice President, Dominion Resources,
Inc.
James L. Truehart, Vice President and Controller, Dominion
Resources, Inc.
Paul J. Bonavia, Senior Vice President and General Counsel,
Dominion Resources, Inc.
Lynwood R. Robertson, Senior Vice President, Chief Financial
Officer, Treasurer, Corporate Secretary, Dominion Resources, Inc.
Donald T. Hernick, Jr., Vice President, Dominion Resources, Inc.
Everard Munsey, Vice President - Public Policy, Dominion Resources,
Inc.
Except as otherwise noted, the business address of each of the
directors and executive officers listed above is 901 East Byrd
Street, Richmond, Virginia 23219.
EXHIBIT 8
AGREEMENT PURSUANT TO RULE 13d-1(f)(1)(iii)
CONCERNING JOINT SCHEDULE 13D FILING
The undersigned each agree, in connection with the
acquisition, effective March 27, 1995, by First Source Financial
LLP of a warrant to purchase 3,150,000 shares of Common Stock, with
a par value of $0.01 per share, of Optek Technology, Inc., a
Delaware corporation: (i) that an Amended Statement on Schedule 13D
(the "Statement") shall be filed jointly by all of them pursuant to
Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), together with any amendments to the Amended Statement as may
from time to time be required; and (ii) that the Amended Statement
and any such amendments are filed on behalf of each of them. The
undersigned acknowledge their respective responsibilities with
respect to the Amended Statement and any such amendments as set
forth in Rule 13d-1(f) promulgated under the Exchange Act.
This Agreement may be executed in counterparts.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ JOHN BLENKE
______________________________
Title: Secretary and Assistant General Counsel
Date: 4/6/95
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
By: /s/ DAVID P. DEKKER
______________________________
Title: Senior Vice President
Date: 4/6/95
HCFS CORPORATE FINANCE VENTURE, INC.
By: /s/ DAVID P. DEKKER
______________________________
Title: Senior Vice President
Date: 4/6/95
FIRST SOURCE FINANCIAL LLP
By: /s/ DAVID P. DEKKER
______________________________
Title: Senior Vice President
Date: 4/6/95
VIRGINIA FINANCIAL VENTURES, INC.
By: /s/ HAYDEN D. McMILLIAN
_________________________
Title: Vice President
Date: 4/6/95
DOMINION CAPITAL, INC.
By: /s/ HAYDEN D. McMILLIAN
____________________________
Title: Vice President and Treasurer
Date: 4/6/95
DOMINION RESOURCES, INC.
By: /s/ DAVID HEAVENRIDGE
____________________________
Title: Senior Vice President
Date: 4/6/95
EXHIBIT 9
AMENDED AND RESTATED
SECURED CREDIT AGREEMENT
dated as of January 20, 1994
between
OPTEK TECHNOLOGY, INC.
and
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
TABLE OF CONTENTS
PAGE
PREAMBLE ...................1
BACKGROUND..................1
SECTION 1 CERTAIN DEFINITIONS..................2
1.1 Certain Definitions..................2
Account..................2
Account Debtor..................2
Acquired Assets..................2
Adjusted Net Worth..................2
Adjusted Operating Profit..................2
Affiliate..................3
Agent Bank..................3
Amended and Restated Closing Date..................3
Applicable Margin..................3
Applicable Rate..................3
Assumed Liabilities..................3
Bank Agency Agreement..................3
Borrower..................3
Borrower Bank Agency Agreement..................3
Borrower Mortgages..................3
Borrower Pledge Agreement..................4
Borrower Security Agreement..................4
Borrowing Certificate..................4
Business Day..................4
Cash Equivalents..................4
Cash Instruments..................4
Collateral..................4
Collateral Documents..................4
Collected Balances..................5
Commitment and Commitments..................5
Compliance Certificate..................5
Contingent Obligation..................5
Contractual Obligation..................5
Controlled Group..................5
Current Assets..................6
Current Liabilities..................6
Current Ratio..................6
Delco-Remy Loan Commitment..................6
Delco-Remy Revolving Loan..................6
Division..................6
Dollar(s)..................6
Employment Agreements..................6
ERISA..................6
Event of Default..................6
Fiscal Quarter..................6
Fiscal Year..................6
Fixed Rate Loan..................7
Floating Rate Loan..................7
Force Majeure..................7
Fourth Amendment..................7
GAAP..................7
General Intangible..................7
Gross Capital Expenditures..................7
Hazardous Material..................7
Household Loan Receipt Account..................8
Household Loan Receipt Account Agreement..................8
Indebtedness..................8
Insurance Assignment..................8
Intangible Assets..................8
Interest Coverage Ratio Number 1..................8
Interest Coverage Ratio Number 2..................9
Interest Expense..................9
Lease Obligations..................9
Lender..................9
Lender Party..................9
Liabilities..................9
Lien..................9
Loans and Loan..................10
Lockbox(es)..................10
Master Account(s)..................10
Material Licensing Agreement..................10
Maximum Rate..................10
Mexican Subsidiaries..................10
Net Cash Generated..................10
Net Income..................10
Note and Notes..................10
Opcom..................10
Opcom Bank Agency Agreement..................10
Opcom Revolving Loan..................10
Opcom Revolving Loan Commitment..................10
Opcom Working Capital Commitment..................11
Operating Account(s)..................11
Optek International..................11
Optron de Mexico..................11
Original Closing Date..................11
Original Credit Agreement..................11
PBGC..................11
Permitted Exceptions..................11
Permitted Liens..................11
Person..................11
Plan..................11
Purchase..................12
Purchase Agreement..................12
Purchase Documents..................12
Redeployment Rate..................12
Reference Rate..................12
Related Documents..................12
Related Transactions..................13
Remaining Term..................13
Reportable Event..................13
Reporting Period..................13
Requirement of Law..................13
Revolving Loan..................13
Revolving Loan Commitment..................13
Revolving Loan Commitment Reduction Amount...............13
Revolving Loan Commitment Reduction Date.................13
Revolving Loan Termination Date..................13
Revolving Note..................13
Scheduled Reduction in the Revolving Loan Commitment.....13
Seller..................14
Senior Management Agreements..................14
Subsidiary..................14
Subsidiary Mortgages..................14
Subsidiary Security Agreement..................14
Third Amendment..................14
Total Fixed Charges..................14
Total Liabilities..................14
Tranche, Tranche One, Tranche Two, Tranche Three,
Tranche Four, Tranche Five, and Tranche Six....15
Triggering Event..................15
Type of Loan..................15
Unmatured Event of Default..................15
Warrant..................15
Welfare Plan..................15
Working Capital..................15
Working Capital Commitment..................15
Working Capital Commitment Extension Request......15
Working Capital Loan..................15
Working Capital Loan Termination Date.............15
Working Capital Note..................15
1.2 Accounting and Financial Determinations...........15
1.3 Cross References; Headings..................16
SECTION 2 COMMITMENTS OF LENDER; PROCEDURES FOR BORROWING...16
2.1 Commitments..................16
2.1.1 Revolving Loan Commitment..................16
2.1.2 Working Capital Commitment..................17
2.2 Extension of Working Capital Loan Termination Date......17
2.3 Various Types of Loans..................18
2.4 Loan Requests; Deemed Loans..................18
2.5 Certain Waivers..................19
2.6 Conditions..................19
SECTION 3 NOTES; RECORDKEEPING..................19
3.1 Revolving Notes..................19
3.2 Working Capital Note..................20
3.3 Recordkeeping..................20
3.4 Replacement Notes..................20
SECTION 4 INTEREST..................21
4.1 Tranches; Interest Rates on Revolving Loan..............21
4.2 Interest Rate on Working Capital Loans..................22
4.3 Interest Payment Dates..................22
4.4 Setting and Notice of Rates..................23
4.5 Computation of Interest..................23
4.6 Limitation on Interest..................23
4.7 Additional Interest..................24
SECTION 5 FEES..................24
5.1 Revolving Loan Non-Use Fee..................24
5.2 Working Capital Loan Non-Use Fee..................24
5.3 Closing Fee..................25
5.4 Computation of Fees..................25
SECTION 6 ACCOUNTS; REDUCTION OR TERMINATION OF THE
COMMITMENTS; PREPAYMENT..................25
6.1 Accounts..................25
6.2 Reduction or Termination of the Revolving Loan
Commitment..................29
6.3 Reduction or Termination of the Working Capital
Commitment..................31
6.4 Mandatory Prepayments..................31
6.5 Voluntary Prepayments..................32
6.6 Prepayment of Loans..................32
SECTION 7 MAKING OF PAYMENTS; SETOFF..................33
7.1 Making of Payments..................33
7.2 Due Date Extension..................33
7.3 Setoff..................33
7.4 Other Accounts..................33
SECTION 8 INCREASED COSTS AND OTHER SPECIAL
PROVISIONS..................34
8.1 Increased Costs..................34
8.2 Funding Losses..................35
8.3 Discretion of Lender as to Manner of Funding......35
8.4 Conclusiveness of Statements; Survival of
Provisions..................35
SECTION 9 COLLATERAL SECURITY; WARRANT................35
9.1 Borrower..................35
9.1.1 Borrower's Personal Property..................35
9.1.2 Borrower's Real Estate..................36
9.1.3 Life Insurance..................36
9.2 Subsidiaries..................36
9.2.1 Personal Property..................36
9.2.2 Real Estate..................36
9.3 Warrant..................36
9.4 Change of Location or Name..................37
9.5 Deliveries; Further Assurances..................37
9.6 Subsequently Acquired Property..................38
SECTION 10 REPRESENTATIONS AND WARRANTIES..................38
10.1 Due Organization, Authorization, etc.................39
10.2 Certain Agreements..................39
10.3 Financial Information; Financial Condition.......39
10.4 Litigation and Contingent Obligations................41
10.5 Liens..................42
10.6 Absence of Default..................42
10.7 Plans and Welfare Plans..................43
10.8 Investment Company Act..................43
10.9 Regulations G, U and X..................43
10.10 Proceeds..................43
10.11 Confirmation of Warranties in Purchase Agreement...43
10.12 Insurance..................44
10.13 Material Disruptions..................44
10.14 Patents, Trademarks, etc..................44
10.15 Ownership of Properties; Property Schedule.......44
10.16 Business Locations; Trade Names..................45
10.17 Accuracy of Information..................45
10.18 Subsidiaries..................45
10.19 Hazardous Materials..................45
10.20 Agent's Fees..................45
10.21 Taxes..................46
10.22 Securities Laws..................46
10.23 Governmental Authorizations..................46
10.24 Compliance with Laws..................47
10.25 Employees and Labor..................47
10.26 Purchase..................47
10.27 Assignment of Claims Act..................48
10.28 Bulk Sales Notices..................48
SECTION 11 COVENANTS..................48
SECTION 11A AFFIRMATIVE COVENANTS..................48
11A.1 Reports, Certificates and Other Information..48
11A.1.1 Audit Report..................48
11A.1.2 Quarterly Reports..................49
11A.1.3 Monthly Reports...................49
11A.1.4 Business Plan..................49
11A.1.5 Compliance Certificates..................50
11A.1.6 Auditors' Materials..................50
11A.1.7 Reports to SEC and to Shareholders..................50
11A.1.8 Notice of Default, Litigation, License and
ERISA Matters..................50
11A.1.9 Insurance Reports..................51
11A.1.10 Information Concerning Subsidiaries..................51
11A.1.11 List of Officers and Directors..................51
11A.1.12 Weekly Reports..................51
11A.1.13 Borrowing Certificate..................51
11A.1.14 Notice of Triggering Event..................52
11A.1.15 Other Information..................52
11A.2 Corporate Existence; Foreign Qualification......52
11A.3 Books, Records and Inspections..................52
11A.4 Insurance..................52
11A.5 Taxes and Liabilities..................53
11A.6 Current Ratio..................53
11A.7 Adjusted Net Worth..................53
11A.8 Plans and Welfare Plans..................54
11A.9 Collateral Documents..................54
11A.10 Compliance with Laws..................54
11A.11 Maintenance of Permits..................54
11A.12 Lender as Observer..................55
11A.13 Opcom Warrant..................55
11A.14 Title Policy..................55
11A.15 Subsidiary Mortgages..................55
SECTION 11B NEGATIVE COVENANTS..................56
11B.1 Working Capital..................56
11B.2 Net Cash Ratio..................56
11B.3 Total Liabilities Ratio..................56
11B.4 Annual Interest Coverage Ratio..................57
11B.5 Quarterly Interest Coverage Ratio..................57
11B.6 Purchase, Redemption, Dividend, Interest and Payment
Restrictions..................58
11B.7 Gross Capital Expenditures..................59
11B.8 Guaranties, Loans, Advances or
Investments..................59
11B.9 Mergers, Consolidations, Sales..................60
11B.10 Leases..................60
11B.11 Unconditional Purchase Obligations.............61
11B.12 Regulations G, U and X..................61
11B.13 Subsidiaries..................61
11B.14 No Amendment of Certain Documents..............61
11B.15 Other Agreements..................61
11B.16 Business Activities..................61
11B.17 Transactions with Affiliates..................61
11B.18 Environmental Liabilities..................62
11B.19 Indebtedness..................62
11B.20 Liens..................62
11B.21 Compensation..................63
SECTION 12 CONDITIONS..................63
12.1 Effectiveness of this Agreement..................63
12.1.1 No Default..................63
12.1.2 Warranties and Representations..................63
12.1.3 Litigation..................64
12.1.4 Fees..................64
12.1.5 Documents..................64
12.1.6 Legality..................66
12.2 All Loans..................66
12.2.1 No Default; Reaffirmation of Warranties and
Representations..................66
12.2.2 Litigation; Adverse Changes..................66
12.2.3 Minimum Loan Balance..................67
12.3 Extensions of Working Capital Commitment.........67
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT.........67
13.1 Events of Default..................67
13.1.1 Non-Payment of Loans..................67
13.1.2 Non-Payment of Fees, etc..................68
13.1.3 Non-Payment of Other Indebtedness............68
13.1.4 Other Material Obligations..................68
13.1.5 Bankruptcy, Insolvency, etc..................68
13.1.6 Non-compliance with Certain Provisions.......69
13.1.7 Non-compliance with Other Provisions.........69
13.1.8 Warranties and Representations..................69
13.1.9 Plans..................70
13.1.10 Related Documents..................70
13.1.11 Collateral..................70
13.1.12 Change in Ownership..................70
13.1.13 Litigation..................70
13.2 Effect of Event of Default..................71
SECTION 14 GENERAL..................71
14.1 Waiver; Amendments..................71
14.2 Confirmations..................71
14.3 Notices..................72
14.4 Costs, Expenses and Taxes..................72
14.5 Indemnification..................73
14.6 Confirmation of Collateral Documents..................74
14.7 SUBMISSION TO JURISDICTION..................75
14.8 GOVERNING LAW..................75
14.9 Sales of Notes; Participation..................75
14.10 JURY TRIAL..................76
14.11 Successors and Assigns..................76
SCHEDULES
SCHEDULE IRevolving Loan Commitment Reduction Amounts
(Section 2.1.1)
SCHEDULE IITranche Amounts
SCHEDULE IIILocations of Bank Accounts (Section 7.4)
SCHEDULE IVLitigation (Section 10.4)
SCHEDULE VInsurance (Section 10.12)
SCHEDULE VILicense Agreements (Section 10.14)
SCHEDULE VIICertain Property of Parent or Borrower (Section 10.15)
SCHEDULE VIIIBusiness Locations; Trade Names (Section 10.16)
SCHEDULE IXHazardous Materials (Section 10.19)
SCHEDULE XBusiness Activities (Section 11B.16)
SCHEDULE XIIndebtedness; Liens (Sections 11B.19 and 11B.20)
SCHEDULE XIIWelfare Plan Liabilities (Section 10.7)
SCHEDULE XIII Employees Subject to Employment Agreements
SCHEDULE XIV Employees To Be Insured (Section 11.A.4)
SCHEDULE XV Subsidiaries (Section 10.18 and Section 11B.13)
SCHEDULE XVI Compensation (Section 11B.21)
EXHIBITS
EXHIBIT A Revolving Note (Section 3.1)
EXHIBIT B Working Capital Note (Section 3.2)
EXHIBIT C Working Capital Commitment Extension Request
(Section 2.2)
EXHIBIT D Bank Agency Agreement (Section 6.1(a))
EXHIBIT D-2 Opcom Bank Agency Agreement (Section 6.1(a))
EXHIBIT E Insurance Assignment (Section 9.1.3)
EXHIBIT F Borrower Security Agreement (Section 9.1.1)
EXHIBIT G-1 Borrower Pledge Agreement (U.S. Stock) (Section 9.1.1)
EXHIBIT G-2 Borrower Pledge Agreement (Mexican Stock)
(Section 9.1.1)
EXHIBIT H Form of Borrower Mortgage (Section 9.1.2)
EXHIBIT I Subsidiary Security Agreement (Section 9.2.1)
EXHIBITS J-1 and J-2 Subsidiary Mortgages (Section 9.2.2)
EXHIBIT K Warrant Agreement (Section 9.3)
EXHIBIT L Compliance Certificate (Section 11A.1.5)
EXHIBIT M Opinion of Hewitt & Hewitt, Inc., counsel for Borrower
(Section 12.1.6(l))
EXHIBIT N Borrowing Certificate (Section 11A.1.13)
AMENDED AND RESTATED
SECURED CREDIT AGREEMENT
THIS AMENDED AND RESTATED SECURED CREDIT AGREEMENT (this
"Agreement"), dated as of January 20, 1994, is entered into between
OPTEK TECHNOLOGY, INC., a Delaware corporation (the "Borrower") and
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC., a Delaware
corporation (the "Lender").
BACKGROUND
1. On July 1, 1988, Optron, Inc., a Texas corporation
("Optron"), Borrower, and Lender entered into a Secured Credit
Agreement (such Secured Credit Agreement as amended by the First
Amendment, dated as of January 16, 1989, the Second Amendment,
dated as of January 24, 1989, the Third Amendment, dated as of
January 31, 1991, and the Fourth Amendment, dated as of
November 27, 1991, being herein referred to as the "Original Credit
Agreement"; the other capitalized terms used herein shall have the
meanings set forth in Section 1 unless otherwise defined herein)
pursuant to which Lender made working capital loans and reducing
revolving loans.
2. Pursuant to the Third Amendment, the Lender made
available to Borrower the Delco-Remy Revolving Loan Commitment
pursuant to which it made the Delco-Remy Revolving Loans.
3. Pursuant to the Fourth Amendment, the Lender made
available to Opcom the Opcom Revolving Loan Commitment and the
Opcom Working Capital Commitment for which Borrower was jointly and
severally liable.
4. Borrower desires that the Original Credit Agreement be
amended and restated to, among other things:
(i) combine the Delco-Remy Revolving Loan Commitment, the
Opcom Revolving Loan Commitment, the Opcom Working Capital
Commitment and the Revolving Loan Commitment established by the
Original Credit Agreement into one reducing revolving loan
facility,
(ii) extend the Working Capital Commitment, and
(iii) revise the financial covenants applicable to
Borrower.
5. As security for the loans made or to be made by Lender
to, or for the account of, Borrower, Borrower and each of its
Subsidiaries has granted to Lender a lien on, and a security
interest in, all of its assets.
Accordingly, in consideration of the mutual agreements
contained herein, and subject to the terms and conditions hereof,
the Original Credit Agreement is amended and restated in its
entirety, and the parties hereto agree, as follows:
SECTION 1 CERTAIN DEFINITIONS.
SECTION 1.1 Certain Definitions. When used herein the
following terms shall have the following meanings:
Account shall have the meaning provided in the Uniform
Commercial Code as from time to time in effect in any applicable
jurisdiction.
Account Debtor shall mean any Person obligated on or under any
Account or General Intangible.
Acquired Assets shall have the meaning provided therefor in
the Purchase Agreement.
Adjusted Net Worth shall mean, at any date, (a) $1,000,000,
plus (b) Net Income plus depreciation and amortization expenses, to
the extent that the same are deducted from net revenues in
determining Net Income, for the period beginning on the Amended and
Restated Closing Date to and including the date of calculation
(treating such period as one accounting period), less (c) all
payments pursuant to Section 11B.6(ii) made by Borrower during the
period beginning on the Amended and Restated Closing Date and
ending on the date of calculation and less (d) unless subtracted in
determining Net Income and without double counting, all amounts
paid by Borrower and its Subsidiaries to purchase, redeem or
otherwise acquire any shares of Borrower's capital stock. Nothing
contained herein shall be deemed to permit Borrower or any of its
Subsidiaries to take any action otherwise prohibited by this
Agreement.
Adjusted Operating Profit shall mean, for any period, Net
Income for such period before deduction of any amount which, in
conformity with GAAP, would be set forth opposite the caption
"income tax expense" (including deferred income taxes) (or any like
caption) on a consolidated income statement of Borrower and its
Subsidiaries for such period, less any amount which, in conformity
with GAAP, would be set forth opposite the caption "extraordinary
pre-tax gain" (or any like caption) on such an income statement,
plus Interest Expense for such period, plus an amount which, in
conformity with GAAP, would be set forth opposite the caption
"depreciation and amortization expenses" (or any like caption)
(including, without limitation, amortization of Intangible Assets)
on such an income statement for such period, to the extent the same
are deducted from consolidated net revenues, in conformity with
GAAP, in determining Net Income for such period.
Affiliate of any Person shall mean (i) any director (or Person
holding the equivalent position) or officer (or Person holding the
equivalent position) of such Person or of any Affiliate of such
Person, and (ii) any other Person which, directly or indirectly,
controls or is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be
deemed to be
(a) "controlled by" any other Person if such other Person
possesses, directly or indirectly, power
(i) to vote 10% or more of the securities having at the time
of any determination hereunder voting power for the election of
directors of such Person; or
(ii) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise; or
(b) "controlled by" or "under common control with" such other
Person if such other Person is a member of the immediate family of
such Person or is the executor, administrator, or other personal
representative of such Person.
Agent Bank shall mean any bank serving in the capacity of
agent for Lender under the Bank Agency Agreements.
Amended and Restated Closing Date shall mean January 20, 1994.
Applicable Margin shall mean, with respect to Revolving Loans
in Tranche Three, 3.5%; Tranche Five, 4.5%; and Tranche One, 3.5%.
Applicable Rate - see Section 4.6(a).
Assumed Liabilities shall have the meaning provided therefor
in the Purchase Agreement.
Bank Agency Agreement - see Section 6.1(a).
Borrower - see Preamble.
Borrower Bank Agency Agreement - see Section 6.1(a).
Borrower Mortgages - see Section 9.1.2.
Borrower Pledge Agreement - see Section 9.1.1.
Borrower Security Agreement - see Section 9.1.1.
Borrowing Certificate - see Section 11A.1.13.
Business Day shall mean any day of the year (other than any
Saturday or Sunday) on which the Federal Reserve Bank is open for
business in Chicago, Illinois.
Cash Equivalents shall mean any or all of the following:
obligations of, or guaranteed as to interest and principal by, the
United States Government maturing within 90 days after the date on
which such obligations are purchased; open market commercial paper
of any corporation (other than Borrower or any of its Affiliates)
incorporated under the laws of the United States of America or any
State thereof or the District of Columbia rated "Prime-1" or its
equivalent by Moody's Investors Service Inc. or "A-1" or its
equivalent by Standard & Poor's Corporation; or certificates of
deposit maturing within 180 days after the issuance thereof issued
by commercial banks organized under the laws of the United States
of America or of any political subdivision thereof and which are
either (a) fully insured by the Federal Deposit Insurance
Corporation or (b) issued by banks (i) having a combined capital
and surplus in excess of $500,000,000 or (ii) being one of the four
domestic banks having the largest combined capital and surplus
among banks having their principal offices in Chicago, Illinois.
Cash Instruments shall mean all cash, checks, drafts and other
similar writings for the payment of money.
Collateral shall mean all property and/or rights on or in
which a Lien or security interest is granted to Lender (or to any
agent, trustee or other party acting on behalf of Lender) pursuant
to this Agreement or any of the Collateral Documents or any other
instruments or documents provided for herein or therein or
delivered or to be delivered hereunder or thereunder or in
connection herewith or therewith.
Collateral Documents shall mean the Borrower Security
Agreement, the Operating Account Agreement, the Subsidiary Security
Agreement, the Borrower Mortgages, the Subsidiary Mortgages, the
Insurance Assignment, the Bank Agency Agreement, the Borrower
Pledge Agreement and any and all other documents provided for in
Section 9 or pursuant to which a Lien is granted to Lender (or to
any agent, trustee, or other party acting on behalf of Lender) as
security for any of the Liabilities, as the same may be amended,
modified or supplemented from time to time.
Collected Balances - see Section 6.1(d).
Commitment and Commitments - see the last paragraph of
Section 2.1.
Compliance Certificate - see Section 11A.1.5.
Contingent Obligation as to any Person shall mean the undrawn
face amount of any letters of credit issued for the account of such
Person and shall also mean any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends, letters of credit or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the
obligee under any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the obligee under such primary
obligation against loss in respect thereof; provided, however, that
the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed
to be an amount equal to the stated or determinable amount of the
primary obligation or, where such Contingent Obligation is
specifically limited to a portion of any such primary obligation,
that portion to which it is limited or, if not stated or
determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
Contractual Obligation of any Person shall mean any provision
of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by
which it or any of its property is bound.
Controlled Group shall mean Borrower and any corporation,
trade or business that is, along with Borrower, a member of a
controlled group of corporations or a controlled group of trades or
businesses as described in sections 414(b) and 414(c),
respectively, of the Internal Revenue Code of 1986, as amended.
Current Assets shall mean, at any date, the amount which, in
conformity with GAAP, would be set forth opposite the caption
"total current assets" (or any like caption) on a consolidated
balance sheet of Borrower and its Subsidiaries at such date, less
cash, Cash Instruments, and Cash Equivalents.
Current Liabilities shall mean, at any date, the amount which,
in conformity with GAAP, would be set forth opposite the caption
"total current liabilities" (or any like caption) on a consolidated
balance sheet of Borrower and its Subsidiaries at such date, less
any portion thereof attributable to the Notes, leases which have
been, or, in accordance with GAAP, should be, recorded as
capitalized leases and any other Indebtedness permitted hereunder.
Current Ratio shall mean, at any date, the ratio on such date
of (x) Current Assets (excluding Intangible Assets) to (y) Current
Liabilities.
Delco-Remy Loan Commitment shall have the meaning given to
such term in the Original Credit Agreement.
Delco-Remy Revolving Loan shall have the meaning given to such
term in the Original Credit Agreement.
Division has the meaning assigned to such term in the Original
Credit Agreement.
Dollar(s) and the sign "$" shall mean lawful money of the
United States of America.
Employment Agreements shall mean those certain Employment
Agreements in existence as of the Amended and Restated Closing Date
by and between Borrower and those persons listed in Schedule XIII,
together with any amendments, modifications and supplements to any
thereof as may be permitted by this Agreement.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute or similar import,
together with the regulations thereunder, in each case as in effect
from time to time. References to sections of ERISA also refer to
any successor sections.
Event of Default shall mean any of the events described in
Section 13.1.
Fiscal Quarter of Borrower shall mean a period of three
consecutive Reporting Periods, commencing, in the case of the first
Fiscal Quarter, on the first day of such Person's Fiscal Year, and
in the case of each succeeding Fiscal Quarter, on the day following
the end of the preceding Fiscal Quarter.
Fiscal Year of Borrower shall mean a period of 52 or 53 weeks,
as applicable, commencing on the first day following the last
Friday in October of each calendar year and ending on the last
Friday in October of the subsequent calendar year.
Fixed Rate Loan - see Section 2.3.
Floating Rate Loan - see Section 2.3.
Force Majeure shall mean acts of God, acts of public enemies,
insurrections, riots, civil disturbances, strikes, boycotts, other
direct consequences of a labor dispute, other industrial
disturbances, fires, explosions, floods, epidemics, quarantine
restrictions, shortages of materials, equipment or transportation,
freight embargoes, power or utility failures, orders or acts, or
failures to act, of civil or military authority or other similar
causes beyond the control of Borrower.
Fourth Amendment shall mean the Fourth Amendment to Secured
Credit Agreement dated as of November 27, 1991 among Borrower,
Opcom and Lender.
GAAP shall mean generally accepted accounting principles in
the United States of America as in effect from time to time.
General Intangible shall mean any of a Person's "general
intangibles", as defined in the Uniform Commercial Code as from
time to time in effect in any applicable jurisdiction.
Gross Capital Expenditures shall mean, for any period, the
total of all expenditures incurred by Borrower and its Subsidiaries
in respect of the purchase or other acquisition of fixed or capital
assets during such period, without any deduction for trade-ins,
salvage values, resales or similar recoveries, including the amount
which in accordance with GAAP is or should be initially posted to
Borrower's consolidated balance sheet with respect to leases
entered into during such period which have been, or, in accordance
with GAAP, should be, recorded as capitalized leases.
Hazardous Material shall mean and include (i) any asbestos,
PCBs or dioxins, or insulation or other material composed of or
containing asbestos, PCBs or dioxins or (ii) any hazardous, toxic
or dangerous waste, substance or material defined as such in (or
for purposes of) the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), any so-called
"Superfund" or "Superlien" law, or any other Federal, state or
local statute, law, ordinance, code, rule, regulation, order or
decree regulating, relating to, or imposing liability or standards
of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect.
Household Loan Receipt Account - See Section 6.1(b)
Household Loan Receipt Account Agreement - See Section 6.1(a).
Indebtedness of a Person shall mean (a) indebtedness of such
Person for borrowed money, (b) indebtedness of such Person for the
deferred purchase price of services or property, excluding trade
payables incurred in the ordinary course of business, (c)
obligations of such Person under leases which have been, or, in
accordance with GAAP, should be, recorded as capitalized leases,
(d) indebtedness of such Person arising under acceptance
facilities, (e) obligations of such Person with respect to
judgments, awards or decrees and (f) indebtedness of such Person
consisting of unpaid reimbursement obligations in respect of all
drawings under letters of credit issued for the account of such
Person (including, without limitation, with respect to each of the
foregoing clauses (a) through (f), any such indebtedness or
obligation which is non-recourse to the credit of such Person but
is secured by assets of such Person). Indebtedness shall not
include the liability of any Person for judgments, awards or
decrees (i) to the extent that such Person is fully insured and
with respect to which the insurer has assumed responsibility in
writing, (ii) to the extent that such Person is fully indemnified
(upon terms and by creditworthy indemnitors which are satisfactory
to Lender) or (iii) which have been in force for less than the
applicable period for filing an appeal so long as execution is not
levied thereunder (or in respect of which such Person shall at the
time in good faith be prosecuting an appeal or proceeding for
review and in respect of which a stay of execution or appropriate
appeal bond shall have been obtained pending such appeal or
review).
Insurance Assignment - see Section 9.1.3.
Intangible Assets of any Person shall mean licenses,
franchises, patents, patent applications, trademarks, computer
software rights, goodwill and research and development expense or
other like intangibles shown on the consolidated balance sheet of
such Person.
Interest Coverage Ratio Number 1 shall mean, for any period,
the ratio of (a) the excess of (i) Adjusted Operating Profit for
such period over (ii) the aggregate amount incurred by Borrower and
its Subsidiaries during such period on account of Gross Capital
Expenditures to (b) Interest Expense for such period.
Interest Coverage Ratio Number 2 shall mean, for any period,
the ratio of (a) Adjusted Operating Profit for such period to (b)
Interest Expense for such period.
Interest Expense shall mean, for any period, the amount which,
in conformity with GAAP, would be set forth opposite the caption
"interest expense" (or any like caption) on an income statement of
Borrower and its Subsidiaries for such period.
Lease Obligations of any Person shall mean, at any date, the
rental commitments of such Person under leases for real and/or
personal property (including taxes, insurance, maintenance and
similar expenses which such Person is obligated to pay under the
terms of said leases) on such date, whether or not such obligations
are reflected as liabilities or commitments on a balance sheet of
such Person or in the notes thereto, excluding, however,
obligations under leases which have been, or, in accordance with
GAAP, should be, recorded as capitalized leases.
Lender - see Preamble.
Lender Party - see Section 14.5.
Liabilities shall mean (i) all obligations to Lender and its
successors and assigns of Borrower or any of its Subsidiaries under
or in connection with this Agreement, any Note, or the other
Related Documents, (ii) all other obligations of Borrower or any of
its Subsidiaries to Lender, in each case howsoever created, arising
or evidenced, whether direct or indirect, joint or several,
absolute or contingent, or now or hereafter existing, or due or to
become due, and whether or not arising out of or in connection with
this Agreement, any Note, or any of the other Related Documents,
and (iii) all other obligations of Borrower or any of its
Subsidiaries to Lender and its successors and assigns in connection
with the Related Transactions.
Lien shall, when used with respect to any Person, mean any
interest in any real or personal property, asset or other right
held, owned or being purchased or acquired by such Person for its
own use, consumption or enjoyment in its business which secures
payment or performance of any obligation and shall include any
mortgage, lien, pledge, encumbrance, charge, retained security
title of a conditional vendor or lessor, or other security interest
of any kind, whether arising under a security agreement, mortgage,
deed of trust, chattel mortgage, assignment, pledge, retention of
security title, financing or similar statement or notice or arising
as a matter of law, judicial process or otherwise.
Loans and Loan - see the last paragraph of Section 2.1.
Lockbox(es) - see Section 6.1(b).
Master Account(s) - see Section 6.1(b).
Material Licensing Agreement - see Section 10.14.
Maximum Rate - shall mean the maximum lawful rate of interest
(if any) permitted by applicable usury laws, which rate shall
change when and as such laws change, to the extent permitted by
such laws, effective on the day such change in law becomes
effective.
Mexican Subsidiaries - shall mean Optron de Mexico and
Semiconductores Opticos, S.A. de C.V.
Net Cash Generated shall mean, for any period, an amount equal
to (a) Adjusted Operating Profit for such period, less (b) Gross
Capital Expenditures incurred during such period, plus (c) the
amount of any reduction (or minus the amount of any increase) in
Working Capital in such period.
Net Income shall mean, for any period, consolidated net income
or loss of Borrower and its Subsidiaries as it would appear on an
income statement of Borrower and its Subsidiaries for such period
prepared in accordance with GAAP, less, to the extent not
subtracted from gross income in computing net income, the amounts
paid or payable under Sections 11B.6(i) and, if paid or payable by
Borrower or any of its Subsidiaries to any Affiliate of Borrower
(other than Borrower and its Subsidiaries), 11B.6(iii).
Note and Notes shall mean the Revolving Note and the Working
Capital Note, or any of them.
Opcom shall mean OTX Corporation (formerly Opcom, Inc.), a
Texas corporation and a partially-owned Subsidiary of Borrower.
Opcom Bank Agency Agreement - see Section 6.1(a).
Opcom Revolving Loan shall have the meaning given to such term
in the Original Credit Agreement.
Opcom Revolving Loan Commitment shall have the meaning given
to such term in the Original Credit Agreement.
Opcom Working Capital Commitment shall have the meaning given
to such term in the Original Credit Agreement.
Operating Account(s) - see Section 6.1(b).
Optek International shall mean Optek International Inc., a
Texas corporation and a wholly-owned Subsidiary of Borrower.
Optron de Mexico - shall mean Optron de Mexico, S.A. de C.V.
Original Closing Date shall mean July 14, 1988.
Original Credit Agreement - see Background.
PBGC means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
Permitted Exceptions shall mean (i) Liens for taxes not yet
due and payable or for installments of special assessments not yet
due and payable, (ii) easements, covenants, conditions and
restrictions of record which are not violated by existing uses or
improvements, do not interfere with the use of the related property
and do not adversely affect the merchantability of the title to the
related property, and (iii) such other matters as Lender may
approve in writing.
Permitted Liens - see Section 11B.20.
Person shall mean any natural person, corporation, firm,
trust, association, government, governmental agency or other
entity, whether acting in an individual, fiduciary or other
capacity.
Plan shall mean a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA (other
than a multiemployer plan as defined in section 4001(a)(3) of
ERISA), and to which Borrower or any corporation, trade or business
that is, along with Borrower, a member of a controlled group of
corporations or a controlled group of trades or businesses, as
described in sections 414(b) and 414(c), respectively, of the
Internal Revenue Code of 1986, as amended, or section 4001 of ERISA
may have any liability, including any liability by reason of having
been a substantial employer within the meaning of section 4063 of
ERISA at any time during the preceding five years, or by reason of
being deemed to be a contributing sponsor under section 4069 of
ERISA.
Purchase shall mean the transactions contemplated by the
Purchase Agreement.
Purchase Agreement shall mean that certain Agreement of
Purchase and Sale dated as of May 25, 1988 between Optron, Inc. and
TRW Inc., together with all schedules thereto and the Disclosure
Packages (as defined therein) delivered thereunder and as hereafter
amended, modified or supplemented as permitted by this Agreement.
Purchase Documents shall mean the Purchase Agreement and any
other instrument, document or agreement executed in connection
therewith, together with all amendments, modifications and
supplements thereto permitted by this Agreement.
Redeployment Rate shall mean, when used to calculate any
amount payable under Section 6.6 in connection with the repayment
of a Fixed Rate Loan, the rate of interest (expressed as an annual
rate) equal to the Applicable Margin plus the simple average of the
yields to maturity, rounded to three decimal places, published for
the direct obligations of the United States in an amount closest to
the amount being repaid and with a remaining term closest to the
applicable Remaining Term in The Wall Street Journal on each of the
five Business Days prior to the date of repayment; provided,
however, that if The Wall Street Journal shall not have published
such a yield to maturity on any day, such yield to maturity shall
be the arithmetic mean of the secondary market yield to maturity
implicit in bids of three primary United States government
securities dealers in New York City or Chicago selected by Lender
as of approximately 3:30 p.m., New York City time, on that day for
the issue of United States Treasury instruments with the remaining
term closest to the applicable Remaining Term.
Reference Rate shall mean at any time the rate per annum then
most recently announced by The First National Bank of Chicago, a
national banking association, as its corporate base rate at
Chicago, Illinois (or if such rate is not being quoted, the rate
which is the successor to such rate, and if no successor is being
quoted, the rate conceptually equivalent to such rate which the
domestic commercial bank having the highest combined capital and
surplus of any bank having its principal office in Chicago,
Illinois is quoting).
Related Documents shall mean the Notes, the Employment
Agreements, the Collateral Documents, the Warrant, the Senior
Management Agreements and the Purchase Documents.
Related Transactions shall mean all transactions contemplated
by the Original Credit Agreement, this Agreement and the Related
Documents, including, without limitation, the Purchase, the Loans,
and the granting by Borrower and its Subsidiaries of Liens on the
Collateral to secure the Liabilities.
Remaining Term shall mean, with respect to any Fixed Rate
Loan, the period from and including the date of repayment to but
excluding the scheduled maturity date for such Loan or any portion
thereof.
Reportable Event shall have the meaning given to such term by
ERISA.
Reporting Period shall mean a period of four or five weeks, as
applicable, with two such consecutive four week periods commencing
on the first day of a Fiscal Quarter and one five week period
commencing on the day after the last day of the second such fiscal
period, except that in Fiscal Years containing 53 weeks, the last
Reporting Period in the Fiscal Year shall contain six weeks.
Requirement of Law for any Person shall mean the corporate
charter and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule, ordinance or regulation
or determination of an arbitrator or a court of other governmental
authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its
property is subject.
Revolving Loan - see Section 2.1.1.
Revolving Loan Commitment - see Section 2.1.1.
Revolving Loan Commitment Reduction Amount - see Section
6.2(a).
Revolving Loan Commitment Reduction Date shall mean each date
indicated as such in Schedule I or, if such date is not a Business
Day, the next succeeding Business Day.
Revolving Loan Termination Date - see Section 2.1.1.
Revolving Note - see Section 3.1.
Scheduled Reduction in the Revolving Loan Commitment for any
period shall mean the amount set forth in the lower portion of
Schedule I opposite any date which falls within such period.
Seller shall mean TRW Inc.
Senior Management Agreements - see Section 11B.6(i).
Subsidiary shall mean a corporation of which the indicated
Person and/or its other subsidiaries, individually or in the
aggregate, own, directly or indirectly, such number of outstanding
shares as have at the time of any determination hereunder more than
50% of voting power for the election of directors (or their
equivalent under the laws of the jurisdiction of organization of
such corporation).
Subsidiary Mortgages - see Section 9.2.2.
Subsidiary Security Agreement - see Section 9.2.1.
Third Amendment shall mean the Third Amendment to Secured
Credit Agreement dated as of January 31, 1991 between Borrower and
Lender.
Total Fixed Charges shall mean, for any period, the sum of (i)
all scheduled or accelerated payments of interest or principal on
account of Indebtedness of Borrower and its Subsidiaries, including
any and all penalties, premiums, prepayment fees or the like
thereon (including without limitation any Scheduled Reduction in
the Revolving Loan Commitment, whether or not such reduction gives
rise to a payment of any Loans) with respect to such period, plus
(ii) taxes paid or payable with respect to such period and which
are of a type included in Net Income in determining Adjusted
Operating Profit, plus (iii) amounts paid or payable by Borrower
and its Subsidiaries under Section 11B.6(ii) with respect to such
period, plus (iv) to the extent not subtracted in determining Net
Income and without double counting, all amounts paid by Borrower
and its Subsidiaries with respect to such period (A) to purchase,
redeem or otherwise acquire any of Borrower's capital stock or (B)
in respect of the purchase of or satisfaction of any principal
installment on any Indebtedness of Borrower or any Affiliate of
Borrower. Nothing contained herein shall be deemed to permit
Borrower or any Subsidiary thereof to take any action otherwise
prohibited by this Agreement. For purposes of the foregoing,
"scheduled or accelerated payments" shall not include (A)
repayments of Loans pursuant to clauses sixth or seventh of the
last paragraph of Section 6.1(d), or (B) repayments of Loans
following any reductions or termination of the Commitments pursuant
to Section 6.2(b) or 6.3.
Total Liabilities at any date shall mean the sum of (i) the
amount which, in conformity with GAAP, would be set forth opposite
the caption "liabilities" (or any like caption) on a consolidated
balance sheet of Borrower and its Subsidiaries at such date, plus
(ii) the aggregate amount of Contingent Obligations of Borrower and
its Subsidiaries outstanding on such date (other than those which
would constitute liabilities under the foregoing clause (i)).
Tranche, Tranche One, Tranche Two, Tranche Three, Tranche
Four, Tranche Five, and Tranche Six - see Section 4.1.
Triggering Event shall mean (i) any consolidation, merger or
sale, transfer or other disposition of all or substantially all of
Borrower's property, assets or business other than a consolidation
or merger of Borrower with a wholly-owned Subsidiary of Borrower,
or (ii) any prepayment of the Loans from the proceeds of a public
offering or private placement of its equity or debt securities or
from any loans or any other refinancing.
Type of Loan - see Section 2.3. The two types of Loans under
this Agreement are Floating Rate Loans and Fixed Rate Loans.
Unmatured Event of Default shall mean any event which, if it
continues uncured will, with lapse of time or notice or lapse of
time and notice, constitute an Event of Default.
Warrant - see Section 9.3.
Welfare Plan means a "welfare plan", as such term is defined
in section 3(i) of ERISA.
Working Capital shall mean, at any date, the excess of Current
Assets over Current Liabilities as at said date.
Working Capital Commitment - see Section 2.1.2.
Working Capital Commitment Extension Request - see Section
2.2.
Working Capital Loan - see Section 2.1.2.
Working Capital Loan Termination Date - see Section 2.1.2.
Working Capital Note - see Section 3.2.
SECTION 1.2 Accounting and Financial Determinations. Where
the character or amount of any asset or liability or item of income
or expense is required to be determined, or any accounting
computation is required to be made, for the purpose of this
Agreement or the Related Documents, such determination or
calculation shall be made, to the extent applicable and except as
otherwise specified in this Agreement or such Related Document, on
a consolidated basis so as to include Subsidiaries of Borrower in
each such calculation, and in accordance with GAAP; provided,
however, that if any promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial
Accounting Standards Board of the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar
functions), the initial announcement of which is made after the
Closing Date, results in a change in the method of calculation of
financial covenants, standards or terms found in Sections 1, 11A or
11B hereof from the method used at the time of preparation of the
financial statements referred to in Section 10.3 hereof, the
parties hereto agree to enter into good faith negotiations in order
to amend such provisions so as to reflect such changes with the
desired result that the criteria for evaluating Borrower's
financial condition shall be the same after such changes as if such
changes had not been made; and provided, further, that until such
time as the parties hereto agree upon such amendments, such
financial covenants, standards and terms shall be construed and
calculated as though such change had not taken place. When used
herein, the term "financial statement" shall include the notes and
schedules thereto.
SECTION 1.3 Cross References; Headings. The words "hereof",
"herein" and "hereunder" and words of a similar import when used in
this Agreement or in any of the Related Documents shall refer to
this Agreement or such Related Document as a whole and not to any
particular provision of this Agreement or such Related Document.
Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or
to this Agreement unless otherwise specified. Any reference in any
Section or definition to any clause is, unless otherwise specified,
to such clause of such Section or definition. The various headings
in this Agreement and the Related Documents are inserted for
convenience only and shall not affect the meaning or interpretation
of this Agreement or such Related Document or any provision hereof
or thereof.
SECTION 2 COMMITMENTS OF LENDER; PROCEDURES FOR BORROWING.
SECTION 2.1 Commitments. Subject to the terms and conditions
of this Agreement, Lender agrees:
2.1.1 Revolving Loan Commitment. To make loans to Borrower
(herein collectively called the "Revolving Loans" and individually
called a "Revolving Loan") on a revolving basis from time to time
before October 31, 1998 (herein called the "Revolving Loan
Termination Date") in such amounts as Borrower may from time to
time request; provided that the aggregate principal amount of all
Revolving Loans from time to time outstanding shall not exceed,
during any period, the amount set forth in Schedule I (as adjusted
pursuant to this Agreement, including pursuant to Section 6.2)
applicable to such period and the aggregate principal amount of
Revolving Loans in each Tranche shall not exceed, during any
period, the amount set forth in Schedule II for such Tranche (as
adjusted pursuant to this Agreement, including pursuant to Section
6.2) applicable to such period. Revolving Loans made after the
Amended and Restated Closing Date shall be deemed to be in Tranche
Six to the extent of availability in Tranche Six, then in Tranche
Four to the extent of availability in Tranche Four and then in
Tranche Two to the extent of availability in Tranche Two. The
foregoing commitment of Lender is herein called the "Revolving Loan
Commitment".
2.1.2 Working Capital Commitment. To make loans to Borrower
(herein collectively called the "Working Capital Loans" and
individually called a "Working Capital Loan"), from time to time
before October 31, 1995, or such later date as may be established
pursuant to Section 2.2 (herein called the "Working Capital Loan
Termination Date") in such amounts as may from time to time be
requested by the Borrower; provided that the aggregate principal
amount of all Working Capital Loans from time to time outstanding
shall not exceed $10,500,000 (or such lesser amount as Borrower
shall specify in any notice delivered pursuant to Section 2.2 or
Section 6.3) and, provided, further Working Capital Loans shall
only be made when there is no availability under the Revolving Loan
Commitment. The foregoing commitment of Lender is herein called
the "Working Capital Commitment".
The Revolving Loan Commitment and the Working Capital
Commitment are herein collectively called the "Commitments" and
individually called a "Commitment"; and the Revolving Loans and the
Working Capital Loans are herein collectively called "Loans" and
individually called a "Loan".
SECTION 2.2 Extension of Working Capital Loan Termination
Date. Borrower may, pursuant to a Working Capital Commitment
Extension Request substantially in the form set forth in Exhibit C,
delivered to Lender not more than 120, nor less than 45, Business
Days prior to the then scheduled Working Capital Loan Termination
Date, request Lender to extend all or part (as specified in such
Working Capital Commitment Extension Request) of its Working
Capital Commitment for an additional period consisting of one
Fiscal Year beginning on the day following the then scheduled
Working Capital Loan Termination Date. If no Event of Default or
Unmatured Event of Default has occurred and is continuing on the
date the Working Capital Commitment Extension Request is received
by Lender and on the then scheduled Working Capital Loan
Termination Date and if Borrower has complied with Section 12.3
hereof, the Working Capital Loan Termination Date shall be so
extended, subject to Lender's consent in writing to such extension
of its Working Capital Commitment for requests made to extend the
Working Capital Loan Termination Date to a date on or after October
31, 1998 which consent may be withheld in Lender's sole and
absolute discretion. Lender shall use reasonable efforts to
respond within 25 Business Days to any Working Capital Commitment
Extension Request made to extend the Working Capital Loan
Termination Date to a date on or after October 31, 1998; provided,
however, that any failure of Lender to respond to any such Working
Capital Commitment Extension Request shall not create any claim
against Lender; and provided, further, that failure to respond to
any Working Capital Commitment Extension Request made to extend the
Working Capital Loan Termination Date to a date on or after October
31, 1998 shall have the effect of denying such Working Capital
Commitment Extension Request.
SECTION 2.3 Various Types of Loans. As specified in Section
4, a certain portion of the outstanding principal amount of the
Loans may bear interest at a rate which is fixed as of a date prior
to the making thereof. Such portion of the principal amount of the
Loans is herein called a "Fixed Rate Loan". The Loans, to the
extent that the interest rate payable thereon is not so fixed and
during any period when such interest rate is not so fixed, are
herein collectively called "Floating Rate Loans" and individually
called a "Floating Rate Loan".
SECTION 2.4 Loan Requests; Deemed Loans. (a) Borrower shall
give notice (which may be oral and shall be confirmed in writing on
the fifteenth day of the next month by delivery of a Borrowing
Certificate to Lender) of each proposed borrowing by 10:00 a.m.,
Chicago time on the day of, or within 5 Business Days prior to, the
proposed date of such borrowing. Each notice given pursuant to
this Section shall be irrevocable. Each such notice shall specify
the date, amount and type of borrowing. Subject to receipt by
Lender of the documents required under Section 11 with respect to
such borrowing and the satisfaction of all other conditions
precedent to such borrowing, on the requested borrowing date Lender
shall pay over such funds by wire transfer to the Household Loan
Receipt Account maintained by Borrower at Household Bank. Each
borrowing shall be on a Business Day and shall be in an aggregate
amount of at least $100,000 and in an integral multiple of $5,000.
(b) Notwithstanding any provision herein to the contrary, if
at any time or from time to time any interest or fee is due and
payable hereunder and the Collected Balances, applied in the order
set forth in Section 6.1(d), are not sufficient to pay such
interest or fee in full, Borrower shall be deemed to have given the
notice required by clause (a) of this Section 2.4 (and to have made
all of the representations set forth in a Borrowing Certificate) of
a proposed borrowing in the amount necessary to pay the remainder
of such interest or fee, and Lender shall be deemed to have made a
Loan to Borrower in such amount, which Loan will be deemed to have
been used by Borrower to pay the remainder of such interest or fee.
Such Loan shall be deemed to have been a Revolving Loan to the
extent of availability of the Revolving Loan Commitment and
otherwise shall be deemed to have been a Working Capital Loan.
SECTION 2.5 Certain Waivers. Borrower waives presentment,
demand for payment, notice of dishonor and protest, notice of the
creation of any of the Liabilities and all other notices whatsoever
to Borrower with respect to the Liabilities except notices required
under Section 13.1. The obligations of Borrower under this
Agreement and the Related Documents shall not be affected by (i)
the failure of Lender, its successors or assigns, any Lender Party
or any holder of any Note or any of the Liabilities to assert any
claim or demand or to exercise or enforce any right, power or
remedy against Borrower, the Collateral or otherwise, (ii) any
extension or renewal for any period (whether or not longer than the
original period) or exchange of any of the Liabilities or the
release or compromise of any obligation of any nature of any Person
with respect thereto, (iii) the surrender, release or exchange of
all or any part of any property (including without limitation the
Collateral) securing payment and performance of any of the
Liabilities or the compromise or extension or renewal for any
period (whether or not longer than the original period) of any
obligations of any nature of any Person (other than, prior to any
Event of Default, any Account Debtor) with respect to any such
property, and (iv) any other act, matter or thing which would or
might, in the absence of this provision, operate to release,
discharge or otherwise prejudicially affect the obligations of
Borrower.
SECTION 2.6 Conditions. The making of each Loan shall be
subject to the satisfaction of the applicable conditions set forth
in Section 12.
SECTION 3 NOTES; RECORDKEEPING.
SECTION 3.1 Revolving Notes. The Revolving Loans shall be
evidenced by a promissory note (herein, as from time to time
supplemented, extended or replaced, called the "Revolving Note"),
substantially in the form set forth in Exhibit A, with appropriate
insertions, dated the Amended and Restated Closing Date, payable to
the order of Lender in the initial principal amount of $28,300,000
(or, if less, in the aggregate unpaid principal amount of all of
the Revolving Loans) on the Revolving Loan Termination Date.
SECTION 3.2 Working Capital Note. The Working Capital Loans
shall be evidenced by a promissory note (herein, as such note may
be from time to time supplemented, extended or replaced, called the
"Working Capital Note") substantially in the form set forth in
Exhibit B, with appropriate insertions, dated the date hereof,
payable to the order of Lender in the initial principal amount of
$10,500,000 (or, if less, in the aggregate unpaid principal amount
of all Working Capital Loans hereunder) on the Working Capital Loan
Termination Date.
SECTION 3.3 Recordkeeping. Lender shall record in its
records, or at its option on the schedule attached to each Note,
the date and amount of each Loan made thereunder, each repayment
thereof, and the other information provided for thereon. The
aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on
the applicable Note. The failure so to record any such information
or any error in so recording any such information shall not,
however, limit or otherwise affect the actual obligations of
Borrower hereunder or under the Notes to repay the principal amount
of all Loans together with all interest and premium, if any,
accruing thereon.
SECTION 3.4 Replacement Notes. The Indebtedness evidenced by
the Revolving Note shall be, (a) to the extent of $20,300,000
aggregate principal amount of Indebtedness, an extension and
restatement of all of the Indebtedness evidenced by the "Second
Revolving Note", as executed on November 27, 1991, (b) to the
extent of $4,000,000 aggregate principal amount of Indebtedness, an
extension and restatement of such amount of Indebtedness evidenced
by the Second Delco-Remy Revolving Note, as executed on
November 27, 1991, (c) to the extent of $2,000,000 aggregate
principal amount of Indebtedness, an extension and restatement of
such amount of Indebtedness evidenced by the Opcom Revolving Note,
as executed on November 27, 1991, and (d) to the extent of
$2,000,000 aggregate principal amount of Indebtedness, an extension
and restatement of such amount of Indebtedness evidenced by the
Opcom Working Capital Note, as executed on November 27, 1991. The
Indebtedness evidenced by the Working Capital Note shall be, to the
extent of $6,662,273.00 aggregate principal amount of Indebtedness,
an extension and restatement of such amount of Indebtedness
evidenced by the Working Capital Note as executed on January 31,
1991, and to that extent the Working Capital Note shall be a
replacement and substitute for such Working Capital Note. The
execution and delivery of this Agreement, the Revolving Note, the
Working Capital Note, and any other document or instrument executed
in connection therewith on the Amended and Restated Closing Date
shall not be construed (i) to have constituted repayment of any
amount of principal or of interest owing on the Loans or (ii) to
release, cancel, terminate, or otherwise impair all or any part of
any security interest granted to the Lender as collateral for the
Liabilities. The "Opcom Note", the "Delco-Remy Note" and the
"Second Revolving Note" executed pursuant to the Original Credit
Agreement shall be marked with the legend "cancelled by
restatement" and attached to the Revolving Note executed on the
Amended and Restated Closing Date. The Working Capital Note
executed pursuant to the Original Credit Agreement shall be marked
with the legend "cancelled by restatement" and attached to the
Working Capital Note executed on the Amended and Restated Closing
Date.
SECTION 4 INTEREST.
SECTION 4.1 Tranches; Interest Rates on Revolving Loan.
For purposes of calculating interest and other amounts with respect
to the Revolving Loans, the Revolving Loans shall at all times be
divided into six Tranches as follows: "Tranche One" shall consist
of an aggregate principal amount of $2,000,000 of the Revolving
Loans outstanding on the Amended and Restated Closing Date;
"Tranche Two" shall consist of an aggregate principal amount of
$6,000,000 of the Revolving Loans outstanding on the Amended and
Restated Closing Date; "Tranche Three" shall consist of an
aggregate principal amount of $10,000,000 of the Revolving Loans
outstanding on the Closing Date; "Tranche Four" shall consist of an
aggregate principal amount of $0 of the Revolving Loans outstanding
on the Amended and Restated Closing Date; "Tranche Five" shall
consist of an aggregate principal amount of $6,000,000 of the
Revolving Loans outstanding on the Amended and Restated Closing
Date; and "Tranche Six" shall consist of an aggregate principal
amount of $4,300,000 of the Revolving Loans outstanding on the
Amended and Restated Closing Date. Except as provided in Section
6.4, repayments of the Revolving Loans shall be applied first to
Loans in the Tranche Six, then to Loans in Tranche Five, then to
Loans in Tranche Four, then to Loans in Tranche Three, then to
Loans in Tranche Two and then to Loans in Tranche One. Any
repayment of Revolving Loans in Tranche Five, Tranche Three and
Tranche One shall permanently reduce the availability for such
Tranche.
Subject to Section 4.6, the unpaid principal amount of each
Revolving Loan shall bear interest for the period commencing on the
date of such Revolving Loan until such Revolving Loan is paid in
full, at the rates per annum specified below:
(a) the Revolving Loans in Tranche Six shall bear interest at
a rate per annum equal to the sum of (i) the Reference Rate from
time to time in effect, plus (ii) one and one-half percent (1-1/2%)
per annum;
(b) each Revolving Loan in Tranche Five shall bear interest
at a rate of thirteen and 40/100 percent (13.40%) per annum;
(c) the Revolving Loans in Tranche Four shall bear interest
at a rate per annum equal to the sum of (i) the Reference Rate from
time to time in effect, plus (ii) two percent (2%) per annum;
(d) each Revolving Loan in Tranche Three shall bear interest
at a rate equal to twelve and 20/100 percent (12.20%) per annum;
(e) the Revolving Loans in Tranche Two shall bear interest at
a rate per annum equal to the sum of (i) the Reference Rate from
time to time in effect, plus (ii) four percent (4%) per annum; and
(f) each Revolving Loan in Tranche One shall bear interest at
a rate equal to twelve and 34/100 percent (12.34%) per annum;
provided, however, that in the event that any principal or interest
of any Revolving Loan is not paid when due (whether by acceleration
or otherwise), the unpaid principal amount of such Revolving Loan
shall bear interest, after the due date of such principal or
interest until such principal or interest is paid, at a rate per
annum equal to the interest rate applicable to such Revolving Loan
under Section 4.1, plus three percent (3%); and provided, further,
that in no event shall any Revolving Loan at any time bear interest
at a rate in excess of the Maximum Rate.
SECTION 4.2 Interest Rate on Working Capital Loans. Subject
to Section 4.6, interest on the unpaid principal amount of each
Working Capital Loan for the period commencing on the date of such
Working Capital Loan until such Working Capital Loan is paid in
full shall be paid at a rate per annum equal to the Reference Rate
from time to time in effect plus one and one-half percent (1-1/2%)
per annum; provided, however, that in the event any principal of or
interest on any Working Capital Loan is not paid when due (whether
by acceleration or otherwise), the unpaid principal amount of such
Working Capital Loan shall bear interest, after the due date of
such principal or interest until such principal or interest is
paid, at a rate per annum equal to the Reference Rate from time to
time in effect (but not less than the Reference Rate in effect at
such due date), plus four and three-quarters percent (4-3/4%) per
annum; and provided, further, that in no event shall any Working
Capital Loan at any time bear interest at a rate in excess of the
Maximum Rate.
SECTION 4.3 Interest Payment Dates. Accrued interest on each
Loan shall be payable on the last day of each month and at
maturity, commencing with the first of such dates to occur after
the date of the initial Working Capital Loan. After maturity
(whether by acceleration or otherwise), accrued interest on all
Loans shall be payable on demand.
SECTION 4.4 Setting and Notice of Rates. Interest rates
hereunder shall be calculated from time to time by Lender and each
such calculation of an interest rate shall be conclusive and
binding on Borrower in the absence of demonstrable error.
SECTION 4.5 Computation of Interest. Interest shall be
computed for the actual number of days elapsed on the basis of a
year consisting of 360 days (unless such calculation would cause
the rate of interest applicable to such Floating Rate Loan to
exceed the Maximum Rate, in which case such rate shall be
calculated on the basis of a year consisting of 365 or 366 days).
The interest rate applicable to each Floating Rate Loan shall
change simultaneously with each change in the Reference Rate.
SECTION 4.6 Limitation on Interest.
(a) Notwithstanding anything to the contrary contained in
this Section 4, if for any period of time interest on any Loan
shall be calculated at the Maximum Rate rather than at any other
rate which would otherwise be applicable hereunder during such
period (hereafter, any "Applicable Rate") and thereafter such
Applicable Rate shall become less than the Maximum Rate, the rate
of interest payable on such Loan shall be the Maximum Rate until
Lender shall have received the amount of interest which Lender
would have received on such Loan had the rate of interest payable
hereunder on such Loan not been limited to the Maximum Rate during
the period the Applicable Rate exceeded the Maximum Rate.
(b) It is the intention of the parties hereto to comply with
applicable usury laws; accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Agreement,
the Notes, or any of the Related Documents, in no event shall this
Agreement, the Notes or such Related Documents require the payment
or permit the collection of interest, as defined under applicable
usury laws, in excess of the Maximum Rate. If any such excess of
interest is contracted for, charged or received under this
Agreement or any Note, or under the terms of any of the Related
Documents, or if the maturity of the indebtedness evidenced by any
Note is accelerated in whole or in part, or in the event that all
or part of the principal of or interest on any Note shall be
prepaid, so that under any of such circumstances the amount of
interest contracted for, charged or received under this Agreement,
such Note, or under any of the Related Documents, on the amount of
principal actually outstanding from time to time under such Note
shall exceed the Maximum Rate, then in any such event (i) the
provisions of this Section shall govern and control, (ii) Borrower
shall not be obligated to pay the Maximum Rate, (iii) any such
excess which may have been collected either shall be applied as a
credit against the then unpaid principal amount of the Liabilities
or refunded to Borrower, at the Lender's option, and (iv) the
effective rate of interest shall be automatically reduced to the
Maximum Rate. It is further agreed that, without limitation of the
foregoing, all calculations of the rate of interest contracted for,
charged or received under this Agreement, the Notes, or under the
Related Documents which are made for the purpose of determining
whether such rate exceeds the Maximum Rate shall be made, to the
extent permitted by applicable usury laws, by amortizing,
prorating, allocating and spreading in equal parts during the
period of the full stated term of the Notes, all interest at any
time contracted for, charged or received from Borrower or otherwise
by the holder or holders thereof in connection with the Notes, the
Related Documents or this Agreement.
SECTION 4.7 Additional Interest. Borrower agrees to pay to
Lender additional interest in an amount equal to the difference of
(a) the amount of interest which would have accrued on the Loans
outstanding under Tranche Two, Tranche Four, Tranche Three and
Tranche One during the period from the Amended and Restated Closing
Date through the date of the Triggering Event assuming an interest
rate of 18% per annum and (b) the actual interest which was payable
in respect to such Loans during such period pursuant to Section
4.1. The interest shall be payable concurrently with the
occurrence of any Triggering Event (and only if a Triggering Event
occurs).
SECTION 5 FEES.
SECTION 5.1 Revolving Loan Non-Use Fee. Borrower shall pay
to Lender a non-use fee for the period from and including
January 1, 1994 to but excluding the Revolving Loan Termination
Date (or such earlier date on which the Revolving Loan Commitment
shall be terminated pursuant to Section 6.2(b) or 13.2 hereof) of
one-half of one percent (1/2%) per annum on the daily average of
the unused amount of the Revolving Loan Commitment. Such non-use
fee shall be payable in arrears on the last day of each March,
June, September and December, and on the Revolving Loan Termination
Date (or such earlier date on which the Revolving Loan Commitment
shall terminate), commencing with the first of such dates to occur
after the Amended and Restated Closing Date, for any period then
ending for which such fee shall not have been theretofore paid.
SECTION 5.2 Working Capital Loan Non-Use Fee. Borrower shall
pay to Lender a non-use fee for the period from and including
January 1, 1994 to but excluding the Working Capital Loan
Termination Date (or such earlier date on which the Working Capital
Loan Commitment shall terminate) of one-half of one percent (1/2%)
per annum on the excess of (i) the daily average of the Working
Capital Loan Commitment, over (ii) the daily average of the
aggregate principal amount of outstanding Working Capital Loans.
Such non-use fee shall be payable in arrears on the last day of
each March, June, September and December and on the Working Capital
Loan Termination Date (or such earlier date on which the Working
Capital Loan Commitment shall terminate), commencing with the first
of such dates to occur after the Amended and Restated Closing Date,
for any period then ending for which such fee shall not have been
theretofore paid.
SECTION 5.3 Closing Fee. On the Amended and Restated Closing
Date, Borrower agrees to pay to Lender a closing fee in the amount
of $145,500, which fee is not refundable under any circumstances.
SECTION 5.4 Computation of Fees. All fees shall be computed
for the actual number of days elapsed on the basis of a year
consisting of 360 days.
SECTION 6 ACCOUNTS; REDUCTION OR TERMINATION OF THE
COMMITMENTS; PREPAYMENT.
SECTION 6.1 Accounts.
(a) Bank Agency Agreement. Prior to the date of the initial
Loan under the Original Credit Agreement, Lender, Borrower and
Agent Bank entered into a Bank Agency Agreement substantially in
the form of Exhibit D (as heretofore or from time to time hereafter
amended, supplemented or modified, the "Borrower Bank Agency
Agreement"). Prior to November 27, 1991, Lender, Opcom and Agent
Bank entered into an agreement substantially in the form of
Exhibit D-2 (as from time to time hereafter amended, supplemented
or modified, the "Opcom Bank Agency Agreement" and, together with
the Borrower Bank Agency Agreement, each a "Bank Agency
Agreement"). Pursuant to the Collateral Documents, including their
respective Bank Agency Agreements, each of Borrower and Opcom has
granted to Lender a continuing lien upon, and security interest in,
its Lockbox, its Master Account, its Operating Account and, in the
case of Borrower, the Household Loan Receipt Account, all funds,
items, instruments, investments, securities and other things of
value at any time paid, deposited, credited or held in any Lockbox,
Master Account, Operating Account or the Household Loan Receipt
Account (whether for collection, provisionally or otherwise), and
all other property of Borrower and Opcom from time to time in the
possession or under the control of, or in transit to, Lender, Agent
Bank or Household Bank or any agent, bailee or custodian therefor,
and all proceeds of all of the foregoing. The Borrower Bank Agency
Agreement specifies with respect to Borrower and the Opcom Bank
Agency Agreement specifies with respect to Opcom that (i)
throughout the term of this Agreement, the Agent Bank shall be
pledgee-in-possession (for the benefit of Lender) of the Lockboxes,
and the Master Accounts and the Operating Accounts, all Cash
Instruments of Borrower and of Opcom, all such funds, items,
instruments, investments, securities, things of value, property and
proceeds and all lockboxes to which any of the foregoing may be
paid, (ii) the Agent Bank or Household Bank shall take such action
as shall be specified by written notice from Lender to enable
Lender to exercise its rights with respect to such lien and
security interest, (iii) the Agent Bank, on behalf of Lender, shall
be entitled to exercise all and any rights which Lender may have
under this Agreement and the Related Documents or applicable law
with respect to the Lockboxes, the Master Accounts, Operating
Accounts and the other property and lockboxes and (iv) the Agent
Bank shall provide Lender with copies of all statements relating to
the Lockboxes, the Master Accounts and the Operating Accounts
provided by Agent Bank to Borrower or to Opcom. The depository
account agreement with respect to the Household Loan Receipt
Account (the "Household Loan Receipt Account Agreement") shall
specify such terms and conditions as shall be satisfactory to
Lender.
(b) (i) Lockboxes, Master Accounts, Operating Accounts and
Household Bank Loan Receipt Account.
(1) Lockboxes. Each of Borrower and Opcom shall maintain at
the applicable Agent Bank the lockbox (individually a "Lockbox" and
collectively the "Lockboxes").
(2) Master Accounts. Each of Borrower and Opcom shall
maintain the account identified as the "Master Account" of such
party in its respective Bank Agency Agreement (herein individually
called a "Master Account" and collectively the "Master Accounts").
(3) Operating Accounts. Each of Borrower and Opcom shall
maintain the respective controlled disbursement operating account
of such party at the Agent Bank described in their respective Bank
Agency Agreements (such accounts being herein called individually
an "Operating Account" and collectively the "Operating Accounts").
(4) Household Bank Loan Receipt Account. Borrower shall
maintain, at all times upon terms and conditions acceptable to
Lender, at Household Bank that certain depository account no.
0190045765 in the name of Borrower (the "Household Bank Loan
Receipt Account").
The Lockboxes and the Master Accounts shall be under the sole
dominion and control of Lender, and neither Opcom nor Borrower
shall have any right of withdrawal therefrom. From and after
Lender's request, each of Borrower and Opcom shall provide Lender
with copies of all statements received from Agent Bank relating to
the Lockboxes and the Master Accounts and the Operating Accounts
promptly upon (and, in any event, within five days after) their
receipt.
(c) Proceeds of Collateral; Notices to Account Debtors.
Promptly after the date of the initial Loan under the Original
Credit Agreement (or, in the case of Opcom, on or prior to
November 27, 1991) and from time to time thereafter as any
additional Account Debtors shall have become obligated to Borrower
or Opcom, Borrower or Opcom, as the case may be, at its sole
expense, has in the past and shall in the future send a notice to
each Account Debtor indebted to such party stating that all
payments are to be made directly to the Lockbox maintained by such
party at Agent Bank; provided that (i) such notice may be included
in an invoice sent by Borrower or Opcom to such Account Debtor and
(ii) no such notice need be sent to an Account Debtor of a type to
which Borrower or Opcom does not customarily send an invoice and
which owes, or is reasonably expected to owe, an aggregate amount
which does not, and is not reasonably expected to, exceed $10,000
during any fiscal year of Borrower or Opcom, as the case may be.
If Lender so requests, each of Borrower and Opcom shall, and Lender
may, if it so chooses, give each Account Debtor of Borrower and
Opcom a notice which shall constitute notification of an assignment
of payments effective under Uniform Commercial Code Section 9-
318(1)(b) and (3). In addition, except as otherwise expressly
provided to the contrary with respect to insurance proceeds in the
Collateral Documents, Borrower and Opcom each shall take all such
actions as Lender in good faith deems necessary or appropriate to
insure that at all times on and after the date hereof all proceeds
of Collateral (including, without limitation, amounts owed by
Account Debtors to whom neither Borrower nor Opcom is required to
give a notice described in clause (c)) are deposited in the Master
Account of the party to which such Collateral pertains. If,
notwithstanding the notices and actions provided for in the
preceding sentences of this clause (c), either Borrower or Opcom
shall receive, or any financial institution shall receive for the
account of Borrower or Opcom, any Cash Instruments, Borrower or
Opcom (as the case may be) shall, or shall cause such financial
institution to, transmit in the form received, before the close of
business on the next succeeding Business Day, all such Cash
Instruments other than refunds of Mexican taxes payable in pesos
(properly endorsed, where required, so that all items delivered may
be collected by Agent Bank) to Agent Bank for deposit in the Master
Account maintained by such respective party. Neither Borrower nor
Opcom shall, or shall permit any such financial institution to,
commingle any Cash Instrument so received with the other property
of Borrower or Opcom, and shall hold separate and apart from all
other property, all such Cash Instruments in express trust for the
benefit of Lender until delivery thereof is made to Agent Bank.
Pursuant to, and subject to the terms and conditions of, the Bank
Agency Agreement, items deposited in the Lockbox maintained by
either Borrower or Opcom shall be credited to the Master Account of
such party.
(d) Application of Funds. At the opening of business on each
Business Day, the Agent Bank shall calculate the amount of
collected funds on deposit in the Borrower's and Opcom's Master
Account (herein, with respect to any day, called the "Collected
Balances" for such account for such day). Promptly upon such
calculation (and in any event prior to 10:00 a.m., Chicago time on
such date), the Agent Bank shall, if no Event of Default shall have
occurred and be continuing, (i) to the extent of Collected Balances
available to do so, transfer from such Master Account to the
Operating Account maintained by the same party such amounts as
shall permit all checks drawn on such Operating Account presented
for payment at the Agent Bank as of such Business Day and all
permitted interbank transfers authorized by such party on such date
to accounts of such party at the Banks listed on Schedule III to be
honored and leaving a zero balance in such Operating Account after
payment and transfer of such items from such Operating Account, and
(ii) after acting pursuant to clause (i) above, transfer, in
increments of $5,000 or greater the remaining Collected Balances in
excess of $300,000 (in the case of Borrower's Master Account) or
$50,000 (in the case of Opcom's Master Account), if any, from such
Master Account to Lender for application in the order specified
below; provided, however, that no such transfer by Agent Bank to
Lender need be made if the amount of Collected Balances transferred
from such Master Account would be less than $100,000 (in the case
of Borrower's Master Account) or $25,000 (in the case of Opcom's
Master Account), in which event such Collected Balances shall
remain in such Master Account.
Any amounts received by Lender pursuant to this clause (d)
from the Borrower's or Opcom's Master Account shall be applied to
the outstanding Liabilities in the following order of priority:
first, to interest then due and payable on the Working Capital
Loans; second, to interest then due and payable on the Revolving
Loans (in the order of (a) Tranche Six, (b) Tranche Five, (c)
Tranche Four, (d) Tranche Three, (e) Tranche Two, and (f) Tranche
One); third, to principal of the Working Capital Loans then due and
payable; fourth, to principal of the Revolving Loans then due and
payable (in the order of (a) Tranche Six, (b) Tranche Five, (c)
Tranche Four, (d) Tranche Three, (e) Tranche Two and (f) Tranche
One); fifth, to any fees hereunder then due and payable, in such
order as Lender may elect; sixth, to the unpaid principal amount of
the Working Capital Loans not otherwise due and payable at such
time (provided, however, that prior to the termination of the
Working Capital Commitment, the unpaid principal amount of the
Working Capital Loans shall never be less than $1,000); and
seventh, to the unpaid principal amount of the Revolving Loans not
otherwise due and payable at such time in the order provided in
Section 4.1 (provided, however, that prior to the termination of
the Revolving Loan Commitment, the unpaid principal amount of the
Revolving Loans shall never be less than $1,000). Any additional
amount remaining following the foregoing applications shall be
transferred to the Master Account maintained by Borrower.
Lender may, in its sole discretion, elect not to apply any
such amounts (whether received from Borrower's or Opcom's Master
Account) to repayment of Fixed Rate Loans, and any amounts which
would, but for such election, have been applied to Fixed Rate Loans
may be invested by Lender in such Cash Equivalents as Borrower may
direct, with such Cash Equivalents and any proceeds thereof being
held by Lender as additional Collateral for the Liabilities.
If, at any time, the total Collected Balances in Borrower's
Master Account shall be less than $200,000, then, at Lender's
election, Borrower shall be deemed to have given the notice
required by clause (a) of Section 2.4 (and to have made all of the
representations set forth in a Borrowing Certificate) of a proposed
borrowing in the amount necessary to increase the total Collected
Balances in such account to at least $300,000 but not more than
$305,000, and Lender may make a Loan to Borrower in such amount,
the proceeds of which shall be deposited in the Borrower's
Household Loan Receipt Account for transfer to Borrower's Master
Account. Such Loan shall constitute first, a Revolving Loan to the
extent of availability of the Revolving Loan Commitment and second,
a Working Capital Loan to the extent of availability of the Working
Capital Commitment.
(e) Application Upon an Event of Default. If an Event of
Default shall have occurred and be continuing, and notwithstanding
the foregoing clause (d), at the request of Lender, Agent Bank
shall from time to time transfer all collected funds in the Master
Accounts to Lender for application to the outstanding Liabilities
in such order as Lender, in its sole discretion, shall elect.
Agent Bank shall be entitled to rely on a statement of Lender to
the effect that an Event of Default has occurred and is continuing.
SECTION 6.2 Reduction or Termination of the Revolving Loan
Commitment. (a) On each Revolving Loan Commitment Reduction Date,
the Revolving Loan Commitment in effect on such date shall be
reduced by an amount equal to the sum of (i) the Revolving Loan
Commitment Reduction Amount, plus (ii) an amount equal to the
difference, if any, by which (x) $7,500,000 exceeds (y) (a) the
average aggregate principal amount of all Working Capital Loans
outstanding for the sixty days prior to such Revolving Loan
Commitment Reduction Date plus (b) the Revolving Loan Commitment
Reduction Amount provided, however, that prior to the termination
of the Revolving Loan Commitment, the Revolving Loan Commitment
shall at no time be less than $1,000. For purposes of the
foregoing, "Revolving Loan Commitment Reduction Amount" shall mean
the amount indicated with respect to the relevant Revolving Loan
Commitment Reduction Date in Schedule I under the caption
"Scheduled Reduction in Revolving Loan Commitment". Borrower
agrees that it will not, in anticipation of any Revolving Loan
Commitment Reduction Date, take any actions primarily intended to
increase the amount specified in clause (y) above for such date.
These actions could include, for example and not by way of
limitation, prepaying or accelerating Borrower's trade payables,
other obligations or discretionary expenditures or making short
term investments (whether with Revolving Loan proceeds, Working
Capital Loan proceeds or other available cash).
(b) In addition to the mandatory reduction of the Revolving
Loan Commitment under clause (a) above, Borrower may voluntarily
from time to time on at least two Business Days' prior written
irrevocable notice to Lender permanently reduce the amount of the
Revolving Loan Commitment or terminate the Revolving Loan
Commitment prior to the Revolving Loan Termination Date; provided,
however, that no such notice may be given unless, prior to or
contemporaneously with the effective date of such reduction or
termination, the Working Capital Commitment shall have been
terminated pursuant to Section 6.3 or otherwise; and provided,
further, that prior to the termination of the Revolving Loan
Commitment, the Revolving Loan Commitment shall at no time be less
than $1,000. Each such voluntary reduction of the Revolving Loan
Commitment shall be in an aggregate amount of at least $1,000,000
and an integral multiple of $1,000,000. The Borrower may terminate
the Revolving Loan Commitment only upon payment in full of the
Revolving Notes.
(c) The Revolving Loan Commitment shall also be automatically
reduced by the amount of the excess, if any, of the amount of any
proceeds of insurance which Lender shall (at the direction of
Borrower pursuant to Section 14(a) of the Security Agreement, or
the Subsidiary Security Agreement, or Section 1.7 of any of the
Borrower Mortgages) apply to repayment of the Loans over the amount
of the associated reduction of the Working Capital Commitment made
pursuant to Section 6.3(b); provided, however, that prior to the
termination of the Revolving Loan Commitment, the Revolving Loan
Commitment shall at no time be less than $1,000.
(d) The amount of each reduction of the Revolving Loan
Commitment pursuant to either of the foregoing clauses (a)(ii), (b)
or (c) shall be subtracted (as an additional reduction of the
Revolving Loan Commitment) from the "Amount of Revolving Loan
Commitment" set forth in Schedule I opposite each remaining period
beginning with the period which includes the date of such
reduction; and shall be subtracted from the availability of the
Tranches set forth in Schedule II in the following order: Tranche
Six, then to Tranche Five, then to Tranche Four, then to Tranche
Three, then to Tranche Two, and then to Tranche One. Lender shall
deliver to Borrower a copy of Schedules I and II setting forth such
revisions, which revised Schedules I and II shall become a part of
this Agreement amending any and all previous versions of Schedules
I and II.
SECTION 6.3 Reduction or Termination of the Working Capital
Commitment. (a) Borrower may from time to time on at least two
Business Days' prior written irrevocable notice to Lender
permanently reduce the amount of the Working Capital Commitment,
and such reduction to be in an aggregate amount of at least
$1,000,000 and an integral multiple of $1,000,000; provided,
however, that prior to the termination of the Working Capital
Commitment, the Working Capital Commitment shall at no time be less
than $1,000. Borrower may at any time on like notice prior to the
Working Capital Loan Termination Date terminate the Working Capital
Commitment upon payment in full of the Working Capital Note.
(b) The Working Capital Commitment shall also be
automatically reduced by the amount of any proceeds of insurance
which Lender shall (at the direction of Borrower or Opcom pursuant
to Section 14(a) of the Borrower Security Agreement, or the
Subsidiary Security Agreement, respectively, or Section 1.7 of any
of the Borrower Mortgages) apply to repayment of the Loans;
provided, however, that prior to the termination of the Working
Capital Commitment, the Working Capital Commitment shall at no time
be less than $1,000.
SECTION 6.4 Mandatory Prepayments. (a) Borrower agrees
that (i) concurrently with each reduction (including any
termination) of the Revolving Loan Commitment (whether pursuant to
Section 6.2 or otherwise), it shall make a mandatory prepayment of
the amount, if any, by which the unpaid principal amount of the
Revolving Loans (after giving effect to any repayments thereof
pursuant to Section 6.1) exceeds the then reduced amount of the
Revolving Loan Commitment (and any such payment shall be
accompanied by accrued interest on such principal amount and any
payment required under Section 6.6), and (ii) concurrently with
each reduction (including any termination) of the Working Capital
Commitment (whether pursuant to Section 6.3 or otherwise), it shall
make a mandatory prepayment of the amount, if any, by which the
unpaid principal amount of the Working Capital Loans (after giving
effect to any repayments thereof pursuant to Section 6.1) exceeds
the then reduced amount of the Working Capital Commitment (and any
such payment shall be accompanied by accrued interest on such
principal amount). Repayments made because of a reduction of the
Revolving Loan Commitment pursuant to (i) Section 6.2(a)(i) shall
be applied to the Tranches which are scheduled to be reduced on
such Revolving Loan Commitment Reduction Date as set forth on
Schedule II, and (ii) Section 6.2(a)(ii)(c), or (d) shall be
applied to Tranche Six, then to Tranche Five, then to Tranche Four,
then to Tranche Three, then to Tranche Two, and then to Tranche
One.
SECTION 6.5 Voluntary Prepayments. Borrower may from time
to time prepay the Loans in whole or in part; provided that:
(i) any prepayment of Revolving Loans may be made only if at the
time of such prepayment the aggregate outstanding principal amount
of all Working Capital Loans is $1,000 or zero; and
(ii) except for prepayments pursuant to Section 6.1(d), Borrower
shall give Lender not less than ten (10) Business Days' prior
notice of any prepayment, specifying the Loans to be prepaid, and
the date and amount of such prepayment; and
(iii) except for prepayments pursuant to Section 6.1(d), each
partial prepayment of a Loan shall be in a principal amount of at
least $50,000 and an integral multiple of $50,000; and
(iv) prior to the termination of the Working Capital Loan
Commitment, Borrower shall be entitled to prepay only so much of
the Working Capital Loans as shall leave at all times outstanding
a minimum principal amount of $1,000 in Working Capital Loans; and
(v) prior to the termination of the Revolving Loan Commitment, the
Borrower shall be entitled to prepay only so much of the Revolving
Loans as shall leave at all times outstanding a minimum principal
amount of $1,000 in Revolving Loans; and
(vi) all prepayments of Revolving Loans shall be applied first to
Tranche Six, then to Tranche Five, then to Tranche Four, then to
Tranche Three, then to Tranche Two, and last to Tranche One; and
(vii) any such prepayment shall be accompanied by accrued interest
on the principal amount prepaid and any amount payable pursuant to
Section 6.6 with respect to such principal amount being prepaid.
SECTION 6.6 Prepayment of Loans. In the event that any
Floating Rate Loan is to be repaid prior to the Revolving Loan
Termination Date or the Working Capital Loan Termination Date, as
applicable, such repayment shall be without any penalty or premium.
In the event that any Fixed Rate Loan is to be repaid on a date
prior to the scheduled maturity date of such Loan, Lender shall
calculate, as of the date of repayment, the result obtained by
discounting to present value at the Redeployment Rate applicable to
the principal amount to be so repaid the excess, if any, of (A) the
interest which would be required to be paid on that amount pursuant
to Section 4.1 for the Remaining Term but for such repayment, over
(B) the interest which would accrue on such amount at the
Redeployment Rate applicable for such amount for the Remaining
Term. Borrower agrees to pay to Lender the amount of the result of
such calculation with respect to any Fixed Rate Loan concurrently
with the repayment of such Fixed Rate Loan. Solely for the purpose
of calculating the payment due under this Section 6.6, it shall be
assumed that principal payments with respect to Fixed Rate Loans of
any Tranche were applied to the Loans of such Tranche in the order
of the respective Redeployment Calculation Dates of such Loans,
with Loans having the earliest Redeployment Calculation Dates being
deemed to have been paid first.
SECTION 7 MAKING OF PAYMENTS; SETOFF.
SECTION 7.1 Making of Payments. All payments of principal
of, or interest on, the Notes and of all fees and other Liabilities
shall be made to Lender in immediately available Dollars. All such
payments shall be made to Lender's Account No. 019-0045799 at
Household Bank (or such other account as Lender may from time to
time specify), not later than 11:30 a.m., Chicago time, on the date
due; and funds received after that hour shall be deemed to have
been received by Lender on the next following Business Day.
Anything in this Agreement to the contrary notwithstanding, under
no circumstances shall receipt by Agent Bank of funds of Borrower
constitute repayment of Loans.
SECTION 7.2 Due Date Extension. If any payment of
principal, interest or fees with respect to any of the Loans falls
due on a Saturday, Sunday or other day which is not a Business Day,
then such due date shall be extended to the next following Business
Day, and additional interest or fees, as the case may be, shall
accrue and be payable for the period of such extension.
SECTION 7.3 Setoff. Borrower agrees that Lender, Agent
Bank (as agent of Lender) and any holder of a Note shall have all
rights of set-off provided by applicable law, and in addition
thereto, Borrower agrees that at any time (a) any payment or amount
owing under or in connection with this Agreement or the Related
Documents is then due to Lender or any such holder of a Note or (b)
any Event of Default exists, Lender (or Agent Bank as Lender's
agent) and any such holder of a Note may apply to the payment of
such payment or other amount any and all balances, credits,
deposits, accounts or moneys of Borrower then or thereafter with
Lender (or Agent Bank as Lender's agent) or such holder of a Note.
SECTION 7.4 Other Accounts. As security for the Notes and
all other Liabilities, Borrower agrees that Borrower and Opcom will
maintain their sole operating accounts (i.e., the Operating
Accounts) with Agent Bank, and that it will not, and will not
permit any of it Subsidiaries to, maintain any bank or similar
accounts with any other financial institution other than the
Household Loan Receipt Account; provided, however, that so long as
no Event of Default shall have occurred and be continuing, Borrower
and its Subsidiaries may maintain petty cash accounts, expense
accounts, group medical accounts for Borrower and payroll accounts
at the financial institutions listed on Schedule III hereto;
provided that in all cases (w) the aggregate amount of funds on
deposit in each such petty cash account shall not exceed $5,000 and
in each such payroll account shall not at any time exceed the sum
of all accrued payroll and payroll taxes then payable by Borrower
or its Subsidiaries on account of payroll obligations payable from
such account, (x) Borrower shall have irrevocably instructed the
relevant financial institution, at the request of Lender, to
provide Lender with information concerning such accounts, (y) such
financial institution shall have acknowledged such instructions in
writing for the benefit of Lender, and (z) Borrower shall, at
Lender's request, cause each such financial institution to provide
Lender with daily reports of the balance in each such account.
SECTION 8 INCREASED COSTS AND OTHER SPECIAL PROVISIONS.
SECTION 8.1 Increased Costs. If, after the date hereof,
the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or
administration thereof by any governmental authority or agency
charged with the interpretation or administration thereof, or
compliance by Lender with any request or directive (whether or not
having the force of law) of any such authority or agency, shall
subject Lender to any tax, duty or other charge with respect to, or
shall otherwise increase the effective cost of, the Loans or
Lender's obligation to make, issue or maintain the Loans, or shall
change the basis of taxation of payments to Lender of the principal
of or interest on the Loans or any other amounts due under this
Agreement in respect of the Loans or Lender's obligation to make
the Loans (except for changes in the rate of tax on the overall net
income of Lender), or shall impose on Lender any other condition
affecting the Loans or the Lender's obligation to make the Loans
and the result of any of the foregoing is to increase the cost to
Lender of making or maintaining the Loans, or to reduce the amount
of any rate of return or any sum received or receivable by Lender
under this Agreement or under the Notes with respect thereto, then
upon written notice of such occurrence by Lender (which notice
shall contain a statement setting forth a description of such
occurrence), Borrower shall pay Lender such additional amount or
amounts as will compensate Lender for such increased cost or such
reduction.
SECTION 8.2 Funding Losses. Borrower hereby agrees that
upon demand by Lender (which demand shall be accompanied by a
statement setting forth the basis for the calculations of the
amount being claimed) Borrower will indemnify Lender against any
net loss or expense which Lender may sustain or incur (including,
without limitation, any net loss or expense incurred by reason of
the liquidation or reemployment of funds acquired by Lender to fund
or maintain Loans), as reasonably determined by Lender, as a result
of any failure of Borrower to borrow any Loan on a date specified
therefor in a notice (whether written or oral) of borrowing
pursuant to this Agreement. For this purpose, all notices to
Lender pursuant to this Agreement shall be deemed to be
irrevocable.
SECTION 8.3 Discretion of Lender as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary,
Lender shall be entitled to obtain the funds used by it to fund and
maintain all or any part of the Loans in any manner it sees fit.
SECTION 8.4 Conclusiveness of Statements; Survival of
Provisions. In making the determinations contemplated by this
Section 8, Lender may make such estimates, assumptions, allocations
and the like that Lender in good faith determines to be
appropriate; and, subject to the foregoing clause, determinations
and statements of Lender pursuant to this Section 8 shall be
conclusive absent demonstrable error. The provisions of this
Section 8 shall survive termination of this Agreement.
SECTION 9 COLLATERAL SECURITY; WARRANT.
SECTION 9.1 Borrower. Except with respect to Section 9.1.3
below, concurrently with or prior to the making of the initial Loan
under the Original Credit Agreement, Borrower executed and
delivered to Lender the following:
9.1.1 Borrower's Personal Property. A security agreement
in the form of Exhibit F covering all personal property of Borrower
(herein, as the same may be amended, modified or supplemented from
time to time with Lender's prior written consent, called the
"Borrower Security Agreement"), and pledge agreements in the forms
of Exhibit G-1 (covering stock issued by U.S. companies) and
Exhibit G-2 (covering stock issued by Mexican companies), together
covering the stock of all direct Subsidiaries of Borrower (herein
collectively, as the same or either thereof may be amended,
modified or supplemented from time to time with Lender's prior
written consent, called the "Borrower Pledge Agreement").
9.1.2 Borrower's Real Estate. Fee and leasehold
mortgages, deeds of trust, deeds to secure debt, assignments of
leases and rents, security agreements and fixture filings, covering
all real estate owned or leased by Borrower, and substantially in
the form of Exhibit H (herein, as the same may be amended, modified
or supplemented from time to time with Lender's prior written
consent, called the "Borrower Mortgages" and individually called a
"Borrower Mortgage").
9.1.3 Life Insurance. Within 90 days of the Amended and
Restated Closing Date, Borrower shall execute and deliver, an
assignment, in the form of Exhibit E (herein, as the same may be
amended, modified or supplemented from time to time with Lender's
prior written consent, called the "Insurance Assignment"), of the
"key man" life insurance policies referred to in Section 11A.4.
SECTION 9.2 Subsidiaries. Concurrently with or prior to
the making of the initial Loan under the Original Credit Agreement,
the Subsidiaries of Borrower, listed below shall have executed and
delivered to Lender the following:
9.2.1 Personal Property. In the case of Opcom, a security
agreement in the form of Exhibit I covering all personal property
of Opcom (herein, as the same may be amended, modified or
supplemented from time to time with Lender's prior written consent,
called the "Subsidiary Security Agreement").
9.2.2 Real Estate. In the case of each of the Mexican
Subsidiaries, (a) Constitutions de Hipoteca Unilateral covering all
real estate beneficially owned by such Subsidiary, and
substantially in the forms of Exhibits J-1 and J-2, and (b)
assignments in form and substance satisfactory to Lender, covering
such Subsidiary's beneficial interests in the trusts holding legal
title to the real estate covered by such Constitutions de Hipoteca
Unilateral (the documents described in the foregoing clauses (a)
and (b) may be herein, as the same or any thereof may be amended,
modified or supplemented from time to time with Lender's prior
written consent, collectively called the "Subsidiary Mortgages" and
individually called a "Subsidiary Mortgage").
SECTION 9.3 Warrant. On or prior to the Amended and
Restated Closing Date, Borrower shall execute and deliver to the
Lender an Amended and Restated Warrant in the form of Exhibit K
(herein, as the same may be amended, modified or supplemented from
time to time with Lender's prior written consent, called the
"Warrant Agreement").
SECTION 9.4 Change of Location or Name. So long as any of
the Liabilities shall remain outstanding or Lender shall continue
to have any Commitment, neither Borrower nor any of its
Subsidiaries will change (a) the location of its principal place of
business, chief executive office, major executive office, chief
place of business or its records concerning its business and
financial affairs, or (b) its name or the name under or by which it
conducts its business, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any
and all action required or desirable to maintain and preserve the
first perfected Lien and security interest in favor of Lender on
all property thereof free and clear of any Lien whatsoever except
for Permitted Liens; provided, however, that notwithstanding the
foregoing, neither Borrower nor any of its Subsidiaries shall
change the location of its principal place of business, chief
executive office, major executive office, chief place of business
or its records concerning its business and financial affairs to (y)
Louisiana or (z) any place outside the contiguous continental
United States of America (except that the chief executive office of
each of the Mexican Subsidiaries may continue to be located in
Juarez, Chihuahua, Mexico).
SECTION 9.5 Deliveries; Further Assurances. Borrower
agrees that it will, at its sole expense, or will cause its
Subsidiaries, at their sole expense, to (i) without any request by
Lender, immediately deliver or cause to be delivered to Lender, in
due form for transfer (i.e., endorsed in blank or accompanied by
duly executed undated blank stock or bond powers), all securities,
chattel paper, instruments and documents, if any, at any time
representing all or any of the Collateral, (ii) upon request of
Lender furnish or cause to be furnished to Lender such surveys,
mortgagee title commitments or policies, appraisals, opinions of
counsel and other documents as Lender may reasonably specify (it
being agreed that, without limiting the foregoing, Lender may
require all items specified in Section 12.1.9 of the Original
Credit Agreement), (iii) without request by Lender, cause Lender's
Lien hereunder and under the Collateral Documents to be at all
times duly noted on any certificate of title issuable with respect
to any of the Collateral and forthwith deliver or cause to be
delivered to the Lender each such certificate of title, and (iv)
execute and deliver, or cause to be executed and delivered, to
Lender in due form for filing or recording (and pay the cost of
filing or recording the same in all public offices deemed necessary
or advisable by Lender) such assignments (including, without
limitation, assignments of life insurance), security agreements,
mortgages, deeds of trust, pledge agreements, consents, waivers,
financing statements, stock or bond powers, and other documents,
and do such other acts and things, all as may from time to time be
necessary or desirable to establish and maintain to the
satisfaction of Lender a valid perfected Lien on and security
interest in all assets of Borrower and its Subsidiaries now or
hereafter existing or acquired (free of all other Liens whatsoever
other than Permitted Liens) to secure payment and performance of
the Liabilities.
SECTION 9.6 Subsequently Acquired Property. As further
security for the payment of the Liabilities, so long as any of the
Liabilities shall remain outstanding or Lender shall continue to
have any Commitment, Borrower shall, and shall cause each of the
Subsidiaries (other than Optek International) to:
(a) acquire and maintain its property in a manner which will
enable it to allow such property to become subject to the Liens of
the Collateral Documents;
(b) obtain and maintain the consent or approval of any Person
whose consent or approval is required to the granting of a Lien on
any such property to or for the benefit of Lender;
(c) execute and deliver from time to time within ten (10)
days of its purchase or acquisition of any real property or of
property subject to a titling statute or of any other personal
property, asset or other right with a fair market value in excess
of $50,000, any and all amendments and supplements to the
Collateral Documents as may be necessary to grant and perfect a
first lien on and security interest in all such property in favor
of Lender, in form and substance satisfactory to Lender, and in
such number of counterparts as Lender may require, by which it
shall pledge, mortgage and grant a perfected Lien on such property,
asset or right to Lender;
(d) execute and deliver to Lender, in form and substance
satisfactory to Lender and in such number of counterparts as Lender
may require, (i) an assignment of its rights under any contract to
construct any property with a fair market value in excess of
$50,000 promptly upon entering into such contract, and (ii) such
other agreements and instruments (including, with limitation,
acknowledgements by other contract parties) as may be necessary to
grant a Lien on and security interest in its rights and interests
under such contract and each such property, whether under
construction or otherwise; and
(e) execute and deliver to Lender, in form and substance
satisfactory to Lender and in such number of counterparts as Lender
may require, assignments of its rights (as sublessee or otherwise)
under each lease to which it is a party (other than any lease which
explicitly prohibits such an assignment), promptly upon entering
into such lease.
SECTION 10 REPRESENTATIONS AND WARRANTIES.
To induce Lender to enter into this Agreement and to make
Loans hereunder, Borrower represents and warrants to Lender that:
SECTION 10.1 Due Organization, Authorization, etc. Borrower
and each of its Subsidiaries is a corporation duly existing and in
good standing under the laws of its respective state of
incorporation and is duly qualified and in good standing in each
jurisdiction where, because of the nature of its activities or
properties, such qualification is required. The execution,
delivery and performance by Borrower and its Subsidiaries of this
Agreement and the Related Documents to which they respectively are
parties, and the consummation of the Related Transactions, are
within their respective corporate powers, have been duly authorized
by all necessary corporate action (including, without limitation,
shareholder approval, if any is required), have received all
necessary governmental and other consents and approvals (if any
shall be required), and do not and will not contravene or conflict
with, or create a Lien or right of termination or acceleration
under, any Requirement of Law or Contractual Obligation binding
upon any of them. This Agreement and each of the Related Documents
to which Borrower, or any Subsidiary of Borrower is a party are (or
when executed and delivered will be) the legal, valid, and binding
obligations of such Person enforceable against such Person in
accordance with their respective terms, except that (a) the
enforceability thereof may be subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (b) the remedy of specific
performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought, and (c) the
enforceability of provisions in the Related Documents relating to
indemnity and contribution may be limited by applicable state or
Federal securities laws or principles of public policy underlying
such laws.
SECTION 10.2 Certain Agreements. Borrower has furnished to
Lender true, correct and complete copies of each of the Related
Documents (including all schedules and written disclosures in
connection therewith). At the time of the initial Loan under the
Original Credit Agreement, all warranties of Borrower, its
Subsidiaries, and (to the best knowledge of Borrower) each other
party thereto set forth in the Related Documents (or with respect
to the Purchase Documents, those set forth in Sections 3.2, 3.3 and
3.4 of the Purchase Agreement) were true and correct in all
material respects, without any waiver or modification thereof and
no default of Borrower, or any of its Subsidiaries, or, to the best
knowledge of Borrower, any other party, existed under any Related
Document.
SECTION 10.3 Financial Information; Financial Condition.
Other than the historical financial information concerning the
Division, which has been prepared as described in the Purchase
Agreement, all balance sheets, all statements of operations, of
shareholders' equity and of changes in financial position, and
other financial data (other than projections) which have been or
shall hereafter be furnished to Lender for the purposes of or in
connection with this Agreement, the Related Documents or the
Related Transactions (including the financial information referred
to below, except for the financial statements described in clause
(d) below and the projections referred to in clauses (e) and (f)
below) have been and will be prepared in accordance with GAAP
consistently applied throughout the periods involved. All such
information (other than projections) whether or not prepared in
accordance with GAAP, does and will present fairly the financial
condition of the entities involved as of the dates thereof and the
results of their operations for the periods covered thereby. The
projections described in clauses (e) and (f) below are based upon
historical financial information and management's reasonable
assumptions accepted by Lender; all other projections which shall
hereafter be furnished to Lender for purposes of or in connection
with this Agreement, the Related Documents or the Related
Transactions will represent management's best estimates of future
performance, based upon historical financial information and
reasonable assumptions of management. Such financial data include,
without limitation, the following financial statements and reports
which have been furnished to Lender prior to the Amended and
Restated Closing Date:
(a) the audited consolidated balance sheet of Borrower and
its Subsidiaries as of October 30, 1987 and the related statements
of earnings, stockholders' equity and changes in financial position
for the Fiscal Year ending on such date;
(b) unaudited balance sheets and statements of income,
shareholders' equity and changes in financial position, each
certified by the chief financial officer of Borrower, for Borrower
and its Subsidiaries for the two Fiscal Quarters ending April 29,
1988 and for the Reporting Period ending May 27, 1988;
(c) pro forma consolidated balance sheet of Borrower and its
Subsidiaries as of the Original Closing Date after giving effect to
all Related Transactions occurring in connection with the Original
Credit Agreement;
(d) unaudited income statements and balance sheets for the
Division for the fiscal year ending December 31, 1987, three months
ending March 31, 1988 and month ending April 30, 1988;
(e) projections, dated June 29, 1988, for Borrower and its
Subsidiaries for the fiscal years 1988 through 1995, based on
Borrower's, the Mexican Subsidiaries' and the Division's historical
financial statements and records, after giving effect to all
Related Transactions occurring in connection with the Original
Credit Agreement;
(f) pro forma projected income statements, balance sheets,
and funds flow statements of Borrower, giving effect to the
assumption of the Opcom Revolving Loan and the Opcom Working
Capital Loans, and covering the five fiscal years subsequent to the
Amended and Restated Closing Date on an annual basis (the first
full fiscal year subsequent to the Amended and Restated Closing
Date on a monthly basis, and the second full fiscal year subsequent
to the Amended and Restated Closing Date on either a monthly or
quarterly basis); and
(g) Borrower's 1993 Fiscal Year audited annual report (final
draft), and unaudited quarterly and monthly financials, including
a balance sheet, income statement and statement of cash flow (such
financials must pertain to the monthly periods ending not more than
41 days prior to the Amended and Restated Closing Date and the
quarterly periods ending not more than 105 days prior to the
Amended and Restated Closing Date).
There has been, and on the date of the Amended and Restated Closing
Date there will have been, no material adverse change since October
29, 1993 in the financial condition, operations, assets, business
or prospects of such respective entity and its Subsidiaries from
that reflected in the financial information referred to above.
On the Original Closing Date and after giving effect to the
Related Transactions occurring in connection with the Original
Credit Agreement, (i) the assets of Borrower, at a fair valuation,
exceeded its respective liabilities, including contingent
liabilities, (ii) the remaining capital of Borrower was not
unreasonably small to conduct its business and (iii) Borrower had
not incurred debts, and did not intend to incur debts, beyond its
ability to pay such debts as they mature. For purposes of this
Section 10.3, "debt" means any liability on a claim, and "claim"
means a (x) right to payment, whether or not such right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or
unsecured.
SECTION 10.4 Litigation and Contingent Obligations. Except
as set forth (including estimates of the dollar amounts involved)
in Schedule IV hereto and except for claims as to which the insurer
has admitted coverage in writing and which are fully covered by
insurance, no claims, litigation (including, without limitation,
derivative actions), arbitration, governmental investigation or
proceeding or inquiry is pending or, to the best of Borrower's
knowledge, threatened against Borrower, or any Subsidiary of
Borrower (i) which would, if adversely determined, materially and
adversely affect the financial condition, operations, assets,
business or prospects of Borrower, or any of its Subsidiaries or
the ability of Borrower, or any Subsidiary of Borrower to perform
its respective obligations in connection with this Agreement and
the Related Documents, or (ii) which relates to any of the Related
Transactions, and there is (except as disclosed in the letter
referred to in Section 10.14) no basis known to Borrower for any of
the foregoing. Other than any liability incident to such claims,
litigation or proceedings, neither Borrower, nor any of its
Subsidiaries has any material Contingent Obligations not provided
for or referred to in the financial statements delivered under
Section 10.3 or in Schedule XI hereto.
SECTION 10.5 Liens. At all times on and after the making of
the initial Loan under the Original Credit Agreement, none of the
assets of Borrower or any of its Subsidiaries will be subject to
any Lien, except for Permitted Liens which (except for Permitted
Liens described in clause (iii) of Section 11B.20 and securing
Indebtedness listed in Part 1 of Schedule XI) are junior to the
Lien of the Collateral Documents. Except as described in Schedule
V and except for Permitted Liens, Lender will obtain, as security
for the Liabilities, (i) a legally valid and binding first mortgage
Liens on all real property and interests in real property described
in the Borrower Mortgages and the Subsidiary Mortgages as being
mortgaged thereby, and (ii) a first perfected Lien on all other
property described in the Collateral Documents as being pledged,
assigned or granted thereby. The legal descriptions attached to
the Borrower Mortgages, and the Subsidiary Mortgages together with
the descriptions of other property described in the Collateral
Documents, correctly describe the property used in the business or
operations of Borrower and its Subsidiaries in a manner sufficient
to create an enforceable Lien on or security interest in such
property.
SECTION 10.6 Absence of Default. Neither Borrower nor any of
its Subsidiaries is in material default under any contract or
contracts (a) to which it is a party or by which it is bound, and
(b) (i) pursuant to which Borrower and/or such Subsidiary provides
goods or services to a customer which contributed more than
$500,000 of gross revenue during the prior fiscal year of Borrower
or which is reasonably expected to contribute more than $500,000 of
gross revenue during the current fiscal year of Borrower, or (ii)
pursuant to which Borrower and/or such Subsidiary incurs Lease
Obligations in excess of $50,000 during any fiscal year of
Borrower, or (iii) which cannot be replaced without material
expense, delay or interruption of business (including, without
limitation, any Material Licensing Agreement).
SECTION 10.7 Plans and Welfare Plans. During the twelve-
consecutive-month period prior to the Original Closing Date and of
each Loan requested hereunder, no steps have been taken to
terminate any Plan, and no contribution failure has occurred with
respect to any Plan sufficient to give rise to a lien under section
302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Plan which could result in the
incurrence by Borrower of any material liability, fine or penalty.
Except as described in Schedule XII, neither Borrower nor any of
its Subsidiaries has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability
for continuation coverage described in Part 6 of title I or ERISA.
SECTION 10.8 Investment Company Act. Neither Borrower nor
any of its Subsidiaries is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 10.9 Regulations G, U and X. Neither Borrower nor
any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning
of Regulation G, U or X of the Board of Governors of the Federal
Reserve System). None of Borrower, any Affiliate of Borrower or
any Person acting on its behalf has taken or will take action to
cause the execution, delivery or performance of this Agreement or
the Notes, the making or existence of the Loans or the use of
proceeds of the Loans to violate Regulation G, U or X of the Board
of Governors of the Federal Reserve System.
SECTION 10.10 Proceeds. The proceeds of the initial
Revolving Loans and Working Capital Loans made on the Original
Closing Date were used (i) for the payment in full of the
obligations of Borrower pursuant to the Purchase, (ii) for the
costs, expenses, fees and taxes incurred by Borrower in connection
therewith, including, without limitation, costs, expenses, fees and
taxes incurred pursuant to Section 14.4, and (iii) for working
capital purposes. The proceeds of the Revolving Loans and Working
Capital Loans after the Amended and Restated Closing Date will be
used for working capital purposes, to pay for capital improvements,
and for other purposes permitted hereunder.
SECTION 10.11 Confirmation of Warranties in Purchase
Agreement. All representations and warranties set forth in
Sections 3.2, 3.3 and 3.4 of the Purchase Agreement were true and
correct in all material respects on the Original Closing Date.
SECTION 10.12 Insurance. Schedule V hereto sets forth a true
and correct summary of all insurance carried by Borrower and its
Subsidiaries. In the opinion of the officers of Borrower, Borrower
and its Subsidiaries are adequately insured for their benefit under
policies issued by insurers of recognized responsibility. No
notice of any pending or threatened cancellation or premium
increase has been received by Borrower or any of its Subsidiaries
with respect to any of such insurance policies. Borrower and its
Subsidiaries are in substantial compliance with all conditions
contained in such insurance policies.
SECTION 10.13 Material Disruptions. Neither the business nor
the properties of Borrower or any of its Subsidiaries is affected,
or anticipated to be affected, by any existing event of Force
Majeure or other existing casualty which would have a materially
adverse effect on the financial condition, business, assets,
operations or prospects of Borrower or any of its Subsidiaries or
the ability of Borrower of any of its Subsidiaries to perform its
respective obligations hereunder or under any Related Document.
SECTION 10.14 Patents, Trademarks, etc. Each of Borrower and
its Subsidiaries owns and possesses, or licenses under valid and
enforceable license agreements, all such patents, patent rights,
trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights and copyrights as are necessary
for the conduct of its business as now conducted or presently
proposed to be conducted without any infringement upon rights of
others, and, except as set forth in Part 1 of Schedule VI, there is
no individual trademark, patent or patent license the loss of which
would have a materially adverse effect on the financial condition,
business, assets, operations or prospects of Borrower or any of its
Subsidiaries or the ability of Borrower or any of its Subsidiaries
to perform its respective obligations under this Agreement or any
Related Document (any such licensing agreement, whether or not set
forth on Schedule VI, being herein called a "Material Licensing
Agreement"). Parts 1 and 2 of Schedule VI together contain a
complete list of all license agreements relating to patent rights,
trademark rights, trade name rights, service mark rights and
copyrights held by Borrower or any of its Subsidiaries under
license agreements. All such license agreements have been validly
assigned to Lender as security for the Liabilities, and pursuant to
the Collateral Documents, Lender has acquired a valid perfected
first security interest therein.
SECTION 10.15 Ownership of Properties; Property Schedule.
Borrower and its Subsidiaries will have good and marketable title
to all of its respective properties and assets, real and personal,
of any nature whatsoever, subject only to Permitted Liens and
Permitted Exceptions. Schedule VII contains descriptions of all
real and personal property (i) in which Borrower or any of its
Subsidiaries has an interest as of the date hereof, (ii) with
respect to which the Collateral Documents will not create a valid
and perfected first lien and security interest, and (iii) which
cannot be replaced without material expense, delay or interruption
of business.
SECTION 10.16 Business Locations; Trade Names. Schedule VIII
lists each of the locations where Borrower or any of its
Subsidiaries maintains an office, a place of business or any
records; and Schedule VIII also lists each name under or by which
Borrower or any of its Subsidiaries conducts its business.
SECTION 10.17 Accuracy of Information. All factual
information (other than projections) heretofore or
contemporaneously herewith furnished by or on behalf of Borrower or
any of its Subsidiaries to Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and
all other such factual information (other than projections)
hereafter furnished by or on behalf of Borrower or any of its
Subsidiaries to Lender will be, true and accurate in every material
respect on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact
necessary to make such information not misleading.
SECTION 10.18 Subsidiaries. Borrower does not have any
Subsidiaries other than as listed in Schedule XV.
SECTION 10.19 Hazardous Materials. Except as disclosed in
the documents delivered pursuant to Section 12.1.9(h) of the
Original Credit Agreement or listed in Schedule IX hereto, neither
Borrower nor any other Person has ever caused or permitted any
Hazardous Material other than asbestos, and neither Borrower nor
(to the knowledge of Borrower after due inquiry) any other Person
has ever caused or permitted any asbestos, to be placed, held,
located or disposed of on, under or at any real property legally or
beneficially owned (or any interest or estate in real property
which is owned) or operated by Borrower or any of its Subsidiaries
(including, without limitation, any property owned by a land trust
the beneficial interest in which is owned in whole or in part by
Borrower or any of its respective Subsidiaries), and no such real
property has ever been used (by Borrower or by any other Person) as
(i) a dump site or permanent storage site for any Hazardous
Material or (ii) (except for temporary storage of Hazardous
Materials in the ordinary course of business and in compliance with
all applicable Federal, state and local laws, regulations and
orders and with sound industry practice) a temporary storage site
for any Hazardous Material.
SECTION 10.20 Agent's Fees. No agent, broker, investment
banker, Person, or firm acting on behalf of Borrower or any
Affiliate of Borrower, or under the authority of any such Person,
is or will be entitled to any broker's or finder's fee or any other
commission or similar fee, directly or indirectly, from any of the
parties hereto in connection with any of the transactions
contemplated herein.
SECTION 10.21 Taxes. Borrower and each of its Subsidiaries
has filed all tax returns that are required to be filed by it, and
has paid or provided adequate reserves for the payment of all
taxes, including, without limitation, all payroll taxes and Federal
and state withholding taxes, and all assessments payable by it that
have become due, other than those that are not yet delinquent or
that are disclosed on Schedule IV and are being contested in good
faith by appropriate proceedings and with respect to which reserves
have been established, and are being maintained, in accordance with
GAAP. None of the Acquired Assets is subject to any lien for tax
liabilities of Seller, and the Assumed Liabilities include no tax
liabilities of Seller. There is no ongoing audit or, to Borrower's
knowledge, other governmental investigation of the tax liability of
Borrower or any of its Subsidiaries and there is no unresolved
claim by a taxing authority concerning Borrower's or any of such
Subsidiary's tax liability, for any period for which returns have
been filed or were due. The liability stated for taxes as of
October 30, 1987 in the financial statements described in Section
10.3(a) is sufficient in all material respects for all taxes as of
such date. As used in this Section 10.21, the term "taxes"
includes all taxes of any nature whatsoever and however
denominated, including, without limitation, exercise, import,
governmental fees, duties and all other charges, as well as
additions to tax, penalties and interests thereon, imposed by any
government or instrumentality, whether Federal, state, local,
foreign or other.
SECTION 10.22 Securities Laws. Neither Borrower, nor any
Affiliate of Borrower, nor anyone acting on behalf of any such
Person, has directly or indirectly offered any interest in the
Notes or any other Liability for sale to, or solicited any offer to
acquire any such interest from, or has sold any such interest to
any Person that would subject the issuance or sale of the Notes or
any other Liability to registration under the Securities Act of
1933, as amended.
SECTION 10.23 Governmental Authorizations. Borrower and its
Subsidiaries have all licenses, franchises, permits and other
governmental authorizations necessary for all businesses presently
carried on by them (including owning and leasing the real and
personal property owned and leased by them), except where failure
to obtain such licenses, franchises, permits and other governmental
authorizations would not (i) subject Borrower or any such
Subsidiary or any of its officers to criminal liability or (ii)
have a material adverse effect on the business, condition
(financial or otherwise) or prospects of Borrower or such
Subsidiary or on the Collateral.
SECTION 10.24 Compliance with Laws. Without limiting the
representations and warranties contained in Section 10.19, Borrower
and each of its Subsidiaries: (i) is not in violation of any law,
ordinance, rule, regulation, order, policy, guideline or other
requirement of any governmental authority, which violation would
subject Borrower or any such Subsidiary or any of its officers to
criminal liability or have a material adverse effect on the
business, condition (financial or otherwise) or prospects of
Borrower or such Subsidiary or on the Collateral, and no such
violation has been alleged, (ii) has filed in a timely manner all
reports, documents and other materials required to be filed by it
with any governmental bureau, agency or instrumentality, and the
information contained in each of such filings is true, correct and
complete in all respects, except where failure to make such filings
would not have a material adverse effect on the business, condition
(financial or otherwise) or prospects of Borrower or such
Subsidiary or on the Collateral, and (iii) has retained all records
and documents required to be retained by it pursuant to any law,
ordinance, rule, regulation, order, policy, guideline or other
requirement of any governmental authority.
SECTION 10.25 Employees and Labor. There is no unfair labor
practice complaint against Borrower or any of its Subsidiaries
pending before the National Labor Relations Board or any state or
local agency nor is there a labor strike or other labor dispute,
pending or threatened, affecting any of the foregoing; there is no
existing representation question respecting the employees of
Borrower or any of its Subsidiaries, nor are there organizational
attempts affecting any of the employees of any of the foregoing;
there is no grievance pending or threatened affecting Borrower or
any of its Subsidiaries; and no labor disputes or work stoppages
involving Borrower or any of its Subsidiaries are pending or
threatened. No customer or supplier of Borrower or any of its
Subsidiaries is involved in, or threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding
which may have a material adverse effect on Borrower's or any of
its Subsidiaries' businesses, assets, financial condition,
operations or prospects.
SECTION 10.26 Purchase. At the time of the making of the
initial Loan under the Original Credit Agreement: (a) the Purchase
had been consummated in accordance with the terms of the Purchase
Agreement; (b) all consents and approvals of, and filings and
registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities required in
order to make or consummate the Purchase were obtained, given,
filed or taken and shall be in full force and effect and all
applicable waiting periods will have elapsed; and (c) all actions
by Borrower pursuant to or in furtherance of the Purchase were
taken in compliance with all applicable laws.
SECTION 10.27 Assignment of Claims Act. The aggregate amount
of all Accounts of the Borrower and its Subsidiaries which are
subject to the Federal Assignment of Claims Act, 31 U.S.C.
Section 3727, does not and will not at any one time exceed $10,000.
SECTION 10.28 Bulk Sales Notices. Borrower has complied, or
caused Seller to comply, with all bulk sales laws applicable to the
Purchase.
SECTION 11 COVENANTS.
Until the expiration or termination of the Commitments and
thereafter until the Notes and all other Liabilities are paid in
full, Borrower agrees that, unless at any time Lender shall
otherwise expressly consent in writing:
SECTION 11A AFFIRMATIVE COVENANTS.
SECTION 11A.1 Reports, Certificates and Other Information.
It will furnish or cause to be furnished to Lender:
11A.1.1 Audit Report. As soon as available, but in any
event within 90 days after the end of each Fiscal Year of Borrower:
(i) copies of the consolidated and consolidating balance sheet of
Borrower and each of its Subsidiaries as at the end of such Fiscal
Year and the related statements of earnings, stockholders' equity
and cash flows for such Fiscal Year, in each case setting forth the
figures for the previous year, prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein, certified, without a going concern or like
qualification or qualifications arising out of the scope of the
audit, by KPMG Peat Marwick (or such other independent certified
public accountants of recognized standing as shall be selected by
Borrower with Lender's approval); (ii) a certificate from the
accountants identified in clause (i) of this Section 11A.1.1
containing a computation of, and showing compliance with, each of
the financial ratios and restrictions contained in Sections 11A and
11B, and to the effect that, in making the examination necessary
for the signing of the annual audit report of Borrower by such
accountants, they have not become aware of any non-compliance by
Borrower, or any Event of Default or Unmatured Event of Default,
under this Agreement or the Related Documents; and (iii) such other
information regarding Borrower and its Subsidiaries as Lender shall
reasonably request.
11A.1.2 Quarterly Reports. As soon as available, but in any
event within 45 days after the end of each Fiscal Quarter of
Borrower: (i) copies of the unaudited consolidated and
consolidating balance sheet of Borrower and each of its
Subsidiaries as at the end of such Fiscal Quarter and the related
unaudited statements of earnings, stockholders' equity and cash
flows for such Fiscal Quarter and the portion of the Fiscal Year
through such Fiscal Quarter, in each case setting forth in
comparative form the figures for the corresponding periods of the
previous Fiscal Year, prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and certified by the chief financial officer of
Borrower as presenting fairly the financial condition and results
of operations of Borrower and its Subsidiaries (subject to normal
year-end audit adjustments); and (ii) such other information
regarding Borrower and its Subsidiaries as Lender shall reasonably
request.
11A.1.3 Monthly Reports. As soon as available, but in any
event within 30 days after the end of each Reporting Period: (i)
copies of the unaudited consolidated and consolidating balance
sheet of Borrower and each of its Subsidiaries as at the end of
such Reporting Period and the related unaudited statements of
earnings and cash flows for such Reporting Period and the portion
of the Fiscal Year through such Reporting Period, in each case
setting forth in comparative form the figures for the corresponding
periods of the previous Fiscal Year, prepared in reasonable detail
and in accordance with GAAP applied consistently throughout the
periods reflected therein and certified by the chief financial
officer of Borrower as presenting fairly the financial condition
and results of operations of Borrower and its Subsidiaries (subject
to normal year-end audit adjustments); and (ii) such other
information regarding Borrower and its Subsidiaries as Lender shall
reasonably request.
11A.1.4 Business Plan. As soon as available, but in any
event: (i) within 30 days after the beginning of each Fiscal Year
of Borrower, a copy of the plan and forecast (including a projected
closing consolidated and consolidating balance sheet, income
statement and funds flow statement) of Borrower for such Fiscal
Year; and (ii) within 30 days after the end of the second Fiscal
Quarter of Borrower in each Fiscal Year, an update of each plan and
forecast delivered with respect to the Fiscal Year in which such
Fiscal Quarter occurs, reflecting changes in such plan resulting
from actual and then anticipated results and forecasts.
11A.1.5 Compliance Certificates. Contemporaneously with the
furnishing of a copy of each annual audit report and of each set of
statements provided for in Sections 11A.1.1, 11A.1.2 and 11A.1.3,
a duly completed certificate in substantially the form of Exhibit
L, signed by the chief financial officer of Borrower, containing,
among other things, a computation of, and showing compliance with,
each of the applicable financial ratios and restrictions contained
in this Section 11A and in Section 11B and to the effect that as of
such date no Event of Default or Unmatured Event of Default has
occurred and is continuing.
11A.1.6 Auditors' Materials. Promptly upon receipt thereof,
copies of all detailed financial and management reports regarding
Borrower or any of its Subsidiaries submitted to Borrower by
independent public accountants in connection with each annual or
interim audit report made by such accountants of the books of
Borrower or any of its Subsidiaries.
11A.1.7 Reports to SEC and to Shareholders. Promptly upon
the filing or making thereof, copies of each material filing and
report made by Borrower or any of its Subsidiaries with or to any
securities exchange or the Securities and Exchange Commission and
of each communication from Borrower to shareholders generally.
11A.1.8 Notice of Default, Litigation, License and ERISA
Matters. Forthwith upon learning of the occurrence of any of the
following, written notice thereof, describing the same and the
steps being taken by Borrower with respect thereto: (i) the
occurrence of an Event of Default or an Unmatured Event of Default,
(ii) the institution of, or any adverse determination or materially
adverse development in, any litigation, arbitration proceeding or
governmental proceeding which would, if adversely determined,
materially and adversely affect the financial condition,
operations, assets, business or prospects of Borrower or any of its
Subsidiaries or the ability of Borrower or any Subsidiary of
Borrower, to perform its respective obligations in connection with
this Agreement and the Related Documents, (iii) the institution of
any steps by Borrower, or any other Person to terminate any Plan,
or the failure to make a required contribution to any Plan if such
failure is sufficient to give rise to a lien under section 302(f)
of ERISA, or the taking of any action with respect to a Plan which
could result in the requirement that Borrower or any of its
Subsidiaries furnish a bond or other security to the PBGC or such
Plan, or the occurrence of any event with respect to any Plan which
could result in the incurrence by Borrower or any of its
Subsidiaries of any material liability, fine or penalty, or any
material increase in the contingent liability of Borrower or any of
its Subsidiaries with respect to any post-retirement Welfare Plan
benefit, (iv) the commencement of any dispute which might lead to
the modification, transfer, revocation, suspension or termination
of any Related Document, (v) any expectation of the termination
(without renewal), loss, suspension or other impairment of
Borrower's or any of its Subsidiaries' rights under any Material
Licensing Agreement or (vi) any event which would have a material
adverse effect on the business, operations, assets, financial
condition or prospects of Borrower or any of its Subsidiaries or
the ability of Borrower or any Subsidiary of Borrower to perform
its respective obligations under this Agreement or the Related
Documents.
11A.1.9 Insurance Reports. (i) Within 90 days after the end
of each Fiscal Year of Borrower, a certificate signed by its chief
financial officer that summarizes the insurance policies carried by
Borrower and its Subsidiaries (such certificate to be in form and
substance satisfactory to Lender), and (ii) written notification 30
days prior to any cancellation or material change of any such
insurance by Borrower or any of its Subsidiaries and within 5 days
after receipt of any notice (whether formal or informal) of
cancellation or change by any of its insurers.
11A.1.10 Information Concerning Subsidiaries. Forthwith upon
learning thereof, written notice of the occurrence with respect to
any Subsidiary of Borrower of any of the events the occurrence of
which in relation to Borrower would constitute an Event of Default
or an Unmatured Event of Default under Section 13.1.5.
11A.1.11 List of Officers and Directors. (i) Not less than
10 Business Days after each anniversary date of the Amended and
Restated Closing Date, a complete list of the officers and
directors of Borrower and each of its Subsidiaries, and (ii) within
15 Business Days of any change in the information provided pursuant
to the foregoing clause (i), written notice of such change.
11A.1.12 Weekly Reports. On the third Business Day of each
week, a report detailing cash flow and loan activity, a summary of
bookings, billings and backlog, orders not scheduled for delivery
and delinquencies, a summary of key indicators and a cash flow
forecast.
11A.1.13 Borrowing Certificate. Not later than the fifteenth
day of each month, (a) a certificate, substantially in the form of
Exhibit N (the "Borrowing Certificate") with respect to all Loans
made during the period from the fifteenth day of the previous month
through the date of such Certificate, signed by the President or a
Vice President of Borrower, and (b) such other documents as Lender
may reasonably request in support of all Loans requested during
such period.
11A.1.14 Notice of Triggering Event. Borrower shall provide
Lender notice of the occurrence of a Triggering Event as soon as
possible and in any event no later than 20 days prior to the
occurrence of a Triggering Event. Such notice shall specify the
estimated date of consummation of the transaction or series of
transactions contemplated thereby and the nature of such Triggering
Event.
11A.1.15 Other Information. From time to time furnish to
Lender such other information concerning Borrower and any
Subsidiary of Borrower as Lender may reasonably request.
SECTION 11A.2 Corporate Existence; Foreign Qualification.
Borrower will do and cause to be done at all times all things
necessary to (i) maintain and preserve the corporate existence of
Borrower and each Subsidiary of Borrower, (ii) be, and ensure that
each Subsidiary of Borrower, is, duly qualified to do business and
in good standing as a foreign corporation in each jurisdiction
where the nature of its business makes such qualification
necessary, and (iii) comply, and cause its Subsidiaries to comply,
with all Contractual Obligations and Requirements of Law binding
upon such entity.
SECTION 11A.3 Books, Records and Inspections. Borrower will
(i) maintain, and cause each of its Subsidiaries to maintain,
complete and accurate books and records; (ii) permit, and cause
each of its Subsidiaries to permit, access at reasonable times by
Lender to its books and records; (iii) permit, and cause each of
its Subsidiaries to permit, Lender to inspect at reasonable times
its properties and operations; and (iv) permit, and cause each of
its Subsidiaries to permit, Lender to discuss its business,
operations and financial condition with its officers.
SECTION 11A.4 Insurance. (i) Borrower will maintain "key
man" insurance with respect to each person listed on Schedule XIV
under one or more policies in form and substance satisfactory to
Lender, in an amount not less than the amount specified in Schedule
XIV with respect to such person, and cause such insurance to be
subjected to the provisions of the Insurance Assignment, (ii)
Borrower will maintain, and cause each of its Subsidiaries to
maintain, such insurance as may be required by law, or by the
Collateral Documents or otherwise by Lender, all to such extent and
against such hazards and liabilities, as is customarily maintained
by prudent companies similarly situated, (iii) Borrower will
furnish Lender a certificate of a duly authorized officer of
Borrower setting forth the nature and extent of all insurance
maintained by Borrower and its Subsidiaries in accordance with this
Section, (iv) with respect to each physical damage and liability
insurance policy and with respect to each life insurance policy
referred to in clause (i), Borrower will (A) cause such policy to
provide, pursuant to endorsements in form and substance
satisfactory to Lender, that Lender is named as an additional
insured (under liability policies) or loss payee (under physical
damage and life insurance policies) and that the insurer will give
Lender 30 days' prior written notice of the termination or other
material modification of such policy and (B) notify Lender within
5 days of obtaining any new policy, or increasing coverage under,
terminating, or otherwise materially modifying any existing policy,
describing in detail in such notice any such new policy, increase,
termination or modification, and (v) with respect to each physical
damage and liability insurance policy, Borrower will cause such
policy to provide, pursuant to endorsements in form and substance
satisfactory to Lender, that the insurance shall not be invalidated
as against Lender, by any action or inaction of any Person other
than Lender, regardless of any breach or violation of any warranty,
declaration or condition contained in such policy, and, as against
Lender, the insurers shall waive any rights of subrogation to the
extent that the named insured has waived such rights (and Borrower
hereby irrevocably and unconditionally waives any right of
subrogation against Lender, except for claims arising out of the
gross negligence or willful misconduct of Lender).
SECTION 11A.5 Taxes and Liabilities. Borrower will pay, and
cause each of its Subsidiaries to pay, when due all taxes,
assessments and other material liabilities except as contested in
good faith and by appropriate proceedings with respect to which
reserves have been established, and are being maintained, in
accordance with GAAP.
SECTION 11A.6 Current Ratio. Borrower will maintain at all
times a minimum Current Ratio of 1.5:1.
SECTION 11A.7 Adjusted Net Worth. Borrower will maintain an
Adjusted Net Worth at all times during each fiscal period listed
below of at least the amounts set forth opposite such period:
Adjusted
Net Worth
Period (in $ millions)
First Fiscal Quarter of 1994 $ 800,000
Second Fiscal Quarter of 1994 1,200,000
Third Fiscal Quarter of 1994 1,900,000
Fourth Fiscal Quarter of 1994 2,500,000
First Fiscal Quarter of 1995 3,000,000
Second Fiscal Quarter of 1995 3,750,000
Third Fiscal Quarter of 1995 4,500,000
Fourth Fiscal Quarter of 1995 5,500,000
First Fiscal Quarter of 1996 6,750,000
Second Fiscal Quarter of 1996 8,000,000
Third Fiscal Quarter of 1996 9,250,000
Fourth Fiscal Quarter of 1996 10,500,000
First Fiscal Quarter of 1997 11,750,000
Second Fiscal Quarter of 1997 13,000,000
Third Fiscal Quarter of 1997 14,250,000
Fourth Fiscal Quarter of 1997 15,500,000
First Fiscal Quarter of 1998 16,750,000
Second Fiscal Quarter of 1998 18,000,000
Third Fiscal Quarter of 1998 19,250,000
Fourth Fiscal Quarter of 1998 20,500,000
SECTION 11A.8 Plans and Welfare Plans. Borrower will
maintain, and cause each of its Subsidiaries to maintain, each Plan
and each Welfare Plan as to which it may have any liability, in
compliance in all material aspects with all applicable Requirements
of Law.
SECTION 11A.9 Collateral Documents. Borrower will cause the
Liens created by the Collateral Documents, as security for the
payment and performance of the Notes and all other Liabilities, to
be and remain valid, perfected Liens on and security interests in
all assets of Borrower and its Subsidiaries now or hereafter
existing or acquired (free of all other Liens whatsoever other than
Permitted Liens).
SECTION 11A.10 Compliance with Laws. Borrower will comply
and cause each of its Subsidiaries to comply, with all Federal,
state and local laws, rules and regulations related to its
businesses (including, without limitation, all such laws, rules and
regulations relating to Hazardous Materials or the disposal
thereof).
SECTION 11A.11 Maintenance of Permits. Borrower will
maintain, and cause each of its Subsidiaries to maintain, all
permits, licenses and consents as may be required for the conduct
of its business by any state, Federal or local government agency or
instrumentality (including, without limitation, any such license,
consent or permit relating to Hazardous Materials or the disposal
thereof).
SECTION 11A.12 Lender as Observer. At all times permit a
representative (who shall be, at the time of such meeting, an
employee of the Lender having substantial responsibility for
administering the account of the Borrower or the Borrower's
relationship with the Lender) of Lender to attend and observe all
meetings of Borrower's Board of Directors and each committee
thereof, and cause Lender to receive reasonably adequate notice of
all such meetings; provided, however, that Lender shall not be
entitled to attend or observe any portion of a meeting relating
solely and exclusively to action proposed to be taken by Borrower
with respect to Borrower's relationship with Lender. The Borrower
acknowledges and agrees that attendance by a designee of Lender at
any meeting of Borrower's Board of Directors or any committee
thereof shall not constitute approval by Lender of or consent by
Lender to any action authorized at such meeting, or constitute a
waiver or modification of any provision of this Agreement or any
Related Document or any right of Lender hereunder or thereunder.
The Borrower agrees to reimburse Lender for all reasonable travel,
lodging, and meal expenses incurred in connection with the
foregoing.
SECTION 11A.13 Opcom Warrant. To the extent Opcom resumes
doing any business, Borrower shall cause Opcom to issue to Lender
a warrant having substantially the same rights as in the Opcom
Warrant being returned to Opcom on the Amended and Restated Closing
Date, provided, to the extent that, as a result of issuing such
warrant, an ownership change would occur within the meaning of
Section 382 of the Internal Revenue Code of 1986, as amended, or
any successor provision with respect to Borrower or Opcom, Opcom
shall not resume doing any business.
SECTION 11A.14 Title Policy. Within ninety (90) days of the
Amended and Restated Closing Date, Borrower will deliver an
Abstractor's Certificate reflecting that there have been no changes
to the state of title to the properties covered by the Mortgages
since the Original Closing Date and endorsements ratifying the
previously issued title insurance after execution of the Third
Amendments to the Borrower Mortgages and, if necessary, a revolving
credit endorsement to such policies, all in form and substance
satisfactory to Lender.
SECTION 11A.15 Subsidiary Mortgages. Borrower shall within
ninety (90) days of the Amended and Restated Closing Date take all
such actions as shall be necessary to supplement the Subsidiary
Mortgages to reflect, among other things, the terms of the Third
Amendment, the Fourth Amendment and the Amended and Restated Credit
Agreement and to preserve and protect the rights of Lender under
such Mortgages.
SECTION 11B NEGATIVE COVENANTS.
SECTION 11B.1 Working Capital. Borrower will not permit the
Working Capital, at any time during any period specified below, to
be less than the amount specified under the heading "Minimum" nor
greater than the amount specified under the heading "Maximum" for
such period:
Minimum Maximum
Period ($ in millions) ($ in millions)
1994 Fiscal Year $4,500,000 $12,000,000
1995 Fiscal Year
and thereafter 5,000,000 15,000,000
SECTION 11B.2 Net Cash Ratio. Borrower will not permit its
ratio (as measured on the last day of any Reporting Period) of Net
Cash Generated to Total Fixed Charges for the twelve Reporting
Periods ending on the last day of such Reporting Period (or if such
Reporting Period ends on or before October 31, 1994, for the period
from October 30, 1993 to the last day of such Reporting Period,
treated as a single accounting period) during each period listed
below to be less than the ratio listed below opposite such period:
Period Ratio
First Fiscal Quarter of 1994 No calculation
Second Fiscal Quarter of 1994 No calculation
Third Fiscal Quarter of 1994 0.00 : 1.00
Fourth Fiscal Quarter of 1994 0.25 : 1.00
First Fiscal Quarter of 1995 0.50 : 1.00
Second Fiscal Quarter of 1995 1.00 : 1.00
Third Fiscal Quarter of 1995 1.00 : 1.00
Fourth Fiscal Quarter of 1995 1.00 : 1.00
First Fiscal Quarter of 1996 1.25 : 1.00
Second Fiscal Quarter of 1996 1.25 : 1.00
Third Fiscal Quarter of 1996 1.25 : 1.00
Fourth Fiscal Quarter of 1996 1.25 : 1.00
First Fiscal Quarter of 1997 1.50 : 1.00
Second Fiscal Quarter of 1997 1.50 : 1.00
Third Fiscal Quarter of 1997 1.50 : 1.00
Fourth Fiscal Quarter of 1997 1.50 : 1.00
First Fiscal Quarter of 1998 1.75 : 1.00
Second Fiscal Quarter of 1998 1.75 : 1.00
Third Fiscal Quarter of 1998 1.75 : 1.00
Fourth Fiscal Quarter of 1998 1.75 : 1.00
SECTION 11B.3 Total Liabilities Ratio. Borrower will not
permit its ratio of (a) Total Liabilities excluding contingent
interest payable pursuant to Section 4.7 to (b) Adjusted Net Worth
to exceed at any time during any period set forth below, the ratio
set forth opposite such period below:
Period Ratio
1994 Fiscal Year 35.00 : 1.00
1995 Fiscal Year 15.00 : 1.00
1996 Fiscal Year 10.00 : 1.00
1997 Fiscal Year 5.00 : 1.00
1998 Fiscal Year 3.00 : 1.00
SECTION 11B.4 Annual Interest Coverage Ratio. Borrower will
not permit its Interest Coverage Ratio Number 1 measured on the
last day of any Reporting Period for any twelve consecutive
Reporting Periods ending on such last day (or if such Reporting
Period ends on or before October 31, 1994, for the period from
October 30, 1993 to the last day of such Reporting Period treated
as a single accounting period) to be less than the ratio listed
below for the period during which such Reporting Period occurs:
Period Ratio
First Fiscal Quarter of 1994 1.00 : 1.00
Second Fiscal Quarter of 1994 1.00 : 1.00
Third Fiscal Quarter of 1994 1.10 : 1.00
Fourth Fiscal Quarter of 1994 1.10 : 1.00
First Fiscal Quarter of 1995 1.20 : 1.00
Second Fiscal Quarter of 1995 1.20 : 1.00
Third Fiscal Quarter of 1995 1.30 : 1.00
Fourth Fiscal Quarter of 1995 1.30 : 1.00
First Fiscal Quarter of 1996 1.40 : 1.00
Second Fiscal Quarter of 1996 1.40 : 1.00
Third Fiscal Quarter of 1996 1.50 : 1.00
Fourth Fiscal Quarter of 1996 1.50 : 1.00
First Fiscal Quarter of 1997 1.60 : 1.00
Second Fiscal Quarter of 1997 1.60 : 1.00
Third Fiscal Quarter of 1997 1.70 : 1.00
Fourth Fiscal Quarter of 1997 1.70 : 1.00
First Fiscal Quarter of 1998 1.80 : 1.00
Second Fiscal Quarter of 1998 1.80 : 1.00
Third Fiscal Quarter of 1998 1.90 : 1.00
Fourth Fiscal Quarter of 1998 1.90 : 1.00
11B.5 Quarterly Interest Coverage Ratio. Borrower will not
permit its Interest Coverage Ratio Number 2 measured on the last
day of any Reporting Period for any three consecutive Reporting
Periods ending on such last day to be less than the ratio listed
below for the period during which such Reporting Period occurs:
Period Ratio
First Fiscal Quarter of 1994 1.00 : 1.00
Second Fiscal Quarter of 1994 1.00 : 1.00
Third Fiscal Quarter of 1994 1.25 : 1.00
Fourth Fiscal Quarter of 1994 1.25 : 1.00
First Fiscal Quarter of 1995 1.50 : 1.00
Second Fiscal Quarter of 1995 1.50 : 1.00
Third Fiscal Quarter of 1995 1.75 : 1.00
Fourth Fiscal Quarter of 1995 1.75 : 1.00
First Fiscal Quarter of 1996 2.00 : 1.00
Second Fiscal Quarter of 1996 2.00 : 1.00
Third Fiscal Quarter of 1996 2.00 : 1.00
Fourth Fiscal Quarter of 1996 2.00 : 1.00
First Fiscal Quarter of 1997 2.50 : 1.00
and every Fiscal Quarter
thereafter
SECTION 11B.6 Purchase, Redemption, Dividend, Interest and
Payment Restrictions. Neither Borrower, nor any of its
Subsidiaries, will purchase, redeem or otherwise acquire any shares
of the capital stock of Borrower or any Affiliate of Borrower
(including Opcom) or declare or pay any dividends on Borrower's or
Opcom's capital stock, make any distribution or payment to
Borrower's or Opcom's stockholders (in their capacity as such) or
set aside any funds for any such purpose, or make any other payment
of any nature whatsoever to Borrower or any of its Affiliates or
shareholders (in their capacity as such) other than Borrower's
Subsidiaries; provided, that if no Event of Default or Unmatured
Event of Default shall exist or result therefrom, Borrower and its
Subsidiaries may do the following:
(i) repurchase or redeem common or preferred stock of Borrower in
accordance with any management and employee incentive plan or
shareholder agreements (the "Senior Management Agreements");
provided, that the aggregate amount expended for such repurchases
during any Fiscal Year of Borrower shall not exceed five percent
(5%) of Borrower's total Stockholders' equity, as shown on the
audited financial statements for the preceding Fiscal Year
delivered pursuant to Section 11A.1.1;
(ii) repurchase shares of capital stock of Borrower as permitted
or required by the Warrant; and
(iii) make payments permitted pursuant to Section 11B.17;
it being understood, that each of Borrower's Subsidiaries may
declare and pay dividends on shares of such Subsidiary's capital
stock and make distributions or payments to such Subsidiary's
stockholders (except that Opcom may not take such actions).
SECTION 11B.7 Gross Capital Expenditures. Neither Borrower,
nor any of its Subsidiaries, will directly or indirectly (by way of
the acquisition of the securities of a Person or otherwise) make or
commit to make Gross Capital Expenditures, except that Borrower and
its Subsidiaries may, so long as no Event of Default or Unmatured
Event of Default shall exist or would result therefrom, make Gross
Capital Expenditures in the ordinary course of business during any
Fiscal Year of Borrower not to exceed the aggregate amounts set
forth below with respect to each Fiscal Year:
Fiscal Year Amount (in millions of dollars)
1994 $1,000,000
1995 3,000,000
1996 and every Fiscal
Year thereafter 4,000,000
; provided, if, in the immediately preceding Fiscal Year, (i) the
Adjusted Operating Profit is less than $6,000,000 and (ii) no Event
of Default or Unmatured Event of Default shall exist or result from
the making of the proposed Gross Capital Expenditures, then the
maximum amount of Gross Capital Expenditures for such Fiscal Year
shall not exceed the aggregate amount set forth below with respect
to such Fiscal Year:
Fiscal Year Amount (in millions of dollars)
1995 $1,500,000
1996 and thereafter 2,000,000
SECTION 11B.8 Guaranties, Loans, Advances or Investments.
Neither Borrower, nor any of its respective Subsidiaries, will
become or be guarantor or surety of, or otherwise incur any
Contingent Obligation or become or be responsible in any manner
(whether by agreement to purchase any obligations, stock, assets,
goods or services, or to supply or advance any funds, assets, goods
or services, or otherwise) with respect to, any undertaking of any
other Person, or make or permit to exist any loans or advances to,
or investments in, any other Person, except for (i) the
endorsement, in the ordinary course of collection, of instruments
payable to it or to its order, (ii) investment in Cash Equivalents,
(iii) if no Event of Default shall have occurred and be continuing
or will result from such activities, loans or advances to, or
guaranties of loans or advances to, officers and employees of
Borrower in the ordinary course of Borrower's business and not
exceeding $100,000 in the aggregate at any one time outstanding
(provided, that if any Unmatured Event of Default shall have
occurred and be continuing, Borrower may maintain in effect any
loans, advances or guaranties described in this clause (iii) which
were in effect on the date such event occurred, but shall not make
any new loans, advances or guaranties until such Unmatured Event of
Default has been cured or waived by Lender in writing), (iv)
indemnification of officers and directors provided for in the by-
laws of Borrower or such Subsidiary; provided, that such
indemnification is similar to that of other similarly situated
companies, (v) the unsecured guaranty by Borrower in favor of the
Seller of the obligations of Borrower under the Purchase Agreement,
(vi) those certain loans made on April 8, 1988 in an aggregate
principal amount of $25,827.21 to certain officers and employees of
the Borrower to satisfy certain indebtedness of such officers and
employees to Massey Investment Company, which loans are evidenced
by promissory notes bearing interest at the prime rate of First
City Bank of Dallas, (vii) the investments of each such entity in
and outstanding loans of each such entity to its Subsidiaries as at
the Amended and Restated Closing Date (not exceeding $7,000,000 in
principal and accrued interest in the case of loans by Borrower to
Opcom), and additional loans, advances or contributions by any such
entity to any Subsidiary thereof (other than loans, advances or
contributions by Borrower to Opcom) not exceeding $50,000 in the
aggregate for all such loans, contributions or advances made during
the term of this Agreement, provided that nothing in this Section
11B.8 shall be deemed to prohibit the accrual of liabilities of
Opcom to the Borrower on account of intercompany allocations of
general and administrative expenses, so long as such liabilities
are paid by Opcom in full not less frequently than each month, and
the aggregate accrued and unpaid amount of such liabilities at any
time does not exceed $100,000.
SECTION 11B.9 Mergers, Consolidations, Sales. Neither
Borrower, nor any of its Subsidiaries, will (a) be a party to any
merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or stock of any class of, or any
partnership or joint venture interest in, any other Person, other
than a merger of any Subsidiary of Borrower into Borrower, or (b)
sell, transfer, convey or lease all or any substantial part of its
assets or sell or assign with or without recourse any receivables,
other than any sale, transfer, conveyance or lease in the ordinary
course of business.
SECTION 11B.10 Leases. Neither Borrower, nor any of its
Subsidiaries, will incur or permit to exist any Lease Obligations
(other than (i) leases which are cancelable at the option of
Borrower or such Subsidiary without penalty and on no more than 90
days' notice and (ii) the lease between Borrower and Cliamatech
with respect to the plant of Optron de Mexico, as such lease is in
effect on the Amended and Restated Closing Date) which require the
payment of amounts of rental in excess of an aggregate, for all
such leases at any one time outstanding, of $200,000, in any one
fiscal year.
SECTION 11B.11 Unconditional Purchase Obligations. Neither
Borrower, nor any of its Subsidiaries, will enter into or be a
party to any contract for the purchase of materials, supplies or
other property or services, if such contract requires that payment
be made by it regardless of whether delivery is ever made of such
materials, supplies or other property or services.
SECTION 11B.12 Regulations G, U and X. Neither Borrower, nor
any of its Subsidiaries, will use or permit any proceeds of the
Loans to be used, either directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of "purchasing or
carrying margin stock" in contravention of Regulations G, U and X
of the Board of Governors of the Federal Reserve System, as amended
from time to time.
SECTION 11B.13 Subsidiaries. Notwithstanding any provision
of this Agreement to the contrary, neither Borrower, nor any of its
Subsidiaries, will create or permit to exist any Subsidiary other
than those listed on Schedule XV.
SECTION 11B.14 No Amendment of Certain Documents. Borrower
will not enter into or permit to exist any amendment or
modification of the Purchase Documents, or any amendment or
modification of the Senior Management Agreements, the Optek
Technology, Inc. Directors' Formula Award Plan or the Optek
Technology, Inc. Long Term Stock Investment Plan which would
increase the percentage of Borrower's common stock subject to such
agreements.
SECTION 11B.15 Other Agreements. Neither Borrower, nor any
of its Subsidiaries, will enter into any agreement containing any
provision which would be violated or breached by the performance of
its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection
herewith.
SECTION 11B.16 Business Activities. Neither Borrower, nor
any of its Subsidiaries, will engage in any type of business except
the businesses described in Schedule X and the activities
incidental and related thereto.
SECTION 11B.17 Transactions with Affiliates. Borrower will
not enter into, cause, suffer or permit to exist:
(a) any arrangement or contract with any of its Affiliates
requiring any payments to be made by Borrower to an Affiliate with
respect to services, where compensation is due whether or not such
services shall be received by Borrower; and
(b) any other transaction, arrangement, or contract
(including, without limitation, any employment contract or
agreement as to payment of a director's fees) with any of its
Affiliates which would not be entered into by a prudent Person in
the position of Borrower, or which is on terms which are less
favorable than those otherwise reasonably attainable on an arm's-
length basis from, any Person which is not one of its Affiliates.
SECTION 11B.18 Environmental Liabilities. Neither the
Borrower, nor any of its Subsidiaries, will violate any Requirement
of Law regarding Hazardous Material; and, without limiting the
foregoing, they will not, and will not permit any Person to,
dispose of any Hazardous Material into or onto, or (except in
accordance with applicable law) from, any real property owned or
operated by Borrower or any of its Subsidiaries nor allow any lien
imposed pursuant to any law, regulation or order relating to
Hazardous Materials or the disposal thereof to be imposed or to
remain on such real property.
SECTION 11B.19 Indebtedness. Neither the Borrower, nor any
of its Subsidiaries, will incur or permit to exist any Indebtedness
except (i) the Loans and the other Liabilities, (ii) deferred
taxes, (iii) current accounts payable arising in the ordinary
course of business and not overdue, (iv) non-current accounts
payable which Borrower is contesting in good faith and by
appropriate proceedings, and with respect to which reserves have
been established, and are being maintained, in accordance with
GAAP, (v) Indebtedness shown on Part 1 of Schedule XI, (vi)
Indebtedness in respect of the deferred payment of insurance
premiums, provided, that the aggregate amount of such premiums
which may be deferred in any fiscal year shall not exceed $100,000
and (vii) other Indebtedness hereafter incurred in connection with
Permitted Liens.
SECTION 11B.20 Liens. Neither the Borrower, nor any of its
Subsidiaries, will create or permit to exist any Lien with respect
to any assets now or hereafter existing or acquired, except the
following (herein collectively called the "Permitted Liens"): (1)
Liens for current taxes not delinquent or for taxes being contested
in good faith and by appropriate proceedings and with respect to
which adequate reserves have been established, and are being
maintained, in accordance with GAAP, (2) Liens arising in the
ordinary course of business for sums being contested in good faith
and by appropriate proceedings and with respect to which adequate
reserves have been established, and are being maintained, in
accordance with GAAP, or for sums not due, and in either case not
involving any deposits or advances for borrowed money or the
deferred purchase price of property or services, (3) Liens in
connection with the acquisition of fixed assets after the date
hereof and attaching only to the property being acquired, if the
indebtedness secured thereby does not exceed one hundred percent
(100%) of the fair market value of such property at the time of
acquisition thereof nor $300,000 in the aggregate at any one time
outstanding, (4) Liens incurred in the ordinary course of business
for amounts not yet due and payable in connection with worker's
compensation, unemployment insurance or other forms of governmental
insurance or benefits, (5) Liens shown on Part 1 of Schedule XI,
(6) Liens in favor of the holders of Notes pursuant to the
Collateral Documents, (7) mechanic's, worker's, materialmen's and
other like Liens arising in the ordinary course of business in
respect of obligations which are not delinquent or which are being
contested in good faith and by appropriate proceedings and with
respect to which adequate reserves have been established, and are
being maintained, in accordance with GAAP, DAT Permitted
Exceptions, and (9) Liens on computer software and equipment
securing obligations under capital leases not exceeding $150,000 in
aggregate principal amount at any one time outstanding.
SECTION 11B.21 Compensation. Borrower will not permit (x)
the salary and (y) other remuneration (which shall mean an amount
equal to (i) gross salary shown on the relevant Form W-2 or gross
income on the relevant Form 1099, plus accrued bonuses and
director's fees for such year, less (ii) base salary for such year,
less (iii) accrued bonuses and director's fees for the previous
year and paid in the current year) to be paid during any Fiscal
Year to the persons holding the positions listed in Schedule XVI
(or any successor of any thereof in the capacity shown in Schedule
XVI), to exceed, in the aggregate for each such person, the amount
for such person shown in Schedule XVI, to be adjusted as of the
first day of each Fiscal Year to an amount not exceeding 110% of
the maximum allowable amount (as set forth in Schedule XVI and
subsequently adjusted) for the preceding Fiscal Year.
SECTION 12 CONDITIONS.
The obligation of Lender to make the Loans is subject to the
following precedent or concurrent:
SECTION 12.1 Effectiveness of this Agreement. The
effectiveness of this Agreement shall be subject to the prior or
concurrent satisfaction (in form and substance satisfactory to
Lender) of each of the conditions precedent set forth below.
12.1.1 No Default. No Event of Default, or Unmatured Event
of Default, shall have occurred and be continuing on the Amended
and Restated Closing Date.
12.1.2 Warranties and Representations. All warranties and
representations contained in this Agreement and the Related
Documents shall be true and correct as of the Amended and Restated
Closing Date, with the same effect as though made on the Amended
and Restated Closing Date.
12.1.3 Litigation. In the opinion of Lender, in its sole and
absolute discretion, (i) no litigation (including, without
limitation, derivative actions), arbitration, governmental
investigation or proceeding or inquiry shall, on the Amended and
Restated Closing Date, be pending, or to the knowledge of Borrower,
threatened which seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or to obtain relief as
a result of, the Related Transactions, or would be materially
adverse to, or be detrimental to the interests of, any of the
parties to this Agreement or the Related Documents or any of the
Related Transactions, and (ii) no material adverse development
shall have occurred in any litigation (including, without
limitation, derivative actions), arbitration, government
investigation or proceeding or inquiry disclosed in Schedule IV.
12.1.4 Fees. Borrower shall have paid or caused to be paid
to Lender the closing fees referred to in Section 5.3 which are due
and payable on or prior to the date of the Amended and Restated
Closing Date.
12.1.5 Documents. Lender shall have received all of the
following, each duly executed and dated the date of the Amended and
Restated Closing Date (or such earlier date as shall be
satisfactory to Lender), in form and substance satisfactory to
Lender:
(a) Revolving Note. Revolving Note duly executed and
delivered and conforming to the requirements hereof.
(b) Working Capital Note. Working Capital Note duly executed
and delivered and conforming to the requirements hereof.
(c) Amendment to Mortgage. Amendments to each of the
Borrower Mortgages and the Subsidiary Mortgage, each duly executed
and delivered by Borrower or its applicable Subsidiary and in form
and substance satisfactory to Lender.
(d) Filing. Evidence that each of the amendments referred to
in (c) has been duly recorded in the appropriate official land or
real property records.
(e) Warrant. The Warrant duly executed and delivered.
(f) Letter from Opcom. The letter dated January 20, 1994
from Opcom to Lender, in form and substance satisfactory to Lender,
confirming certain matters.
(g) Resolutions. Certified copies of resolutions of the
Board of Directors of Borrower and each Subsidiary of Borrower
authorizing or ratifying the execution, delivery and performance,
respectively, of those documents and matters required of it with
respect to this Agreement or the Related Documents.
(h) Consents, etc. Certified copies of all documents
evidencing any necessary corporate action, consents and
governmental approvals (if any) with respect to this Agreement, the
Related Documents, any other document provided for hereunder and
the Related Transactions.
(i) Incumbency and Signatures. A certificate of the
Secretary or an Assistant Secretary of Borrower and each of its
Subsidiaries certifying the names of the individual or individuals
authorized to sign this Agreement and the Related Documents to
which such entity is a party, together with a sample of the true
signature of each such individual. (Lender may conclusively rely
on each such certificate until formally advised by a like
certificate of any changes therein.)
(j) Opinions of Counsel. The opinion of Hewitt & Hewitt,
counsel for Borrower, addressed to the Lender, in the form of
Exhibit M.
(k) Charter and By-Laws. Certified copies of the corporate
charter and by-laws of Borrower and each of its Subsidiaries
(including Borrower).
(l) Insurance. Evidence that Borrower and its Subsidiaries
are maintaining insurance of the type required by this Agreement
and the Collateral Documents (including without limitation
casualty, liability, worker's compensation and "key man"
insurance), together with certificates of insurance naming Lender
as an additional insured (for liability insurance) or loss payee
(for physical damage and life insurance and specifying, among other
things, such matters as shall be required by Section 11A.4. Such
evidence shall include, without limitation, a certificate, in form
and substance satisfactory to Lender and signed by the chief
financial officer of Borrower summarizing the insurance policies
carried by Borrower, Borrower and its Subsidiaries.
(m) Other Documents. Copies of the Employment Agreements
certified to be true and accurate copies thereof by the Secretary
of Borrower.
(n) List of Directors and Officers. A complete list of the
officers and directors of Borrower and each of its Subsidiaries as
at the date of the Amended and Restated Closing Date.
(o) Good Standing and Franchise Tax Certificates.
Certificates of good standing and attesting to the fact that all
applicable franchise taxes have been duly paid for Borrower and
each of its Subsidiaries in each jurisdiction in which the business
of such entity requires it to be qualified.
(p) Financial Statements. Borrower shall have furnished
Lender with each of the financial statements listed in Section
10.3.
(q) Confirmatory Certificate (Borrower). A duly completed
certificate confirming satisfaction of the conditions set forth in
Sections 12.1.1, 12.1.2, and 12.1.4, signed by the President or
Vice President of Borrower.
(r) Other. Such other documents (including, without
limitation, evidence of compliance with any applicable bulk sales
statutes) as Lender may reasonably request.
12.1.6 Legality. No statute, regulation, rule, injunction,
judgment or restraining or other order prohibiting or otherwise
restraining transactions contemplated hereby shall be in effect or
shall have been proposed as at the Amended and Restated Closing
Date; and Lender shall be satisfied that the transactions
contemplated hereby comply with all applicable statutes,
regulations, rules, injunctions, judgments and orders then in
effect.
SECTION 12.2 All Loans. The obligation of Lender to make
each Loan is subject to the further conditions precedent that:
12.2.1 No Default; Reaffirmation of Warranties and
Representations. (a) No Event of Default, or Unmatured Event of
Default under Section 13.1.5, shall have occurred and be continuing
or will result from the making of such Loan, (b) the warranties and
representations contained in this Agreement and the Related
Documents shall be (except insofar as they are, by their express
terms, limited to a specific date) true and correct as of the date
of such requested Loan, with the same effect as though made on the
date of such Loan, and (c) there shall have been no material
adverse change or notice of prospective material adverse change
with respect to insurance maintained by Borrower or any of its
Subsidiaries.
12.2.2 Litigation; Adverse Changes. (a) No claims,
litigation (including, without limitation, derivative actions),
arbitration, governmental proceeding, investigation or inquiry not
disclosed in writing by Borrower to Lender prior to the date of the
last previous Loan hereunder shall be pending or known to be
threatened against Borrower, or any Subsidiary of Borrower, (b) no
material development not so disclosed shall have occurred in any
claim, litigation (including, without limitation, derivative
actions), arbitration, governmental proceeding, investigation or
inquiry so disclosed, and (c) no event, condition or development
shall have occurred or developed at any time (whether before or
after the making of the last previous Loan hereunder), which (in
the case of each of the foregoing clauses (a) through (c)) in the
opinion of Lender has affected or is likely to affect materially
and adversely the financial condition, operations, assets, business
or prospects of Borrower or any of its Subsidiaries or the ability
of Borrower or any Subsidiary of Borrower, to perform its
respective obligations in connection with this Agreement and the
Related Documents.
12.2.3 Minimum Loan Balance. In the case of any Revolving
Loan (other than the initial Revolving Loan), there shall be
outstanding Revolving Loans in a minimum principal amount of $1,000
and in the case of Working Capital Loans (other than the initial
Working Capital Loan), there shall be outstanding Working Capital
Loans in a minimum principal amount of $1,000.
SECTION 12.3 Extensions of Working Capital Commitment. If a
Working Capital Commitment Extension Request is made pursuant to
Section 2.2 to extend the Working Capital Loan Termination Date to
a date on or after October 31, 1998, and if Lender consents to such
extension, Borrower shall promptly furnish to Lender (a) certified
copies of resolutions of the Boards of Directors of Borrower
authorizing or ratifying the execution, delivery and performance,
respectively, of those documents and matters required of Borrower
in connection with Section 2.2 and this Section 12.4, (b) an
opinion of counsel for Borrower addressed to Lender, in such form
and substance as Lender may reasonably request, and (c) such other
documents as Lender may reasonably request.
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT.
SECTION 13.1 Events of Default. Each of the following shall
constitute an Event of Default under this Agreement:
13.1.1 Non-Payment of Loans. Default in the payment when
due, whether by acceleration or otherwise, of any principal of or
interest or premium on any Loan.
13.1.2 Non-Payment of Fees, etc. Default, and continuance
thereof for 5 days, in the payment when due, whether by
acceleration or otherwise, of any amount payable hereunder or under
the Related Documents (other than any amount described in Section
13.1.1).
13.1.3 Non-Payment of Other Indebtedness. (i) Default in the
payment when due (subject to any applicable grace period), whether
by acceleration or otherwise, of any other Indebtedness of, or
guaranteed by, Borrower or any of its Subsidiaries if the aggregate
amount of such Indebtedness which is accelerated or due and
payable, or which may be accelerated or otherwise become due and
payable, by reason of such default is $250,000 or more, or (ii)
default in the performance or observance of any obligation or
condition with respect to any such other Indebtedness of, or
guaranteed by, Borrower and/or any of its Subsidiaries if the
effect of such default is to accelerate the maturity of any such
Indebtedness of $250,000 or more or to permit the holder or holders
of such Indebtedness of $250,000 or more, or any trustee or agent
for such holders, to cause such Indebtedness to become due and
payable prior to its expressed maturity.
13.1.4 Other Material Obligations. Default in the payment
when due, or in the performance or observance of, any material
obligation of, or material condition agreed to by, Borrower or any
of its Subsidiaries with respect to any material purchase or lease
of goods or services or any Material Licensing Agreement, and
continuance thereof beyond any period or grace provided therein, if
such default could have a material adverse effect on the business,
condition (financial or otherwise) or prospects of Borrower or such
Subsidiary (except only to the extent that the existence of any
such default is being contested by Borrower in good faith and by
appropriate proceedings and Borrower has established, and is
maintaining, adequate reserves therefor in accordance with GAAP).
13.1.5 Bankruptcy, Insolvency, etc. (a) Borrower or any
Subsidiary of Borrower becomes insolvent or generally fails to pay,
or admits in writing its inability to pay, debts as they become
due; or (b) Borrower or any Subsidiary of Borrower applies for,
consents to, or acquiesces in the appointment of, a trustee,
receiver or other custodian or similar Person for Borrower, or such
Subsidiary or any property of any thereof, or makes a general
assignment for the benefit of creditors; or (c) in the absence of
such application, consent or acquiescence, a trustee, receiver or
other custodian or similar Person is appointed for Borrower, or any
Subsidiary of Borrower or for a substantial part of the property of
any thereof, unless (i) Borrower or such Subsidiary institutes
appropriate proceedings to contest or discharge such appointment
within 10 days and thereafter continuously and diligently
prosecutes such proceedings and (ii) such appointment is in fact
discharged within 60 days of such appointment; or (d) any
bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding is commenced in respect of
Borrower, or any Subsidiary of Borrower, unless (i) such case or
proceeding is not commenced by Borrower, or any Subsidiary of
Borrower, (ii) such case or proceeding is not consented to or
acquiesced in by Borrower or such Subsidiary, (iii) Borrower or
such Subsidiary institutes appropriate proceedings to dismiss such
case or proceeding within 10 days and thereafter continuously and
diligently prosecutes such proceedings and (iv) such case or
proceeding is in fact dismissed within 60 days after the
commencement thereof; or (e) Borrower, or any Subsidiary of
Borrower, takes any action to authorize, or in furtherance of, any
of the foregoing.
13.1.6 Non-compliance with Certain Provisions. Failure of
Borrower to comply with the provisions of each of Sections 6.1(a)
through (c), 7.4, 9.5, 9.6, 11A.2 through 11A.7, 11A.9, 11B.1
through 11B.16, and 11B.19 through 11B.20 hereof.
13.1.7 Non-compliance with Other Provisions. Failure by
Borrower to comply with or to perform any provision of this
Agreement (and not constituting an Event of Default under any of
the other provisions of this Section 13) and continuance of such
failure for 30 days after notice thereof from Lender.
13.1.8 Warranties and Representations. Any warranty or
representation made by or on behalf of Borrower or any of its
Subsidiaries herein or in any of the Related Documents or otherwise
in connection herewith or therewith is inaccurate or incorrect or
is breached or false or misleading in any material respect as of
the date such warranty or representation is made; or any schedule,
certificate, financial statement, report, notice, or other writing
furnished by or on behalf of Borrower or any of its Subsidiaries to
Lender is false or misleading in any material respect on the date
as of which the facts therein set forth are stated or certified
(provided, however, that delivery to Lender of any projections
required to be delivered hereunder shall not be deemed to
constitute a warranty that any results shown therein shall or can
be achieved).
13.1.9 Plans. With respect to any Plan as to which any
company in the Controlled Group may have any liability, (i)
Borrower or any other Person shall institute any steps to terminate
such Plan if as a result of such termination Borrower could be
required to make a contribution to such Plan, or could incur a
liability or obligation to such Plan, in excess of $200,000; or
(ii) a contribution failure occurs with respect to any such Plan
sufficient to give rise to a lien under section 302(f) of ERISA.
13.1.10 Related Documents. At any time after the initial
Loan, Borrower shall fail to comply with or to perform any
provision of any of the Purchase Documents or the Collateral
Documents applicable to it; or any party (including Borrower) to
any other Related Document shall fail to comply with or to perform
any provision of such Related Document applicable to it, if such
failure could have a material adverse effect on the business,
condition (financial or otherwise) or prospects of Borrower; or any
of the Purchase Documents or the Collateral Documents shall fail to
remain in full force and effect or any action shall be taken to
discontinue any of the Purchase Documents or the Collateral
Documents or to contest the validity, binding nature or
enforceability of any thereof; or any of the other Related
Documents shall fail to remain in full force and effect or any
action shall be taken to discontinue any of the other Related
Documents or to contest the validity, binding nature or
enforceability of any thereof, if such failure to remain in force,
invalidity or unenforceability could have a material adverse effect
on the business, condition (financial or otherwise) or prospects of
Borrower.
13.1.11 Collateral. Any portion or portions of the
Collateral shall be seized or taken by governmental or similar
authority; or Borrower or any Subsidiary of Borrower shall fail to
maintain the liens, security interest and priority of the
Collateral Documents as against any Person; or the title and rights
of Borrower, or any Subsidiary of Borrower to any portion or
portions of the Collateral shall have become the subject matter of
litigation which might, in the opinion of Lender, upon final
determination result in impairment or loss of the security provided
by the Collateral Documents.
13.1.12 Change in Ownership. Allstate Insurance Company
shall cease to own, directly or indirectly, twenty percent (20%) or
more of the issued and outstanding capital stock of each class of
Borrower.
13.1.13 Litigation. There shall be entered against Borrower
or any of its Subsidiaries one or more judgments, awards or
decrees, or orders of attachment, garnishment or any other writ,
which exceed $250,000 at any one time outstanding, remaining unpaid
for more than 30 days, excluding judgments or decrees (i) for which
there is full insurance and with respect to which the insurer has
assumed responsibility in writing, (ii) for which there is full
indemnification (upon terms and by creditworthy indemnitors which
are satisfactory to Lender) or (iii) which have been in force for
less than the applicable period for filing an appeal so long as
execution is not levied thereunder (or in respect of which Borrower
or the appropriate Subsidiary shall at the time in good faith be
prosecuting an appeal or proceeding for review and in respect of
which a stay of execution or appropriate appeal bond shall have
been obtained pending such appeal or review).
SECTION 13.2 Effect of Event of Default. If any Event of
Default described in Section 13.1.5 shall occur, the Commitments
(if not theretofore terminated) shall immediately terminate and the
Notes and all other Liabilities shall become immediately due and
payable, all without notice of any kind; and, in the case of any
other Event of Default, Lender may declare the Commitments (if not
theretofore terminated) to be terminated and the Notes and all
other Liabilities to be immediately due and payable, whereupon the
Commitments (if not theretofore terminated) shall immediately
terminate and the Notes and all other Liabilities shall become
immediately due and payable, all without further notice of any
kind. Lender shall promptly advise Borrower of any such
declaration but failure to do so shall not impair the effect of
such declaration. Notwithstanding the foregoing, the effect as an
Event of Default of any event described in Section 13 may be waived
by Lender in writing.
SECTION 14 GENERAL.
SECTION 14.1 Waiver; Amendments. No delay on the part of
Lender or any holder of a Note or other Liability in the exercise
of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by any of them of any
right, power or remedy preclude other or further exercise thereof,
or the exercise of any other right, power or remedy. No amendment,
modification or waiver of, or consent with respect to, any
provision of this Agreement or a Note or any Related Document shall
in any event be effective unless the same shall be in writing and
signed and delivered by the holders of the majority of the
aggregate outstanding principal amount of the Loans and then any
such amendment, modification, waiver or consent shall be effective
only in the specific instance and for the specific purpose for
which given.
SECTION 14.2 Confirmations. Borrower and Lender (or any
holder of a Note) agree from time to time, upon written request
received by it from the other, to confirm to the other in writing
the aggregate unpaid principal amount of the Loans then outstanding
under such Note.
SECTION 14.3 Notices. Notices forwarded by mail shall be
deemed to have been given three days after the date sent if sent by
registered or certified mail, postage paid, and:
(i) if to Borrower, addressed to Borrower at its address
shown below its signature hereto, with a copy to Borrower;
(ii) if to Lender, addressed to Lender at the address shown
below its signature hereto; or
in the case of any party, at such other address as such party may,
by written notice received by the other parties to this Agreement,
have designated as its address for notices. Notices given by
telegram or telex shall be deemed to have been given when sent if
addressed to the party to whom sent, at its address as aforesaid.
Notices of borrowing pursuant to Section 2.4 shall be effective
upon receipt by Lender and shall be in writing (or by telephone to
be confirmed in writing by Borrower). Lender shall be entitled to
rely upon all telephone notices and the Borrower shall hold Lender
harmless from any loss, cost or expense ensuring from any such
reliance.
SECTION 14.4 Costs, Expenses and Taxes. Borrower agrees to
pay on demand all out-of-pocket costs and expenses of Lender
(including the reasonable fees and out-of-pocket expenses of
counsel for Lender and of local counsel, if any, whom may be
retained by said counsel and all costs of appraisals, surveys,
environmental reviews and the like required to be made or done in
connection herewith) in connection with the preparation, execution
and delivery of this Agreement, the Related Documents and all other
instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith. Borrower further
agrees to pay all out-of-pocket costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred by Lender
in connection with the administration, enforcement, waiver or
amendment of this Agreement, the Related Documents and any such
other instruments or documents. In addition, Borrower agrees to
pay, and to save Lender harmless from all liability for, any
document, stamp, filing, recording, mortgage or other taxes which
may be payable in connection with the execution, delivery,
recording or filing of this Agreement or any of the Related
Documents, the borrowings hereunder or of any other instruments or
documents provided for herein or delivered or to be delivered
hereunder or in connection herewith. All obligations provided for
in this Section 14.4 shall survive any termination of this
Agreement.
SECTION 14.5 Indemnification. (a) In consideration of
Lender's execution and delivery of this Agreement and Lender's
extension of the Commitments, Borrower hereby agrees to indemnify,
exonerate and hold Lender and each of its officers, directors,
employees, and agents (including, without limitation, the Agent
Bank, and herein collectively called for purposes of this Section
14.5 "Lender Parties" and individually called a "Lender Party")
free and harmless from and against any and all claims, demands,
actions, causes of action, suits, losses, costs (including, without
limitation, all documentary, recording, filing, mortgage or other
stamp taxes or duties), charges, liabilities and damages, and
expenses in connection therewith (irrespective of whether such
Lender Party is a party to the action for which indemnification
hereunder is sought), and including, without limitation, reasonable
attorneys' fees and disbursements (called in this clause (a) the
"Indemnified Liabilities"), incurred by Lender Parties or any of
them as a result of, or arising out of, or relating to (a) any
transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or involving
any Loan, or (b) the execution, delivery, performance or
enforcement of this Agreement, the Related Documents and any
instrument, document or agreement executed pursuant hereto by any
of Lender Parties, including, without limitation, the ordinary
negligence of any lender Party, except for any such Indemnified
Liabilities arising on account of the relevant Lender Party's gross
negligence or willful misconduct and, to the extent that the
foregoing undertaking may be unenforceable for any reason, Borrower
agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
(b) Without limiting the generality of the indemnity set out
in the preceding clause (a), Borrower hereby further agrees to
indemnify, exonerate and hold Lender and all Lender Parties free
and harmless from and against any and all claims, demands, actions,
causes of action, suits, losses, costs, charges, liabilities and
damages, and expenses in connection therewith, of any and every
kind whatsoever paid, incurred or suffered by, or asserted against,
Lender or any Lender Party for, with respect to, or as a direct or
indirect result of, the presence on or under, or the escape,
seepage, leakage, spillage, discharge, emission or release from,
any real property owned or operated by Borrower or any of its
Subsidiaries of any Hazardous Material (including, without
limitation, any claims, demands, actions, causes of action, suits,
losses, costs, charges, liabilities and damages, asserted or
arising under the Comprehensive Environmental Response,
Compensation and Liability Act, any so-called "Superfund" or
"Superlien" law, or any other Federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating,
relating to or imposing liability or standards of conduct
concerning, any Hazardous Material), regardless of whether caused
by, or within the control of, Borrower or any of its Subsidiaries.
(c) Without limiting the generality of the indemnities set
out in the preceding clauses (a) and (b), Borrower hereby further
agrees to indemnify, exonerate and hold Lender and all Lender
Parties free and harmless from and against any claims, demands,
actions, causes of action, suits, losses, costs, charges,
liabilities and damages, and expenses in connection therewith,
including, without limitation, reasonable counsel fees (called in
this clause (c) the "Indemnified Liabilities") under Federal or
state securities laws or otherwise (A) arising out of or based upon
any untrue statement or alleged untrue statement of a material fact
contained in any registration statement, prospectus or offering
memorandum or in any preliminary prospectus or preliminary offering
memorandum or any amendment or supplement to any thereof or in any
other writing prepared in connection with the offer, sale or resale
of any securities of Borrower or any of its Subsidiaries, or (B)
arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated or necessary to
make the statements therein not misleading. If and to the extent
that the foregoing undertakings in this paragraph may be
unenforceable for any reason, Borrower agrees to make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
In the event of any conflict between the provisions of this
paragraph (c) and the Warrant, the Warrant shall control.
(d) All obligations provided for in this Section 14.5 shall
survive any termination of this Agreement and shall not be reduced
or impaired by any investigation made by or on behalf of Lender or
any Lender Party.
SECTION 14.6 Confirmation of Collateral Documents. Borrower
confirms that the Collateral Documents to which it is a party
(including, in its capacity as successor by merger of Optron)
remain in full force and effect that each provision thereof (except
to the extent specifically modified by the amendments to the
Mortgages delivered pursuant to Section 12.1.5(c)) is ratified and
confirmed in each and every respect. Borrower also confirms and
agrees that the Loans extended by Lender hereunder are secured by
the Collateral granted pursuant to the Collateral Documents and
that the Indebtedness created hereby comprises "Liabilities" under
each of the Collateral Documents to which it is a party, and it
hereby assigns, conveys and hypothecates to Lender, and grants to
Lender a security interest in, the Collateral described in such
Collateral Documents for the purpose of securing the obligations of
Borrower under this Agreement.
SECTION 14.7 SUBMISSION TO JURISDICTION. LENDER MAY ENFORCE
ANY CLAIM ARISING OUT OF THIS AGREEMENT OR THE RELATED DOCUMENTS IN
ANY STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION AND
LOCATED IN CHICAGO, ILLINOIS. FOR THE PURPOSE OF ANY ACTION OR
PROCEEDING INSTITUTED WITH RESPECT TO ANY SUCH CLAIM, BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS.
BORROWER HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM, WITH
OFFICES ON THE DATE HEREOF AT 208 S. LASALLE STREET, CHICAGO,
ILLINOIS 60604, TO RECEIVE FOR AND ON BEHALF OF BORROWER SERVICE OF
PROCESS IN ILLINOIS. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF SAID COURTS BY MAILING A COPY THEREOF, BY
REGISTERED MAIL, POSTAGE PREPAID, TO BORROWER AND AGREES THAT SUCH
SERVICE, WHEN EVIDENCED BY POSTAL RETURN RECEIPT, TO THE FULLEST
EXTENT PERMITTED BY LAW, (I) SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON THEM IN ANY SUCH SUIT, ACTION OR
PROCEEDING AND (II) SHALL BE TAKEN AND HELD TO BE VALID PERSONAL
SERVICE UPON AND PERSONAL DELIVERY TO THEM. NOTHING HEREIN
CONTAINED SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR PRECLUDE LENDER FROM BRINGING AN
ACTION OR PROCEEDING IN RESPECT HEREOF IN ANY OTHER COUNTRY, STATE
OR PLACE HAVING JURISDICTION OVER SUCH ACTION. BORROWER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH EITHER OF THEM MAY HAVE OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT LOCATED IN CHICAGO, ILLINOIS AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 14.8 GOVERNING LAW. THIS AGREEMENT AND THE NOTES
SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF ILLINOIS WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES. WHENEVER POSSIBLE EACH PROVISION OF THIS AGREEMENT
SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID
UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT SHALL
BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION
SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR
THE REMAINING PROVISIONS OF THIS AGREEMENT. ALL OBLIGATIONS OF
BORROWER, BORROWER OR ANY OF THEIR RESPECTIVE SUBSIDIARIES AND
RIGHTS OF LENDER AND ANY OTHER HOLDER OF A NOTE OR LIABILITY
EXPRESSED HEREIN OR IN THE RELATED DOCUMENTS SHALL BE IN ADDITION
TO AND NOT IN LIMITATION OF THOSE PROVIDED BY APPLICABLE LAW OR IN
ANY OTHER WRITTEN INSTRUMENT OR AGREEMENT RELATING TO ANY OF THE
LIABILITIES.
SECTION 14.9 Sales of Notes; Participation. Lender may
assign to one or more banks or other Persons all or any part of, or
may grant participations to one or more banks or other Persons in
or to, any Loan or Loans or the Notes or any of them, and to the
extent of any such assignment or participation (unless otherwise
stated therein) the assignee or participant of such assignment or
participation shall have the same rights and benefits, and shall be
bound by the same obligations, duties and Commitments, hereunder
and thereunder as it would have if it were Lender hereunder;
provided, however, that Lender will continue to act in its capacity
as "agent" for all purposes of this Agreement; and provided,
further, that Lender will not transfer the Loans or the Notes in a
manner so as to require the Notes or the Loans to be registered
under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended.
SECTION 14.10 JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY RELATED
DOCUMENT TO WHICH IT IS A PARTY, OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY
RELATED DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 14.11 Successors and Assigns. This Agreement shall
be binding upon Borrower, Lender and their respective successors
and assigns, and shall inure to the benefit of Borrower, Lender and
their respective successors and assigns; provided, however, that
Borrower shall not have any right to assign its rights or delegate
its duties under this Agreement. This Agreement and the Related
Documents contain the entire agreement of the parties hereto with
respect to the matters covered hereby.
Delivered at Chicago, Illinois, as of the day and year first above
written.
OPTEK TECHNOLOGY, INC.
By: /s/ D. VINSON MAILEY
__________________________
Name Printed: D. Vinson Mailey
Its: Vice President - Finance
1215 West Crosby Road
Carrollton, Texas 75006
Attention: D. Vinson Marley
Telecopy: (214) 542-1739
Telephone: (214) 542-9461
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
By: /s/ ROBERT M. COSEO
_______________________________
Name Printed: Robert M. Coseo
Its: Vice President
2700 Sanders Road
Prospect Heights, Illinois 60070
Attention: HCFS Corporate Finance Administration IN-W
Telecopy: (708) 205-7411
Telex: 254336 (Answerback: HFCHQPHTS)
Telephone: (708) 564-5000
EXHIBIT 10
ASSET PURCHASE AGREEMENT
dated as of December 30, 1994
by and among
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.,
HCFS CORPORATE FINANCE VENTURE, INC.,
DOMINION CAPITAL, INC.
and
VIRGINIA FINANCIAL VENTURES, INC.
TABLE OF CONTENTS
Page No.
ARTICLE I
DEFINITIONS
ARTICLE II
FORMATION AND CAPITALIZATION OF BUYER
2.1 Formation of Buyer..... 6
2.2 Capitalization of Buyer..... 6
ARTICLE III
FORMATION OF MANAGEMENT COMPANY;
SUPPORT SERVICES AGREEMENT
3.1 Formation of Management Company; Management Agreement..... 7
3.2 Support Services Agreement..... 7
ARTICLE IV
PURCHASE AND SALE OF PURCHASED ASSETS
4.1 Agreement to Buy and Sell Purchased Assets..... 7
4.2 Closing..... 8
4.3 Transfer of Purchased Assets; Assignments and Endorsements...8
4.4 Creation of the Escrow Account..... 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
AND HCFS VENTURER
5.1 Organization; Qualification..... 9
5.2 Authority Relative to this Agreement; Binding Obligation...10
5.3 Operation of the Management Company..... 10
5.4 Consents and Approvals..... 10
5.5 Non-Contravention..... 10
5.6 Ownership of Purchased Assets..... 10
5.7 Amount of Fees; Gross Book Value..... 11
5.8 Validity of Notes and Loan Documents..... 11
5.9 No Borrower Default..... 11
5.10 Seller's Compliance with Loan Documents; No Default..... 11
5.11 No Defenses of Borrowers; Evidence of Obligations..... 11
5.12 No Escrows..... 11
5.13 No Other Indebtedness Secured..... 12
5.14 Insurance..... 12
5.15 Litigation..... 12
5.16 No Brokers..... 12
5.17 Compliance with Law..... 12
5.18 Full Disclosure..... 12
5.19 ERISA..... 13
5.20 Updating of Representations and Warranties..... 13
5.21 Seller's Knowledge..... 13
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
DOMINION AND DOMINION VENTURER
6.1 Organization; Qualification..... 14
6.2 Corporate Power..... 14
6.3 Consents and Approvals..... 14
6.4 Non-Contravention..... 14
6.5 No Brokers..... 14
6.6 Litigation...... 14
6.7 Public Utility Holding Company Act..... 14
6.8 Dominion's Knowledge..... 15
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Payment of Interest and Fees after the Closing Date..... 15
7.2 Servicing of the Purchased Loans; Notices; Power of
Attorney..... 15
7.3 Communication with Borrowers..... 16
7.4 Investigation of Loan Portfolio and Warrants..... 16
7.5 Confidentiality..... 17
7.6 Public Announcements..... 17
7.7 Expenses..... 17
7.8 HSR Act Filings..... 18
7.9 Bulk Sales Laws...... 18
7.10 Loans for which Consent is not Obtained by Closing...... 18
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to Seller's Obligations..... 19
8.2 Conditions to the Obligations of Dominion and Dominion
Venturer..... 20
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification..... 22
9.2 Third Party Claims..... 22
9.3 Limitations on Indemnification..... 24
9.4 Survival; Investigation..... 25
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination..... 25
10.2 Effect of Termination..... 26
10.3 Extension; Waiver..... 26
10.4 Amendment..... 26
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Notices..... 26
11.2 Severability..... 28
11.3 Headings..... 28
11.4 Governing Law..... 28
11.5 Assignments; Binding Effect..... 28
11.6 Survival..... 28
11.7 Entire Agreement..... 28
11.8 Counterparts..... 28
11.9 Construction..... 28
Exhibits
Exhibit A - Schedule of Loans
Exhibit B - Schedule of Warrants
Exhibit C - Form of Management Agreement
Exhibit D - Form of Support Services Agreement
Exhibit E - Venture Agreement
Exhibit F - Form of Instrument of Assignment and Assumption for
Purchased Loans
Exhibit G - Form of Instrument of Assignment for
Purchased Warrants
Exhibit H - Form of Escrow Agreement
Exhibit I - Form of Opinion of McGuire, Woods, Battle & Boothe
Exhibit J - Form of Opinion of Katten Muchin & Zavis
Exhibit K - Form of Pre-Closing Escrow Agreement
Exhibit L - Formation Agreement
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") is made as of
December 30, 1994 by and among HOUSEHOLD COMMERCIAL FINANCIAL
SERVICES, INC., a Delaware corporation ("Seller"), HCFS CORPORATE
FINANCE VENTURE, INC., a Delaware corporation and a wholly-owned
subsidiary of Seller ("HCFS Venturer"), DOMINION CAPITAL, INC., a
Virginia corporation ("Dominion"), and VIRGINIA FINANCIAL VENTURES,
INC., a Virginia corporation and a wholly-owned subsidiary of
Dominion ("Dominion Venturer").
RECITALS
A. HCFS Venturer and Dominion Venturer have formed First
Source Financial LLP, an Illinois registered limited liability
partnership ("Buyer").
B. As set forth in this Agreement, Seller wishes to sell to
Buyer certain loans (individually, a "Loan" and collectively, the
"Loan Portfolio") that are more particularly described in Exhibit
A hereto and the warrants, restructuring fees or other income
upside (other than the stock of Rexene Corporation) associated with
such Loans (collectively, the "Warrants") that are more
particularly described in Exhibit B hereto.
C. Subject to the terms and conditions of this Agreement,
HCFS Venturer and Dominion Venturer desire to cause Buyer to buy
the Loans in the Loan Portfolio (the "Purchased Loans") and all of
the Warrants associated with such Loans (the "Purchased Warrants"
and, together with the Purchased Loans, the "Purchased Assets").
D. As a condition to the obligations of Dominion and
Dominion Venturer under this Agreement and in connection with
Buyer's purchase of the Purchased Assets, Buyer and a newly created
subsidiary of Seller named First Source Financial, Inc. (the
"Management Company") will enter into a management agreement (the
"Management Agreement") in substantially the form attached hereto
as Exhibit C and Seller and the Management Company will enter into
a support services agreement (the "Support Services Agreement") in
substantially the form attached hereto as Exhibit D.
NOW, THEREFORE, in consideration of the foregoing and the
agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have
the meanings indicated below:
"Accrued Interest Amount" has the meaning set forth
in Section 4.1(d).
"Aggregate Purchase Price" has the meaning set forth in
Section 4.1(b).
"Agreement" has the meaning set forth in the first paragraph
hereof.
"Asset Loss" has the meaning set forth in Section
9.3(b).
"BGG" has the meaning set forth in Section 5.16.
"Borrower" means each person who is now or, will hereafter be,
liable for the full or partial payment or performance of any Loan,
whether such obligation is direct, indirect, primary, secondary,
joint or several.
"Buyer" has the meaning set forth in the Recitals.
"Closing" has the meaning set forth in Section 4.2.
"Closing Date" has the meaning set forth in Section 4.2.
"Collateral" means any real or personal property securing the
payment of the Notes.
"Consent Date" has the meaning set forth in Section 7.10(b).
"Credit Files" means all documents in the possession of Seller
pertaining to the Loan Portfolio and the Warrants, which files
shall include the Notes and, to the extent Seller actually has such
documents in its possession, the Loan Documents and, as applicable,
general credit information, credit records, payment histories,
signed proposal or commitment letters, appraisals, insurance
policies, certificates of insurers, title insurance policies or
attorney's title opinions.
"Dominion" has the meaning set forth in the first
paragraph hereof.
"Dominion Venturer" has the meaning set forth in the first
paragraph hereof.
"DRI" has the meaning set forth in Section 6.2.
"Encumbrances" has the meaning set forth in Section 4.3(a).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" has the meaning set forth in Section 4.4.
"Escrow Agreement" has the meaning set forth in Section 4.4.
"Escrow Amount" has the meaning set forth in Section 4.4.
"Fees" means the unamortized fees payable by the Borrowers
with respect to origination of the Purchased Loans.
"Formation Agreement" means the Formation Agreement dated as
of December 27, 1994 between HCFS Venturer and Dominion Venturer,
a copy of which is attached as Exhibit L.
"Gross Book Value" means the face amount recorded on the
Seller's books, in accordance with generally accepted accounting
principles in effect as of the date hereof, with respect to each
Loan or Warrant.
"HCFS Venturer" has the meaning set forth in the first
paragraph hereof.
"HSR Act" has the meaning set forth in Section 5.4.
"Indemnified Party" has the meaning set forth in Section 9.2.
"Indemnifying Party" has the meaning set forth in Section 9.2.
"Initial Reserve" means $10 million.
"Internal Rating" means the rating assigned to each Loan in
the Loan Portfolio as a result of Seller's internal review and
assessment. Such Rating measures the loss potential of the Loans
in the Loan Portfolio on a scale ranging from one to seven, with an
Internal Rating of one indicating the lowest probability for loss
of principal and an Internal Rating of seven indicating the highest
probability for such loss. Schedule 1.1 includes guidelines
considered by Seller in assigning an Internal Rating to a Loan.
"Legal Action" has the meaning set forth in Section 9.2(b).
"Loan" has the meaning set forth in the Recitals.
"Loan Documents" means all original documents, other than the
Notes, relating to the Purchased Assets including without
limitation, to the extent such documents exist with respect to any
Loan, security agreements, pledge agreements, deeds of trust,
financing statements, other documents relating to Collateral,
guarantees and documents evidencing Seller's rights in the
Purchased Warrants.
"Loan Purchase Price" has the meaning set forth in Section
4.1(a).
"Loan Portfolio" has the meaning set forth in the Recitals.
"Management Agreement" has the meaning set forth in the
Recitals.
"Management Company" has the meaning set forth in the
Recitals.
"Notes" means the original executed promissory note or notes
evidencing the indebtedness of the Borrowers under the Purchased
Loans.
"Participation Interests" means, in respect of a Loan, an
interest therein that constitutes a contractual right arising under
an agreement between Seller and a financial institution, pursuant
to which agreement Seller has the right to receive a portion of the
principal and interest received by such financial institution under
a Note with a Borrower, but has no rights against such Borrower
itself and pursuant to which Seller may have assumed certain
ongoing funding obligations.
"Pre-Closing Escrow Agent" means LaSalle National Bank or its
successors, as escrow agent under the Pre-Closing Escrow Agreement.
"Pre-Closing Escrow Agreement" means the Escrow Agreement
dated as of December 30, 1994 among Seller, HCFS Venturer,
Dominion, Dominion Venturer and the Pre-Closing Escrow Agent, a
copy of which is attached to this Agreement as Exhibit K.
"Pre-Closing Escrow Amount" means an aggregate of $10,000,000
which has been deposited with the Pre-Closing Escrow Agent by
Seller and Dominion in equal amounts contemporaneously with the
execution of this Agreement.
"Person" means any individual, corporation, general
partnership, limited partnership, limited liability partnership or
any other entity authorized by law.
"Prepaid Interest Amount" has the meaning set forth in Section
4.1(e).
"Purchased Assets" has the meaning set forth in the Recitals.
"SEC" has the meaning set forth in Section 6.7.
"Purchased Loans" has the meaning set forth in the Recitals.
"Purchased Warrants" has the meaning set forth in the
Recitals.
"Seller" has the meaning set forth in the first paragraph
hereof.
"Support Services Agreement" has the meaning set forth in the
Recitals.
"Survival Date" has the meaning set forth in Section 9.4.
"Venture Agreement" has the meaning set forth in Section 2.1.
"Warrants" has the meaning set forth in the Recitals.
"Warrant Purchase Price" has the meaning set forth in Section
4.1(b).
"Withheld Loan" has the meaning set forth in Section 7.10(a).
"Withheld Loan Purchase Price" has the meaning set forth in
Section 7.10(b).
"1935 Act" has the meaning set forth in Section 6.7.
ARTICLE II
FORMATION AND CAPITALIZATION OF BUYER
2.1 Formation of Buyer. Subject to the terms of the Formation
Agreement, HCFS Venturer and Dominion Venturer have formed Buyer as
a registered limited liability partnership under the laws of the
State of Illinois which after the Closing will be operated
according to the terms and provisions of the Venture Agreement
attached hereto as Exhibit E (the "Venture Agreement"), as the same
may be required to be amended in connection with the execution of
the credit facility contemplated by Section 2.2(d).
2.2 Capitalization of Buyer.
(a) Pre-Closing Escrow. Contemporaneously with the execution
and delivery of this Agreement, each of HCFS Venturer and Dominion
Venturer has deposited $5,000,000 with the Pre-Closing Escrow Agent
to be held pursuant to the terms of the Pre-Closing Escrow
Agreement. At the Closing, the Pre-Closing Escrow Amount will be
paid by the Pre-Closing Escrow Agent to Buyer and will be applied
by the Buyer as a credit against the obligations of HCFS Venturer
and Dominion Venturer under Section 2.2(b).
(b) Contribution for Partnership Interests. At the Closing,
Seller agrees to cause HCFS Venturer and Dominion agrees to cause
Dominion Venturer to contribute, and HCFS Venturer and Dominion
Venturer each agree to contribute, $45 million to Buyer, which when
combined with the $5,000,000 contributed pursuant to the Pre-
Closing Escrow Agreement shall be in satisfaction of their
obligation to fund "Mandatory Capital" under the Venture Agreement.
(c) Commitment for Special Capital. By virtue of their
execution of the Venture Agreement but subject to the provisions of
the Formation Agreement and to the Closing occurring, HCFS Venturer
and Dominion Venturer have committed to contribute an additional
$25 million to Buyer as special capital on the terms referred to in
the Venture Agreement. Subject to the provisions of the Formation
Agreement and to the Closing occurring, Seller agrees to cause HCFS
Venturer, and Dominion agrees to cause Dominion Venturer, to
perform its obligations with respect to such commitment.
(d) Negotiation of Credit Facility. Before the Closing and as
a condition to the obligations of Seller, Dominion and Dominion
Venturer under this Agreement, Seller and Dominion will negotiate
a credit facility to provide initial funds to Buyer with such
financial institutions and on such terms as Seller and Dominion
shall determine (with such determination being made by each of them
in their sole discretion). At the Closing, Seller, Dominion, HCFS
Venturer and Dominion Venturer will cause Buyer to take such
actions as may be necessary to close such credit facility. The
parties acknowledge that as of the date hereof, the parties do not
know the final terms, the effects on the Buyer's operations or the
economic impact of the Venturers' investment in the Buyer of the
financing arrangements being discussed with financial institutions
as of the date hereof.
ARTICLE III
FORMATION OF MANAGEMENT COMPANY; SUPPORT SERVICES AGREEMENT
3.1 Formation of Management Company; Management Agreement.
Seller has formed the Management Company and, at the Closing
and as a condition to the obligations of Dominion and Dominion
Venturer under this Agreement to close, will cause the Management
Company to enter into a Management Agreement in substantially the
form attached hereto as Exhibit C, as the same may be required to
be amended in connection with the execution of the credit facility
contemplated by Section 2.2(d).
3.2 Support Services Agreement. Before the Closing and as a
condition to the obligations of Dominion and Dominion Venturer
under this Agreement, Seller and the Management Company shall enter
into a Support Services Agreement in substantially the form
attached hereto as Exhibit D, as the same may be required to be
amended in connection with the execution of the credit facility
contemplated by Section 2.2(d).
ARTICLE IV
PURCHASE AND SALE OF PURCHASED ASSETS
4.1 Agreement to Buy and Sell Purchased Assets.
(a) Sale and Purchase of Purchased Loans. Subject to the
terms and conditions set forth in this Agreement, at the Closing,
Seller agrees to sell to Buyer, and HCFS Venturer and Dominion
Venturer agree to cause Buyer to buy from Seller, the Purchased
Loans for consideration (the "Loan Purchase Price") equal to the
Gross Book Value of the Purchased Loans as of the Closing Date
minus the amount of the Fees as of the Closing Date and minus the
Initial Reserve.
(b) Sale and Purchase of Warrants. Subject to the terms and
conditions set forth in this Agreement, at the Closing, Seller
agrees to sell to Buyer, and HCFS Venturer and Dominion Venturer
agree to cause Buyer to buy from Seller, the Warrants for
consideration (the "Warrant Purchase Price" and, together with the
Loan Purchase Price, the "Aggregate Purchase Price") equal to the
Gross Book Value of the Warrants as of the Closing Date.
(c) Dominion's Right to Exclude Certain Loans and Warrants;
Adjustment to Aggregate Purchase Price.
(i) At any time before the Closing Date, Dominion shall have
the right, with the consent of Seller, to exclude any of the
following Loans from the Loan Portfolio: (A) any Loan with an
Internal Rating of five or higher or (B) any other Loan which
Dominion concludes, based upon the results of its investigation
pursuant to Section 7.4, should have loss exposure parameter
ratings equivalent to an Internal Rating of five (as calculated in
accordance with the specifications contained in Schedule 1.1) or
which has a reasonable probability for loss of principal.
(ii) Seller shall not unreasonably withhold consent to the
exclusion of any Loan which Seller reasonably agrees meets the
criteria for exclusion contained in Section 4.1(c)(i).
(iii) If any Loan is excluded pursuant to the provisions of
this Section 4.1(c), such Loan and any Warrant associated with such
Loan shall not be included in the Purchased Assets. In such case,
the Gross Book Values of such Loan and any Warrant associated
therewith and, the Fees relating to such Loan shall not be
considered in the calculation of the Aggregate Purchase Price.
(d) Payment of Accrued Interest to Seller. At the Closing,
HCFS Venturer and Dominion Venturer agree to cause Buyer to pay to
Seller all unpaid interest accrued (the "Accrued Interest Amount")
up to, but not including, the Closing Date on each of the Purchased
Loans for the month or other applicable payment period in which the
Closing Date occurs.
(e) Payment of Prepaid Interest to Buyer. At the Closing,
Seller agrees to pay to Buyer all prepaid interest paid by any
Borrower to Seller or HCFS Venturer or the respective affiliates of
such parties with respect to any of the Purchased Loans (the
"Prepaid Interest Amount") as of the Closing Date.
4.2 Closing. Subject to the satisfaction of the conditions
set forth in this Agreement, the closing (the "Closing") of the
purchase and sale of the Purchased Assets and the other matters
contemplated by this Agreement shall take place on December 30,
1994 (the "Closing Date") and shall be deemed to occur as of 11:59
p.m. on such date. The Closing shall occur at the offices of
Katten, Muchin & Zavis, or at such other time or place as may be
mutually agreed upon by the parties hereto.
4.3 Transfer of Purchased Assets; Assignments and
Endorsements.
(a) Endorsement of Notes; Transfer of Purchased Assets;
Execution of Other Documents. At the Closing, Seller shall endorse
(such endorsement to be without recourse) the Notes to Buyer (in
certain cases, in lieu of such endorsement, Seller shall cause the
issuance of new notes in substitution of the existing Notes). In
addition, Seller shall transfer the Purchased Loans to Buyer, and
Buyer shall assume Seller's obligations related to the Purchased
Loans, in accordance with the terms of an instrument of assignment
and assumption in substantially the form attached hereto as Exhibit
F and Seller shall transfer the Purchased Warrants to Buyer in
accordance with the terms of an instrument of assignment in
substantially the form attached hereto as Exhibit G. Seller shall
transfer the Purchased Assets pursuant to this Section 4.3(a) free
and clear of any liens, security interests or other encumbrances
(collectively, "Encumbrances"). Furthermore, Seller shall execute
such individual assignments of security agreements, mortgages,
financing statements, deeds of trust and other documents or
instruments as Buyer or Dominion, each in its reasonable
discretion, deems to be necessary or appropriate for the transfer
to Buyer of Seller's right, title and interest in the Purchased
Assets. Seller shall be responsible for the preparation of such
assignments, assumptions and other documents or instruments and the
payment of any costs associated with such preparation. Buyer shall
be responsible for the recording of such assignments and for the
payment of any costs associated with such recording.
(b) Delivery. At the Closing, (i) Seller shall deliver to
Buyer the Notes, the Loan Documents and all other documents or
instruments reasonably requested by Buyer or Dominion to transfer
title to the Purchased Assets to Buyer and (ii) Buyer shall deliver
to Seller all documents and instruments reasonably requested by
Seller to evidence Buyer's assumption of the obligations arising
under the Purchased Assets.
4.4 Creation of the Escrow Account. At the Closing, Seller
shall deposit $10 million (the "Escrow Amount") in an account
designated by an escrow agent reasonably agreed upon by Seller and
Dominion (the "Escrow Agent") and, together with Buyer, Dominion
and the Escrow Agent, shall execute and deliver an Escrow Agreement
to the Escrow Agent in substantially the form attached hereto as
Exhibit H (the "Escrow Agreement").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER AND HCFS VENTURER
Seller and HCFS Venturer represent and warrant the following
to Dominion and Dominion Venturer as of the date hereof:
5.1 Organization; Qualification. Each of Seller and HCFS
Venturer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and each such
corporation has corporate power and authority to own all of its
assets and to carry on its business as it is presently being
conducted.
5.2 Authority Relative to this Agreement; Binding Obligation.
Each of Seller and HCFS Venturer has corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by Seller and HCFS Venturer and the consummation of
the transactions contemplated hereby have been duly authorized by
the Boards of Directors of Seller and HCFS Venturer, and no other
corporate proceedings on the part of Seller or HCFS Venturer are
necessary with respect thereto. This Agreement constitutes a valid
and binding obligation of each of Seller and HCFS Venturer,
enforceable against each such party according to its terms, except
as such enforceability may be limited by the bankruptcy laws and
similar laws relating to or affecting creditors' rights generally
and general principles of equity.
5.3 Operation of the Management Company. The Management
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has
conducted no business other than business conducted in preparation
for the consummation of the transactions contemplated hereby.
5.4 Consents and Approvals. Except as required by the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and
as listed on Schedule 5.4, there is no requirement applicable to
either Seller or HCFS Venturer to make any filing with, or to
obtain any consent or approval from, any governmental body or any
unaffiliated business entity, as a condition to the consummation of
the transactions contemplated by this Agreement.
5.5 Non-Contravention. Except as set forth on Schedule 5.5,
the execution and delivery by Seller and HCFS Venturer of this
Agreement and the consummation of the transactions contemplated
hereby will not (i) violate or result in a material breach of any
provision of the Certificate of Incorporation or Bylaws of Seller
or HCFS Venturer, (ii) result in a default or give rise to any
right of termination, cancellation or acceleration (whether
immediately or after the giving of notice or the passage of time,
or both), under the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement, lease or other
instrument or obligation to which Seller or HCFS Venturer is a
party or by which any such party or any of the Purchased Assets may
be bound, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller or HCFS Venturer,
any of the Purchased Assets or the business of Seller or HCFS
Venturer.
5.6 Ownership of Purchased Assets. Seller is the legal and
equitable owner of the Purchased Assets and, for all Purchased
Assets other than the Participation Interests, the Notes and the
Loan Documents, free and clear of any Encumbrances, and, except for
obtaining the consents of, or providing notices to, those Borrowers
and other persons listed on Schedule 5.6, Seller has the right to
assign the Purchased Assets, the Notes and the other Loan Documents
to Buyer. Neither Seller nor HCFS Venturer has, directly or
indirectly, assigned or transferred to any other person (i) any of
the Purchased Assets, the Notes or the Loan Documents or (ii) any
rights with respect to the Purchased Assets or under the Notes or
the Loan Documents, except for the interests in the Loans to
AEC/Sterling and Optek, Inc. sold to Mitsui Nevitt Capital
Corporation. At the Closing, Buyer will acquire title to the
Purchased Assets, the Notes and the Loan Documents free and clear
of any Encumbrances.
5.7 Amount of Fees; Gross Book Value. The amount of Fees
relating to each Loan and the Gross Book Value of each Loan and
each Warrant set forth on Schedule 5.7 are correct as of the date
of this Agreement.
5.8 Validity of Notes and Loan Documents. The Notes and the
Loan Documents have been validly authorized, executed and delivered
by, and are binding obligations of, Seller, and, to the best of
Seller's knowledge, the Borrowers and all other parties thereto.
5.9 No Borrower Default. Except as set forth in Schedule 5.9,
there are no defaults with respect to the payment of principal or
interest under the Notes nor, to the best of Seller's knowledge,
any other material violations by any of the Borrowers of the
representations, warranties or covenants under the Loan Documents
relating to such Borrowers.
5.10 Seller's Compliance with Loan Documents; No Default.
Each of Seller and HCFS Venturer, as applicable, has complied in
all material respects with, and is not in default under, the terms,
conditions and covenants of any of the Notes or the Loan Documents.
5.11 No Defenses of Borrowers; Evidence of Obligations.
Except as set forth in Schedule 5.11, (i) to Seller's knowledge, no
defenses exist with respect to the enforcement of the Notes and the
Loan Documents against the Borrowers and (ii) the Notes evidence
and the Loan Documents and Warrants, in all material respects,
evidence the Borrowers' obligations with respect to the Purchased
Assets, in each case as necessary to allow Buyer to collect the
principal, interest, fees and expenses and to exercise the warrants
under such Notes and Loan Documents upon consummation of the
transactions contemplated hereby.
5.12 No Escrows. Except for an aggregate amount not in excess
of $100,000, there are no escrows for taxes or insurance premiums
currently held by Seller or HCFS Venturer under any of the Notes or
the Loan Documents.
5.13 No Other Indebtedness Secured. There is no indebtedness
secured by the Loan Documents other than as set forth in the Notes
and the Loan Documents. Except as described in Schedule 5.13, none
of Seller or HCFS Venturer has any obligation to extend any further
credit under the Loan Documents.
5.14 Insurance. Except as set forth in Schedule 5.14, none of
Seller or HCFS Venturer has received any notice of cancellation as
to any of the insurance policies on which the Loan Documents
require any such party to be listed as a loss payee or additional
insured with respect to any Collateral.
5.15 Litigation. Except as described on Schedule 5.15, there
are no actions, suits, claims, investigations or proceedings
(legal, administrative or arbitrative) whether at law or in equity
and whether civil or criminal in nature, before any court,
arbitrator, governmental department, commission, agency or
instrumentality, pending or, to Seller's knowledge, threatened
against Seller or HCFS Venturer (i) affecting, or with respect to,
the Purchased Assets, the Collateral, the Notes or the Loan
Documents, or (ii) which could materially affect the ability of
Seller or HCFS Venturer to consummate the transactions contemplated
hereby.
5.16 No Brokers. Except for amounts payable to Benedetto,
Gartland & Greene, Inc. ("BGG") or as otherwise set forth herein or
in the Venture Agreement, no amount will be payable to any broker,
agent or finder employed by Seller, HCFS Venturer or their
respective affiliates in connection with the transactions
contemplated hereby.
5.17 Compliance with Law. Except as set forth in Schedule
5.17, each of Seller, HCFS Venturer and, as of the Closing Date,
the Management Company has operated its business with respect to
the Loan Portfolio and the Warrants in compliance in all material
respects with all laws, regulations, orders, judgments or decrees
of any federal, state, local or foreign court or governmental
authority applicable to the Loan Portfolio or the Warrants. None
of Seller, HCFS Venturer or, as of the Closing Date, the Management
Company has received notice of, or has knowledge of, any facts,
events or conditions which allege or with the passage of time could
give rise to an allegation of, a failure to be in compliance in any
material respects with such laws, regulations, orders, judgments or
decrees. The parties recognize and agree that, as of the Closing,
Management Company may not be fully licensed in all jurisdictions
where licensing may be required, but that such failure shall not
materially and adversely affect Buyer's interest in the Loans or
Loan Documents.
5.18 Full Disclosure. To the knowledge of Seller and HCFS
Venturer, the representations and warranties made by Seller and
HCFS Venturer herein and the historical financial information
furnished to Dominion or Dominion Venturer prior to Closing related
to the Purchased Assets and the business operations related thereto
do not contain an untrue statement of a material fact or omit to
state a material fact necessary to make such information, in the
light of the circumstances under which such information was
reviewed, not misleading.
5.19 ERISA. The Purchased Assets are free and clear of all
Encumbrances in respect of ERISA.
5.20 Updating of Representations and Warranties. The
representations and warranties contained in this Article V shall be
deemed re-made on and as of the Closing Date. If Seller or HCFS
Venturer becomes aware of information that causes a representation
or warranty contained in this Article V to become untrue before the
Closing Date, such party shall immediately disclose such
information in writing (in reasonable specificity as to the nature
of the untruth) to Dominion. If Seller's or HCFS Venturer's
representations or warranties in question become untrue prior to
Closing and Seller or HCFS Venturer notifies Dominion or Dominion
Venturer in writing of such untruth prior to Closing, Seller and
HCFS Venturer shall not be in default hereunder and the sole right
of Dominion and Dominion Venturer shall be to terminate this
Agreement. If Dominion or Dominion Venturer does not terminate
this Agreement in accordance with this Section 5.20, the
representations and warranties made in this Article V shall be
deemed to be modified by such information disclosed pursuant to
this Section 5.20. Dominion and Dominion Venturer are prohibited
from making any claims against Seller or HCFS Venturer after the
Closing with respect to any breaches of the representations and
warranties made by Seller or HCFS Venturer contained in this
Agreement that Dominion or Dominion Venturer had actual knowledge
of before the Closing pursuant to a written notice delivered in
accordance with this Section 5.20.
5.21 Seller's Knowledge. As used in this Article V, the
phrase "Seller's knowledge" shall mean the actual knowledge of all
personnel of Seller involved in the origination, underwriting or
portfolio management of the Purchased Loans, except for (i)
clerical and secretarial personnel and (ii) loan operations
personnel reporting to Rebecca A. Reese.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF DOMINION AND DOMINION VENTURER
Dominion and Dominion Venturer represent and warrant the
following to Seller and HCFS Venturer as of the date hereof:
6.1 Organization; Qualification. Each of Dominion and
Dominion Venturer is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Virginia
and has corporate power and authority to own all of its assets and
to carry on its business as it is presently being conducted.
6.2 Corporate Power. Each of Dominion and Dominion Venturer
has corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
6.3 Consents and Approvals. Except as required by the HSR
Act, there is no requirement applicable to Dominion or Dominion
Venturer to make any filing with, or to obtain any consent or
approval from, any governmental body or unaffiliated business
entity, as a condition to the consummation of the transactions
contemplated by this Agreement.
6.4 Non-Contravention. The execution and delivery of this
Agreement by Dominion and Dominion Venturer and the consummation of
the transactions contemplated hereby will not (i) violate or result
in a breach of any provision of the Articles of Incorporation or
Bylaws of Dominion or Dominion Venturer, (ii) result in a default
or give rise to any right of termination, cancellation or
acceleration (whether immediately or after the giving of notice or
the passage of time, or both), under the terms, conditions or
provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which either
Dominion or Dominion Venturer is a party or by which either such
party may be bound, or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Dominion or
Dominion Venturer or the business of either such party.
6.5 No Brokers. Except for amounts payable to BGG or as
otherwise set forth herein or in the Venture Agreement, no amount
will be payable to any broker, agent or finder employed by
Dominion, Dominion Venturer or their respective affiliates in
connection with the transactions contemplated hereby.
6.6 Litigation. There are no actions, suits, claims,
investigations or proceedings (legal, administrative or
arbitrative) pending or, to Dominion's knowledge, threatened
against Dominion or Dominion Venturer which could materially affect
the ability of either such party to consummate the transactions
contemplated hereby, whether at law or in equity and whether civil
or criminal in nature, before any court, arbitrator, governmental
department, commission, agency or instrumentality.
6.7 Public Utility Holding Company Act. DRI is an exempt
holding company under Section 3(a)(1) of the Public Utility Holding
Company Act of 1935 (the "1935 Act") pursuant to Rule 2 and, as
such, is exempt from all provisions of the 1935 Act except Section
9(a)(2). None of DRI, Dominion, Dominion Venturer or, based solely
upon Dominion Venturer being a partner in Buyer, Buyer is required
to obtain any approval or other authorization from the Securities
and Exchange Commission ("SEC") under the 1935 Act in connection
with any such party's execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby. Section
9(a)(2) of the 1935 Act will not require Buyer to obtain any
approvals or authorizations from the SEC under the 1935 Act except
to the extent that Buyer acquires, directly or indirectly, five
percent or more of the outstanding voting securities of any public
utility company as defined in the 1935 Act.
6.8 Dominion's Knowledge. As used in this Article VI, the
phrase "Dominion's knowledge" shall mean the actual knowledge of
all officers of Dominion.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Payment of Interest and Fees after the Closing Date.
(a) Payment of Interest. Except for the Accrued Interest
Amount, Buyer shall not be required to pay to Seller or HCFS
Venturer any accrued and unpaid interest on any Purchased Loan.
Any installments of interest that are received by Buyer after the
Closing Date shall be retained by Buyer or, if delivered to Seller
or HCFS Venturer, shall be promptly remitted to, or as otherwise
directed by, Buyer.
(b) Other Payments. Except as otherwise provided herein or in
the Management Agreement, all payments received by Seller or HCFS
Venturer or the affiliates of such parties after the Closing Date
with respect to any Purchased Asset shall belong to Buyer, and
Seller and HCFS Venturer shall deliver or cause the delivery of any
such payments to, or as otherwise directed by, Buyer promptly after
such party's receipt thereof.
7.2 Servicing of the Purchased Loans; Notices; Power of
Attorney.
(a) Servicing of the Purchased Loans. As of the Closing Date,
Seller shall have no further obligation to service the Purchased
Loans, and Buyer shall assume all of Seller's obligations with
respect to such servicing.
(b) Notices.
(i) After the Closing Date, Seller and HCFS Venturer
shall forward to Buyer all notices or other information concerning
any of the Purchased Assets promptly after such party's receipt
thereof, and HCFS Venturer and Dominion Venturer shall cause Buyer
to notify the Borrowers of Buyer's purchase of the Purchased Assets
and direct that all payments and communications with respect to
such Purchased Assets be sent as directed by Buyer.
(ii) After the Closing Date, if required under existing
policies, Seller shall notify all companies providing hazard,
collision or any other types of insurance for the protection of the
Purchased Assets or the Collateral of the consummation of the
transactions contemplated hereby.
(c) Further Assurances. Each of the parties hereto will use
its best efforts to implement the provisions of this Agreement;
provided that the foregoing obligation shall not be interpreted as
limiting in any manner the ability of a party to act in its sole
discretion in respect of any matter for which sole discretion is
provided herein [including but not limited to Sections 2.2(d),
8.1(d) and 8.2(h)]. From time to time after the Closing, upon the
request of Buyer, the parties hereto will, without further
consideration, execute and deliver such additional documents and
take such other actions that Buyer may reasonably deem necessary or
desirable to (i) consummate the transactions contemplated hereby,
(ii) vest title to the Purchased Assets in Buyer or (iii) enable
Buyer to collect amounts due with respect to the Purchased Assets
or pursue remedies for default by any Borrower under any Note or
any Loan Document.
7.3 Communication with Borrowers. From the date hereof to and
including the Closing Date, Seller shall grant to Buyer and Buyer's
authorized representatives including, without limitation, Buyer's
attorneys, accountants and financial advisors, the right to
communicate directly with the Borrowers regarding the Loan
Portfolio and the Warrants; provided, however, that none of
Dominion, Dominion Venturer or their attorneys, accountants or
financial advisors shall act on behalf of Buyer with respect to
this Section 7.3.
7.4 Investigation of Loan Portfolio and Warrants. From the
date hereof until and including the Closing Date, Seller and HCFS
Venturer and their respective affiliates shall afford Dominion and
Dominion Venturer and the authorized representatives of such
parties (including, without limitation, the attorneys, accountants
and financial advisors of such parties) such access, during normal
business hours, to (i) all books and records relating to the Loan
Portfolio and the Warrants including, without limitation, the
Credit Files and (ii) any personnel of Seller, HCFS Venturer or
their respective affiliates who possess knowledge with respect to
the Loan Portfolio and the Warrants, as Dominion or Dominion
Venturer may reasonably request to enable it to make a full
investigation of the Loan Portfolio and the Warrants. Seller, HCFS
Venturer and their respective affiliates shall also cause their
respective employees and advisors to furnish to Dominion, Dominion
Venturer and the authorized representatives of such parties such
data and other information as such parties may reasonably request
in writing to make such an investigation to the extent such data
and information is available without unreasonable effort or
expense.
7.5 Confidentiality.
(a) Confidentiality Agreement. Each party hereto agrees to
hold, and to cause its employees, representatives and advisors to
hold, in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all documents and
information furnished by any other party hereto in connection with
the transactions contemplated by this Agreement, and not to use
such information for any purpose other than in connection with the
transactions contemplated hereby, except to the extent that such
information has been or shall have become (i) generally available
to the public otherwise than as a result of disclosure by such
party or its employees, representatives and advisors, (ii)
available on a non-confidential basis from a source other than a
party hereto, (iii) known to such party prior to the date such
information was furnished as contemplated by this Section, (iv)
known to such party as a result of the regular business
relationships between the parties hereto existing without regard to
this Agreement or (v) part of normal and customary disclosure to
legitimate constituencies including, but not limited to,
shareholders, rating agencies, analysts and lenders or prospective
lenders.
(b) Survival of Confidentiality; Termination.
(i) The confidentiality agreement contained in Section
7.5(a) will terminate upon the consummation of the transactions
contemplated hereby.
(ii) If the Closing does not occur, any party in
possession of confidential information originating from another
party shall return the originals or any copies of documents
constituting such confidential information to such party and shall
not retain any copies of such materials, and each party shall
continue to honor its obligations under Section 7.5(a).
7.6 Public Announcements. Except for announcements or filings
required by law, each party hereto will advise and consult with the
others before making, or authorizing the making of, any press
release or other statement to any third party with respect to this
Agreement or the transactions contemplated hereby.
7.7 Expenses. Each party hereto shall bear its own expenses
and the expenses of its respective affiliates incurred in
connection with the transactions contemplated hereby. If the
Closing occurs, Buyer shall bear only those expenses directly
related to the formation of Buyer in an amount not to exceed $4
million (which amount shall include a fee payable to BGG in an
amount not to exceed $2 million) plus the fees and expenses related
to the credit facility referred to in Section 2.2(c). If this
Agreement is terminated or the Closing does not occur for any
reason, then notwithstanding the parties' obligations under the
first sentence of this Section, they agree that the expenses
directly related to the formation of Buyer shall be borne by the
parties as follows:
(i) the fees and expenses of BGG shall be borne by
Seller;
(ii) the expenses incurred on or before December 30, 1994
including the fees and expenses contemplated under Section 7.8
shall be divided equally between Dominion and Seller; and
(iii)the expenses incurred after December 30, 1994 shall
be borne by Seller.
7.8 HSR Act Filings. Each party hereto shall cooperate with
the others to make all required filings under the HSR Act. Buyer
shall bear the expense of such filings, including related legal
fees.
7.9 Bulk Sales Laws. The parties hereto acknowledge and agree
that the transactions contemplated hereby will be consummated
without regard to compliance with the "bulk sales laws" of any
state or jurisdiction. Accordingly, notwithstanding the provisions
of Article IX, Seller will indemnify and hold harmless Dominion,
Dominion Venturer and Buyer from any and all claims made by
creditors of Seller or HCFS Venturer relating to provisions of such
"bulk sales laws" which may be applicable to the transactions
contemplated hereby and from all costs (including reasonable
attorney's fees) incurred in the defense of any claims made under
such laws.
7.10 Loans for which Consent is not Obtained by Closing.
(a) If Seller does not obtain the consent of a Borrower
required as a precondition to assignment of that Loan under the
applicable Loan Documents to the inclusion of a Loan in the
Purchased Assets, such Loan (a "Withheld Loan") and any Warrant
associated with such Loan shall not be included in the Purchased
Assets at Closing. In such case, the Gross Book Values of the
Withheld Loan and any Warrant associated therewith, the Fees
relating to such Loan and any portion of the Initial Reserve
attributable to such Loan shall not be considered in the
calculation of the Aggregate Purchase Price.
(b) At such time as the Seller obtains the consent of a
Borrower to the inclusion of a Withheld Loan in the Purchased
Assets (the "Consent Date"), such Withheld Loan and any Warrant
associated with such Loan shall become Purchased Assets and Seller
agrees to sell to Buyer, and Buyer agrees to purchase from Seller
[subject to the satisfaction, or waiver by Dominion, of the
conditions set forth in Sections 8.2(a)-(d) as of the Consent Date
in respect of the Withheld Loan and receipt of funding at the
applicable advance rate for such Loan under the credit facility
contemplated under Section 2.2(d)], such Assets for a purchase
price (the "Withheld Loan Purchase Price") equal to (i) the
outstanding principal amount of the Withheld Loan as of the Consent
Date, plus (ii) the book value of any Warrant related thereto as of
the Consent Date, minus (iii) the portion of the Initial Reserve
attributable to such Withheld Loan and minus (iv) the Fees relating
to such Withheld Loan as of the Consent Date. Seller shall also be
deemed to make as of the Consent Date the representations and
warranties in Article V of this Agreement (other than those
relating to consents of borrowers or other parties) to the extent
applicable to the Withheld Loan.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to Seller's Obligations. Seller's obligations
under this Agreement shall be contingent and specifically
conditioned upon the satisfaction or waiver by Seller at or before
the Closing, of the following matters:
(a) Each of Dominion and Dominion Venturer shall have complied
in all material respects with all of the covenants, agreements and
conditions required by this Agreement to be complied with by
Dominion or Dominion Venturer, as the case may be, before or as of
the Closing;
(b) All of the representations and warranties of Dominion and
Dominion Venturer set forth in this Agreement shall be true and
correct in all material respects at and as of the Closing Date, as
though such representations and warranties were made at and as of
the Closing Date;
(c) All governmental consents, authorizations, orders or
approvals required to consummate the transactions contemplated by
this Agreement and to permit Buyer to operate the business
contemplated in the Venture Agreement shall have been obtained and
all waiting periods specified by law with respect thereto shall
have passed;
(d) Buyer shall have obtained a credit facility to provide
initial funding to Buyer as contemplated by Section 2.2(d) which
shall be satisfactory to Seller in its sole discretion;
(e) The amount of Loans and Warrants excluded pursuant to
Dominion's exercise of its exclusion right set forth in Section
4.1(c) shall not have exceeded $75 million;
(f) Neither Dominion nor Dominion Venturer shall be in
receivership or dissolution, or have made any assignment for the
benefit of its respective creditors, or admitted in writing its
inability to pay its debts as they mature, or have been adjudicated
a bankrupt, or have filed a petition in voluntary bankruptcy, a
petition or answer seeking reorganization or an arrangement with
creditors under the federal bankruptcy law or any other similar law
or statute of the United States or any state, nor shall any such
petition have been filed against it;
(g) All consents of Borrowers specified on Schedule 5.6 shall
have been obtained; provided, however, that if consents of
Borrowers, which are obligated in the aggregate in respect of $75
million or less of the Gross Book Value of the Purchased Assets,
have not been obtained as of the Closing Date, this condition shall
be deemed satisfied.
(h) Seller and HCFS Venturer shall have received an opinion,
dated as of the Closing Date, of McGuire, Woods, Battle & Boothe,
counsel for Dominion and Dominion Venturer, in substantially the
form attached hereto as Exhibit I; and
(i) No order of any court or administrative agency shall be in
effect which restrains or prohibits the consummation of the
transactions contemplated hereby or which would limit or affect, in
any material respect, Buyer's ability to conduct its business as
contemplated by the Venture Agreement, and there shall not have
been threatened, nor shall there be pending, any action or
proceeding by or before any court or governmental agency or other
regulatory or administrative agency or commission, seeking to
prohibit or delay or challenging the validity of any of the
transactions contemplated by this Agreement.
8.2 Conditions to the Obligations of Dominion and Dominion
Venturer. The obligations of Dominion and Dominion Venturer under
this Agreement shall be contingent and specifically conditioned
upon the satisfaction or waiver by either Dominion or Dominion
Venture, at or before the Closing, of the following matters:
(a) Seller and HCFS Venturer shall have complied in all
material respects with all of the covenants, agreements and
conditions required by this Agreement to be complied with by such
parties before or as of the Closing;
(b) All of the representations and warranties of Seller and
HCFS Venturer set forth in this Agreement shall be true and correct
in all material respects at and as of the Closing Date, as though
such representations and warranties were made at and as of the
Closing Date;
(c) Neither Seller nor HCFS Venturer shall be in receivership
or dissolution, or have made any assignment for the benefit of its
respective creditors, or admitted in writing its inability to pay
its debts as they mature, or have been adjudicated a bankrupt, or
have filed a petition in voluntary bankruptcy, a petition or answer
seeking reorganization or an arrangement with creditors under the
federal bankruptcy law or any other similar law or statute of the
United States or any state, nor shall any such petition have been
filed against it;
(d) All governmental consents, authorizations, orders or
approvals required to consummate the transactions contemplated by
this Agreement and to permit Buyer to operate the business
contemplated in the Venture Agreement shall have been obtained and
all waiting periods specified by law with respect thereto shall
have passed;
(e) All consents of Borrowers specified on Schedule 5.6 shall
have been obtained; provided, however, that if consents of
Borrowers, which are obligated in the aggregate in respect of $75
million or less of the Gross Book Value of the Purchased Assets,
have not been obtained as of the Closing Date, this condition shall
be deemed satisfied.
(f) Seller shall have caused the Management Company to execute
and deliver the Management Agreement to Buyer;
(g) Seller shall have, and shall have caused the Management
Company to have, executed and delivered the Support Services
Agreement to the other party thereto;
(h) Buyer shall have obtained a credit facility to provide
initial funding to Buyer as contemplated by Section 2.2(d) which
shall be satisfactory to Dominion in its sole discretion;
(i) Seller shall not have unreasonably withheld its consent to
Dominion's exercise of its exclusion right set forth in Section
4.1(c);
(j) Dominion and Dominion Venturer shall have received an
opinion, dated as of the Closing Date, of Katten Muchin & Zavis,
counsel for Seller and HCFS Venturer, in substantially the form
attached hereto as Exhibit J;
(k) No order of any court or administrative agency shall be in
effect which restrains or prohibits the consummation of the
transactions contemplated hereby or which would limit or affect, in
any material respect, Buyer's ability to conduct its business as
contemplated by the Venture Agreement, and there shall not have
been threatened, nor shall there be pending, any action or
proceeding by or before any court or governmental agency or other
regulatory or administrative agency or commission, seeking to
prohibit or delay or challenging the validity of any of the
transactions contemplated by this Agreement; and
(l) Buyer shall have received a guaranty from Household
Finance Corporation of Seller's indemnification obligations for
breach of certain of Seller's representations and undertakings
under this Agreement, the form and content of such guaranty to be
satisfactory to Dominion Venturer in its sole discretion.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification.
(a) By Seller and HCFS Venturer. Subject to the limitations
contained in this Article IX, Seller and HCFS Venturer, jointly and
severally, shall indemnify and hold Dominion, Dominion Venturer and
Buyer harmless from any damage, loss, liability or expense
(including, without limitation, reasonable expenses of
investigation and litigation and reasonable attorneys',
accountants' and other professional fees) arising out of a breach
of (i) any representation or warranty made by Seller or HCFS
Venturer to any such party in this Agreement or (ii) any agreement
made by Seller or HCFS Venturer with any such party in this
Agreement.
(b) By Dominion and Dominion Venturer. Subject to the
limitations contained in this Article IX, Dominion and Dominion
Venturer, jointly and severally, shall indemnify and hold Seller
and HCFS Venturer harmless from any damage, loss, liability or
expense (including, without limitation, reasonable expenses of
investigation and litigation and reasonable attorneys',
accountants' and other professional fees) arising out of a breach
of (i) any representation or warranty made by Dominion or Dominion
Venturer to any such party in this Agreement or (ii) any agreement
made by Dominion or Dominion Venturer with any such party in this
Agreement.
9.2 Third Party Claims. The obligation of any party hereto
(the "Indemnifying Party") to indemnify any other party hereto (the
"Indemnified Party") under the provisions of this Article IX with
respect to claims resulting from the assertion of liability by
those not parties to this Agreement (including governmental claims
for penalties, fines and assessments) shall be subject to the
following terms and conditions:
(a) Notice. The Indemnified Party shall give prompt written
notice to the Indemnifying Party of any assertion of liability by
a third party which might give rise to a claim for indemnification
based on the provisions of this Article IX, which notice shall
state, to the extent known, the nature, basis and amount of the
assertion; provided, however, that no delay on the part of the
Indemnified Party in giving such notice shall relieve the
Indemnifying Party of any obligation to indemnify unless (and then
solely to the extent that) the Indemnifying Party is prejudiced by
such delay.
(b) Defense of a Legal Action by the Indemnifying Party. If
any action, suit or proceeding (a "Legal Action") is brought
against the Indemnified Party with respect to which the
Indemnifying Party may have liability under the provisions of this
Article IX, the Legal Action shall be defended (such defense to
include all proceedings for appeal or review which counsel for the
Indemnified Party shall reasonably deem appropriate) by the
Indemnifying Party.
(c) Defense of a Legal Action by the Indemnified Party.
Notwithstanding the provisions of the previous subsection of this
Agreement, until the Indemnifying Party shall have assumed the
defense of the Legal Action, the defense shall be handled by the
Indemnified Party. Furthermore, (i) if the Indemnified Party shall
have reasonably concluded that there are likely to be defenses
available to it that are different from or in addition to those
available to the Indemnifying Party; (ii) if the Indemnifying Party
fails to provide the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party has
sufficient financial resources to defend and fulfill its
indemnification obligation with respect to the Legal Action; (iii)
if the Legal Action involves other than money damages and seeks
injunctive or other equitable relief; or (iv) if a judgment against
the Indemnified Party in the Legal Action will, in the good faith
of the Indemnified Party, establish a custom or precedent which
will be adverse to the best interest of the continuing business of
the Indemnified Party, the Indemnifying Party shall not be entitled
to assume the defense of the Legal Action and the defense shall be
handled by the Indemnified Party. If the defense of the Legal
Action is handled by the Indemnified Party under the provisions of
subsections (i), (ii) or (iii) of this Section 9.2(c), the
Indemnifying Party shall pay all legal and other expenses
reasonably incurred by the Indemnified Party in conducting such
defense.
(d) Rights of the Indemnified Party. In any Legal Action
initiated by a third party and defended by the Indemnifying Party
(i) the Indemnified Party shall have the right to be represented by
advisory counsel and accountants, at its own expense, (ii) the
Indemnifying Party shall keep the Indemnified Party fully informed
as to the status of such Legal Action at all stages thereof,
whether or not the Indemnified Party is represented by its own
counsel, (iii) the Indemnifying Party shall make available to the
Indemnified Party and its attorneys, accountants and other
representatives, all books and records of the Indemnifying Party
relating to such Legal Action and (iv) the Indemnifying Party and
the Indemnified Party shall render to each other such assistance as
may be reasonably required in order to ensure the proper and
adequate defense of such Legal Action.
(e) Consent to Settlement. In any Legal Action initiated by
a third party and defended by the Indemnifying Party, the
Indemnifying Party shall not make settlement of any claim without
the written consent of the Indemnified Party, which consent shall
not be unreasonably withheld. If the settlement discharges the
Indemnified Party from any further liability in connection with the
Legal Action and does not otherwise involve injunctive or equitable
relief against the Indemnified Party and the Indemnified Party
nevertheless withholds consent thereto, then (i) the Indemnified
Party shall pay all legal and other expenses incurred in continuing
the defense of such Legal Action and (ii) in no event shall the
Indemnifying Party's liability on account of such Legal Action
exceed the amount of the settlement.
9.3 Limitations on Indemnification.
(a) All damages to which the Indemnified Party may be entitled
pursuant to the provisions of this Article IX shall be net of any
insurance coverage with respect thereto.
(b) If and to the extent any breach by Seller or HCFS Venturer
of any representation, warranty or agreement made herein results in
a loss with respect to any of the Purchased Assets (an "Asset
Loss"), then:
(i) If, and to the extent, that any party hereto would,
in the absence of this Section 9.3(b)(i), be entitled to
indemnification under this Article IX by reason of an Asset Loss,
then the Indemnifying Party shall indemnify Buyer in respect of
such Asset Loss and, upon such indemnification, Dominion, Dominion
Venturer, HCFS or HCFS Venturer shall not be entitled to
indemnification in respect of such Asset Loss.
(ii) Neither Seller nor HCFS Venturer shall have any
obligation to reimburse Buyer, Dominion or Dominion Venturer for
any portion of an Asset Loss that is attributable to the inability
of any Borrower to pay for its obligations with respect to any
Purchased Asset. In the case of such inability, the portion of the
Asset Loss attributable to a Borrower's nonpayment shall be
reimbursed from the Initial Reserve or the Escrow and only the
portion of the Asset Loss attributable directly to the breach of a
representation, warranty or agreement made herein shall be
reimbursed pursuant to the indemnification provisions of this
Article IX.
9.4 Survival; Investigation. Subject to Section 5.20 hereof,
the representations and warranties of each party contained in this
Agreement shall survive any investigation by any party to whom such
representations and warranties are made and shall not terminate
until the third anniversary of the Closing Date (the "Survival
Date"), at which time they shall lapse. Notwithstanding the
provisions of the preceding sentence, any representation or
warranty in respect of which indemnification may be sought under
Section 9.1 shall survive the Survival Date if written notice,
given in good faith, of a specific breach thereof is given to the
Indemnifying Party before the Survival Date, whether or not
liability has actually been incurred.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated at any
time before the Closing Date:
(a) by mutual consent of the Boards of Directors of Seller and
Dominion;
(b) by Seller if any condition contained in Section 8.1 of
this Agreement has not been fulfilled (unless such failure is the
result of Seller's breach of a representation, warranty or
agreement; provided that the parties understand that Seller's
action in exercising its rights to act in its sole discretion under
Sections 2.2(d) and 8.1(d) shall not under any circumstances be
considered a breach by Seller of any representation, warranty or
agreement);
(c) by Dominion or Dominion Venturer if any condition
contained in Section 8.2 of this Agreement has not been fulfilled
(unless such failure is the result of the breach of a
representation, warranty or agreement of Dominion or Dominion
Venturer; provided that the parties understand that Dominion's
action in exercising its rights to act in its sole discretion under
Sections 2.2(d) and 8.2(h) shall not under any circumstances be
considered a breach by Dominion or Dominion Venturer of any
representation, warranty or agreement) or if Seller withholds its
consent to Dominion's exercise of its exclusion right set forth in
Section 4.1(c);
(d) by Dominion or Dominion Venturer pursuant to Section 5.20
of this Agreement; or
(e) by any party hereto if the Closing has not occurred by
11:59 p.m. Chicago, Illinois time, February 28, 1995.
10.2 Effect of Termination. If this Agreement is terminated
as provided in Section 10.1, it shall become wholly void and of no
further force and effect, and there shall be no further liability
or obligation on the part of any party hereto except to pay such
expenses as are required of such party and to comply with the
confidentiality provisions of Section 7.5.
10.3 Extension; Waiver. At any time before the Closing, Buyer
and Seller may (i) extend the time for the performance of any of
the obligations of any other party hereto, (ii) waive a breach of
a representation or warranty by any other party hereto, or (iii)
waive compliance by any other party hereto with any of the
agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in a written instrument signed
by the party giving the extension or waiver. In addition, no
waiver exercised pursuant to the terms of this Section 10.4 shall
be deemed a waiver of any subsequent breach of, or compliance with,
any term, covenant or condition of this Agreement.
10.4 Amendment. This Agreement and the Exhibits and Schedules
hereto may be amended at any time before the Closing if Dominion
and Seller approve any such amendment in writing.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Notices. Any notice, request, demand or other
communication required or permitted under this Agreement shall be
given in writing and shall be delivered or sent by registered or
certified mail, return receipt requested in a prepaid envelope, by
overnight mail or courier, or by facsimile transmission, to the
address set forth below or such other addresses as such party shall
hereafter specify in writing in accordance with this Section:
If to Seller or HCFS Venturer:
Household Commercial Financial Services, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
Attention: Edward A. Szarkowicz
Telecopy: (708) 564-6238
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60606-3693
Attention: Gregory P.L. Pierce
Telecopy: (312) 902-1061
If to Buyer:
To Seller and Dominion at the addresses listed herein.
with a copy to:
McGuire, Woods, Battle & Boothe
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Thomas H. Tullidge, Jr.
Telecopy: (804) 775-1061
and
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60606-3693
Attention: Gregory P.L. Pierce
Telecopy: (312) 902-1061
If to Dominion or Dominion Venturer:
Dominion Capital, Inc.
Riverfront Plaza, West Tower
901 East Byrd Street
Richmond, Virginia 23219
Telecopy: (804) 775-5819
with a copy to:
McGuire, Woods, Battle & Boothe
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Thomas H. Tullidge, Jr.
Telecopy: (804) 775-1061
Such notice or other communication shall be deemed to have been
given (i) when delivered, if sent by registered or certified mail,
facsimile transmission or delivered personally or (ii) on the
following business day if sent by overnight mail or overnight
courier.
11.2 Severability. Each part of this Agreement is intended to
be severable. If any term, covenant, condition or provision of
this Agreement is unlawful, invalid or unenforceable, such
illegality, invalidity or unenforceability shall not affect the
remaining provisions of this Agreement, which shall remain in full
force and effect and shall be binding upon the parties hereto.
11.3 Headings. The headings of the Articles and Sections of
this Agreement are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or any
provision thereof.
11.4 Governing Law. The parties agree that this Agreement
shall be construed, and the rights and obligations of the parties
under the Agreement shall be determined, in accordance with the
laws of the State of Illinois, without regard to its conflicts of
laws provisions.
11.5 Assignments; Binding Effect. This Agreement shall not be
assigned by any party hereto without the express written consent of
all of the other parties hereto. This Agreement shall inure to the
benefit of and be binding upon the respective successors and
permitted assigns of the parties.
11.6 Survival. Seller and Dominion agree that the covenants,
warranties and representations contained herein shall survive the
Closing, shall not merge into the Closing Documents and shall be
independently enforceable.
11.7 Entire Agreement. This Agreement, including any
attachments, exhibits and schedules referred to herein and attached
hereto, the Formation Agreement and the Venture Agreement
constitute the entire agreement between the parties pertaining to
the subject matter hereof and thereof and supersede any and all
prior agreements, representations and understandings of the
parties, written or oral, with respect to the subject matter hereof
and thereof.
11.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same instrument.
11.9 Construction. Unless the context requires otherwise,
singular nouns and pronouns used herein shall be deemed to include
the plural, and pronouns of one gender shall be deemed to include
the equivalent pronoun of the other gender.
11.10 Additional Indemnification. In consideration of the
execution of this Agreement by Dominion and Dominion Venturer and
the execution of the Venture Agreement by Dominion Venturer, if the
Closing does not occur for any reason, HCFS agrees, subject to the
last sentence of this Section, to indemnify, defend, and hold
Dominion and Dominion Venturer harmless from any damage, loss,
liability or expense (including, without limitation, reasonable
expenses of investigation and litigation and reasonable attorneys',
accountants' and other professional fees) arising out of (i) the
execution and delivery or the existence of this Agreement and the
Venture Agreement including without limitation any liability
arising from any representation, warranty or agreement made by HCFS
or HCFS Venturer in this Agreement or the Venture Agreement or (ii)
any termination of this Agreement or the Venture Agreement pursuant
to the terms hereof or thereof. Notwithstanding the failure of the
Closing to occur, the indemnification obligations of HCFS set forth
in this Section shall not be construed to relieve Dominion and
Dominion Venturer of their obligations under Sections 7.5 and 7.7
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
By: /s/ D.P. DEKKER
_____________________________________
Title: Senior Vice President
HCFS CORPORATE FINANCE VENTURE, INC.
By: /s/ D.P. DEKKER
_____________________________________
Title: Senior Vice President
DOMINION CAPITAL, INC.
By: /s/ D. HEAVENRIDGE
_____________________________________
Title: President
VIRGINIA FINANCIAL VENTURES, INC.
By: /s/ D. HEAVENRIDGE
_____________________________________
Title: President
HOUSEHOLD FINANCE CORPORATION ("HFC") hereby covenants and
agrees, that, in the event that HCFS does not pay any amount which
HCFS may owe from time to time to Dominion or Dominion Venturer,
pursuant to Section 11.10, HFC will promptly pay same on demand by
Dominion or Dominion Venturer.
HOUSEHOLD FINANCE CORPORATION
By: /s/ GLEN O. FICK
___________________________
Title: Senior Vice President
EXHIBIT A
Schedule of Loans
AEC/Sterling
Amerisource
ATCO
Axia
Big V
Camping World
Color Tile
Comdata
Converse
Crosman
Deknatel
Denwest
Desa
El Dorado
Equitable
Health O Meter
Huddle House
Logan
Michaels of Oregon
Micropore
Miles Homes
Omega
Optek, Inc.
Petrolane/QFB
Pioneer Plastics
Roller Bearing
Technetics Corp.
Thermadyne
Thrifty
Tucson Electric
Wayn-Tex
EXHIBIT B
Schedule of Warrants
AEC/Sterling
Logan
Optek, Inc. (including restructuring fees)
Technetics Corp.
EXHIBIT C
Form of Management Agreement
Attached hereto.
EXHIBIT D
Form of Support Services Agreement
Attached hereto.
EXHIBIT E
Venture Agreement
Attached hereto.
EXHIBIT F
Form of Instrument of Assignment and Assumption
for Purchased Loans
Attached hereto.
EXHIBIT G
Form of Instrument of Assignment for Purchased Warrants
Attached hereto.
EXHIBIT H
Form of Escrow Agreement
Attached hereto.
EXHIBIT I
Form of Opinion of McGuire, Woods, Battle & Boothe
Attached hereto.
EXHIBIT J
Form of Opinion of Katten Muchin & Zavis
Attached hereto.
EXHIBIT K
Form of Pre-Closing Escrow Agreement
Attached hereto.
EXHIBIT L
Form of Formation Agreement
Attached hereto.
SCHEDULE 5.4
Governmental Consents of HCFS
None.
SCHEDULE 5.5
Non-Contravention re: HCFS
None.
SCHEDULE 5.6
Required Consents of and Notices to Borrowers
SCHEDULE 5.7
Fees and Gross Book Value
Attached hereto.
SCHEDULE 5.9
Defaults of Borrowers
Attached hereto.
SCHEDULE 5.11
Defenses of Borrowers
None.
SCHEDULE 5.13
Obligations to Extend Credit
See Attached.
SCHEDULE 5.14
Notices re: Insurance
None.
SCHEDULE 5.15
Litigation
None.
EXHIBIT 11
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment")
is made as of the 24th day of March, 1995 by and among HOUSEHOLD
COMMERCIAL FINANCIAL SERVICES, INC., a Delaware corporation
("Seller"), HCFS CORPORATE FINANCE VENTURE, INC., a Delaware
corporation and a wholly-owned subsidiary of Seller ("HCFS
Venturer"), DOMINION CAPITAL, INC., a Virginia corporation
("Dominion"), and VIRGINIA FINANCIAL VENTURES, INC., a Virginia
corporation and a wholly-owned subsidiary of Dominion ("Dominion
Venturer").
RECITALS
A. The parties hereto have previously entered into that
certain Asset Purchase Agreement made as of December 30, 1994
("Agreement"). All terms not otherwise defined herein shall have
the meanings set forth in the Agreement.
B. It is a condition precedent to Closing that Buyer shall
have obtained a credit facility as contemplated by Section 2.2(d)
of the Agreement. The parties to such credit facility have
required, as a condition precedent to making such credit facility
available to Buyer, that certain amendments be made to the
Agreement, without which amendments such parties would be unwilling
to enter into the credit facility. The parties hereto desire to
amend the Agreement in order to, among other things, satisfy such
requirements to allow the credit facility to be made available to
Buyer.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto do agree as follows:
1. Article I of the Agreement is hereby amended by changing
the definition of "Initial Reserve" from "$10 Million" to
"$10,572,000 (Ten Million Five Hundred Seventy-Two Thousand
Dollars)".
2. Section 4.2 of the Agreement is (i) hereby deleted in its
entirety and (ii) hereby replaced by the following Section 4.2:
Section 4.2 Closing. Subject to the satisfaction of the
conditions set forth in this Agreement, the closing (the "Closing")
of the purchase and sale of the Purchased Assets and the other
matters contemplated by this Agreement shall take place on such
date as is mutually agreed upon by the parties hereto (the "Closing
Date") and shall be deemed to occur as of 11:59 p.m. on such date.
The Closing shall occur at the offices of Katten, Muchin & Zavis,
or at such other place as may be mutually agreed upon by the
parties hereto.
3. The following sentence is hereby added to the Agreement
immediately following the end of Section 11.5 and immediately
before Section 11.6 of the Agreement:
Except as otherwise provided herein, and except for Buyer's
rights pursuant to Sections 7.1, 7.2(b), 7.2(c), 7.3, 7.7, 7.9,
7.10(b), 9.1(a), 9.3(b), 10.3 and 11.11 hereof, this Agreement is
not intended to confer any rights or remedies upon any party except
the parties hereto.
4. The following Section 11.11 is hereby added to the
Agreement immediately after Section 11.10 of the Agreement:
Section 11.11 Loan Eligibility. Seller and HCFS
Venturer hereby represent and warrant to Buyer that as of the
Closing Date each of the Purchased Loans shall be an "Eligible
Loan" as such term is defined in each of that certain CXC Credit
Agreement and Committed Credit Agreement dated as of March 24, 1995
among First Source Financial LLP, as borrower, the lenders named
therein, First Source Financial, Inc., as servicer, Citicorp North
America, Inc., as agent, Financial Security Assurance Inc., as
surety provider, HCFS Venturer, and Dominion Venturer ("Credit
Agreements"). Notwithstanding anything to the contrary contained
in this Agreement, Buyer's sole remedy in the event that the
representation and warranty contained in this Section 11.11 is
breached, shall be the repurchase by Seller of the loan or loans
which are not Eligible Loans, to the extent said repurchase is
required pursuant to, and in accordance with the terms of, either
of the Credit Agreements.
5. Any documents or agreements referred to in the Agreement
as being executed simultaneously with, or on or about the same time
as, the Agreement, shall, to the extent not previously executed, be
executed on or about the date hereof.
6. Any provisions in the Agreement which benefit or
otherwise convey rights upon Buyer (as defined in the Agreement)
shall not be amended or modified without the prior written consent
of Buyer.
7. Exhibits A, B, and H to the Agreement, and Schedules 5.6,
5.7, 5.9, 5.13 and 5.15 to the Agreement, are (i) hereby deleted in
their entirety and (ii) replaced with Exhibits A, B, and H attached
to this Amendment, and Schedules 5.6, 5.7, 5.9, 5.13 and 5.15
attached to this Amendment.
8. Except as specifically modified by this Amendment, the
Agreement shall remain in full force and effect in accordance with
the terms thereof and is hereby adopted, ratified, and confirmed.
All references in the Agreement to the "Agreement" shall hereafter
refer to the Agreement as amended by this Amendment.
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed as of the date above written.
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
By: /s/ GLEN O. FICK
________________________________
Title: President
HCFS CORPORATE FINANCE VENTURE, INC.
By: /s/ D.P. DEKKER
_________________________________
Title: Senior Vice President
DOMINION CAPITAL, INC.
By: /s/ DAVID HEAVENRIDGE
_________________________________
Title: President
VIRGINIA FINANCIAL VENTURES, INC.
By: /s/ DAVID HEAVENRIDGE
_________________________________
Title: President
EXHIBIT A
Schedule of Loans
Alliance
Amerisource Corp.
ATCO
Axia, Inc.
Big V Supermarket
Camping World
Color Tile, Inc.
Comdata Network
Community Distributors
Converse
Crosman
Deknatel
Denwest
Desa International
El Dorado
Equitable
Health-O-Meter
HIMSCORP
Huddle House
Logan
Michaels of Oregon
Micropore
Miles Homes
Omega
Optek
Petrolane
Pioneer
Roller Bearing
Technetics
Thermadyne
Thrifty Payless
Tucson Electric
Wayn-Tex
EXHIBIT B
Schedule of Warrants
Logan
Optek
Technetics
EXHIBIT H
Form of Escrow Agreement
Attached hereto.
SCHEDULE 5.6
Required Consents of and Notices to Borrowers
Attached hereto.
SCHEDULE 5.7
Fees and Gross Book Value
Attached hereto.
SCHEDULE 5.9
Defaults of Borrowers
Attached hereto.
SCHEDULE 5.13
Obligations to Extend Credit
None.
SCHEDULE 5.15
Litigation
None.
EXHIBIT 12
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED
EXCEPT IN ACCORDANCE WITH SUCH REGISTRATION REQUIREMENTS OR AN
AVAILABLE EXEMPTION THEREFROM AND EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF THIS WARRANT.
WARRANT
To Purchase Common Stock of
OPTEK TECHNOLOGY, INC.
THIS IS TO CERTIFY that Household Commercial Financial
Services, Inc., a Delaware corporation, or registered assigns, is
entitled upon the due exercise hereof at any time during the
Exercise Period (as hereinafter defined) to purchase, in whole or
in part, from Optek Technology, Inc., a Delaware corporation (the
"Company"), the number of shares of Common Stock, $0.01 par value,
of the Company as provided in Section 2.1 (subject to adjustment)
at the price for each share of such Common Stock so purchased as
provided in Section 2.1 (subject to adjustment) and to exercise the
other rights, powers and privileges hereinafter provided, all on
the terms and conditions and pursuant to the provisions hereinafter
set forth.
This Warrant (or, if this Warrant is dated a date subsequent
to the Closing Date (as hereinafter defined), then the predecessor
Warrant dated the Closing Date) has been issued to Household
Commercial Financial Services, Inc. pursuant to the Secured Credit
Agreement (as hereinafter defined) in consideration of the loans by
Household Commercial Financial Services, Inc. as provided therein.
This Warrant is an amendment and restatement of, and is issued
in replacement of, the warrant dated as of November 27, 1991, which
was an amendment and restatement of, and was issued in replacement
of, the warrant dated as of January 31, 1991, both of which were
issued to Household Commercial Financial Services, Inc.
Dated as of January 20, 1994.
TABLE OF CONTENTS
Page No.
ARTICLE I DEFINITIONS...... 1
ARTICLE II EXERCISE OF WARRANT...... 8
2.1 Right to Exercise, Number of Shares and
Exercise Price...... 8
2.2 Notice of Exercise; Issuance of Common Stock...... 9
2.3 Fractional Shares...... 10
2.4 Continued Validity...... 10
ARTICLE III REGISTRATION, TRANSFER AND EXCHANGE...... 11
ARTICLE IV ANTIDILUTION PROVISIONS AND RIGHTS UPON
EXTRAORDINARY TRANSACTIONS...... 12
4.1 Adjustment of Number of Shares Purchasable and Exercise
Price...... 12
(a) Adjustment to Exercise Price...... 12
(b) Adjustment to Number of Shares Issuable Pursuant to this
Warrant...... 13
(c) Adjustment to the Schedules of Minimum Prices...... 14
(d) Minimum Adjustment...... 15
(e) Maximum and Minimum Exercise Price...... 15
4.2 Diluting Events and Related Matters...... 15
(a) Issuance of Stock...... 15
(b) Issuance of Warrants, Options or Other Rights....... 16
(c) Issuance of Convertible Securities...... 17
(d) Dividends...... 18
(e) Dividends in Securities...... 19
(f) Other Distributions...... 19
(g) Reorganization, Reclassification, Recapitalization, Merger or
Sale of Company...... 19
(h) Splits and Combinations...... 19
(i) Readjustments...... 20
(j) Determination of Consideration for Rights or Options.... 21
(k) Determination of Consideration upon Payment of Cash,
Property or Merger...... 21
(l) Record Date...... 22
(m) Shares Outstanding...... 22
(n) Date of Determination...... 22
4.3 Rights of the Holder upon Rights Offering, Mergers,
Reorganizations and Other Transfers...... 22
(a) Participation in Rights Offerings...... 22
(b) Participation in Stock Dispositions...... 22
(c) Adjustment to Repurchase Payment...... 23
4.4 Certificates, Notices and Consents...... 24
4.5 No Implied Consent...... 26
ARTICLE V NO IMPAIRMENT...... 27
ARTICLE VI RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT;
PREEMPTIVE RIGHTS...... 28
ARTICLE VII LISTING ON SECURITIES EXCHANGE...... 28
ARTICLE VIII RESTRICTIONS ON TRANSFER...... 28
8.1 Notice of Proposed Transfer; Transfers Without
Registration...... 29
8.2 Registration and Qualification...... 29
(a) Piggyback Registration...... 29
(b) Demand Registration...... 32
(c) Termination of Repurchase Rights...... 33
8.3 Registration and Qualification Procedures...... 34
8.4 Allocation of Expenses...... 35
8.5 Indemnification...... 36
8.6 Legend on Certificates...... 38
8.7 Supplying Information...... 39
8.8 Damages...... 39
8.9 Holdback Agreements...... 40
8.10 Rule 144 Reporting...... 40
8.11 Consent for Additional Registration Rights...... 41
ARTICLE IX REPURCHASES...... 42
9.1 Obligation of Company...... 42
9.2 Option of Company...... 43
9.3 Delayed Repurchases...... 45
ARTICLE X FINANCIAL AND BUSINESS INFORMATION...... 45
10.1 Delivery of Financial and Business Information...... 45
10.2 Disputed Financial Statements...... 47
ARTICLE XI MISCELLANEOUS...... 48
11.1 Nonwaiver and Expenses...... 48
11.2 Holder Not a Stockholder...... 48
11.3 Notice Generally...... 48
11.4 Payment of Certain Expenses...... 48
11.5 Successors and Assigns...... 48
11.6 Amendment...... 49
11.7 Headings...... 49
11.8 GOVERNING LAW...... 49
11.9 Subsidiaries...... 49
11.10 No Section 338 Election or Step-Up in Asset Value
on Books of the Company...... 49
11.11 Limitation on Interest...... 49
NOTICE OF EXERCISE FORM
ASSIGNMENT FORM
ARTICLE I
DEFINITIONS
The terms defined in this ARTICLE I, whenever used in this
Warrant, shall have the respective meanings hereinafter specified.
Whenever used in this Warrant, any noun or pronoun shall be deemed
to include both the singular and plural and to cover all genders.
"Adjusted Operating Profits" means an amount equal to the Net
Income of the Company and its Subsidiaries for the four most recent
fiscal quarters of the Company before deduction of any amount
which, in conformity with generally accepted accounting principles,
would be set forth opposite the caption "income tax expense"
(including deferred income taxes) (or any like caption) on a
consolidated income statement of the Company, and excluding any
amounts which, in conformity with generally accepted accounting
principles, would be set forth opposite the captions "extraordinary
pre-tax gain" and "extraordinary pre-tax loss" (or any like
captions) on such consolidated income statement, plus the amount
which, in accordance with generally accepted accounting principles,
would be set forth opposite the caption "interest expense" (or any
like caption) on such consolidated income statement, plus an amount
which, in conformity with generally accepted accounting principles,
is equal to any amortization or depreciation for such fiscal
period, to the extent the same are deducted from net revenues, in
conformity with generally accepted accounting principles, in
determining Net Income for such fiscal period.
"Affiliate" of any person means any other person which,
directly or indirectly, controls or is controlled by or is under
common control with, such person. A person shall be deemed to be
"controlled by" any other person if such other person possesses,
directly or indirectly, power
(a) to vote 10% or more of the securities having ordinary voting
power, or if not having ordinary voting power, having at the time
voting power, for the election of directors of such person; or
(b) to direct or cause the direction of the management and
policies of such person whether by contract or otherwise.
"Applicable Rate" shall have the meaning provided in Section
11.11.
"Assignment" means the form of Assignment appearing at the end
of this Warrant.
"Basic Exercise Price" shall have the meaning provided in
Section 2.1(b)(i).
"Closing Date" means January 20, 1994.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's authorized Common Stock,
$0.01 par value, and any class of capital stock of the Company now
or hereafter authorized having the right to share in distributions
either of earnings or assets of the Company without limit as to
amount or percentage.
"Common Stock on a Fully Diluted Basis" means, at any date as
at which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by
or for the account of the Company, and shall include all shares
issuable in respect of outstanding scrip or any certificates
representing fractional interests in shares of Common Stock (which
issued and outstanding shares shall be 3,222,305 shares on the date
this Warrant is issued), and all shares issuable pursuant to the
Company's incentive stock option plan or restricted stock bonus
plan or pursuant to an employee or director stock option plan,
restricted stock bonus or ownership plan, stock appreciation plan
or similar equity appreciation plan which the Company may implement
after receiving written approval of a majority of the Holders in
their sole discretion (which approval must include Household if
Household is a Holder) (whether or not options or awards with
respect to such shares have been granted) or issuable upon exercise
of any warrant (including this Warrant), rights to subscribe for or
options (whether or not vested) to purchase Common Stock or
Convertible Securities or upon the conversion of any Convertible
Securities. On the Closing Date the number of shares of Common
Stock on a Fully Diluted Basis shall be 8,042,268 shares, including
3,150,000 shares of Common Stock initially issuable pursuant to
this Warrant.
"Common Stock Repurchase Price" in effect as of any date shall
mean a per share value equal to the result obtained by dividing
(a) an amount equal to (i) the product of the Company's
Adjusted Operating Profits (at the end of the Quarterly Fiscal
Period of the Company immediately preceding such date) and seven
(7) less (ii) the amount of Funded Indebtedness (at the end of the
Quarterly Fiscal Period of the Company immediately preceding such
date), plus (iii) the proceeds that would be received by the
Company upon exercise of all warrants, rights to subscribe for or
options to purchase Common Stock or Convertible Securities or upon
conversion of any Convertible Securities, plus (iv) the fair market
value of proceeds received by the Company (other than proceeds in
the form of services of employees of the Company and cash proceeds
which are reflected in the amount of Funded Indebtedness in clause
(ii) above) upon any issuances or sales by it of Common Stock,
Convertible Securities or warrants, rights to subscribe for or
options to purchase Common Stock or Convertible Securities,
multiplied by a fraction the numerator of which (which shall never
be less than zero) is four minus the number of full Quarterly
Fiscal Periods since such issuance or sale and the denominator of
which is four, by
(b) the number of shares of Common Stock on a Fully Diluted
Basis on such date,
all as determined by a firm of independent public accountants of
recognized standing selected by the Company and reasonably
acceptable to the Holder; provided, however, that the Common Stock
Repurchase Price in effect on the date of any notice given to or by
the Company under Section 9.2 will not be less than an amount equal
to the Minimum Price as set forth below associated with the date of
such notice plus an amount equal to the weighted average Exercise
Price actually paid by such Holder for all shares of Common Stock
issued to such Holder upon the exercise of the Warrant which have
not theretofore been repurchased by the Company pursuant to Section
9.1 or 9.2 of the Warrant.
Minimum
For Date of Notice Price
_________________________________________ ________
Closing Date through January 31, 1994 $ 3.98
February 1, 1994 through January 31, 1995 $ 5.23
February 1, 1995 through January 31, 1996 $ 6.92
February 1, 1996 through January 31, 1997 $ 8.39
Thereafter $10.49
"Company" means Optek Technology, Inc., a Delaware
corporation.
"Convertible Securities" means evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable for, with or without payment of additional
consideration in cash or property, additional shares of Common
Stock, either immediately or upon the arrival of a specified date
or the happening of a specified event.
"Default Rate" means at any time 4.50% plus the rate per annum
then most recently announced by The First National Bank of Chicago,
a national banking association ("FNBC"), as its corporate base rate
at Chicago, Illinois (or if such rate is not being quoted by FNBC,
the rate which is the successor to such rate, and if FNBC is not
quoting any such rate, the rate conceptually equivalent to such
rate which the domestic commercial bank having the highest combined
capital and surplus of any bank having its principal office in
Chicago, Illinois is quoting).
"Diluting Event" means any transaction or event which is
identified as a Diluting Event in Section 4.2(a) - (h).
"Exercise Period" means the period commencing on the Closing
Date and terminating at 5:00 p.m., Chicago time, on October 31,
1998, subject to the provisions of Section 4.3(c).
"Exercise Price" means the price per share of Common Stock as
set forth in Section 2.1 as such price may be adjusted from time to
time pursuant to Article IV.
"Exercise Price and Other Factors" shall have the meaning
provided in Section 4.1.
"First Alternative Exercise Price" shall have the meaning
provided in Section 2.1(b)(ii).
"Funded Indebtedness" means all indebtedness of the Company
and its Subsidiaries, on a consolidated basis, if appropriate,
solely for money borrowed and owing, less the aggregate amount of
all cash and cash equivalents of the Company and its Subsidiaries
but not including the amount of any indebtedness of the Company
represented by Convertible Securities and not including additional
interest pursuant to Section 4.7 of the Secured Credit Agreement,
less the product of (x) the Opcom Minority Percentage and (y) the
sum of the Opcom Revolving Loan and the Opcom Working Capital Loan
(each as defined in the Secured Credit Agreement).
"Holder" means the person in whose name this Warrant is
registered on the books of the Company maintained for such purpose.
"Household" means Household Commercial Finance Services, Inc.,
a Delaware corporation.
"Independent Counsel" means counsel to the Company, unless
counsel to the Holder disagrees in writing with the opinion or
advice of such counsel with respect to the issue in question within
15 days after receipt of such opinion or advice, in which case the
Company and Holder shall select another counsel, not the regular
counsel of the Company or the Holder and experienced in Securities
Act matters, who shall render an opinion with respect to the issue
in question. The opinion or advice of such other counsel so given
shall be conclusive and binding on the Company and the Holder. The
legal fees and expenses of such other counsel incurred in
connection with the rendering of such opinion shall be borne
equally by the Holder and the Company.
"Market Value" per share of Common Stock on any date shall
mean the average of the daily market prices for the 30 consecutive
trading days preceding such date. The market price for each such
day shall be the last sale price on such day on such stock exchange
on which such stock is listed or admitted to trading, or, if no
sale takes place on such day on any such exchange, the average of
the closing bid and asked prices on such day and officially quoted
on any such exchange, or, if the Common Stock is not then listed or
admitted to trading on any stock exchange, the market price for
each such business day shall be the last sale price on such day if
reported by the National Association of Securities Dealers
Automated Quotation System or, if not so reported, the average of
the reported closing bid and asked price quotations for such day,
as reported by the National Association of Securities Dealers
Automated Quotation System or, if not so reported, as furnished by
the National Quotation Bureau, Inc., or, if such firm at the time
is not engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business as
selected by the Holder, or if there is no such firm, as determined
by any member of the National Association of Securities Dealers,
Inc. selected by the Holder.
"Maximum Rate" means the maximum lawful rate of interest (if
any) permitted by applicable usury laws, which rate shall change
when and as such laws change, to the extent permitted by such laws,
effective on the day such change in law becomes effective.
"Net Income" for any fiscal period of the Company shall mean
consolidated net income or loss of the Company and its Subsidiaries
(including, without limitation, Opcom), if any, as it would appear
on the consolidated statement of income of the Company for such
fiscal period prepared in accordance with generally accepted
accounting principles and as it may be adjusted pursuant to Section
9.3 or Section 10.2.
"Notice of Cashless Exercise" shall have the meaning provided
in Section 2.2(b)(ii).
"Notice of Exercise" means the form of Notice of Exercise
appearing at the end of this Warrant.
"Organic Change" shall have the meaning provided in Section
4.3(b).
"Plan Adjusted Operating Profits" for any fiscal year shall be
the amount so identified in Schedule I hereto.
"Quarterly Fiscal Period" means a period comprised of thirteen
or fourteen weeks, as applicable, representing a fiscal quarter of
the Company, the first of which in any fiscal year shall begin on
the first day of the Company's fiscal year and the remainder of
which in such year shall begin on the day following the termination
of the preceding Quarterly Fiscal Period.
"Registration Agreement" shall have the meaning provided in
Section 8.2.
"Registration Period" means any period beginning on the date
of any notice of repurchase delivered pursuant to Section 9.2 and
ending at 5:00 p.m., Chicago time, 30 days thereafter.
"Repurchase Price" means the Common Stock Repurchase Price or
the Warrant Repurchase Price, as applicable.
"Second Alternative Exercise Price" shall have the meaning
provided in Section 2.1(b)(iii).
"Secured Credit Agreement" means the Amended and Restated
Secured Credit Agreement among the Company and Household Commercial
Financial Services, Inc., as the same may be amended, modified or
supplemented from time to time.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of
the Commission promulgated thereunder, all as the same shall be in
effect from time to time.
"Shares" shall have the meaning provided in Section 2.1.
"Stockholder's Consideration Per Share" shall have the meaning
provided in Section 4.3(c).
"Subsidiary" means a corporation, partnership or other entity
of which a person and/or such person's other Subsidiaries,
individually or in the aggregate, own, directly or indirectly, such
number of outstanding shares or other interests as have more than
50% of the ordinary voting power (or, at the time extraordinary
powers are available to holders of shares or other interests, such
number of outstanding shares or other interests as have more than
50% of voting power) for the election of directors or the members
of any similar governing body.
"Unsold Amount" shall mean that portion of any Warrant with
respect to which the holder thereof requested registration pursuant
to Section 8.2 of shares of Common Stock issuable upon exercise
thereof and which was not registered by the Company as permitted
hereby or not sold pursuant to such registration.
"Unsold Shares" shall mean any shares of Common Stock that the
holder thereof requested be registered pursuant to Section 8.2 and
which were not registered by the Company as permitted hereby or not
sold pursuant to such registration.
"Warrant" and "Warrants," including "this Warrant," mean (a)
the warrant dated as of the Closing Date issued to Household and
(b) all warrants issued upon the partial exercise, transfer or
division of or in substitution for such warrant.
"Warrant Repurchase Price" in effect as of any date shall mean
a per share value equal to the difference between the Common Stock
Repurchase Price (without regard to the proviso contained in the
definition of "Common Stock Repurchase Price") and the Exercise
Price then in effect; provided, however, that the Warrant
Repurchase Price in effect on the date of any notice given to or by
the Company under Section 9.2 will not be less than the difference
between the Minimum Price associated with the date of such notice
as set forth in the schedule below and the Exercise Price then in
effect.
Minimum
For Date of Notice Price
________________________________________ _______
Closing Date through January 31, 1994 $ 4.48
February 1, 1994 through January 31, 1995 $ 5.73
February 1, 1995 through January 31, 1996 $ 7.42
February 1, 1996 through January 31, 1997 $ 8.89
Thereafter $10.99
ARTICLE II
EXERCISE OF WARRANT
2.1 Right to Exercise, Number of Shares and Exercise Price.
Subject to and upon compliance with the conditions of this ARTICLE
II, the Holder shall have the right, at its option, at any time and
from time to time during the Exercise Period, unless the Company
shall have given notice to the Holder pursuant to Section 9.2 and
the Registration Period shall have expired without termination
pursuant to Section 8.2(c) of the Company's rights under Section
9.2, to exercise this Warrant in whole or in part.
The aggregate number of shares of Common Stock which may be
purchased from time to time during the Exercise Period by the
Holder upon exercise of this Warrant shall be as set forth below,
subject to adjustment as provided in ARTICLE IV hereof (the
"Shares"):
(a) The number of shares of Common Stock issuable upon the
exercise of the Warrant shall be 3,150,000 (subject to adjustment
as provided herein). The initial Exercise Price shall be fifty
cents ($0.50) (subject to adjustment as provided herein).
(b) On January 31 of each year (and applicable for the period
through and including January 30 of the next succeeding year), the
Exercise Price shall be adjusted to the extent provided as follows:
(i) If the Company's cumulative Adjusted Operating Profits
for the period from November 1, 1993 through the end of the most
recently ended fiscal year are equal to or greater than Plan
Adjusted Operating Profits through the end of the most recently
ended fiscal year as set forth in Schedule I hereto, then the
Exercise Price through January 30 of the next succeeding year shall
be fifty cents ($0.50) (subject to adjustment as provided herein)
(the "Basic Exercise Price")
(ii) If the Company's cumulative Adjusted Operating Profits
for the period from November 1, 1993 through the end of the most
recently ended fiscal year are less than 100% of Plan Adjusted
Operating Profits but at least 90% of Plan Adjusted Operating
Profits for the period from November 1, 1993 through the end of the
most recently ended fiscal year as set forth on Schedule I hereto,
then the Exercise Price through January 30 of the next succeeding
year shall be twenty-five cents ($0.25) (subject to adjustment as
provided herein) (the "First Alternative Exercise Price")
(iii) If the Company's cumulative Adjusted Operating Profits
for the period from November 1, 1993 through the end of the most
recently ended fiscal year are less than 90% of Plan Adjusted
Operating Profits through the end of the most recently ended fiscal
year as set forth on Schedule I hereto, then the Exercise Price
through January 30 of the next succeeding year shall be one cent
($0.01) (the "Second Alternative Exercise Price").
2.2 Notice of Exercise; Issuance of Common Stock. (a) To
exercise this Warrant, the Holder shall deliver to the Company at
its principal office at 1215 West Crosby Road, Carrollton, Texas
75006 Attention: President (i) a Notice of Exercise duly executed
by the Holder and specifying the number of shares of Common Stock
to be purchased and (ii) this Warrant.
(b) Payment of the Exercise Price shall be made in the manner
selected by the Holder as set forth below:
(i) At the option of the Holder, (A) by wire transfer to an
account in a bank located in the United States designated for such
purpose by the Company or (B) by certified or official bank check
payable to the order of the Company and drawn on a member of the
Chicago or New York Clearing House; or
(ii) In lieu of delivering the cash Exercise Price as set
forth in Section 2.2(b)(i), the Holder may instruct the Company in
writing ("Notice of Cashless Exercise") to deduct from the number
of shares of Common Stock that would otherwise be issued upon such
exercise a number of shares of Common Stock equal to the quotient
obtained from dividing
(x) the product obtained by multiplying (1) the number of
shares of Common Stock for which the Warrant is being exercised and
(2) the Exercise Price then in effect, by
(y) the Market Value of a share of Common Stock.
The Notice of Cashless Exercise may be given by completing the
appropriate box in the Notice of Exercise at the end of this
Warrant. Upon receipt of the cash payment described in Section
2.2(b)(i) or the Notice of Cashless Exercise described in Section
2.2(b)(ii), the Company shall, as promptly as practicable, and in
any event within five days thereafter, cause to be issued and
delivered to the Holder, or, subject to ARTICLE VIII, the
transferee designated in the Notice of Exercise, a certificate or
certificates representing the aggregate number of full shares of
Common Stock issuable upon such exercise registered in the name of
the Holder or the name of the transferee so designated.
(c) Unless otherwise requested by the Holder, this Warrant
shall be deemed to have been exercised and such certificate or
certificates 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 shares for all
purposes, as of the close of business on the date the Notice of
Exercise, together with payment or Notice of Cashless Exercise as
herein provided, and this Warrant, is received by the Company.
(d) If this Warrant is exercised in part, the Company shall,
at the time of delivery of the certificate or certificates for
Common Stock, unless this Warrant has then expired, issue and
deliver to the Holder or the transferee so designated in the Notice
of Exercise a new Warrant evidencing the rights of the Holder or
such transferee to purchase the aggregate number of shares of
Common Stock for which this Warrant shall not have been exercised,
and this Warrant shall be cancelled.
2.3 Fractional Shares. The Company shall not issue fractional
shares of Common Stock or scrip representing fractional shares of
Common Stock upon exercise of this Warrant. As to any fractional
share of Common Stock which the Holder would otherwise be entitled
to purchase upon such exercise, the Company shall purchase from the
Holder such unissued fractional share at a price equal to an amount
calculated by multiplying such fractional share (calculated to the
nearest 1/100th of a share) by the Common Stock Repurchase Price,
unless such Common Stock Repurchase Price is a negative amount, in
which case such fractional share shall be multiplied by its
Exercise Price determined in accordance with this Warrant. Payment
of such amount shall be made in cash or by check payable to the
order of the Holder at the time of delivery of any certificate or
certificates arising upon such exercise.
2.4 Continued Validity. A holder of shares of Common Stock
issued upon the exercise of this Warrant, in whole or in part,
shall continue to be entitled to all rights provided to holders of
Common Stock issuable on the exercise of this Warrant, whether or
not this Warrant has been fully exercised. The Company will, at
the time of the exercise of this Warrant, in whole or in part, upon
the request of the holder of the shares of Common Stock issued upon
the exercise thereof, 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; provided, however, 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.
ARTICLE III
REGISTRATION, TRANSFER AND EXCHANGE
The Company shall keep at the Company's principal office
referred to in Section 2.2 or at the offices of Kilgore & Kilgore
in Dallas, Texas or at such other address as shall be specified in
a written notice to the Holder a register in which, subject to such
reasonable regulations as it may prescribe, the Company shall
provide for the registration, transfer and exchange of this
Warrant. The Company will not at any time, except upon the
dissolution, liquidation or winding up of the Company, close such
register so as to result in preventing or delaying the exercise or
transfer of this Warrant.
Upon surrender for registration of transfer of this Warrant at
such office, the Company shall execute and deliver, in the name of
the designated transferee or transferees, one or more new Warrants
representing the right to purchase a like aggregate number of
shares of Common Stock. At the option of the Holder, this Warrant
may be exchanged for other Warrants representing the right to
purchase a like aggregate number of shares of Common Stock upon
surrender of this Warrant at such office. Whenever this Warrant is
so surrendered for exchange, the Company shall execute and deliver
the Warrants which the Holder making the exchange is entitled to
receive.
Every Warrant presented or surrendered for registration of
transfer or exchange shall be accompanied by an Assignment duly
executed by the holder thereof or its attorney duly authorized in
writing.
All warrants issued upon any registration of transfer or
exchange of warrants shall be the valid obligations of the Company,
evidencing the same rights, and entitled to the same benefits as
the warrants surrendered upon such registration of transfer or
exchange.
Upon receipt by the Company of evidence satisfactory to it (in
the exercise of reasonable discretion) of the ownership of and the
loss, theft, destruction or mutilation of this Warrant and (in case
of loss, theft or destruction) the written agreement of the Holder
to indemnify the Company (or, if the Holder is not Household
Commercial Financial Services, Inc. and if the Company reasonably
requests, a bond) against any resulting loss or expense and in case
of mutilation upon surrender and cancellation thereof, the Company
will execute and deliver in lieu thereof a new Warrant.
No service charge shall be made for any registration of
transfer or exchange of Warrants, but the Company may require
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of
transfer as provided in Section 11.4.
The Company and any agent of the Company may treat the person
in whose name this Warrant is registered as the owner of this
Warrant for all purposes whatsoever, and neither the Company nor
any agent of the Company shall be affected by notice to the
contrary. This Warrant, if properly assigned, may be exercised by
a new holder without first having a new Warrant issued.
ARTICLE IV
ANTIDILUTION PROVISIONS AND RIGHTS UPON
EXTRAORDINARY TRANSACTIONS
4.1 Adjustment of Number of Shares Purchasable and Exercise
Price. Subject to the provisions of this ARTICLE IV, the Basic
Exercise Price, the First Alternative Exercise Price and the Second
Alternative Exercise Price at the time of any calculation pursuant
to this Article IV, the number of shares of Common Stock issuable
upon exercise of this Warrant at the time of any calculation
pursuant to this Article IV and the schedules of minimum prices set
forth in the definitions of Common Stock Repurchase Price and
Warrant Repurchase Price (together, "Exercise Price and Other
Factors") shall be subject to adjustment from time to time as set
forth below in the order set forth below. After making any
antidilution adjustment, pursuant to this Article IV, the
adjustments described in Section 2.1(d) must be made.
(a) Adjustment to Exercise Price. If a Diluting Event, as
identified in Section 4.2, occurs (unless otherwise specified in
Section 4.2), the Basic Exercise Price, the First Alternative
Exercise Price and the Second Alternative Exercise Price shall each
be reduced to the lower of the prices calculated by:
(i) Dividing (A) an amount equal to the sum of (x) the number
of shares of Common Stock on a Fully Diluted Basis (but not
including Shares issuable upon exercise of this Warrant)
immediately prior to such Diluting Event multiplied by the then
existing Basic Exercise Price, First Alternative Exercise Price or
Second Alternative Exercise Price, as applicable, plus (y) the
aggregate consideration, if any, received or deemed to be received
by the Company upon such Diluting Event, by (B) the total number of
shares of Common Stock on a Fully Diluted Basis (but not including
Shares issuable upon exercise of this Warrant) immediately after
such Diluting Event; and
(ii) Multiplying the then existing Basic Exercise Price, First
Alternative Exercise Price or Second Alternative Exercise Price, as
applicable, by a fraction (a) the numerator of which is (x) the sum
of (i) the number of shares of Common Stock on a Fully Diluted
Basis immediately prior to such Diluting Event (but not including
shares of Common Stock issuable upon exercise of this Warrant)
multiplied by the Common Stock Repurchase Price immediately prior
to such Diluting Event plus (ii) the aggregate consideration, if
any, deemed to be received by the Company upon such Diluting Event,
divided by (y) the total number of shares of Common Stock on a
Fully Diluted Basis immediately after such Diluting Event (but not
including shares of Common Stock issuable upon exercise of this
Warrant), and (b) the denominator of which shall be the Common
Stock Repurchase Price immediately prior to such Diluting Event.
Notwithstanding the foregoing, if the Common Stock Repurchase
Price is less than or equal to zero, the Basic Exercise Price and
the First Alternative Exercise Price and the Second Alternative
Exercise Price shall be reduced in accordance with clause (i)
above.
(b) Adjustment to Number of Shares Issuable Pursuant to this
Warrant. Upon any adjustment of the Basic Exercise Price, First
Alternative Exercise Price and the Second Alternative Exercise
Price as provided in this Section 4.1 or Section 4.2, the Holder
shall thereafter be entitled upon exercise of this Warrant under
Section 2.1 to receive, at the Exercise Price in effect after such
adjustment (which may be the Basic Exercise Price, the First
Alternative Exercise Price or Second Alternative Exercise Price):
(i) If the Warrant Repurchase Price in effect immediately
prior to and after a Diluting Event are each positive numbers, the
number of shares of Common Stock (calculated to the nearest 1/100th
of a share) which, when multiplied by the Warrant Repurchase Price
in effect immediately after the Diluting Event (and after giving
effect to the number of shares of Common Stock issuable upon the
exercise of this Warrant as determined under this clause (i)
immediately after the Diluting Event), shall equal the product of
(A) the Warrant Repurchase Price in effect immediately prior to
such Diluting Event and (B) the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such
Diluting Event.
(ii) If the Warrant Repurchase Price in effect immediately
prior to or after a Diluting Event is not a positive number, the
number of shares of Common Stock (calculated to the nearest 1/100th
of a share) which, when multiplied by the Exercise Price per share
of Common Stock in effect immediately after the Diluting Event,
shall equal the product of (A) the Exercise Price per share of
Common Stock immediately prior to such Diluting Event and (B) the
number of shares of Common Stock issuable upon exercise of this
Warrant immediately prior to such Diluting Event.
The Company shall not engage in any Diluting Event if as a
result of such event and the adjustment pursuant to this Section
4.1(b), an ownership change would occur within the meaning of
Section 382 of the Internal Revenue Code of 1986, as amended, or
any successor provision. If notwithstanding the foregoing, a
Diluting Event inadvertently occurs which would result in such an
ownership change if the full adjustments provided herein were made,
then the number of shares subject to this Warrant shall only be of
adjusted to the extent possible without causing such an ownership
change, and notwithstanding such partial adjustment, the Holder
shall retain all applicable rights with respect to breach of the
foregoing sentence.
(c) Adjustment to the Schedules of Minimum Prices. Upon any
adjustment of the Basic Exercise Price, First Alternative Exercise
Price and the Second Alternative Exercise Price or any other
adjustment as provided in this Section 4.1 or Section 4.2 (unless
otherwise specified in Section 4.2):
(i) the Minimum Prices in the schedule set forth in the
definition of Warrant Repurchase Price will be adjusted upward or
downward so that the result obtained by multiplying (1) such
Minimum Price prior to such adjustment, by (2) the number of shares
of Common Stock issuable upon exercise of this Warrant immediately
prior to the Diluting Event is equal to the result obtained by
multiplying (3) such Minimum Price, after such adjustment, by (4)
the number of shares of Common Stock issuable upon exercise of this
Warrant immediately after the Diluting Event and the related
application of Section 4.1(b); and
(ii) the Minimum Prices in the schedule set forth in the
definition of Common Stock Repurchase Price will be adjusted upward
or downward so that the result obtained by multiplying (1) such
Minimum Price prior to such adjustment, by (2) the number of shares
of Common Stock issuable upon exercise of this Warrant immediately
prior to the Diluting Event is equal to the result obtained by
multiplying (3) such Minimum Price, after such adjustment, by (4)
the number of shares of Common Stock issuable upon exercise of this
Warrant immediately after the Diluting Event and the related
application of Section 4.1(b); the Minimum Prices in effect at the
time any shares of Common Stock were issued upon exercise of this
Warrant shall remain the Minimum Prices in effect with respect to
such shares of Common Stock only, notwithstanding the occurrence of
any Diluting Event; provided, however, that if an event set forth
in Sections 4.2(e) or 4.2(h) shall occur, the Minimum Prices in
effect shall be adjusted as set forth in the last sentence of
Section 4.2(h).
(d) Minimum Adjustment. In the event any adjustment of the
Exercise Price and Other Factors pursuant to this Section 4.1 shall
result in an adjustment of the Basic Exercise Price, the First
Alternative Exercise Price or the Second Alternative Exercise Price
of less than $0.01 per share of Common Stock, 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 $0.01 or more per share of Common
Stock; provided, however, that upon any adjustment of the Exercise
Price and Other Factors 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 Convertible
Securities 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 $0.01 per share
(or such figure as last adjusted) shall be proportionately
adjusted; and provided, further, that upon exercise or repurchase
of this Warrant, the Company shall make all necessary adjustments
not theretofore made to the Exercise Price and Other Factors up to
and including the date upon which this Warrant is exercised or
repurchased.
(e) Maximum and Minimum Exercise Price. At no time shall the
Exercise Price per share of Common Stock exceed $0.50 except as
provided in subsection (g) or (h) of Section 4.2. Subject to
Article V, at no time shall the Exercise Price per share of Common
Stock be less than the par value per share of Common Stock.
4.2 Diluting Events and Related Matters. Except as otherwise
expressly provided, upon the occurrence of a Diluting Event, as
identified in subsections (a)-(h) below, the Exercise Price and
Other Factors shall be adjusted as set forth in Section 4.1:
(a) Issuance of Stock. If the Company shall issue or sell any
shares of Common Stock, including any treasury shares (but
excluding any shares issued pursuant to warrants or options
outstanding on the date hereof or any shares issued pursuant to the
Company's existing incentive stock option plan or restricted stock
bonus plan, directors' formula award plan or long term stock
incentive plan, in each case as in effect and in an amount
permitted on the date hereof, whether or not options or awards with
respect to such shares have been granted (at prices not less than
the prices at which such warrants and options are exercisable on
the date hereof) or any shares issuable pursuant to an employee or
director stock option plan, restricted stock bonus or ownership
plan, stock appreciation plan or similar equity appreciation plan
which the Company may implement after receiving the written
approval of a majority of the Holders in their sole discretion
(which approval must include Household if Household is a Holder)
whether or not options or awards with respect to such shares have
been granted (at prices not less than prices which are so approved
as described above)) for the consideration per share less than (x)
the Exercise Price in effect immediately prior to the time of such
issue or sale or (y) the Common Stock Repurchase Price in effect
immediately prior to the time of such issue or sale, then a
Diluting Event shall have occurred and the Exercise Price and Other
Factors shall be adjusted as set forth in Section 4.1.
(b) Issuance of Warrants, Options or Other Rights.
(i) Characterization of Transaction for Antidilution
Adjustment. In case the Company shall in any manner grant (whether
directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase of
Common Stock or for the purchase of Convertible Securities (but
excluding options or awards granted pursuant to the Company's
existing incentive stock option plan, restricted stock bonus plan,
directors' formula award plan or long term stock incentive plan, in
each case as in effect and in an amount permitted on the date
hereof or granted pursuant to an employee or director stock option
plan, restricted stock bonus or ownership plan, stock appreciation
plan or similar equity appreciation plan which the Company may
implement after receiving the written approval of a majority of the
Holders in their sole discretion (which approval must include
Household if Household is a Holder) in amounts permitted pursuant
to the approval described above), whether or not such rights or
options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for
which shares of Common Stock are issuable upon the exercise of such
rights or options or upon conversion or exchange of such
Convertible Securities shall be less than (1) the Exercise Price in
effect immediately prior to the time of the granting of such rights
or options, or (2) the Common Stock Repurchase Price existing
immediately prior to the time of such granting of such rights or
options, then a Diluting Event shall have occurred and the maximum
number of shares of Common Stock issuable upon the exercise of such
rights or options or upon conversion or exchange of the maximum
amount of such Convertible Securities issuable upon the exercise of
such rights or options shall (as of the date for adjustment
required by subsection (n) below) be deemed to be outstanding and
to have been issued for such price per share. Except as otherwise
specified in Section 4.2(i), no further adjustments described in
Section 4.1 of the Exercise Price and Other Factors shall be made
upon the actual issuance of such Common Stock or of such rights or
options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) Adjustment to Price. The price per share for which
shares of Common Stock are issuable upon the exercise of such
rights or options or upon conversion or exchange of such
Convertible Securities shall be determined by dividing (1) the
total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration payable to the
Company upon the exercise of such rights or options, plus, in the
case of such Convertible Securities, the minimum aggregate amount
of additional consideration if any, payable upon the conversion or
exchange thereof plus the net amount received or receivable upon
the issuance of such Convertible Securities (in each case without
double counting), by (2) the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options
or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options.
(c) Issuance of Convertible Securities.
(i) Characterization of Transaction for Antidilution
Adjustment. In case the Company shall in any manner issue or sell
(whether directly or by assumption in a merger or otherwise) any
Convertible Securities, whether or not the rights to convert or
exchange thereunder are immediately exercisable, and the price per
share for which shares of Common Stock are issuable upon such
conversion or exchange shall be less than (1) the Exercise Price in
effect immediately prior to the time of such issue or sale or (2)
the Common Stock Repurchase Price existing immediately prior to the
time of such issuance or sale, then a Diluting Event shall have
occurred and the Exercise Price and Other Factors shall be adjusted
as provided in Section 4.1 and the maximum number of shares of
Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date for adjustment
required by subsection (n) below) be deemed to be outstanding and
to have been issued for such price per share. Except as otherwise
specified in Section 4.2(i), (x) no further adjustments of the
Exercise Price and Other Factors shall be made upon the actual
issue of such Common Stock upon conversion or exchange of such
Convertible Securities and (y) if any such issue or sale of such
Convertible Securities is made upon exercise of any rights to
subscribe for or to purchase or any option to purchase any such
Convertible Securities for which adjustments of the Exercise Price
and Other Factors have been or are to be made pursuant to other
provisions of Sections 4.1 and 4.2, no further adjustment of the
Exercise Price and Other Factors shall be made by reason of such
issue or sale.
(ii) Adjustment to Price. The price per share for which
shares of Common Stock are issuable upon such conversion or
exchange shall be determined by dividing (1) the total amount
received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to
the Company upon the conversion or exchange thereof, by (2) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities.
(d) Dividends. In case the Company shall declare, in any 12-
month period, dividends upon the Common Stock (excluding a dividend
payable in Common Stock referred to in subsection (e) below or in
warrants, rights or Convertible Securities referred to in
subsection (b) or (c) above) which in the aggregate is in excess of
either 50% of Net Income for such 12-month period or 15% of the Net
Worth of the Company (as shown on the most recent year end
consolidated balance sheet described in ARTICLE X hereof), then a
Diluting Event shall have occurred and the Basic Exercise Price and
the First Alternative Exercise Price in effect immediately prior to
the declaration of such dividend shall each be reduced by an amount
equal to the aggregate amount of such dividends in excess of (x)
the lesser of (a) 50% of Net Income for such 12-month period and
(b) 15% of Net Worth divided by (y) all outstanding shares of
Common Stock with respect to which such dividend is payable. Such
reductions shall take effect as of the date on which a record date
is established for the purpose of such dividend, or, if a record
date is not established, the date as of which the holders of Common
Stock of record entitled to such dividend are to be determined.
Appropriate readjustment of the Basic Exercise Price and the First
Alternative Exercise Price shall be made in the event that any
dividend referred to in this subsection (d) shall be lawfully
abandoned.
(e) Dividends in Securities. In case the Company shall
declare a dividend or make any other distribution upon any stock of
the Company payable in either case in Common Stock or Convertible
Securities, then a Diluting Event shall have occurred, and such
Common Stock or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution, shall be
deemed to have been issued or sold without consideration.
(f) Other Distributions. In case the Company shall distribute
or grant to the holders of shares of Common Stock (whether or not
on a pro rata basis) any evidence of its indebtedness or any assets
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) or rights or options to subscribe or purchase any such
evidence of its indebtedness or assets (excluding rights or options
to subscribe or purchase Common Stock or Convertible Securities),
then a Diluting Event shall have occurred and the Basic Exercise
Price, the First Alternative Exercise Price and the Second
Alternative Exercise Price in effect immediately prior to such
distribution or grant shall each be reduced by an amount equal to
the aggregate amount of such distribution divided by the number of
outstanding shares of Common Stock with respect to which such
distribution was made immediately prior to such distribution, and
other adjustments shall be made as set forth in Section 4.1 hereof.
Such reductions shall take effect as of the date on which a record
date is established for the purpose of such distribution or grant,
or, if a record date is not established, the date as of which the
holders of Common Stock of record entitled to such distribution or
grant are to be determined.
(g) Reorganization, Reclassification, Recapitalization, Merger
or Sale of Company. In case the Company or a successor thereto
issues Common Stock, options, other rights or Convertible
Securities in connection with any consolidation or merger of the
Company or any of its Subsidiaries with or into another corporation
or in connection with the sale or other disposition of all or
substantially all of the business or assets of the Company or any
of its Subsidiaries and the consideration per share realized by the
Company by reason of any such transaction, determined as applicable
in accordance with subsection (k) of this Section 4.2, is less than
(i) the Exercise Price in effect immediately prior to such event,
or (ii) the Common Stock Repurchase Price in effect immediately
prior to such event, then a Diluting Event shall have occurred and
the Exercise Price and Other Factors shall be adjusted as set forth
in Section 4.1.
(h) Splits and Combinations. In case the Company shall at any
time subdivide its outstanding shares of Common Stock into a
greater number of shares or combine its outstanding shares of
Common Stock into a smaller number of shares, then a Diluting Event
shall have occurred and the Exercise Price and Other Factors in
effect immediately prior to such combinations, notwithstanding
Section 4.1, shall be adjusted as follows: Each of the Basic
Exercise Price, the First Alternative Exercise Price and the Second
Alternative Exercise Price in effect immediately after such event
shall equal the product of (a) the Basic Exercise Price, the First
Alternative Exercise Price or the Second Alternative Exercise
Price, as applicable, in effect immediately prior to such event and
(b)(i) the number of outstanding shares of Common Stock immediately
prior to such event, divided by (ii) the number of outstanding
shares of Common Stock immediately after such event. The number of
shares of Common Stock issuable upon the exercise of the Warrant
immediately after such event shall equal the product of (c) the
number of shares of Common Stock issuable upon the exercise of the
Warrant immediately prior to such event and (d)(i) the number of
outstanding shares of Common Stock immediately after such event,
divided by (ii) the number of shares of outstanding Common Stock
immediately prior to such event. Each Minimum Price in the
schedule set forth in the definitions of Warrant Repurchase Price
and Common Stock Repurchase Price immediately after such event
shall be equal to the product of (e) the applicable Minimum Price
immediately prior to such event and (f)(i) the number of
outstanding shares of Common Stock immediately prior to such event,
divided by (ii) the number of outstanding shares of Common Stock
immediately after such event.
(i) Readjustments. In the event (i) the purchase price
provided for in any rights or options referred to in subsection (b)
above, or (ii) the additional consideration, if any, payable upon
the conversion or exchange of Convertible Securities referred to in
subsection (b) or (c) above or (iii) the rate at which any
Convertible Securities referred to in subsection (b) or (c) above
are convertible into or exchangeable for Common Stock shall change
(other than under or by reason of provisions designed to protect
against dilution), the Exercise Price and Other Factors in effect
at the time of such event shall forthwith be readjusted to the
Exercise Price and Other Factors which would have been in effect at
such time had such rights, options or Convertible Securities still
outstanding provided for such changed purchase price, additional
consideration or exercise rate, as the case may be, at the time
initially granted, issued or sold. On the expiration of any such
option or right or the termination of any such right to convert or
exchange such Convertible Securities, the Exercise Price and Other
Factors then in effect hereunder shall forthwith be readjusted to
the Exercise Price and Other Factors which would have been in
effect at the time of such expiration or termination had such
right, option or Convertible Security never been issued, and the
Common Stock issuable thereunder shall no longer be deemed to be
outstanding.
(j) Determination of Consideration for Rights or Options. In
case any rights or options to purchase any shares of Common Stock
or Convertible Securities shall be issued in connection with the
issue or sale of other securities of the Company, together
comprising one integral transaction in which no specific
consideration is allocated to the rights or options, such rights or
options shall be deemed to have been issued without consideration.
(k) Determination of Consideration upon Payment of Cash,
Property or Merger. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any
such Common Stock or Convertible Securities shall be issued or sold
for cash, the consideration received therefor shall be deemed to be
the net amount received by the Company therefor, after deduction of
any accrued interest, dividends or any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Company in connection therewith. In case any shares of Common
Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be
issued for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be
deemed to be the fair market value of such other consideration on
the date of issue of such securities, as determined in good faith
by the Board of Directors of the Company, less any expenses
incurred by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or
options to purchase such Common Stock or Convertible Securities
shall be issued in connection with any merger or consolidation in
which the Company and its Subsidiary, if applicable, survive, the
amount of consideration therefor shall be deemed to be the fair
market value thereof on the date of issue, as determined in good
faith by the Board of Directors of the Company, for such portion of
the assets and business of the non-surviving corporation as the
Board of Directors shall attribute to such Common Stock,
Convertible Securities, rights or options, as the case may be. In
the event of any consolidation or merger of the Company or any of
its Subsidiaries in which the Company or its Subsidiary, if
applicable, does not survive or in the event of any sale or other
disposition of all or substantially all of the business or assets
of the Company or any of its Subsidiaries for stock or other
securities of any corporation, the Company shall be deemed to have
issued a number of shares of its Common Stock for stock or
securities of the other corporation computed on the basis of the
actual exchange ratio on which the transaction was predicated and
for a consideration equal to the fair market value on the date of
such transaction of such stock or securities of the other
corporation.
(l) Record Date. In case the Company shall establish a record
date 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 or in Convertible Securities or (ii) to
subscribe for or purchase Common Stock or Convertible Securities,
then effective as of such record date such Common Stock or
Convertible Securities shall be deemed to have been issued or sold.
(m) Shares Outstanding. Except as provided to the contrary
herein, the number of shares of Common Stock deemed to be
outstanding for purposes of Section 4.2(d), (f) and (h) at any
given time shall be the number of shares of Common Stock actually
issued and outstanding at such time, plus any shares of Common
Stock issuable in respect of scrip certificates which have been
issued in lieu of fractional shares of Common Stock.
(n) Date of Determination. For purposes of Section 4.1 and
4.2, the date as of which the Exercise Price and Other Factors
shall be adjusted shall be the earlier of the date upon which the
Company shall (1) enter into a firm contract for the issuance of
shares of Common Stock, rights or other options or Convertible
Securities, as the case may be, or (2) issue such shares of Common
Stock, rights or other options or Convertible Securities, as the
case may be.
4.3 Rights of the Holder upon Rights Offering, Mergers,
Reorganizations and Other Transfers.
(a) Participation in Rights Offerings. In the event the
Company shall effect an offering of Common Stock or other stock pro
rata among its stockholders, the Holder shall be entitled, at the
Holder's option, regardless of whether the Warrant is otherwise
then exercisable, in lieu of the adjustments set forth in Sections
4.1 and 4.2 to the extent that such option is exercised by the
Holder, to elect to participate in each and every such offering as
though this Warrant had been exercised and the Holder were, at the
time of any such rights offering, then a holder of that number of
shares of Common Stock to which the Holder is then entitled on the
exercise hereof.
(b) Participation in Stock Dispositions. In the event that
the Company shall offer, approve, accept or recommend an offering,
sale, transfer, redemption, cancellation or other disposition of
Common Stock (including, without limitation, by way of any merger,
capital reorganization, or reclassification or recapitalization of
the capital stock of the Company) to any person (other than in any
offering described in subsection (a) above) or in the event that
the Company liquidates or dissolves following a sale or transfer of
all or substantially all of its assets to any entity, the Company
shall arrange as part of such offering, sale or other disposition
for the participation of the Holder, with respect to including this
Warrant or the Shares issuable upon exercise hereof in such
offering, sale or other disposition upon identical terms, without
such Holder incurring any liability under Section 16(b) of the
Securities Exchange Act of 1934, as amended, and after taking into
account the Exercise Price, but without taking into account any
minimum prices in the definition of the Repurchase Prices. Such
participation shall be at the Holder's option, regardless of
whether the Warrant is otherwise then exercisable, in lieu of the
adjustments set forth in Sections 4.1 and 4.2, to the extent such
option is exercised by the Holder.
In case of the consolidation or merger of the Company or any
of its Subsidiaries with or into another corporation (each such
event is herein called an "Organic Change") and in which the Holder
does not participate as contemplated by the preceding paragraph,
then after any required adjustment in the Exercise Price and Other
Factors on account of such Organic Change, there shall thereafter
be deliverable upon the exercise of this Warrant or any portion
hereof (in lieu of or in addition to the number of shares of Common
Stock theretofore deliverable) the number of shares of stock or
other securities or property to which a holder of the number of
shares of Common Stock represented by that portion of this Warrant
so exercised would have been entitled upon such Organic Change, and
at the same aggregate Exercise Price, as adjusted. Prior to and as
a condition of the consummation of any Organic Change described,
the Company shall make appropriate, written adjustments in the
application of the provisions herein set forth satisfactory to the
holders of the Warrants entitled to not less than a majority of the
shares of Common Stock issuable upon the exercise thereof with
respect to the rights and interests of the holders of the Warrants
so that the provisions set forth herein 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 between the Company
and the successor entity and be approved by the holders of the
Warrants entitled to not less than a majority of the shares of
Common Stock issuable upon the exercise thereof.
(c) Adjustment to Repurchase Payment. In the event (i) the
Board of Directors of the Company shall adopt a resolution
authorizing the sale or other disposition by the Company of all or
substantially all of the business or assets of the Company, the
Company shall engage an investment banking firm to assist in such
sale or disposition, or the Company shall enter into a written
agreement in principle relating to such sale or disposition, or
(ii) the stockholders of the Company shall exchange or sell all or
substantially all of their shares of Common Stock (including,
without limitation, by way of a merger, reorganization or
recapitalization), the Company or its stockholders shall engage an
investment banking firm to assist in such exchange or sale, the
Board of Directors of the Company shall adopt a resolution
recommending such sale or exchange to the stockholders of the
Company, or the Company shall enter into a written agreement in
principle relating to such exchange or sale or (iii) the Board of
Directors of the Company shall adopt a resolution authorizing the
Company to sell shares of Common Stock, the Company shall engage an
investment banking firm to assist in such sale, or the Company
shall enter into a written agreement in principle relating to such
sale, in any case within 180 days after the date of a repurchase
pursuant to Section 9.2, for a consideration per share (determined
by reference to all of the consideration received in such
transaction by the stockholders of the Company (or which would be
received thereby if all of any such consideration received by the
Company in such transaction were distributed to the stockholders
and to the holders of Common Stock repurchased in such repurchase
pursuant to Section 9.2 or issuable upon exercise of the portion of
the Warrant repurchased in such repurchase), as determined by an
investment banking firm selected by the Company and acceptable to
the Holders (the "Stockholder's Consideration Per Share")) greater
than the consideration per share which was paid to the Holders on
the date of such repurchase, then immediately upon the closing of
the transaction resulting from such event the Company shall pay to
such Holders an amount equal to (x) the number of shares of Common
Stock repurchased and/or represented by that portion of the Warrant
repurchased, multiplied by (y) the difference between the
Stockholder's Consideration Per Share and the consideration per
share received by the Holders in such repurchase. The calculation
of the amount to be paid a Holder pursuant to this Section 4.3(c)
shall be made after taking into account any adjustment to the
Exercise Price and Other Factors pursuant to Sections 4.1 and 4.2
resulting from such transactions described in clauses (i), (ii) or
(iii) above. The obligation of this Section 4.3(c) survives any
repurchase of the Warrant or the Common Stock issuable upon the
exercise thereof.
4.4 Certificates, Notices and Consents.
(a) Upon the occurrence of any Diluting Event requiring
adjustments of the Exercise Price and Other Factors pursuant to
Sections 4.1 and/or 4.2, a certificate signed (i) by the President
or a Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the Company or (ii)
by any independent firm of certified public accountants of
recognized standing selected by, and at the expense of, the Company
setting forth in reasonable detail the events requiring the
adjustment and the method by which such adjustment was calculated,
shall be mailed (by first class mail, postage prepaid) to the
Holder specifying the adjusted Exercise Price and Other Factors
after giving effect to the adjustment(s).
The certificate of any independent firm of certified public
accountants of recognized standing selected by the Board of
Directors of the Company and reasonably acceptable to the Holder
shall be conclusive evidence, absent manifest error, of the
correctness of any computation made under Sections 4.1 and/or 4.2.
(b) In case the Company after the date hereof shall propose to
(i) pay any dividend payable in stock to the holders of shares of
Common Stock or to make any other distribution to the holders of
shares of Common Stock, (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 involving merely the subdivision
or combination of outstanding shares of Common Stock, or (iv) any
capital reorganization or any consolidation or merger, or any sale
or other disposition of all or substantially all of the business or
assets of the Company, or the liquidation, dissolution or winding
up of the Company or (v) engage in any Diluting Event not otherwise
mentioned in this subsection (b), then, in each such case, the
Company shall mail (by first class mail, postage prepaid) to the
Holder notice of such proposed action, which shall specify the date
on which the books of the Company shall close, or a record date
shall be established, for determining holders of Common Stock
entitled to receive such stock dividends or other distribution of
such rights or options, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, dissolution or winding up shall take
place or commence, as the case may be, and 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 notice shall be
mailed, in the case of any action covered by clause (i) or (ii)
above, at least 30 days prior to the date upon which such action
takes place, and, in the case of any action covered by clause (iv)
above, at lease 30 days prior to the date upon which such action
takes place and 30 days prior to any record date to determine
holders of Common Stock entitled to receive such securities or
other property.
(c) Failure to file any certificate or notice or to mail any
notice, or any defect in any certificate or notice, pursuant to
this Section 4.4, shall not affect the legality or validity of the
adjustment of the Exercise Price and Other Factors, the number of
shares purchasable upon exercise of this Warrant, or any
transaction giving rise thereto.
4.5 No Implied Consent. Nothing in this Warrant is intended
to permit any action or event which is prohibited by the Secured
Credit Agreement as long as such Secured Credit Agreement remains
in effect.
ARTICLE V
NO IMPAIRMENT
The Company shall not, and shall not permit its Subsidiaries
to, directly or indirectly, by any action, including, without
limitation, amending its Certificate of Incorporation or through
any reorganization, 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 against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the
par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon
such exercise, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant and any required issuance of additional
shares of Common Stock pursuant to Sections 4.1 and 4.2, (c) obtain
all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to
enable the Company to perform its obligations under this Warrant,
(d) not issue any capital stock of any class which is preferred as
to dividends or as to the distribution of assets upon voluntary or
involuntary dissolution, liquidation or winding up of the Company
or which has disproportionately greater voting rights under any
circumstance, (e) not permit any Subsidiary of the Company to
issue, sell or transfer any capital stock or other equity interest
in such Subsidiary, or to sell all or substantially all of the
assets of such Subsidiary, to any person or entity other than the
Company, except in connection with the Opcom warrant and the
exercise of such warrant or in connection with an employee or
director stock option plan, restricted stock bonus or ownership
plan, stock appreciation plan or similar equity appreciation plan
which the Company or Opcom may implement after receiving the
written approval of a majority of the Holders (which approval must
include Household if Household is a Holder), (f) not undertake any
reverse stock split, combination, reorganization or other
reclassification of its capital stock which would have the effect
of making this Warrant exercisable for less than one share of
Common Stock, (g) not take or permit the taking of any action which
could subject the holder of this Warrant or shares of Common Stock
issuable upon exercise thereof to liability under Section 16(b) of
the Securities Exchange Act of 1934, as amended and (h) not change
the Company's fiscal year from a fiscal year ending at the end of
October as identified on Schedule I hereto.
Upon the request of the Holder, the Company will at any time
and from time to time during the period this Warrant is outstanding
acknowledge in writing, in form satisfactory to the Holder, the
continued validity of this Warrant and the Company's obligations
hereunder.
ARTICLE VI
RESERVATION OF STOCK ISSUABLE ON EXERCISE OF
WARRANT; PREEMPTIVE RIGHTS
The Company will at all times reserve and keep available,
solely for issuance, sale and delivery upon the exercise of this
Warrant, a number of shares of Common Stock equal to the number of
full shares of Common Stock issuable upon the exercise of this
Warrant. All shares of Common Stock issuable upon the exercise of
this Warrant shall, when issued upon such exercise, (a) be duly and
validly authorized and issued, fully paid and nonassess-able, and
(b) be free from all taxes, liens and charges with respect to the
issue thereof other than any stock transfer taxes in respect of any
transfer occurring contemporaneously with such issue. No
stockholder of the Company has or shall have any preemptive rights
to subscribe for such shares of Common Stock.
ARTICLE VII
LISTING ON SECURITIES EXCHANGE
If the Company shall list any shares of Common Stock on any
securities exchange, it will during the Exercise Period, at its
expense, list thereon, maintain and, when necessary, increase such
listing of, all shares of Common Stock issued or, to the extent
permissible under the rules of the applicable securities exchange
or automated quotation system, issuable upon the exercise of this
Warrant so long as any shares of Common Stock shall be so listed.
ARTICLE VIII
RESTRICTIONS ON TRANSFER
The conditions contained in the following sections of this
ARTICLE VIII are intended to insure compliance with the Securities
Act in respect of the transfer of Warrants or Common Stock issuable
upon the exercise of Warrants. Reference in this ARTICLE VIII to
shares of Common Stock issuable upon the exercise of Warrants
includes shares of Common Stock theretofore issued upon the
exercise of any Warrants which are then evidenced by certificates
required to bear the legend set forth in Section 8.6.
8.1 Notice of Proposed Transfer; Transfers Without
Registration. The Holder or the holder of any shares of Common
Stock issuable upon the exercise of this Warrant, by acceptance
hereof or thereof, agrees to give written notice to the Company,
prior to any transfer of this Warrant, such shares of Common Stock
or any portion thereof which bear the legend described in
Section 8.6, of its intention to make such transfer, which notice
shall include a brief description of such proposed transfer. A
copy of such notice shall be sent to Independent Counsel.
If in the opinion of Independent Counsel the proposed transfer
may be effected without registration or qualification under any
Federal or State law, such counsel shall, as promptly as
practicable, notify the Company and the Holder of such opinion and
of the terms and conditions, if any, to be observed in such
transfer, whereupon the Holder shall be entitled to transfer such
shares of Common Stock in accordance with the terms of the notice
delivered to the Company and the opinion of Independent Counsel.
In the event this Warrant shall be exercised as an incident to such
transfer, such exercise shall relate back and for all purposes of
this Warrant be deemed to have occurred as of the date of such
notice regardless of delays incurred by reason of the provisions of
this ARTICLE VIII which may result in the actual exercise on any
later date.
8.2 Registration and Qualification. The provisions of Section
8.2(a), 8.2(b) and 8.9 below are subject to the terms of the First
Amended and Restated Registration Rights Agreement, dated as of
July 1, 1988 (the "Original Registration Agreement"), among the
Company, Household and the stockholders listed therein, as the same
may be amended, modified or supplemented from time to time with the
consent required by Section 8.11 (the "Registration Agreement"),
and if, prior to an amendment of the Original Registration
Agreement as amended by any effective amendment thereof, any
conflict exists between the provisions of the Original Registration
Agreement as amended by any effective amendment thereof, and
Section 8.2(a), 8.2(b) and 8.9, the applicable conflicting
provisions of the Original Registration Agreement as amended by any
effective amendment thereof shall control, but only to the extent
of the conflict and the holder of any Warrant and the shares of
Common Stock issuable upon exercise thereof shall have the
applicable conflicting rights contained in the Original Registra-
tion Agreement as amended by any effective amendment thereof but
only to the extent of the conflict, until such time as the Original
Registration Agreement as amended by any effective amendment
thereof is so amended.
(a) Piggyback Registration. If the Company proposes (whether
on its own behalf or at the request of any other person or entity)
to register any security under the Securities Act on any
registration form (otherwise than for the registration of
securities to be offered and sold pursuant to (a) an employee
benefit plan, (b) a dividend or interest reinvestment plan, (c)
other similar plans or (d) reclassifications of securities,
mergers, consolidations and acquisitions of assets on Form S-4 or
any successor thereto) prescribed by the Commission permitting a
secondary offering or distribution, not less than 60 days prior to
each such registration, the Company shall give to the holders of
the Warrants or shares of Common Stock issuable upon the exercise
thereof written notice of such proposal which shall describe in
detail the proposed registration and distribution (including those
jurisdictions where registration or qualification under the
securities or blue sky laws is intended) and, upon the written
request of any holder of a Warrant or shares of Common Stock
issuable upon the exercise thereof given within 30 days after the
date of any such notice, proceed to include in such registration
such shares of Common Stock as have been requested by any such
holder to be included in such registration; provided, however, that
the Company shall not be required to include fewer than 50,000
shares (subject to adjustment upon any combination or split of
shares or similar event) of Common Stock in any such registration
pursuant to this Section 8.2(a). Any holder of a Warrant or shares
of Common Stock issuable upon the exercise thereof shall in its
request describe briefly the proposed disposition of such shares of
Common Stock. The Company will in each instance use its best
efforts to cause any shares of Common Stock issuable upon the
exercise of the Warrants (the holders of which shall have so
requested registration thereof) to be registered under the
Securities Act and qualified under the securities or blue sky laws
of any jurisdiction requested by a prospective seller, all to the
extent necessary to permit the sale or other disposition thereof
(in the manner stated in such request) by a prospective seller of
the securities so registered.
If the managing underwriter, who shall be selected by the
Company (subject to the approval, not unreasonably withheld, of a
majority of the holders that have requested registration (which
must include Household if Household is then a holder and requesting
registration) to manage the distribution of the shares of Common
Stock being registered, advises the Company in writing that, in its
opinion, the inclusion of the shares of Common Stock requested to
be included in such registration by a holder of a Warrant or shares
of Common Stock issuable upon the exercise thereof with the
securities being registered by the Company and other prospective
sellers would materially adversely affect the distribution of all
such securities, then: (a) (i) if such registration has been
initially proposed by the Company, the Company shall include in
such registration the number of shares proposed to be registered by
the Company and by the holders of the Warrants or shares of Common
Stock issuable upon the exercise thereof before including any other
securities in the registration, and, if an additional reduction in
the number of securities being registered is necessary, the Company
shall include in such registration such shares of the Company and
the holders of the Warrants or shares of Common Stock issuable upon
the exercise thereof pro rata based on the number of shares
originally proposed to be registered by the Company and by the
holders of the Warrants or shares of Common Stock issuable upon the
exercise thereof or (ii) if such registration has been initially
proposed by a holder of securities other than the Company or the
holders of Warrants or shares of Common Stock issuable upon
exercise thereof, the Company shall include in such registration
the number of shares proposed to be registered by such other holder
and the holders of Warrants or shares of Common Stock issuable upon
exercise thereof before including any other securities in the
registration and, if an additional reduction in the number of
securities being registered is necessary, the Company shall include
in such registration such shares of such other holder and the
holders of Warrants or shares of Common Stock issuable upon
exercise thereof pro rata based on the number of shares originally
proposed to be registered by such other holder and by each holder
of Warrants or shares of Common Stock issuable upon exercise
thereof; or (b) any holder of a Warrant or shares of Common Stock
issuable upon the exercise thereof may, at its sole option, delay
its offering and sale for a period not to exceed 120 days after the
effective date of such registration as such managing underwriter
shall reasonably request. In the event of such delay, the Company:
(i) shall use its best efforts to effect any registration or
qualification under the Securities Act and the securities or blue
sky laws of any jurisdiction as may be necessary to permit such
prospective seller to make its proposed offering and sale following
the end of such period of delay; and (ii) during such period of
delay and for at least 90 days thereafter, shall not file or cause
to be effected any other registration of its capital stock or
securities convertible into or exchangeable or exercisable for any
such capital stock, whether on its own behalf or at the request of
any other person or entity, and shall not sell any shares of its
capital stock or securities convertible into or exchangeable or
exercisable for any such capital stock.
The holder of a Warrant or shares of Common Stock issuable
upon the exercise thereof who has requested shares of Common Stock
to be included in a registration pursuant to this Section 8.2(a) by
acceptance hereof or thereof, agrees to execute an underwriting
agreement with such underwriter that is (i) reasonably satisfactory
to such holder and (ii) in customary form.
Nothing in this Section 8.2(a) shall be deemed to require the
Company to proceed with any registration of its securities after
giving the notice herein provided.
(b) Demand Registration. The holders of the Warrants and of
any shares of Common Stock issuable upon the exercise thereof may,
on up to four separate occasions (unless such request is withdrawn
in accordance with the terms hereof) (the "Demands"), require the
Company to effect the registration of the Shares pursuant to the
provisions of this Section 8.2(b). Such Demands shall consist of
two demands for which the Company shall pay all the fees and
expenses as set forth in Section 8.4 (the "Free Demands") and two
demands for which the holders shall pay their proportionate share
of the fees and expenses set forth in Section 8.4 (the "Charged
Demands"). If the holders of the Warrants and of any shares of
Common Stock issuable upon the exercise thereof representing a
total of more than 50% of the shares of Common Stock then issued
and issuable upon the exercise of the Warrants (which must include
Household if Household is then a holder) shall give notice to the
Company to the effect that such holders intend to (i) transfer all
or any part of the Shares or (ii) exercise all or any part of the
Warrants and transfer all or any part of the Shares under such
circumstances that a public distribution (within the meaning of the
Securities Act) of the Shares will be involved, then the Company
shall (A) within 10 days after receipt of such notice, give written
notice of the proposed registration to the other holders of
warrants and shares of Common Stock issuable upon exercise thereof,
and (B) within 30 days after receipt of such notice, file a
registration statement pursuant to the Securities Act to the effect
that such shares may be sold under the Securities Act as promptly
as is practicable thereafter and the Company will use its best
efforts to cause any such registration to become effective and to
keep the prospectus included therein current for at least six
months after the effective date thereof or until the distribution
shall have been completed, whichever first occurs; provided,
however, that such holders shall furnish the Company with such
appropriate information (relating to the intention of such holders)
in connection therewith as the Company may reasonably request in
writing; and provided, further, that the Company shall not be
required to register fewer than 200,000 (subject to adjustment upon
any combination or split of shares or similar event) shares of
Common Stock in any registration pursuant to this Section 8.2(b).
As long as the Company is not in default on its obligations under
Section 10.1, the Company's obligation to file a registration
statement, at any time when it is impossible or impracticable to
include the Company's fiscal year-end financial statements as the
most recent certified financial statements required to be included
therein, shall be suspended until the Company's next fiscal year-
end financial statements are due in accordance with Section
10.1(b), unless the request for registration pursuant to this
Section 8.2(b) has been withdrawn. The managing underwriter for
offerings made pursuant to this Section 8.2(b) shall be selected by
the parties requiring registration hereunder (which must include
Household if Household is then a holder and requesting
registration), subject to the consent, not unreasonably withheld,
of the Company.
If the managing underwriter for any offering made pursuant to
this Section 8.2(b) advises the Company in writing that, in its
opinion, the inclusion of all of the shares of Common Stock
requested to be included in such registration by the holders of
Warrants and shares of Common Stock issuable upon the exercise
thereof would materially adversely affect the distribution of all
such securities, then (a) there shall be included in such
registration shares of the holders of Warrants or shares of Common
Stock issuable upon the exercise thereof pro rata based on the
number of shares originally proposed to be registered by each
holder of Warrants or shares of Common Stock issuable upon the
exercise thereof or (b) any holder of a Warrant or shares of Common
Stock issuable upon the exercise thereof may, at its sole option,
delay its offering and sale for a period not to exceed 120 days
after the effective date of such registration as such managing
underwriter shall reasonably request. In the event of such delay,
the Company (i) shall use its best efforts to effect any
registration or qualification under the Securities Act and the
securities or blue sky laws of any jurisdiction as may be necessary
to permit such prospective seller to make its proposed offering and
sale following the end of such period of delay; and (ii) during
such period of delay and for at least 90 days thereafter, shall not
file or cause to be effected any other registration of its capital
stock or securities convertible into or exchangeable or exercisable
for any such capital stock, whether on its own behalf or at the
request of any other person or entity, and shall not otherwise sell
any of its capital stock or securities convertible into or
exchangeable or exercisable for any such capital stock. A
registration shall not reduce the number of Demands available to
the holders under this Section 8.2(b) until such registration has
become effective and the holders of the Warrants or shares of
Common Stock issuable upon the exercise thereof participating in
the demand registration are able to register and sell at least 80%
of the shares of Common Stock originally requested to be included
in such registration; provided, however, that if in connection with
a proposed Demand made pursuant to Section 8.2(b) the holders of
the Warrants or shares of Common Stock issuable upon the exercise
thereof participating in the demand registration are able to
register and sell more than 50% but less than 80% of the shares of
Common Stock originally requested to be included in such
registration, the number of Free Demands shall be reduced by one,
and the number of Charged Demands shall be increased by one.
(c) Termination of Repurchase Rights. The Company shall have
no repurchase rights pursuant to Section 9.2 with respect to any
shares of Common Stock or portion of the Warrant exercisable for
shares of Common Stock that a Holder has requested be registered
pursuant to Section 8.2(a) or 8.2(b) if such request pursuant to
Section 8.2(a) or 8.2(b) is given prior to (i) the date of any
notice under Section 9.2, or (ii) the expiration of the
Registration Period with respect to all shares of Common Stock or
the entire portion of the Warrant specified in any notice delivered
pursuant to Section 9.2; provided, however, that subject to the
last sentence of Section 8.2(a), the Company may repurchase
pursuant to Section 9.2 any Unsold Shares or Unsold Amount that the
Company was requested to register prior to any notice under Section
9.2, and the holders of Unsold Shares and unsold Amounts may not
override any such repurchase by requesting registration within the
applicable Registration Period.
8.3 Registration and Qualification Procedures. Whenever the
Company is required by the provisions of Section 8.2 to use its
best efforts to effect the registration of any of its securities
under the Securities Act, the Company will, as expeditiously as is
possible:
(a) prepare and file with the Commission a registration
statement with respect to such securities;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective and the prospectus current and to
comply with the provisions of the Securities Act with respect to
the sale of all securities covered by such registration statement
whenever the seller of such securities shall desire to sell the
same, including the offering or sale of such securities on a
continuous or delayed basis pursuant to Rule 415 under the
Securities Act as the same shall be in effect from time to time;
(c) furnish to each seller such number of copies of
preliminary prospectuses and prospectuses and each supplement or
amendment thereto and such other documents as each seller may
reasonably request in order to facilitate the sale or other
disposition of the securities owned by such seller in conformity
with (i) the requirements of the Securities Act and (ii) the
seller's proposed method of distribution;
(d) register or qualify the securities covered by such
registration statement under the securities or blue sky laws of
such jurisdictions within the United States as each seller shall
reasonably request, and do such other reasonable acts and things as
may be required of it to enable each seller to consummate the sale
or other disposition in such jurisdictions of the securities owned
by such seller; provided, however, that the Company shall not be
required to (i) qualify as a foreign corporation or consent to a
general and unlimited service of process in any such jurisdictions,
(ii) qualify as a dealer in securities or (iii) register or qualify
at its own expense securities of such seller in any jurisdiction
not described in the notice of the Company referred to in the first
paragraph of Section 8.2, in any case in order to accomplish any of
the foregoing;
(e) furnish, at the request of any seller on the date such
securities are delivered to the underwriters for sale pursuant to
such registration or, if such securities are not being sold through
underwriters, on the date the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and to
the seller making such request, covering such legal matters with
respect to the registration in respect of which such opinion is
being given as the seller of such securities may reasonably request
and are customarily included in such opinion and (ii) letters,
dated, respectively, (1) the effective date of the registration
statement and (2) the date such securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from
a firm of independent certified public accountants of recognized
standing selected by the Company, addressed to the underwriters, if
any, and to the seller making such request, covering such
financial, statistical and accounting matters with respect to the
registration in respect of which such letters are being given as
the seller of such securities may reasonably request and are
customarily included in such letters;
(f) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders as soon as reasonably
practicable, but not later than 16 months after the effective date
of the registration statement, an earnings statement covering a
period of at least 12 months beginning after the effective date of
the registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act;
(g) enter into and perform an underwriting agreement with the
managing underwriter, if any, selected as provided in Section 8.2,
as the case may be, containing customary terms of offer and sale of
the securities, payment provisions, underwriting discounts and
commissions, representations, warranties, covenants, indemnities,
terms and conditions; and
(h) keep each seller advised in writing as to the initiation
and progress of any registration under Section 8.2, as the case may
be.
8.4 Allocation of Expenses. If the Company is required by the
provisions of Section 8.2 to use its best efforts to effect the
registration or qualification under the Securities Act or any state
securities or blue sky laws of any of the shares of Common Stock
issuable upon the exercise of the Warrants, the Company will pay
all expenses in connection therewith, including, without
limitation, (a) all expenses incident to filing with the National
Association of Securities Dealers, Inc., (b) registration fees, (c)
printing expenses, (d) the Company's accounting and legal fees and
expenses, (e) expenses of any special audits incident to or
required by any such registration or qualification, (f) premiums
for insurance in such amount, if any, deemed appropriate by the
managing underwriter and (g) expenses of complying with the
securities or blue sky laws of any jurisdictions in connection with
such registration or qualification; provided, however, that the
holders of any Warrant or shares of Common Stock issuable upon
exercise thereof participating in a Charged Demand shall be liable
for the amount of such expenses in connection with such Charged
Demand made pursuant to Section 8.2(b) equal to the product of (a)
all such expenses and (b) the proportion which the number of shares
of Common Stock issuable upon exercise of the Warrants for which
registration has become effective and which are sold pursuant to
Section 8.2(b) bears to the total number of all shares included in
such registration; and provided, further, that the Company shall
not be liable for (1) any discounts or commissions to any
underwriter or (2) any stock transfer taxes incurred in respect of
the shares of Common Stock issuable upon the exercise of the
Warrants sold by the sellers.
8.5 Indemnification. In connection with any registration or
qualification of securities under Section 8.2 or 8.3, the Company
hereby indemnifies the Holder and the holders of any shares of
Common Stock issuable upon the exercise of the Warrants and each
underwriter thereof, including each person, if any, who controls
the Holder or such stockholder or underwriter within the meaning of
Section 15 of the Securities Act, against all losses, claims,
damages, liabilities and expenses (including reasonable costs of
investigation) caused by any untrue, or alleged untrue, statement
of a material fact contained in any registration statement,
preliminary prospectus, prospectus or notification or offering
circular (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or caused by 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, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any untrue statement
or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information furnished in
writing to the Company by the Holder or any such stockholder or
underwriter expressly for use therein. The Company and each
officer, director and controlling person of the Company or
underwriter within the meaning of Section 15 of the Securities Act
are hereby indemnified by the Holder and by the holders of any
shares of Common Stock issuable upon the exercise of the Warrants
against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) caused by any untrue,
or alleged untrue, statement of a material fact contained in any
registration statement, preliminary prospectus or notification or
offering circular (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or caused by
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, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with
information furnished in writing to the Company by the Holder or
any such stockholder expressly for use therein.
Promptly upon receipt by a party indemnified under this
Section 8.5 of notice of the commencement of any action against
such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under
this Section 8.5, such indemnified party shall notify the
indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may have to any indemnified
party, unless such failure shall materially adversely affect the
defense of such action. In case notice of commencement of any such
action shall be given to the indemnifying party as above provided,
the indemnifying party shall be entitled to participate in and, to
the extent it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense of such action at its own
expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other
than reasonable costs of investigation) shall be paid by the
indemnified party unless (a) the indemnifying party agrees to pay
the same, (b) the indemnifying party fails to assume the defense of
such action with counsel reasonably satisfactory to the indemnified
party or (c) the named parties to any such action (including any
impleaded parties) have been advised by such counsel that
representation of such indemnified party and the indemnifying party
by the same counsel would be inappropriate under applicable
standards of professional conduct (in which case the indemnifying
party shall not have the right to assume the defense of such action
on behalf of such indemnified party); provided that the
indemnifying party shall not be required to pay the fees and
expenses of more than one counsel to indemnified parties claiming
indemnification pursuant to this Section 8.5. No indemnifying
party shall be liable for any settlement entered into without its
consent.
If the indemnification provided for in this Section 8.5 shall
for any reason be unenforceable by an indemnified party, although
otherwise available in accordance with its terms, then each
indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages, liabilities or
expenses with respect to which such indemnified party has claimed
indemnification, in such proportion as is appropriate to reflect
the relative fault of the indemnified party on the one hand and the
indemnifying party on the other in connection with the statements
or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The Company, each holder of the Warrants and each
holder of Shares of Common Stock issued upon the exercise thereof
agree that it would not be just and equitable if contribution
pursuant hereto were to be determined by pro rata allocation or by
any other method of allocation which does not take into account
such equitable considerations. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
liabilities or expenses referred to herein shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
against any action or claim which is the subject hereof. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
Each Holder of the Warrants and each holder of shares of
Common Stock issued upon the exercise thereof and bearing the
legend required by Section 8.6, by acceptance thereof, agrees to
the indemnification provisions of this Section 8.5.
8.6 Legend on Certificates. In case any shares of Common
Stock are issued upon the exercise in whole or in part of the
Warrants or are thereafter transferred, in either case under such
circumstances that no registration under the Securities Act is
required, each certificate representing such shares shall bear on
the face thereof the following legend:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and any transfer
thereof is subject to the conditions specified in the Warrant,
dated as of November 27, 1991, originally issued by Optek
Technology, Inc. (the "Company") to Household Commercial Financial
Services, Inc. A copy of the form of such Warrant is on file with
the Secretary of the Company at 1215 West Crosby Road, Carrollton,
Texas 75006 and will be furnished without charge by the Company to
the holder of this certificate upon written request to the
Secretary of the Company at such address.
In case (a) a registration statement covering shares of Common
Stock represented by a certificate bearing the legend specified
above becomes effective under the Securities Act or (b) the Company
receives an opinion of Independent Counsel that such legend is no
longer necessary on such certificate to protect the Company from a
violation of the Securities Act, the Company shall, or shall
instruct its transfer agent and registrar to, issue in lieu thereof
a new certificate or certificates for such shares in the name of
the holder of such shares without such legend on the face thereof.
8.7 Supplying Information. The Company, the Holder and each
holder of shares of Common Stock issuable upon the exercise of the
Warrant shall cooperate with each other in supplying such
information as may be necessary for any of such parties to complete
and file any information reporting forms presently or hereafter
required by the Commission or any commissioner or other authority
administering the blue sky or securities laws of any jurisdiction
where shares of Common Stock are proposed to be sold pursuant to
Section 8.2 or 8.3.
8.8 Damages. In the event the Company fails to comply with
any provision of Section 8.2 or 8.3, upon written request of the
Holder of the warrant or any holder of shares of Common Stock
issuable upon the exercise thereof, the Company shall promptly
obtain from an independent investment banking firm acceptable to
such person an opinion estimating the net proceeds which such
person would have received (after deducting underwriting
commissions and discounts and any other expenses that would have
been for the account of such Holder or holder of shares of Common
Stock in connection with the registration or qualification of such
shares of Common Stock) upon the sale of shares of Common Stock
proposed to be sold pursuant to such registration or qualification.
Such opinion of the independent investment banking firm shall be
(a) delivered in writing to the Company, with a copy to such
person, within 15 days after the date of the request of such person
to the Company and (b) conclusive and binding on the Company and
such person.
Within 21 days of receipt by the Company of such estimate, if
such person so elects, the Company shall pay to such person an
amount equal to such estimated net proceeds related to the Warrants
or shares of Common Stock, as the case may be. Payment of such
amount shall be made by, at the option of such person, (i) wire
transfer to an account in a bank located in the United States
designated by such person for such purpose or (ii) a certified or
official bank check drawn on a member of the Chicago or New York
Clearing House payable to the order of such person. Upon payment to
such person of such amount, such person shall assign to the
Company, this Warrant and, if issued, the shares of Common Stock
issued upon the exercise of this Warrant proposed to be sold
pursuant to the registration or qualification in question, without
any representation or warranty (other than that such Holder has
good and valid title thereto free and clear of liens, claims,
encumbrances and restrictions of any kind arising by or through
such Holder). If less than all of the shares of Common Stock
issuable upon exercise of this Warrant were proposed to be sold
pursuant to the registration or qualification in question, the
Company shall cancel the Warrant and issue in the name of, and
deliver to, the Holder, pursuant to Section 2, a new Warrant for
the shares of Common Stock issuable upon the exercise thereof not
required to be assigned to the Company pursuant to the provisions
of the preceding sentence. The Company agrees that the amount of
actual damages that would be sustained by the Holder as a result of
the failure of the Company to comply with any provisions of Section
8.2 or 8.3 is not capable of ascertainment on any other basis.
8.9 Holdback Agreements. The Company agrees: (i) not to
effect any public sale or distribution of or otherwise dispose of
any of its capital stock or securities convertible into or
exchangeable or exercisable for any such capital stock during the
seven days prior to or 135 days after the date any registration
pursuant to Section 8.2(a) or 8.2(b) has become effective, except
as part of such registration and except pursuant to any
registration of securities to be offered and sold pursuant to (A)
an employee benefit plan, (B) a dividend or interest reinvestment
plan, (C) other similar plans or (D) reclassifications of
securities, mergers, consolidations and acquisitions of assets on
Form S-4 or any successor thereto; and (ii) to cause each person or
entity which owns any capital stock of the Company as of the date
of this Warrant (other than persons or entities holding
nonrestricted stock that can be freely traded pursuant to Section
4(1) of the Securities Act and persons or entities who obtained
stock pursuant to a registration described in Section 8.9(i)(A),
(B), (C) or (D)) and each person or entity which purchases the
Company's capital stock or securities convertible into or
exchangeable or exercisable for any such capital stock at any time
after the date of this Warrant (other than in a public offering and
other than persons or entities holding nonrestricted stock that can
be freely traded pursuant to Section 4(1) of the Securities Act and
persons or entities who obtained stock pursuant to a registration
described in Section 8.9(i)(A), (B), (C) or (D)) to agree not to
effect any such public sale or distribution during such period.
8.10 Rule 144 Reporting. With a view to making available to
the holders of Warrants and of shares of Common Stock issuable upon
exercise thereof the benefits of certain rules and regulations of
the Commission which may permit the sale of Warrants or shares of
Common Stock issuable upon exercise thereof to the public without
registration, the Company agrees to: (a) make and keep public
information available as those terms are understood and defined in
Rule 144 under the Securities Act or any successor rule or
regulation from time to time in effect; (b) file with the
Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange
Act; and (c) furnish to the Holder or a holder of Common Stock
issuable upon exercise of Warrants forthwith upon request a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144 and the Exchange Act, a copy of the most
recent annual or quarterly report of the Company filed with the
Commission and such other reports and documents of the Company and
other information in the possession of or reasonably obtainable by
the Company as the Holder or such holders may reasonably request in
availing themselves of any rule or regulation of the Commission
allowing them to sell securities without registration under the
Securities Act.
8.11 Consent for Additional Registration Rights. The Company
shall not grant rights to register any of its securities under the
Securities Act to any person or entity, and shall not permit the
amendment, supplement or modification of any such rights existing
as of the Closing Date, without the consent of the holders of
Warrants and shares of Common Stock issuable upon exercise thereof
representing more than 50% of the shares of Common Stock issued or
issuable upon exercise of the Warrants (which must include
Household if Household is then a Holder), except for the rights
described by the Registration Agreement.
ARTICLE IX
REPURCHASES
Reference in this ARTICLE IX to issued shares of Common Stock
shall mean shares of Common Stock theretofore issued upon the
exercise of any Warrants, together with any additional shares of
Common Stock or other securities issued with respect to such shares
pursuant to any transaction described in Section 4.2(e), (f), (g)
or (h), and, for purposes of this ARTICLE IX, references to a
Holder or Holders shall include any holder of shares of Common
Stock issued upon the exercise of any Warrants.
9.1 Obligation of Company. From time to time prior to the
later to occur of (i) October 31, 1998 and (ii) payment in full of
all Liabilities (as defined in the Secured Credit Agreement), upon
written notice to the Company from a Holder, the Company will,
subject to the terms and conditions of the Secured Credit
Agreement, on the date (not less than 90 days from the date of such
notice) designated in such notice (unless delayed pursuant to
Section 9.3), repurchase from such Holder all or any portion of
this Warrant or all or any number of issued shares of Common Stock
held by such Holder designated in such notice for:
(a) in the case of all or a portion of the Warrant, an amount
equal to the product of (i) the lesser of (x) the Warrant
Repurchase Price in effect on the date of such notice and (y) the
Market Value as of the date of such notice reduced by the Exercise
Price then in effect and (ii) the number of shares of Common Stock
represented by the Warrant on the date of such notice or the
portion of the Warrant to be repurchased; and
(b) in the case of issued shares of Common Stock, an amount
equal to the product of (i) the lesser of (x) the Common Stock
Repurchase Price and (y) the Market Value as of the date of such
notice and (ii) the number of shares of Common Stock to be
repurchased.
Upon receipt by the Company of any notice pursuant to this
Section 9.1, the Company shall, within five days thereof, send a
copy of such notice to each Holder of the Warrants and issued
shares of Common Stock held by such Holders. Thereafter, each
other Holder of the Warrants and/or such issued shares of Common
Stock shall be entitled to exercise its rights pursuant to the
preceding paragraph by giving not less than 30 days' notice of such
request for repurchase. The date designated for such repurchase
shall be the same day designated by the Holder initially requesting
such repurchase.
On each date designated for the repurchase of Warrants and/or
issued shares of Common Stock pursuant to this Section 9.1 (unless
delayed pursuant to Section 9.3), each appropriate Holder shall
assign to the Company the Warrant or portion thereof and/or the
issued shares of Common Stock being repurchased, without any
representation or warranty (other than that such Holder has good
and valid title thereto free and clear of liens, claims,
encumbrances and restrictions of any kind arising by or through
such Holder), against payment of the amounts set forth above by, at
the option of such Holder, (i) wire transfer to an account in a
bank located in the United States designated by the Holder for such
purpose, or (ii) a certified or official bank check drawn on a
member of the Chicago or New York Clearing House payable to the
order of the Holder. If less than all of this Warrant is being
repurchased, the Company shall cancel this Warrant and issue in the
name of, and deliver to, the appropriate Holders, pursuant to
Section 2, new Warrants for the portion not being repurchased. Any
Warrants repurchased pursuant to this Section 9.1 shall be
cancelled and shall not be reissued by the Company.
The Company shall not be obligated under this Section 9.1 to
repurchase any Warrant or portion thereof and/or issued shares of
Common Stock (i) to the extent such a repurchase would (a) violate
the corporate laws of the Company's state of incorporation, as
determined by an opinion of Independent Counsel or (b) unless
waived by the Lender (as defined in the Secured Credit Agreement),
result in an "Event of Default" or "Unmatured Event of Default" as
such terms are defined in the Secured Credit Agreement, (ii)
unless, if the Secured Credit Agreement is in effect, the Lender
shall loan to the Company under such Secured Credit Agreement
sufficient funds for such repurchase at a rate applicable to
Revolving Loans in Tranche Six (as defined in the Secured Credit
Agreement) or (iii) with respect to which the Holder requested
registration pursuant to Section 8.2(a) or 8.2(b) prior to the
expiration of the applicable Registration Period and after the
Company delivered a notice of repurchase pursuant to Section 9.2.
The Company shall repurchase any Warrant or portion thereof and/or
issued shares of Common Stock requested to be, but not (due to
operation of this paragraph), repurchased pursuant to this Section
9.1 before repurchasing any other Warrant or portion thereof and/or
issued shares of Common Stock pursuant to this Section 9.1.
9.2 Option of Company. The Company shall have the right,
(subject to clause (g) of ARTICLE V) upon the giving of written
notice to the Holder from time to time prior to the later to occur
of (i) October 31, 1998 and (ii) payment in full of all Liabilities
(as defined in under the Secured Credit Agreement), upon the giving
of written notice to the Holder, but subject to the terms and
conditions of the Secured Credit Agreement, to repurchase from a
Holder all or any portion of this Warrant or all or any number of
issued shares of Common Stock held by such Holder (except for such
portion of this Warrant or shares of Common Stock with respect to
which the Company's right to repurchase has terminated pursuant to
Section 8.2(c)) for:
(a) in the case of all or a portion of the Warrant (other than
an Unsold Amount), an amount equal to the product of (i) the
Warrant Repurchase Price in effect on the date of such notice and
(ii) the number of shares of Common Stock represented on the date
of such notice by the Warrant; and
(b) in the case of issued shares of Common Stock (other than
Unsold Shares), an amount equal to the product of (i) the Common
Stock Repurchase Price in effect on the date of such notice and
(ii) the number of shares of Common Stock to be repurchased; and
(c) in the case of a repurchase of Unsold Shares, an amount
equal to the product of (i) the greater of (x) the Common Stock
Repurchase Price in effect on the date of such notice and (y) the
Market Value as of the date of such notice and (ii) the number of
Unsold Shares to be repurchased; and
(d) in the case of a repurchase of an Unsold Amount, an amount
determined by multiplying (i) the greater of (x) the Warrant
Repurchase Price in effect on the date of such notice, and (y) the
Market Value as of the date of such notice reduced by the Exercise
Price then in effect and (ii) the number of shares of Common Stock
issuable on the date of such notice upon exercise of the portion of
the Unsold Amount to be repurchased;
provided, however, that without the prior written consent of all of
the Holders, the Company shall not make such a repurchase without
simultaneously repurchasing from each Holder a proportionate amount
of such Warrants and issued shares of Common Stock held by such
Holders; and provided further, that an additional payment may be
required by the terms of Section 4.3(c).
If the Company exercises its rights to repurchase under this
Section 9.2, all Unsold Shares and Unsold Amounts must be
repurchased before the Company may repurchase other Common Stock or
any other portion of a Warrant.
Such notice of repurchase shall (a) designate the date of
repurchase, which date shall be not less than 60 or more than 120
days from the date of such notice, (b) state the Warrant Repurchase
Price and the Common Stock Repurchase Price and number of shares of
Common Stock subject to this Warrant or portion thereof and/or the
number of issued shares of Common Stock to be repurchased and (c)
indicate the method by which calculations were made. On the date
so designated (unless delayed pursuant to Section 9.3), the Holder
shall assign to the Company the Warrant or portion thereof and/or
the number of issued shares of Common Stock to be repurchased
without any representation or warranty (other than that the Holder
has good and valid title thereto free and clear of liens, claims,
encumbrances and restrictions of any kind), against payment of the
amounts set forth above by, at the option of the Holder, (i) wire
transfer to an account in a bank located in the United States
designated by the Holder for such purpose or (ii) a certified or
official bank check drawn on a member of the Chicago or New York
Clearing House payable to the order of the Holder. If less than
all of this Warrant is being repurchased, the Company shall cancel
this Warrant and shall issue in the name of, and deliver to the
appropriate Holders pursuant to Section 2 new Warrants for the
portion hereof not being repurchased. Any Warrants repurchased
pursuant to this Section 9.2 shall be cancelled and shall not be
reissued by the Company.
9.3 Delayed Repurchases. Any repurchase by the Company of all
or any portion of this Warrant or issued shares of Common Stock
pursuant to Sections 9.1 or 9.2 which is delayed by (a) the failure
of the Company to deliver financial statements within the time
periods required in Section 10.1 or (b) an objection by the Holder
to any financial statements delivered in accordance with Section
10.1 shall be consummated within 10 days after, as the case may be,
the delivery of such financial statements or the resolution of such
objection.
ARTICLE X
FINANCIAL AND BUSINESS INFORMATION
10.1 Delivery of Financial and Business Information. The
Company will deliver to the Holder:
(a) As soon as practicable after the end of each of the first
three Quarterly Fiscal Periods in each fiscal year of the Company,
and in any event within 45 days thereafter, two copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter (reflecting, among other
things, Funded Indebtedness), and
(ii) consolidated statements of income, retained earnings and
changes in financial position of the Company and its Subsidiaries
for such quarter and (in the case of the second and third quarters)
for the portion of the fiscal year ending with such quarter;
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year (reflecting,
among other things, Adjusted Operating Profits, and for the first
fiscal year of the Company setting forth comparative figures as if
the Company had existed during the previous fiscal year with a
comparable corporate structure). Such statements shall be (1)
prepared in accordance with generally accepted accounting
principles consistently applied, (2) in reasonable detail and (3)
certified as complete and correct by the principal financial or
accounting officer of the Company;
(b) As soon as practicable after the end of each fiscal year
of the Company, and in any event within 90 days thereafter, two
copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, and
(ii) consolidated statements of income, retained earnings and
changes in financial position of the Company and its Subsidiaries
for such year;
setting forth in each case in comparative form the figures for the
previous fiscal year (except in the case of the figures for the
first fiscal year of the Company which shall be set forth in
comparative form as though the Company had existed during the
previous fiscal year with a comparable corporate structure), all in
reasonable detail and accompanied by a report thereon by a firm of
independent certified public accountants of recognized standing
selected by the Company, which report shall state that such
financial statements fairly present the financial position of the
company being reported upon at the end of such year and the results
of their operations and changes in their financial position for
such year in conformity with generally accepted accounting
principles applied consistently (except for changes in accounting
principles with which such accountants concur) and that their
examination of such financial statements has been made in
accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and other
auditing procedures as they considered necessary in the
circumstances;
(c) Promptly upon their becoming available one copy of each
report, notice or proxy statement sent by the Company to its
stockholders generally, and of each regular or periodic report
(pursuant to the Securities Exchange Act of 1934, as amended) and
any registration statement, prospectus or written communication
(other than transmittal letters) (pursuant to the Securities Act),
filed by the Company with (i) the Commission or (ii) any securities
exchange on which shares of the Common Stock are listed;
(d) With reasonable promptness, such other data and
information as from time to time may be reasonably requested by the
Holder; and
(e) Promptly upon, and in any event within 10 days after, the
adoption, initiation or undertaking of any plan, arrangement,
negotiations, intention or commitment to enter into any of the
transactions described in Sections 4.1, 4.2, or 4.3, notice of any
such transactions, including information in reasonable detail
pertaining to the terms, conditions and consummation of any such
transactions.
10.2 Disputed Financial Statements. The Holder shall have the
right at any time after receipt thereof to object to any financial
statements delivered to the Holder pursuant to subsections (a) or
(b) of Section 10.1 by specifying in writing to the Company the
nature of its objection, and, unless such objection is resolved by
agreement of the Company and the Holder, the Company and the Holder
shall each have the right to submit the disputed financial
statements to separate firms of independent accountants of
recognized standing for a joint resolution (based upon written
submissions) of the objection of the Holder (which firms of
independent accountants may, in either case, be the firm of
accountants regularly retained by the Company or the Holder). If
such firms cannot jointly resolve the objection of the Holder,
then, unless otherwise directed by agreement of the Company and the
Holder, such firms shall in their sole discretion choose another
firm of independent certified public accountants of recognized
standing not the regular auditor of the Holder or of the Company,
which firm shall resolve such objection. In either case, the
determination so made shall be conclusive and binding on the
Company solely for purposes of this Warrant, the Holder and all
persons claiming under or through either of them, and any
adjustment in the disputed financial statements and the applicable
Repurchase Price resulting from such determination shall be made.
The cost of any such determination shall be borne by the Company if
it results in an increase in the applicable Adjusted Operating
Profits or by the Holder if it results in no adjustment or a
decrease in the Adjusted Operating Profits.
ARTICLE XI
MISCELLANEOUS
11.1 Nonwaiver and Expenses. No course of dealing or any
delay or failure to exercise any right hereunder on the part of the
Holder shall operate as a waiver of such right or otherwise
prejudice the Holder's rights, power or remedies. If the Company
fails to make, when due, any payments provided for herein or fails
to comply with any other provision of this Warrant, the Company
shall pay to the Holder (a) interest at the Default Rate on any
amounts due and owing to the Holder and (b) such further amounts as
shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys' fees, incurred by the Holder
in collecting any amounts due pursuant to this Warrant or in
otherwise enforcing any of its rights, powers or remedies
hereunder.
11.2 Holder Not a Stockholder. Except as otherwise provided
herein, prior to the exercise of this Warrant as hereinbefore
provided, the Holder shall not be entitled to any of the rights of
a stockholder of the Company, including, without limitation, the
right as a stockholder to (a) vote or consent, or (b) receive
dividends or any other distributions made to stockholders.
11.3 Notice Generally. Any notice, demand or delivery to be
made pursuant to the provisions of this Warrant shall be
sufficiently given or made if sent by first class mail, postage
prepaid, addressed to (a) the Holder at its last known address
appearing on the books of the Company maintained for such purpose
or (b) the Company at its principal office referred to in Section
2.2. The Holder and the Company may each designate a different
address by notice to the other pursuant to this Section 11.3.
11.4 Payment of Certain Expenses. The Company shall pay all
expenses in connection with, and all taxes (other than stock
transfer taxes and income taxes) and other governmental charges
that may be imposed in respect of, the issue, sale and delivery of
(a) the shares of Common Stock issuable upon the exercise of this
Warrant or (b) this Warrant.
11.5 Successors and Assigns. This Warrant and the rights
evidenced hereby shall inure to the benefit of and be binding upon
the successors of the Company and the Holder. The provisions of
this Warrant are intended to be for the benefit of all Holders from
time to time of this Warrant, and shall be enforceable by any such
Holder.
11.6 Amendment. This Warrant may not be modified or amended
except by an instrument in writing signed by the party against
which enforcement is sought.
11.7 Headings. The headings of the Articles and Sections of
this Warrant are for convenience of reference only and shall not,
for any purpose, be deemed a part of this Warrant.
11.8 GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF ILLINOIS FOR CONTRACTS ENTERED INTO AND TO BE
PERFORMED IN SUCH STATE.
11.9 Subsidiaries. The provisions of this Warrant referring
to "Subsidiaries" of the Company or to "consolidated" financial
statements shall only apply during such times as the Company has
one or more Subsidiaries.
11.10 No Section 338 Election or Step-Up in Asset Value on
Books of the Company. The Company acknowledges that the definition
of Adjusted Operating Profits is based upon the assumption that
neither the Company nor any of its Subsidiaries will (or will be
deemed to) make a Section 338 election under the Internal Revenue
Code of 1986, as amended, or otherwise write-up the value of any of
its assets on its books used for computing Adjusted Operating
Profits. The Company hereby agrees and covenants that neither it
nor any of its Subsidiaries will (or will be deemed to) make any
such election or write-up.
11.11 Limitation on Interest.
(a) Notwithstanding anything to the contrary contained in
this Warrant, if for any period of time interest pursuant to this
Warrant shall be calculated at the Maximum Rate rather than at any
other rate which would otherwise be applicable hereunder
(hereafter, any "Applicable Rate") and thereafter such Applicable
Rate shall become less than the Maximum Rate, the rate of interest
payable pursuant to this Warrant shall be the Maximum Rate until
the Holder shall have received the amount of interest which the
Holder would have received pursuant to this Warrant had the rate of
interest pursuant to this Warrant not been limited to the Maximum
Rate during the period the Applicable Rate exceeded the Maximum
Rate.
(b) It is the intention of the parties hereto to comply with
applicable usury laws; accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Warrant, in
no event shall this Warrant require the payment or permit the
collection of interest, as defined under applicable usury laws, in
excess of the Maximum Rate. If any such excess of interest is
contracted for, charged or received under this Warrant so that the
amount of interest contracted for, charged or received under this
Warrant shall exceed the Maximum Rate, then (i) the provisions of
this Section 11.11 shall govern and control, (ii) the Company shall
not be obligated to pay the amount of such interest to the extent
that it is in excess of the Maximum Rate, (iii) any such excess
which may have been collected by a Holder either shall be applied
as a credit against any unpaid amount due to such Holder or
refunded to the Company, at the Holder's option, and (iv) the
effective rate of interest shall be automatically reduced to the
Maximum Rate. It is further agreed that, without limitation of the
foregoing, all calculations of the rate of interest contracted for,
charged or received under this Warrant which are made for the
purpose of determining whether such rate exceeds the Maximum Rate
shall be made, to the extent permitted by applicable usury laws, by
amortizing, prorating, allocating the spreading in equal parts
during the remaining Exercise Period, all interest at any time
contracted for, charged or received from the Company or otherwise
by the holder or holders thereof in connection with this Warrant.
Dated as of January 20, 1994.
OPTEK TECHNOLOGY, INC.
By: /s/ D. VINSON MAILEY
___________________________
Vice President
Attest:
/s/ CHRISTOPHER M. HEWITT
_________________________
Secretary
(AFFIX CORPORATE SEAL)
NOTICE OF EXERCISE FORM
(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 of Optek Technology, Inc. and
[Make appropriate selection by placing an "X"
in the box and completing the blank associated with that box]
[ ] (a) agrees to make payment therefor in the amount of
$__________,
[ ] (b) pursuant to Section 2.2(b)(ii) of the within Warrant
instructs and agrees that __________ shares of Common Stock of
Optek Technology, Inc. be withheld in payment therefor,
all at the price and on the terms and conditions specified in the
within Warrant and requests that a certificate (or _____________
certificates in denominations of _______ shares) for the shares of
Common Stock of Optek Technology, Inc. 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 of Common Stock shall not include all the shares
of Common Stock issuable as provided in the within Warrant, that a
new Warrant of like tenor for the number of shares of Common Stock
of Optek Technology, Inc. not being purchased hereunder be issued
in the name of and delivered to [choose one] (a) the undersigned or
(b) _____________________ whose address is _____________________.
Dated:__________________, 19__
By /s/
______________________________
(Signature of Registered
Holder)
Signature Guaranteed:
/s/
__________________________
By /s/
_______________________
[Title] ________________
NOTICE: The signature of this Notice of Exercise must correspond
exactly with the name of the Holder as specified on the face of the
within Warrant.
The signature to this Notice of Exercise must be guaranteed by a
commercial bank or trust company in the United States or a member
firm of the New York Stock Exchange.
ASSIGNMENT FORM
(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 of Optek Technology, Inc.
and if such shares of Common Stock shall not include all the shares
of Common Stock issuable as provided in the within Warrant, that a
new Warrant of like tenor for the number of shares of Common Stock
of Optek Technology, Inc. not being transferred hereunder be issued
in the name of and delivered to the undersigned, and does hereby
irrevocably constitute and appoint _______________ Attorney to
register such transfer on the books of Optek Technology, Inc.
maintained for the purpose, with full power of substitution in the
premises.
Dated:__________________, 19__
By: /s/
___________________________
(Signature of Registered
Holder)
Signature Guaranteed:
/s/
__________________________
By /s/
_______________________
[Title] ________________
NOTICE: The signature to this Assignment must correspond exactly
with the name of the Holder as specified on the face of the within
Warrant.
The signature to this Assignment must be guaranteed by a commercial
bank or trust company in the United States or a member firm of the
New York Stock Exchange.
Schedule I
Cumulative Plan Adjusted Operating Profits
For the
Period from
November 1, 1993
through the
Fiscal Year Plan Adjusted
Ending, Operating Profits
____________________ _________________
10/31/94 $ 6,413,000
10/31/95 $15,060,000
10/31/96 $25,262,000
10/31/97 $37,515,000
10/31/98 $51,851,000
EXHIBIT 13
ASSIGNMENT FORM
(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 transfer unto First Source
Financial LLP, whose address is 2700 Sanders Road, Prospect
Heights, Illinois 60070, all of the rights of the undersigned under
the within Warrant, with respect to Three Million One Hundred Fifty
Thousand and 00/100 shares of Common Stock of Optek Technology,
Inc. and if such shares of Common Stock shall not include all the
shares of Common Stock issuable as provided in the within Warrant,
that a new Warrant of like tenor for the number of shares of Common
Stock of Optek Technology, Inc. not being transferred hereunder be
issued in the name of and delivered to the undersigned, and does
hereby irrevocably constitute and appoint Gregory P.L. Pierce,
Attorney to register such transfer on the books of Optek
Technology, Inc. maintained for the purpose, with full power of
substitution in the premises.
Dated: March 24, 1995
By: /s/ GLEN O. FICK
________________________________
(Signature of Registered Holder)
Signature Guaranteed:
/s/ BANK OF AMERICA
__________________________________
By: _____________________________
[Title]
NOTICE: The signature to this Assignment must correspond exactly
with the name of the Holder as specified on the face of the within
Warrant.
The signature to this Assignment must be guaranteed by a commercial
bank or trust company in the United States or a member firm of the
New York Stock Exchange.
EXHIBIT 14
[SIDLEY & AUSTIN LETTERHEAD]
To the Parties Specified on Schedule I
Re: Escrow Arrangement
Ladies and Gentlemen:
We have acted as attorneys for Citicorp North America, Inc.
("CNAI") in connection with the Credit Agreement dated as of March
24, 1995 among First Source Financial LLP, Certain Financial
Institutions Party thereto, First Source Financial, Inc., Financial
Security Assurance Inc., HCFS Corporate Finance Venture, Inc. and
Virginia Financial Ventures, Inc. (the "Credit Agreement") and
certain other agreements, documents, and instruments related
thereto ("Other Agreements"). All capitalized terms used in this
letter and not otherwise defined herein shall have the meanings set
forth in the Credit Agreement.
In connection with the execution and delivery to us of the
Credit Agreement and the Other Agreements, each of you agrees that
the delivery of the Credit Agreement and the Other Agreements to
the parties described on Schedule I hereto is not completed, and
that the Credit Agreement and the Other Agreements will not become
effective, until each of you shall provide written certification to
us to that effect ("Written Certification").
Each of you has instructed us to hold, and we have agreed to
hold, the Credit Agreement and the Other Agreements as escrow
agent, and each of you has asked us to deliver, and we have agreed
to deliver, such Credit Agreement and the Other Agreements to the
parties described on Schedule I upon receipt by us of the Written
Certification. Each of you agrees that (1) our responsibility to
hold such Credit Agreement and the Other Agreements will be
fulfilled if we do so in accordance with our normal records
retention policy, and (2) our responsibility to deliver the Credit
Agreement and the Other Agreements to the parties described on
Schedule I will be satisfied upon delivery of the Credit Agreement
and the Other Agreements to you or to Federal Express with proper
delivery instructions. We take no responsibility for the failure
of, or improper delivery by, Federal Express.
If we have not received the Written Certification by 5:00 p.m.
(New York time) on March 31, 1995 (the "Deadline"), we will destroy
the Credit Agreement and the Other Agreements and they shall not be
deemed to have been delivered by you for any purpose. If we
receive the Written Certification before the Deadline, we will
deliver the Credit Agreement and the Other Agreements to the
parties described on Schedule I, and the Credit Agreement and the
Other Agreements shall be deemed to have been delivered to the
aforementioned parties immediately prior to the Written
Certification described above.
Neither the undersigned nor Sidley & Austin shall have any
responsibility to verify the statements made in the Written
Certification, and the undersigned and Sidley & Austin shall be
entitled to rely exclusively upon such certifications. If you are
in agreement with the terms and conditions of this letter, please
execute and return to me one copy of this letter.
This agreement may be executed by the parties hereto in
separate counterparts, each of which shall be deemed to be an
original, and all such counterparts shall together constitute but
one and the same instrument.
Very truly yours,
/s/ THOMAS W. ALBRECHT
______________________
Thomas W. Albrecht
Acknowledged and agreed to this 24th day of March, 1995.
FIRST SOURCE FINANCIAL LLP
By: HCFS Corporate Finance Venture, Inc., a Delaware corporation
By: /s/ D.P. DEKKER
_______________________
Name: D.P. Dekker
Title:
By: Virginia Financial Venture, Inc., a Virginia corporation
By: /s/ HAYDEN D. McMILLIAN
_______________________
Name: Hayden D. McMillian
Title:
FIRST SOURCE FINANCIAL, INC.
By: /s/ D.P. DEKKER
_______________________
Name:
Title:
CITICORP NORTH AMERICA, INC., as Agent
By: /s/ KENNETH WORMSER
_______________________
Name:
Title:
FINANCIAL SECURITY ASSURANCE INC.,
By: /s/ FREDERICK UTLEY
_______________________
Name:
Title:
HCFS CORPORATE FINANCE VENTURE, INC.
By: /s/ D.P. DEKKER
_______________________
Name:
Title:
VIRGINIA FINANCIAL VENTURES, INC.
By: /s/ HAYDEN D. McMILLIAN
_______________________
Name:
Title:
CITIBANK, N.A.
By: /s/ KENNETH WORMSER
_______________________
Title:
CXC INCORPORATED
By: Citicorp North America, Inc., as its attorney-in-fact
By: /s/ MICHAEL STORM
_______________________
Title:
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
By: /s/ D.P. DEKKER
_______________________
Title:
HOUSEHOLD FINANCE CORPORATION
By: /s/ GLEN O. FICK
_______________________
Title:
DOMINION RESOURCES, INC.
By: /s/ DAVID L. HEAVENRIDGE
_______________________
Title:
DOMINION CAPITAL, INC.
By: /s/ DAVID L. HEAVENRIDGE
_______________________
Title:
SCHEDULE I ESCROW LETTER
FIRST SOURCE FINANCIAL LLP
FIRST SOURCE FINANCIAL, INC.
CITICORP NORTH AMERICA, INC., as Agent
FINANCIAL SECURITY ASSURANCE INC.,
HCFS CORPORATE FINANCE VENTURE, INC.
VIRGINIA FINANCIAL VENTURES, INC.
CITIBANK, N.A.
CXC INCORPORATED
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
HOUSEHOLD FINANCE CORPORATION
DOMINION RESOURCES, INC.
DOMINION CAPITAL, INC.
March 26, 1995
Sidley & Austin
One First National Plaza
Chicago, Illinois 60030
Attention: Thomas W. Albrecht
Ladies and Gentlemen:
Reference is hereby made to your letter dated March 24, 1995
to the parties specified on Schedule I attached hereto regarding
the escrow arrangement with respect to the Credit Agreement dated
as of March 24, 1995 among First Source Financial LLP, certain
financial institutions party thereto, First Source Financial, Inc.,
Financial Security Assurance Inc., HCFS Corporate Finance Venture,
Inc. and Virginia Financial Ventures, Inc. (the "Letter"). With
respect to such Letter we hereby release for delivery the "Credit
Agreement" and the "Other Agreement" (as such terms are defined in
the Letter). This letter shall serve as the "Written
Certification" of our release of the above-referenced agreements.
Very truly yours,
FIRST SOURCE FINANCIAL LLP
By: HCFS Corporate Finance Venture, Inc.
By: /s/ D.P. DEKKER
_______________________
Name:
Title:
By: Virginia Financial Venture, Inc.
By: /s/ HAYDEN D. McMILLIAN
_______________________
Name: Hayden D. McMillian
Title: Vice President
FIRST SOURCE FINANCIAL, INC.
By: /s/ D.P. DEKKER
_______________________
Name:
Title:
CITICORP NORTH AMERICA, INC., as Agent
By: /s/ KENNETH WORMSER
_______________________
Name:
Title:
HCFS CORPORATE FINANCE VENTURES, INC.
By: /s/ D.P. DEKKER
_______________________
Name:
Title:
VIRGINIA FINANCIAL VENTURES, INC.
By: /s/ HAYDEN D. McMILLIAN
_______________________
Name: Hayden D. McMillian
Title: Vice President
CITIBANK, N.A.
By: /s/ KENNETH WORMSER
_______________________
Title:
CXC INCORPORATED
By: Citicorp North America, Inc., as its attorney-in-fact
By: /s/ MICHAEL STORM
_______________________
Title:
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
By: /s/ D.P. DEKKER
_______________________
Title:
HOUSEHOLD FINANCE CORPORATION
By: /s/ GLEN O. FICK
_______________________
Title: Senior Vice President
DOMINION RESOURCES, INC.
By: /s/ HAYDEN D. McMILLIAN
_______________________
Title: Attorney-in-fact
DOMINION CAPITAL, INC.
By: /s/ HAYDEN D. McMILLIAN
_______________________
Title: Attorney-in-fact
March 27, 1995
Sidley & Austin
One First National Plaza
Chicago, Illinois 60030
Attention: Thomas W. Albrecht
Ladies and Gentlemen:
Reference is hereby made to your letter dated March 24, 1995
to the parties specified on Schedule I attached hereto regarding
the escrow arrangement with respect to the Credit Agreement dated
as of March 24, 1995 among First Source Financial LLP, certain
financial institutions party thereto, First Source Financial, Inc.,
Financial Security Assurance Inc., HCFS Corporate Finance Venture,
Inc. and Virginia Financial Ventures, Inc. (the "Letter"). With
respect to such Letter we hereby release for delivery the "Credit
Agreement" and the "Other Agreement" (as such terms are defined in
the Letter). This letter shall serve as the "Written
Certification" of our release of the above-referenced agreements.
By: Virginia Financial Venture, Inc.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ GEOFF DURRO
_______________________
Name: Geoff Durro
Title: Managing Director
