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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
MAY 11, 1995
------------------------------------------------
Date of report (Date of earliest event reported)
THE ALPINE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9078 22-1620387
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(State or other Commission File Number (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
1790 BROADWAY, NEW YORK, NEW YORK 10019-1412
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 757-3333
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The Alpine Group, Inc. (the "Company") acquired from Alcatel NA Cable
Systems, Inc. and Alcatel Canada Wire, Inc. (collectively, "Alcatel") certain
operations in Canada and the United States used in the manufacture of copper
telecommunications wire and cable products (the "Alcatel Business") on May 11,
1995 for a purchase price of approximately $103,000,000 subject to
certain post-closing adjustments, of which $93,000,000 was paid at closing.
Alpine combined the Alcatel Business with the existing operations of its
wholly-owned subsidiary, Superior Teletec Inc. ("Superior"). In connection
with the acquisition of the Alcatel Business Superior issued and sold to
Nomura International Trust Company $85,000,000 principal amount of Variable
Rate Senior Secured Guaranteed Extendible Revolving Notes, Series A, due
1997, and $55,000,000 principal amount of Senior Secured Guaranteed
Extendible Notes, due 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) AND (B). FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED AND PRO
FORMA FINANCIAL INFORMATION.
The Company will file the required financial statements for the
Alcatel Business and the required pro forma financial information as soon as
practicable, but not later than 60 days after the date that this report on Form
8-K must be filed.
(C) EXHIBITS.
Exhibit 1 - Asset Purchase Agreement dated March 17, 1995, as amended,
by and among Alcatel NA Cable Systems, Inc., Alcatel Canada Wire Inc., Superior
Cable Corporation and Superior.
Exhibit 2 - Amendment dated May 11, 1995 to the Asset Purchase
Agreement.
Exhibit 3 - Note Purchase Agreement dated May 10, 1995 by and among
Superior, the Company, Superior Cable Corporation and Nomura International Trust
Company.
Exhibit 4 - Security Agreement dated May 11, 1995 by Superior and
Nomura International Trust Company.
Exhibit 5 - Pledge Agreement dated May 11, 1995 by the Company and
Nomura International Trust Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ALPINE GROUP, INC.
Date: May 24, 1995 By /s/ Bragi F. Schut
------------------------------------
Bragi F. Schut
Executive Vice President
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ASSET PURCHASE AGREEMENT
dated as of March 17, 1995
By and Between
ALCATEL NA CABLE SYSTEMS, INC.
and
ALCATEL CANADA WIRE INC.,
as Sellers, and
SUPERIOR TELETEC INC. and SUPERIOR CABLE CORPORATION,
as Purchasers
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Page
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TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II SALE OF ASSETS AND ASSUMPTION OF LIABILITIES. . . . . . . . . . . 2
Section 2.01 Assets to be Purchased and Sold. . . . . . . . . . . . . . 2
Section 2.02 Liabilities to be Assumed. . . . . . . . . . . . . . . . . 8
ARTICLE III PURCHASE PRICE AND ADJUSTMENTS THERETO. . . . . . . . . . . . . .12
Section 3.01 Purchase Price . . . . . . . . . . . . . . . . . . . . . .12
Section 3.02 Adjustment of Purchase Price . . . . . . . . . . . . . . .13
Section 3.03 Allocation of the Purchase Price.. . . . . . . . . . . . .15
Section 3.04 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE IV CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Section 4.01 Closing and Closing Date . . . . . . . . . . . . . . . . .16
Section 4.02 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . .18
Section 5.01 Corporate Organization and Authority . . . . . . . . . . .18
Section 5.02 Foreign Qualification. . . . . . . . . . . . . . . . . . .18
Section 5.03 No Conflicts and Consent Requirements. . . . . . . . . . .18
Section 5.04 Governmental Approvals and Filings . . . . . . . . . . . .19
Section 5.05 Financial Statements . . . . . . . . . . . . . . . . . . .19
Section 5.06 Changes of Financial Condition . . . . . . . . . . . . . .20
Section 5.07 Real Property. . . . . . . . . . . . . . . . . . . . . . .20
Section 5.08 Tangible Personal Property . . . . . . . . . . . . . . . .21
Section 5.09 Inventory and Accounts Receivable. . . . . . . . . . . . .22
Section 5.10 Vehicles . . . . . . . . . . . . . . . . . . . . . . . . .22
Section 5.11 Intellectual Property Rights . . . . . . . . . . . . . . .22
Section 5.12 Material Contracts . . . . . . . . . . . . . . . . . . . .23
Section 5.13 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . .24
Section 5.14 Litigation and Claims. . . . . . . . . . . . . . . . . . .25
Section 5.15 Compliance With Laws and Orders. . . . . . . . . . . . . .25
Section 5.16 Labor Matters. . . . . . . . . . . . . . . . . . . . . . .25
Section 5.17 Employee Benefits. . . . . . . . . . . . . . . . . . . . .25
Section 5.18 Licenses . . . . . . . . . . . . . . . . . . . . . . . . .30
Section 5.19 Insurance Programs . . . . . . . . . . . . . . . . . . . .30
Section 5.20 Environmental Matters. . . . . . . . . . . . . . . . . . .30
Section 5.21 Relationship With Affiliates . . . . . . . . . . . . . . .31
Section 5.22 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . .31
Section 5.23 No Guarantees. . . . . . . . . . . . . . . . . . . . . . .31
Section 5.24 Substantial Customers and Suppliers. . . . . . . . . . . .32
Section 5.25 Jointly Used Property. . . . . . . . . . . . . . . . . . .32
Section 5.26 Residency. . . . . . . . . . . . . . . . . . . . . . . . .32
Section 5.27 Certain Business Matters . . . . . . . . . . . . . . . . .32
Section 5.28 Disclosure . . . . . . . . . . . . . . . . . . . . . . . .32
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASERS. . . . . . . . . . .33
Section 6.01 Corporate Organization and Authority . . . . . . . . . . .33
Section 6.02 Foreign Qualification. . . . . . . . . . . . . . . . . . .33
Section 6.03 No Conflicts and Consent Requirements. . . . . . . . . . .33
Section 6.04 Governmental Approvals and Filings . . . . . . . . . . . .34
Section 6.05 Litigation and Claims. . . . . . . . . . . . . . . . . . .34
Section 6.06 Compliance with Laws and Orders. . . . . . . . . . . . . .34
Section 6.07 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 6.08 Financing. . . . . . . . . . . . . . . . . . . . . . . . .35
Section 6.09 Acknowledgement. . . . . . . . . . . . . . . . . . . . . .35
Section 6.10 GST Registration . . . . . . . . . . . . . . . . . . . . .35
Section 6.11 Disclosure . . . . . . . . . . . . . . . . . . . . . . . .35
ARTICLE VII EMPLOYEE MATTERS. . . . . . . . . . . . . . . . . . . . . . . . .35
Section 7.01 Employment . . . . . . . . . . . . . . . . . . . . . . . .35
Section 7.02 Employee Benefits - US . . . . . . . . . . . . . . . . . .37
Section 7.03 Employee Benefits - Canada . . . . . . . . . . . . . . . .45
Section 7.04 No Third Party Beneficiary . . . . . . . . . . . . . . . .51
ARTICLE VIII ADDITIONAL AGREEMENTS OF SELLERS. . . . . . . . . . . . . . . . .51
Section 8.01 Operation of Business. . . . . . . . . . . . . . . . . . .51
Section 8.02 Access to Books and Records of Business. . . . . . . . . .51
Section 8.03 Governmental Filings . . . . . . . . . . . . . . . . . . .51
Section 8.04 Notice of Estimated Canadian Business
Value. . . . . . . . . . . . . . . . . . . . . . . . . . .52
Section 8.05 Delivery of Documents. . . . . . . . . . . . . . . . . . .52
ARTICLE IX ADDITIONAL AGREEMENTS OF PURCHASERS . . . . . . . . . . . . . . .52
Section 9.01 Governmental Filings . . . . . . . . . . . . . . . . . . .52
Section 9.02 Release of Guaranties, Etc . . . . . . . . . . . . . . . .52
Section 9.03 Resale Certificates. . . . . . . . . . . . . . . . . . . .53
Section 9.04 Safe Harbor Lease Notice . . . . . . . . . . . . . . . . .53
ARTICLE X ADDITIONAL MUTUAL AGREEMENTS. . . . . . . . . . . . . . . . . . .53
Section 10.01 Condition of Assets; No Warranty . . . . . . . . . . . . .53
Section 10.02 Confidentiality. . . . . . . . . . . . . . . . . . . . . .53
Section 10.03 Maintenance of Records . . . . . . . . . . . . . . . . . .54
Section 10.04 Consents . . . . . . . . . . . . . . . . . . . . . . . . .55
Section 10.05 Cooperation in Litigation. . . . . . . . . . . . . . . . .55
Section 10.06 Environmental Matters. . . . . . . . . . . . . . . . . . .56
Section 10.07 Business Dealings Post-Closing . . . . . . . . . . . . . .57
Section 10.08 Joint Contracts and Claremont Tangible
Assets . . . . . . . . . . . . . . . . . . . . . . . . . .57
Section 10.09 License. . . . . . . . . . . . . . . . . . . . . . . . . .58
[Section 10.10 Intentionally left blank]. . . . . . . . . . . . . . . . .58
Section 10.11 Access to Facilities Following Closing For
Environmental Remediation. . . . . . . . . . . . . . . . .58
Section 10.12 Collection and Repurchase of U.S. Accounts Receivable. . .59
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Section 10.13 Collection and Repurchase of Canadian Accounts
Receivable . . . . . . . . . . . . . . . . . . . . . . . .59
Section 10.14 Updating Schedules . . . . . . . . . . . . . . . . . . . .60
ARTICLE XI CONDITIONS TO OBLIGATIONS OF PURCHASERS . . . . . . . . . . . . .60
Section 11.01 Accuracy of Representations and Warranties . . . . . . . .60
Section 11.02 Performance of Agreements. . . . . . . . . . . . . . . . .61
Section 11.03 Bring-Down Certificate . . . . . . . . . . . . . . . . . .61
Section 11.04 Title Documents. . . . . . . . . . . . . . . . . . . . . .61
Section 11.05 Sellers' Documents . . . . . . . . . . . . . . . . . . . .61
Section 11.06 Related Agreements . . . . . . . . . . . . . . . . . . . .62
Section 11.07 Material Adverse Change. . . . . . . . . . . . . . . . . .62
Section 11.08 No Adverse Proceedings . . . . . . . . . . . . . . . . . .62
Section 11.09 Other Assurances . . . . . . . . . . . . . . . . . . . . .63
Section 11.10 Consents and Approvals . . . . . . . . . . . . . . . . . .63
Section 11.11 Remediation Commitment . . . . . . . . . . . . . . . . . .63
Section 11.12 Satisfaction of Commitment Conditions. . . . . . . . . . .63
ARTICLE XII CONDITIONS TO OBLIGATIONS OF SELLERS. . . . . . . . . . . . . . .64
Section 12.01 Accuracy of Representations and Warranties . . . . . . . .64
Section 12.02 Performance of Agreements. . . . . . . . . . . . . . . . .64
Section 12.03 Bring-Down Certificate . . . . . . . . . . . . . . . . . .64
Section 12.04 Purchaser's Documents. . . . . . . . . . . . . . . . . . .64
Section 12.05 Environmental Investigation. . . . . . . . . . . . . . . .65
Section 12.06 Related Agreements . . . . . . . . . . . . . . . . . . . .66
Section 12.07 No Adverse Proceedings . . . . . . . . . . . . . . . . . .66
Section 12.08 Other Assurances . . . . . . . . . . . . . . . . . . . . .66
Section 12.09 Consents and Approvals . . . . . . . . . . . . . . . . . .66
ARTICLE XIII SURVIVAL AND INDEMNIFICATION. . . . . . . . . . . . . . . . . . .67
Section 13.01 Survival . . . . . . . . . . . . . . . . . . . . . . . . .67
Section 13.02 Indemnification by Sellers . . . . . . . . . . . . . . . .67
Section 13.03 Indemnification by Purchasers. . . . . . . . . . . . . . .67
Section 13.04 Method of Asserting Claims . . . . . . . . . . . . . . . .68
Section 13.05 Continued Liability for Indemnity Claims . . . . . . . . .71
Section 13.06 Limitations on Indemnification . . . . . . . . . . . . . .71
Section 13.07 Exclusive Remedies . . . . . . . . . . . . . . . . . . . .72
Section 13.08 Time Limits on Claims. . . . . . . . . . . . . . . . . . .72
Section 13.09 Specific Performance . . . . . . . . . . . . . . . . . . .73
ARTICLE XIV TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . .73
Section 14.01 General. . . . . . . . . . . . . . . . . . . . . . . . . .73
Section 14.02 Continuing Obligations on Termination. . . . . . . . . . .73
ARTICLE XV DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .74
ARTICLE XVI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . .84
Section 16.01 Notices. . . . . . . . . . . . . . . . . . . . . . . . . .84
Section 16.02 Bulk Transfer Compliance . . . . . . . . . . . . . . . . .85
Section 16.03 Fees and Expenses. . . . . . . . . . . . . . . . . . . . .85
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Section 16.04 Public Announcements . . . . . . . . . . . . . . . . . . .86
Section 16.05 Entire Agreement . . . . . . . . . . . . . . . . . . . . .86
Section 16.06 Waiver; Remedies . . . . . . . . . . . . . . . . . . . . .86
Section 16.07 Amendment. . . . . . . . . . . . . . . . . . . . . . . . .86
Section 16.08 Benefits and Binding Effect. . . . . . . . . . . . . . . .86
Section 16.09 Captions . . . . . . . . . . . . . . . . . . . . . . . . .86
Section 16.10 Exhibits and Schedules . . . . . . . . . . . . . . . . . .86
Section 16.11 Governing Law. . . . . . . . . . . . . . . . . . . . . . .86
Section 16.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . .87
Section 16.13 Severability . . . . . . . . . . . . . . . . . . . . . . .87
Section 16.14 No Third Party Beneficiary . . . . . . . . . . . . . . . .87
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as
of the 17th day of March, 1995 by and among ALCATEL NA CABLE SYSTEMS, INC., a
Delaware corporation with its principal place of business in Hickory, North
Carolina, U.S.A. (the "U.S. SELLER"), ALCATEL CANADA WIRE INC., an Ontario
corporation with its principal place of business in North York, Ontario, Canada
(the "CANADIAN SELLER"), SUPERIOR TELETEC INC., a Georgia corporation with its
principal place of business in Atlanta, Georgia, U.S.A. (the "U.S. PURCHASER")
and SUPERIOR CABLE CORPORATION, an Ontario corporation with its principal place
of business in Ontario, Canada (the "CANADIAN PURCHASER").
W I T N E S S E T H:
WHEREAS, U.S. Seller is engaged through its Alcatel Telecommunications
Cable Division in the business of manufacturing and selling copper
telecommunications toll and exchange cable at facilities located in Tarboro,
North Carolina, U.S.A. and Elizabethtown, Kentucky, U.S.A. which are operated
with the support of certain specifically designated personnel, assets and
operations located at the Alcatel Telecommunications Cable headquarters in
Claremont, North Carolina, U.S.A. and at sales offices located in Schaumberg,
Illinois, U.S.A., Overland Park, Kansas, U.S.A., and Greensboro, North Carolina,
U.S.A. (collectively, the "U.S. BUSINESS");
WHEREAS, Canadian Seller is engaged through its Alcatel Telecommunications
Cable Division in the business of manufacturing and selling copper
telecommunications toll and exchange cable at facilities, located in Winnipeg,
Manitoba, Canada (collectively, the "CANADIAN BUSINESS");
WHEREAS, U.S. Seller and Canadian Seller (individually a "SELLER" and,
collectively, the "SELLERS") operate the U.S. Business and the Canadian Business
(collectively, the "BUSINESS") on a combined basis as a single business unit;
WHEREAS, U.S. Purchaser and Canadian Purchaser (individually a "PURCHASER"
and, collectively, the "PURCHASERS") own and operate a business similar to the
Business;
WHEREAS, U.S. Seller desires to sell and transfer to U.S. Purchaser, and
U.S. Purchaser desires to purchase and acquire from U.S. Seller, certain assets
of U.S. Seller relating to the Business, and U.S. Purchaser has agreed to assume
certain liabilities of U.S. Seller relating to the Business, in each case on the
terms and conditions set forth in this Agreement;
WHEREAS, Canadian Seller desires to sell and transfer to Canadian
Purchaser, and Canadian Purchaser desires to purchase and acquire from Canadian
Seller, certain assets of Canadian Seller relating to the Business, and Canadian
Purchaser has
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agreed to assume certain liabilities of Canadian Seller relating to the
Business, in each case on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Certain capitalized terms used herein are defined at various places in the
text of this Agreement. Capitalized terms not defined in this manner shall have
the meanings set forth in Article XV hereof.
ARTICLE II
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
Section 2.01 ASSETS TO BE PURCHASED AND SOLD.
(a) SALE OF ASSETS. Subject to the terms and conditions set forth in
this Agreement, at the Closing, U.S. Seller shall sell, transfer and convey to
U.S. Purchaser, and U.S. Purchaser shall purchase and acquire from U.S. Seller,
all of the right, title and interest of U.S. Seller in, to and under the Assets
and Properties of U.S. Seller used or held for use in connection with the
Business described in Section 2.01(b) hereof (collectively, the "U.S. ASSETS").
Subject to the terms and conditions set forth in this Agreement, at the Closing,
Canadian Seller shall sell, transfer and convey to Canadian Purchaser, and
Canadian Purchaser shall purchase and acquire from Canadian Seller, all of the
right, title and interest of Canadian Seller in, to and under the Assets and
Properties of Canadian Seller used or held for use in connection with the
Business described in Section 2.01(b) hereof (collectively, the "CANADIAN
ASSETS"). (The U.S. Assets and the Canadian Assets are referred to herein,
collectively, as the "ASSETS").
(b) DESCRIPTION OF ASSETS. The Assets and Properties of each Seller
referred to in Section 2.01(a) above shall mean the following Assets and
Properties of such Seller used or held for use in connection with the Business
as the same shall exist on the Closing Date (and, if any such Assets and
Properties are described on a Schedule hereto as provided below, such Schedule
shall separately reflect such Assets and Properties of each Seller described
thereon); provided that the following shall not include any Excluded Assets:
(i) REAL PROPERTY. The real property of such Seller
described in SCHEDULE 2.01(b)(i) hereof, and all
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easements and rights-of-way relating thereto and all other rights arising
out of the ownership thereof or appurtenant thereto (collectively, with
respect to both Sellers, the "REAL PROPERTY"), together with all buildings,
structures, facilities, fixtures and other improvements thereto
(collectively, with respect to both Sellers, the "IMPROVEMENTS").
(ii) REAL PROPERTY LEASES. (A) the leases and subleases of
real property described in SCHEDULE 2.01(b)(ii)(A) hereof as to which such
Seller is the lessor or sublessor and (B) to the extent their transfer is
permitted under the terms thereof, the leases and subleases of real
property described in SCHEDULE 2.01(b)(ii)(B) hereof as to which such
Seller is the lessee or sublessee, and in each case all other rights
appurtenant to or related to such leases and subleases (such leases and
subleases are referred to herein, collectively with respect to both
Sellers, as the "REAL PROPERTY LEASES").
(iii) INVENTORY. All inventories of raw materials, work-in-
process, finished goods, products under research and development,
demonstration equipment, office and other supplies, parts, packaging
materials and other accessories related thereto which are held at, or are
in transit from or to, the locations at which the Business is conducted, or
located at customers' premises on consignment (other than consigned
inventory held by Southwestern Bell and accessories inventory located in
Winston-Salem, North Carolina, U.S.A.), in each case, which are used or
held for use by such Seller solely in the conduct of the Business, together
with all rights of such Seller against suppliers of such inventories
(collectively, with respect to both Sellers, the "INVENTORY").
(iv) ACCOUNTS RECEIVABLE. All trade accounts receivable,
all notes, bonds and other evidences of indebtedness and rights to receive
payments in each case arising out of sales occurring in the conduct of the
Business (except intracompany or interdivision receivables and receivables
from any Affiliate of such Seller and except any right to receive payment
from Southwestern Bell relating to the consigned inventory described in the
preceding subparagraph (iii)), including all rights of such Seller under
any security arrangements securing the payment thereof and all rights of
such Seller with respect to any collection procedures (if any) or any other
actions or proceedings (if any) which have been commenced in connection
therewith (collectively, with respect to both Sellers, the "ACCOUNTS
RECEIVABLE").
(v) TANGIBLE PERSONAL PROPERTY. All furniture,
furnishings, fixtures, equipment, machinery, tools, reels and other
tangible personal property (other than Inventory, Vehicles and the fiber
cable manufacturing
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assets located at the Winnipeg, Manitoba, Canada facility described in
Section 2.01(c)(xiii)) used or held for use by such Seller solely in the
conduct of the Business, (A) at the locations at which the Business is
conducted in Elizabethtown, Kentucky, U.S.A., Tarboro North Carolina,
U.S.A., Schaumberg, Illinois, U.S.A., Overland Park, Kansas, U.S.A.,
Greensboro, North Carolina, U.S.A., and Winnipeg, Manitoba, Canada, or
(B) at customers' premises on consignment, and the Claremont Tangible
Assets required to be included in Assets pursuant to Section 10.08 hereof
(collectively, with respect to both Sellers, the "TANGIBLE PERSONAL
PROPERTY").
(vi) PERSONAL PROPERTY LEASES. Subject to Section 10.04
hereof, all leases of Tangible Personal Property to which such Seller is a
party as lessee or sublessee thereunder and which are utilized solely in
the conduct of the Business including, without limitation, the leases of
Tangible Personal Property described in SCHEDULE 2.01(b)(vi) (such leases
and subleases whether or not transferrable are referred to herein,
collectively with respect to both Sellers, as the "PERSONAL PROPERTY
LEASES"), except that, with respect to the Safe Harbor Leases, only the
rights thereunder relating to the Safe Harbor Equipment shall be
transferred.
(vii) BUSINESS CONTRACTS. Subject to Section 10.04 hereof
and except for any Contract which may result from Sellers' 10/24/94 quote
to Bell South RFQ 94-0208-MBE, all Contracts to which such Seller is a
party and which are utilized solely in the conduct of the Business,
including without limitation such Contracts relating to suppliers, sales
representatives, distributors, customers, marketing arrangements and
manufacturing arrangements (other than the Real Property Leases, the
Personal Property Leases, the Accounts Receivable, the U.S. Union Contract
and the Canadian Union Contract) (such Contracts, whether or not
transferrable, are referred to herein, collectively with respect to both
Sellers, as the "BUSINESS CONTRACTS").
(viii) UNION CONTRACT. That certain 1990/1995 Agreement
between Alcatel NA Cable Systems, Inc. Elizabethtown, Kentucky and the
International Union of Electronic, Electrical, Technical, Salaried Machine
and Furniture Workers, AFL-CI0 and its Local #690, dated July 27, 1990, as
amended (the "U.S. UNION CONTRACT") and that certain August 14, 1994 to
March 31, 1997 Collective Agreement between Alcatel Canada Wire Inc. and
Local Union 1572, International Brotherhood of Electrical Workers executed
on October 17, 1994 (the "CANADIAN UNION CONTRACT").
(ix) PREPAID EXPENSES. All prepaid expenses of such Seller
relating to any Assumed Liability of the Business as described in the Final
Closing Date Schedule of
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Net Assets (collectively, with respect to both Sellers, the "PREPAID
EXPENSES").
(x) INTELLECTUAL PROPERTY. All Intellectual Property owned
by such Seller and used or held for use by such Seller solely in the
conduct of the Business (including such Seller's goodwill therein) except
(A) any patents of such Seller and (B) subject to Section 10.09, any
Intellectual Property acquired or used by such Seller under or pursuant to
the General Relations Agreement among such Seller and one or more of its
Affiliates or under or pursuant to any cross-license agreement between or
among such Seller or any of its Affiliates and third parties (collectively,
with respect to both Sellers, the "BUSINESS INTELLECTUAL PROPERTY").
(xi) LICENSES. To the extent their transfer is permitted
under the terms thereof or under applicable Laws, all Licenses (including
applications therefor) utilized by such Seller solely in the conduct of the
Business (collectively, with respect to both Sellers, the "BUSINESS
LICENSES").
(xii) VEHICLES. The motor vehicles of such Seller listed in
SCHEDULE 2.01(b)(xii) hereof (collectively, with respect to both Sellers,
the "VEHICLES").
(xiii) SECURITY DEPOSITS. All security deposits made by such
Seller as lessee or sublessee under the Real Property Leases.
(xiv) BUSINESS RECORDS. All files, documents, instruments,
papers, books and records used or held for use by such Seller solely in the
conduct of the Business including without limitation financial statements
and related work papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, architectural plans,
surveys, studies, reports, promotional, instructional or educational
documentation, and other general, administrative or marketing information;
provided, however, that the foregoing shall not include any Tax Returns of
such Seller and shall include copies, and not originals, of all financial
books and records described above (collectively, with respect to both
Sellers, the "BUSINESS RECORDS").
(xv) RIGHTS UNDER WARRANTIES. All rights and remedies of
such Seller against third parties under warranties, or with respect to
claims for defects in workmanship, manufacturing or design, relating to any
of the Assets.
(xvi) GOODWILL. All goodwill relating to the Business and
the foregoing Assets and Properties of such Seller.
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(xvii) CLAIMS AGAINST TRANSPORTERS. All claims of such Seller
against transporters for damaged goods relating to any customer claims or
credit notes assumed by either Purchaser.
(xviii) OTHER ASSETS. Any other Assets of such Seller
reflected on the Final Closing Date Schedule of Net Assets pursuant to the
Accounting Policies.
(c) EXCLUDED ASSETS. Notwithstanding anything in this Agreement to the
contrary, the Assets of each Seller to be purchased and sold hereunder shall not
include the following Assets and Properties of such Seller in existence on the
Closing Date (the "EXCLUDED ASSETS"):
(i) CASH. Cash, bank deposits, certificates of deposit,
commercial paper, treasury bills, marketable securities and other cash
equivalents.
(ii) CORPORATE RECORDS. Such Seller's corporate seals,
minute books, stock record books, corporate charter documents,
qualifications to conduct business as a foreign corporation, arrangements
with registered agents relating to foreign qualifications, taxpayer and
other identification numbers, blank stock certificates, Tax Returns,
original financial books and records and such other books and records as
pertain to the organization, existence or share capitalization of such
Seller (it being understood that, as provided in Section 2.01(b)(xiv)
hereof, the Assets and Properties of such Seller to be purchased and sold
hereunder will include copies of such financial books and records used or
held for use by such Seller solely in the conduct of the Business).
(iii) CERTAIN PREPAID EXPENSES. All prepaid expenses of such
Seller not described in the Final Closing Date Schedule of Net Assets.
(iv) INSURANCE. All casualty, liability or other policies
of insurance of such Seller relating to the operation of the Business or
the Assets or, subject to Article VII, covering any Employees and rights
thereunder and, subject to Article VII, all rights under self-insurance
programs maintained or established with respect to the Business
(collectively, the "INSURANCE PROGRAMS").
(v) EMPLOYEE BENEFIT PLANS. Except as provided in Article
VII hereof, all U.S. Seller Benefit Plans and all assets owned or held by
any U.S. Seller Benefit Plans and any funds set aside or provided for by
Canadian Seller or by any third party custodian to fund Canadian Seller's
obligations under any Canadian Seller Benefit Plans.
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(vi) TAX REFUNDS; CLAIMS. All claims and rights of such
Seller to any Tax refunds, Tax refund claims and Tax credits, deductions or
other Tax benefits of such Seller, including those benefits created as a
result of adjustments made in connection with any audit.
(vii) LITIGATION CLAIMS. Any rights, claims and recoveries
under litigation of such Seller (against third parties or otherwise)
relating to the Business, other than any collection procedures or any other
actions or proceedings relating to Accounts Receivable and other than
rights and remedies described in Section 2.01(b)(xv).
(viii) TRADENAMES, TRADEMARKS AND LOGOS. Subject to Section
10.09 hereof, all of such Seller's right, title and interest in, to and
under the trademarks and/or names and/or logos containing "Alcatel",
"Alcatel Telecommunications Cable", "Alcatel Canada Wire" and/or "Canada
Wire and Cable".
(ix) CERTAIN INTELLECTUAL PROPERTY. The rights, title and
interest of such Seller in any Intellectual Property used or held for use
by such Seller in the Business under or pursuant to the General Relations
Agreement among such Seller and one or more of its Affiliates (subject to
Section 10.09 hereof) or under or pursuant to any cross-license agreements
between or among such Seller and any of its Affiliates and third parties
and all patents of such Seller.
(x) EXCLUDED OBLIGATIONS. The rights and privileges of
such Seller in, to or under all Contracts of any nature, the obligations of
such Seller under which expressly are not assumed by either Purchaser
pursuant to Section 2.02(c) hereof, subject to Section 10.04 hereof.
(xi) RIGHTS UNDER AGREEMENT. Such Seller's rights under
this Agreement, any other agreement contemplated hereby or any other
agreement between either Purchaser and such Seller entered into on or after
the date hereof.
(xii) CERTAIN RECEIVABLES. All intracompany and
interdivision receivables and receivables existing prior to Closing from
any Affiliate of such Seller.
(xiii) FIBER ASSETS. Any fiber cable manufacturing assets
located at the facilities of the Business in Winnipeg, Manitoba and
described on SCHEDULE 2.01(c)(xiii) HEREOF.
(xiv) OTHER ASSETS. All of the other Assets and Properties
of such Seller not specifically included within the definition of "Assets".
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Section 2.02 LIABILITIES TO BE ASSUMED.
(a) ASSUMPTION OF LIABILITIES. Subject to the terms and conditions
set forth in this Agreement, at the Closing, U.S. Purchaser shall assume and
agree to pay, perform and discharge when due, the Liabilities and obligations of
U.S. Seller described in Section 2.02(b) hereof (the "ASSUMED U.S.
LIABILITIES"). Subject to the terms and conditions set forth in this Agreement,
at the Closing, Canadian Purchaser will assume and agree to pay, perform and
discharge when due, the Liabilities and obligations of Canadian Seller described
in section 2.02(b) hereof (the "ASSUMED CANADIAN LIABILITIES"). (The Assumed
U.S. Liabilities and the Assumed Canadian Liabilities are referred to herein,
collectively, as the "ASSUMED LIABILITIES"). Except as expressly provided in
this Agreement (including, without limitation, Article VII hereof), Purchasers
shall assume no Liabilities of Sellers other than the Assumed Liabilities.
(b) DESCRIPTION OF ASSUMED LIABILITIES. The Liabilities and
obligations of each Seller referred to in Section 2.02(a) above shall mean the
following Liabilities and obligations of such Seller arising in connection with
the operation of the Business as the same shall exist on the Closing Date (and,
if any such Liabilities and obligations are described on a Schedule hereto as
provided below, such Schedule shall separately reflect such Liabilities and
obligations of each Seller):
(i) REAL PROPERTY OBLIGATIONS AND PERSONAL PROPERTY
OBLIGATIONS. All obligations of such Seller relating to the ownership of
the Real Property to be performed on or after the Closing Date (including,
without limitation, all such obligations (A) under all easements and
rights-of-way relating thereto, (B) regarding ad valorem property taxes
relating thereto, and (C) regarding rents and utilities) and all
obligations of such Seller under the Real Property Leases to be performed
on or after the Closing Date, but in any event, excluding such obligations
described in Section 2.02(c)(ii) hereof. All obligations of such Seller
relating to the ownership of the Tangible Personal Property to be performed
on or after the Closing Date (including, without limitation, all such
obligations regarding ad valorem property taxes relating thereto).
(ii) ACCOUNTS PAYABLE. All obligations of such Seller with
respect to accounts payable of the Business reflected or reserved against
in the Final Closing Date Schedule of Net Assets which shall not include
(A) intracompany or interdivision accounts payable in favor of other
divisions of such Seller and accounts payable to any Affiliate of such
Seller (other than any accounts payable to other divisions of such Seller
for the supply of copper rod) and (B) accounts payable of such Seller with
respect to which checks have been provided but not presented for payment as
of the Closing Date.
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(iii) PERSONAL PROPERTY LEASE OBLIGATIONS. Subject to
Section 10.04, all obligations of such Seller under the Personal Property
Leases to be performed on or after the Closing Date, except that, with
respect to the safe harbor leases identified on SCHEDULE 2.02(b)(iii)(A)
hereof (the "SAFE HARBOR LEASES"), only the obligations of such Seller
thereunder relating to the equipment described on SCHEDULE 2.02(b)(iii)(B)
hereof (the "SAFE HARBOR EQUIPMENT") to be performed on or after the
Closing Date shall be assumed.
(iv) OBLIGATIONS UNDER BUSINESS CONTRACTS AND BUSINESS
LICENSES. Subject to Section 10.04 hereof, all obligations of such Seller
under the Business Contracts and Business Licenses to be performed on or
after the Closing Date, all purchase and supply commitments in favor of or
with any division or Affiliate of such Seller and all commitments and
arrangements with respect to any Inventory which is held for use in the
Business by such Seller on consignment from any supplier thereof.
(v) OBLIGATIONS UNDER UNION CONTRACTS, ETC. All
obligations of such Seller under the U.S. Union Contract and all
obligations of such Seller under the Canadian Union Contract in each case
to be performed on or after the Closing Date.
(vi) ACCRUED EXPENSES. All obligations of such Seller with
respect to accrued expenses reflected or reserved against in the Final
Closing Date Schedule of Net Assets pursuant to the Accounting Policies.
(vii) SECURITY DEPOSITS. All obligations of such Seller with
respect to any security deposit held by such Seller as lessor or sublessor
under the Real Property Leases and all obligations of such Seller with
respect to any deposit held by such Seller in respect of reels which are
returnable by customers of the Business.
(viii) WARRANTY LIABILITY. All obligations and Liabilities of
such Seller pursuant to product warranties or otherwise for repair or
replacement of, or refund for, damaged, defective or returned products or
goods sold by the Business except with respect to the warranty claim made
by Jiangxi Import and Export Corporation and/or Nanchang (the "CHINA
WARRANTY CLAIM").
(ix) PRODUCT LIABILITIES. All obligations and Liabilities
of such Seller arising out of or with respect to claims by any Person for
damage or injury suffered as a result of defective products, parts or
components included in the Inventory.
(x) EMPLOYEE MATTERS. All obligations and Liabilities of
such Seller relating to Employees and
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employee benefits pursuant to and to the extent provided in Article VII
hereof.
(xi) CERTAIN AGREEMENTS. All obligations and Liabilities of
such Seller to or in favor of bonding companies or banks with respect to
performance or other bonds issued by such companies or equivalent letters
of credit in connection with the Business to be performed on or after the
Closing Date, all of which are described on SCHEDULE 2.02(b)(xi) hereof.
(xii) HEDGING AGREEMENTS. Subject to Section 10.04, all
obligations and Liabilities of such Seller under or pursuant to those
copper and currency hedging agreements or arrangements described on
SCHEDULE 2.02(b)(xii) hereof.
(xiii) CONSIGNED INVENTORY. All obligations of such Seller
with respect to inventory held by such Seller pursuant to any consignment
arrangements with the supplier of such inventory.
(xiv) CREDIT NOTES. All credit notes issued by either Seller to
customers.
(xv) OTHER LIABILITIES. Any other Liabilities or
obligations of such Seller reserved against or reflected on the Final
Closing Date Schedule of Net Assets pursuant to the Accounting Policies.
(c) RETAINED LIABILITIES. Except as expressly provided in this
Agreement (including, without limitation, Article VII hereof) and except for the
Assumed U.S. Liabilities, U.S. Purchaser shall not assume pursuant to this
Agreement or the transactions contemplated hereby, and shall have no liability
for, any Liabilities or obligations of U.S. Seller (including, without
limitation, those related to the Business) of any kind, character or description
whatsoever (the "RETAINED U.S. LIABILITIES"). U.S. Seller shall discharge in a
timely manner, or shall make adequate provision for, all of the Retained U.S.
Liabilities; provided that U.S. Seller may contest, in good faith, any such
claim of liability asserted in respect thereof by any Person other than U.S.
Purchaser.
Except as expressly provided in this Agreement (including, without
limitation, Article VII hereof) and except for the Assumed Canadian Liabilities,
Canadian Purchaser shall not assume pursuant to this Agreement or the
transactions contemplated hereby, and shall have no liability for, any
Liabilities or obligations of Canadian Seller (including, without limitation,
those related to the Business) of any kind, character or description whatsoever
(the "RETAINED CANADIAN LIABILITIES"). Canadian Seller shall discharge in a
timely manner, or shall make adequate provision for, all of the Retained
Canadian Liabilities, PROVIDED that Canadian Seller may contest, in good faith,
any such claim of liability asserted in respect thereof by any Person
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other than Canadian Purchaser. (The Retained U.S. Liabilities and the Retained
Canadian Liabilities are referred to herein, collectively, as the "RETAINED
LIABILITIES").
Without limiting the foregoing, the Retained Liabilities shall include the
following:
(i) PRODUCT LIABILITIES. All obligations and Liabilities
of either Seller arising out of or with respect to claims by any Person for
damage or injury suffered as the result of defective products sold by such
Seller with respect to the Business prior to the Closing Date.
(ii) CERTAIN ENVIRONMENTAL LIABILITIES. All obligations and
Liabilities of either Seller, whether or not identified in connection with
the environmental assessments undertaken pursuant to Section 10.06(a),
resulting from (A) the presence or Release of any Hazardous Material at,
on, or under the Real Property or any real property subject to the Real
Property Leases, to the extent such Hazardous Material was present or such
Release occurred, prior to the Closing, and any Environmental Law in effect
at the time of the Closing required investigation, assessment, monitoring,
corrective action, remediation or reporting to any Governmental Authority
of such presence or Release at the time of Closing, (B) the violation of
any Environmental Law by either Seller prior to Closing or (C) the disposal
by either Seller at a site other than the Real Property of any Hazardous
Materials generated in connection with the Business, the Assets or the Real
Property prior to the Closing.
(iii) FINES AND PENALTIES. All civil and criminal fines and
penalties imposed upon either Seller by any Governmental Authority with
respect to the operation of the Business prior to Closing.
(iv) INCOME TAXES OF SELLERS. All income Taxes of either
Seller arising out of the transactions contemplated hereby.
(v) CHINA CLAIM REGARDING BREACH OF WARRANTY. All
obligations of either Seller with respect to the China Warranty Claim.
(vi) EMPLOYEE CLAIMS. Except as specifically provided
elsewhere in this Agreement (including, without limitation, Article VII
hereof), all obligations and Liabilities of such Seller arising out of or
in connection with any claims by Employees, contingent or otherwise,
relating to (A) labor relations or discriminatory, harassing or illegal
employment practices of either Seller or the violation by either Seller of
any laws relating to labor or employment in each case attributable to such
Seller's
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actions or omissions before the Closing Date (including, without
limitation, the claims, proceedings and litigation involving Employees
described on SCHEDULE 2.02(c)(vi) hereof), or (B) post-retirement welfare
benefits other than to the extent provided to U.S. Seller Employees (and
their dependents) under Section 4980B of the Code or provided to Canadian
Seller Employees pursuant to the terms of the Canadian Union Contract.
(vii) PROPERTY TAX CLAIM. All obligations and Liabilities of
such Seller arising out of or relating to that certain Alcatel NA Cable
Systems, Inc., Edgecombe County Business Personal Property Tax Case Appeal
to North Carolina Property Tax Commission Case No. 93 PTC 311.
(viii) CERTAIN LITIGATION. Except as expressly provided in
this Agreement (including, without limitation, Article VII hereof),
litigation disclosed or required to be disclosed on SCHEDULE 5.14 hereof.
ARTICLE III
PURCHASE PRICE AND ADJUSTMENTS THERETO
Section 3.01 PURCHASE PRICE.
(a) AMOUNT AND PAYMENT OF PURCHASE PRICE. The purchase price for the
Assets is the sum of (i) the Net Asset Value and (ii) US$22,000,000.00
(collectively, the "PURCHASE PRICE"). At the Closing, the amount of
US$93,000,000.00, which represents the sum of (i) US$71,000,000.00 (being an
agreed amount determined mutually by all parties hereto) and (ii) the foregoing
US$22,000,000.00 amount, shall be paid as follows:
(A) As partial consideration for the Assets transferred to U.S.
Purchaser by U.S. Seller, U.S. Purchaser shall pay to U.S. Seller in
immediately available United States funds by means of wire transfer to an
account designated by U.S. Seller the sum of (I) US$11,000,000.00 and (II)
an additional amount in U.S. Dollars equal to US$71,000,000.00 less the
Estimated Canadian Business Value (as defined below); and
(B) As partial consideration for the Assets transferred to
Canadian Purchaser by Canadian Seller, Canadian Purchaser shall pay to
Canadian Seller in immediately available United States funds by means of
wire transfer to an account designated by Canadian Seller the sum of (I)
US$11,000,000.00 and (II) an additional amount in U.S. Dollars equal to the
Sellers' good faith estimate of the component of the Net Asset Value
related to the Canadian Assets and the Assumed Canadian Liabilities in U.S.
Dollars (the "ESTIMATED CANADIAN BUSINESS VALUE");
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provided that the total of all amounts set forth in subparagraphs (A) and
(B) above which shall be paid by U.S. Purchaser and Canadian Purchaser to
U.S. Seller and Canadian Seller, respectively, at Closing shall equal
US$93,000,000.00.
Section 3.02 ADJUSTMENT OF PURCHASE PRICE.
(a) DETERMINATION OF NET ASSET VALUE. Within a period of thirty (30)
days following the Closing Date, Sellers shall prepare a schedule in accordance
with GAAP subject to the accounting principles and standards set forth on
SCHEDULE 3.02(a)(i) hereof (the "ACCOUNTING POLICIES") reflecting all components
(and the amounts thereof) necessary to compute the Net Asset Value and the
computation thereof (it being understood that such components shall be shown
thereon separately with respect to the U.S. Business and the Canadian Business)
(the "PRELIMINARY CLOSING DATE SCHEDULE OF NET ASSETS") and furnish copies of
the Preliminary Closing Date Schedule of Net Assets to the office of Arthur
Andersen in Greensboro, North Carolina, U.S.A. ("ARTHUR ANDERSEN-GREENSBORO")
and to Purchasers. Sellers and Purchasers shall jointly instruct Arthur
Andersen-Greensboro to conduct an audit of the Preliminary Closing Date Schedule
of Net Assets according to the procedures set forth on SCHEDULE 3.02(a)(ii)
hereto (the "PROCEDURES") in order to confirm the determination of the Net Asset
Value thereon in accordance with GAAP subject to the Accounting Policies, to
make any necessary corrections therein and to issue a final report thereon,
together with any proposed adjustments to the Preliminary Closing Date Schedule
of Net Assets (the "ARTHUR ANDERSEN REPORT"), to Sellers and to Purchasers
within thirty (30) days following the expiration of the thirty (30) day period
noted above (the "REVIEW PERIOD").
Sellers, on the one hand, and Purchasers, on the other hand, shall each
have the right to object to any item or computation appearing in the Arthur
Andersen Report by notifying the other within ten (10) days following the
expiration of the Review Period (the "OBJECTION PERIOD"). If neither Sellers
nor Purchasers makes any such objection within the Objection Period, the Net
Asset Value appearing in the Arthur Andersen Report (together with all
components thereof, and the amounts of such components, necessary to compute
such Net Asset Value) shall be determinative for purposes of this Section 3.02
and shall be final and binding on all parties hereto (absent manifest error
therein).
If either Sellers or Purchasers (or both) makes any such objection within
the Objection Period, Sellers and Purchasers shall immediately attempt in good
faith to determine jointly the Net Asset Value (together with all components
thereof, and the amounts of such components, necessary to compute such Net Asset
Value) in accordance with the Accounting Policies within a period of ten (10)
days following the expiration of the Objection Period. In the event Sellers and
Purchasers cannot agree on the Net Asset Value (together with all components
thereof, and the amounts of such components, necessary to compute such Net Asset
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Value) by the end of such ten (10) day period, such parties shall immediately
engage the office of Ernst & Young located in Charlotte, North Carolina (the
"NEUTRAL ACCOUNTANTS") to make such determination. The parties shall require
the Neutral Accountants to determine the Net Asset Value (together with all
components thereof, and the amounts of such components, necessary to compute
such Net Asset Value), which shall be an amount within the range of the amounts
in dispute claimed by the parties, in accordance with the Accounting Policies
within fifteen (15) days thereafter.
The Net Asset Value (together with all components thereof, and the amounts
of such components, necessary to compute such Net Asset Value), as determined
automatically if neither Purchasers nor Sellers objects to the Arthur Andersen
Report in the Objection Period, as determined jointly by Purchasers and Sellers
as provided above or as determined by the Neutral Accountants (in the event the
Neutral Accountants are engaged), as the case may be, shall be determinative for
purposes of this Section 3.02 and shall be final and binding on all parties
hereto (absent manifest error therein) (all components, and the amounts of such
components, necessary to compute the final and binding Net Asset Value and the
amount of such Net Asset Value are referred to herein, collectively, as the
"FINAL CLOSING DATE SCHEDULE OF NET ASSETS").
Sellers, on the one hand, and Purchasers on the other hand, shall each bear
one-half (1/2) of the fees and expenses of Arthur Andersen-Greensboro and the
Neutral Accountants, if any.
For purposes of this Agreement, the "NET ASSET VALUE" shall mean the excess
of the book value of the Assets within the categories identified in, and as
further described in, the Accounting Policies over the book value of the Assumed
Liabilities within the categories identified in, and as further described in,
the Accounting Policies as of the close of business on the Closing Date as
determined in accordance with GAAP and subject to the Accounting Policies.
(b) ADJUSTMENTS IN U.S. PRICE. To the extent that the component of the
Net Asset Value related to the U.S. Assets and Assumed U.S. Liabilities as
reflected in U.S. Dollars on the Final Closing Date Schedule of Net Assets is
less than the amount paid by U.S. Purchaser to U.S. Seller pursuant to Section
3.01(a)(A) hereof (less US$11,000,000.00), U.S. Seller shall pay the amount of
such shortfall to U.S. Purchaser in U.S. Dollars via wire transfer of
immediately available funds to an account designated by U.S. Purchaser on the
later of (i) the tenth (10th) day following the determination of the Net Asset
Value pursuant to Section 3.02 hereof and (ii) the ninetieth (90th) day
following the Closing Date. To the extent that the component of the Net Asset
Value related to the U.S. Assets and Assumed U.S. Liabilities as reflected in
U.S. Dollars on the Final Closing Date Schedule of Net Assets is greater than
the amount paid by U.S. Purchaser to U.S. Seller pursuant to Section 3.01(a)(A)
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hereof (less US$11,000,000.00), U.S. Purchaser shall pay the amount of such
excess to U.S. Seller in U.S. Dollars via wire transfer of immediately available
funds to an account designated by U.S. Seller on the later of (i) the tenth
(10th) day following the determination of the Net Asset Value pursuant to
Section 3.02 hereof and (ii) the ninetieth (90th) day following the Closing
Date.
(c) ADJUSTMENTS IN CANADIAN PRICE. To the extent that the component of
the Net Asset Value related to the Canadian Assets and Assumed Canadian
Liabilities as reflected in U.S. Dollars on the Final Closing Date Schedule of
Net Assets is less than the amount paid by Canadian Purchaser to Canadian Seller
pursuant to Section 3.01(a)(B) hereof (less US$11,000,000.00), Canadian Seller
shall pay the amount of such shortfall to Canadian Purchaser in U.S. Dollars via
wire transfer of immediately available funds to an account designated by
Canadian Purchaser on the later of (i) the tenth (10th) day following the
determination of the Net Asset Value pursuant to Section 3.02 hereof and (ii)
the ninetieth (90th) day following the Closing Date. To the extent that the
component of the Net Asset Value related to the Canadian Assets and Assumed
Canadian Liabilities as reflected in U.S. Dollars on the Final Closing Date
Schedule of Net Assets is greater than the amount paid by Canadian Purchaser to
Canadian Seller pursuant to Section 3.01(a)(B) hereof (less US$11,000,000.00),
Canadian Purchaser shall pay the amount of such excess to Canadian Seller in
U.S. Dollars via wire transfer of immediately available funds to an account
designated by Canadian Seller on the later of (i) the tenth (10th) day following
the determination of the Net Asset Value pursuant to Section 3.02 hereof and
(ii) the ninetieth (90th) day following the Closing Date.
(d) DEFINITION OF U.S. DOLLAR EQUIVALENT. All amounts reflected on the
Preliminary Closing Date Schedule of Net Assets and on the Final Closing Date
Schedule of Net Assets shall be in U.S. Dollars. For purposes of preparing the
Preliminary Closing Date Schedule of Net Assets and the Final Closing Date
Schedule of Net Assets, the U.S. Dollar equivalent of any Canadian Dollar amount
shall be determined pursuant to the Accounting Policies as of the close of
business on the Closing Date.
Section 3.03 ALLOCATION OF THE PURCHASE PRICE.
(a) ALLOCATION OF AMOUNTS PAID TO U.S. SELLER. The amounts paid to
U.S. Seller pursuant to Section 3.01 above (as adjusted pursuant to Section 3.02
above) shall be allocated for tax purposes among the U.S. Assets based on the
relative fair market values of the U.S. Assets. The fair market values of the
U.S. Assets will be the amounts included in the Final Closing Date Schedule of
Net Assets except that, if any U.S. Assets are appraised by an independent
qualified appraiser and such appraised values are agreed to by the U.S. Seller,
the allocation for such U.S. Assets will be based on such appraised values. In
addition, the parties agree that the value of, and the amount to
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be allocated to, the Covenant Not-To-Compete with respect to the U.S. Business
is US$125,000.00. Each of U.S. Purchaser and U.S. Seller agrees (i) that any
such allocation is consistent with the requirements of Section 1060 of the Code
and the regulations thereunder and (ii) to complete and file Form 8594 with its
U.S. Federal Income Tax Return consistent with such allocation for the Tax year
in which the Closing occurs.
(b) ALLOCATION OF AMOUNTS PAID TO CANADIAN SELLER. The amounts paid to
Canadian Seller pursuant to Section 3.01 above (as adjusted pursuant to Section
3.02 above), together with the amount of the Assumed Canadian Liabilities
reflected in the Final Closing Date Schedule of Net Assets, shall be allocated
for tax purposes among the Canadian Assets based on the relative fair market
values of the Canadian Assets. The fair market values of the Canadian Assets
will be the amounts included in the Final Closing Date Schedule of Net Assets
except that, if any Canadian Assets are appraised by an independent qualified
appraiser, and such appraised values are agreed to by the Canadian Seller, the
allocation for such Canadian Assets will be based on such appraised values. In
addition, the parties agree that the value of, and the amount to be allocated
to, the Covenant-Not-To-Compete with respect to the Canadian Business is
US$125,000.00. Each of Canadian Purchaser and Canadian Seller agrees to
complete and file such forms and documents as may be required to reflect such
allocation for the Tax year in which the Closing occurs.
Section 3.04 GUARANTY. The Alpine Group Inc. hereby unconditionally and
irrevocably guarantees all obligations, agreements and covenants of each
Purchaser contained in this Article III.
ARTICLE IV
CLOSING
Section 4.01 CLOSING AND CLOSING DATE. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall be held at 10:00 o'clock
a.m. North Carolina Time on the third business day following the fulfillment or
waiver of the conditions precedent referred to in Articles XI and XII hereof or
on such other date as the parties hereto may mutually agree. (The date on which
the Closing occurs is referred to herein as the "CLOSING DATE".) The Closing
shall be held at the offices of Moore & Van Allen, PLLC, at NationsBank
Corporate Center, 100 N. Tryon Street, Floor 47, Charlotte, North Carolina 28202
or such other location as may be agreed to by the parties hereto.
Section 4.02 TRANSFER TAXES. U.S. Seller shall be responsible for and
shall pay when due all sales and transfer taxes, if any, resulting from the sale
and transfer of any Assets by U.S. Seller hereunder, including, without
limitation, real estate transfer taxes and sales taxes on Vehicles. Canadian
Purchaser shall be responsible for and pay when due all sales and
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transfer taxes, if any, resulting from the sale and transfer of any Assets by
Canadian Seller hereunder, including, without limitation, real estate transfer
taxes and sales taxes on Vehicles.
Canadian Seller and Canadian Purchaser shall execute at Closing and file as
required (a) such elections and/or agreements as may be required pursuant to the
Income Tax Act (Canada) and any other Law which may require the same for the
purpose of confirming the foregoing allocation, (b) the appropriate elections as
to accounts receivable under Section 22 of the Income Tax Act (Canada) and any
other Law which may require the same. Canadian Seller and Canadian Purchaser
shall also prepare and file all of their respective Tax returns in a manner
consistent with the aforesaid allocations.
At Closing, Canadian Purchaser and Canadian Seller shall jointly execute an
election under Section 167 of the Excise Tax Act (Canada) on the form prescribed
for such purpose along with any documentation necessary or desirable in order to
effect the transfer of the Assets without payment of any Goods and Services Tax.
Canadian Purchaser shall file the election form referred to above, along with
any documentation necessary or desirable to give effect to such, with Revenue
Canada together with Canadian Purchaser's Goods and Services Tax return for the
reporting period in which the transactions contemplated herein are consummated.
Notwithstanding such election, in the event that it is finally determined
that there is a Goods and Services Tax liability of Canadian Purchaser to pay
Goods and Services Tax on all or part of the Assets, the parties agree that such
Goods and Services Tax shall, unless already collected from Canadian Purchaser
by Canadian Seller, be forthwith remitted by Canadian Purchaser to Revenue
Canada and Canadian Purchaser shall indemnify and hold Canadian Seller harmless
with respect to any such Goods and Services Tax, as well as any interest and
penalties related thereto.
Notwithstanding the Closing, Canadian Seller shall continue to have sole
responsibility and liability for the payment of tax under the Health and Post-
Secondary Education Tax Levy Act (Manitoba) in respect of all remuneration paid
to employees of Canadian Seller in respect of the period ending on the Closing
Date.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to Purchasers as
of the date hereof as follows:
Section 5.01 CORPORATE ORGANIZATION AND AUTHORITY. U.S. Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, with full corporate power and authority to
conduct the U.S. Business as now conducted and to own, lease and use the U.S.
Assets. Canadian Seller is a corporation incorporated, existing and in good
standing under the laws of Canada, with full corporate power and authority to
conduct the Canadian Business as now conducted and to own, lease and use the
Canadian Assets. Each Seller has the power to enter into and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each Seller and the consummation of the transactions
contemplated hereby by such Seller, including, without limitation, the sale of
the Assets by such Seller and the execution and performance of the Related
Agreements to which such Seller is a party by such Seller have been duly
authorized by all requisite corporate action on the part of such Seller. This
Agreement constitutes, and the Related Agreements to which each Seller is a
party and the other instruments and documents to be executed and delivered by
each Seller hereunder will, when executed and delivered, constitute, the legal,
valid and binding obligations of each Seller enforceable against such Seller in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or similar laws or
general principles of equity.
Section 5.02 FOREIGN QUALIFICATION. With respect to the U.S. Business,
U.S. Seller is duly qualified or registered to do business as a foreign
corporation and is in good standing in the states identified in SCHEDULE 5.02(a)
hereof. With respect to the Canadian Business, Canadian Seller is duly
qualified or registered to do business and is in good standing in the
jurisdictions identified in SCHEDULE 5.02(b) hereof. There are no other
jurisdictions in which the character of the Business or the location of the
Assets makes any such qualification by either Seller necessary and wherein the
failure to so qualify could reasonably be expected to have a material adverse
effect on the Business.
Section 5.03 NO CONFLICTS AND CONSENT REQUIREMENTS. The execution and
delivery of this Agreement by each Seller do not, and the execution and delivery
by each Seller of the Related Agreements to which such Seller is a party, the
performance by each Seller of its obligations under this Agreement and such
Related Agreements, and the consummation of the transactions contemplated hereby
and thereby will not:
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(a) conflict with or violate any provision of the Certificate of
Incorporation or Articles of Incorporation, as the case may be, or Bylaws
of such Seller;
(b) subject to obtaining the consents and approvals and to
making the filings and giving the notices set forth in SCHEDULE 5.03(b)
hereof, conflict with, violate or breach any Law or Order applicable to
such Seller or any of its Assets and Properties, other than any such
conflict, violation or breach which, individually or in the aggregate with
all other such conflicts, violations or breaches, could not reasonably be
expected to have an adverse effect on the validity or enforceability of
this Agreement or any Related Agreement or a material adverse effect on the
Business; or
(c) except as set forth in SCHEDULE 5.03(c) hereof, (i) conflict
with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require
such Seller to obtain any consent, approval or action of, make any filing
with or give any notice to any Person as a result or under the terms of, or
(iv) result in the creation or imposition of any Lien upon such Seller or
any of its Assets or Properties under, any Contract or License to which
such Seller is a party or by which any of its Assets and Properties is
bound, except as could not reasonably be expected to have an adverse effect
on the validity or enforceability of this Agreement or any Related
Agreement or a material adverse effect on the Business.
Section 5.04 GOVERNMENTAL APPROVALS AND FILINGS. Except as required by
the HSR Act and the Competition Act, neither the execution, delivery, or
performance of this Agreement or any Related Agreement to which it is a party by
either Seller nor the consummation of the transactions contemplated hereby or
thereby will require the consent of, filing with or notice to any Governmental
Authority on the part of such Seller.
Section 5.05 FINANCIAL STATEMENTS. SCHEDULE 5.05 hereof contains true
and complete copies of the audited Copper Cable Group of Alcatel NA Cable
Systems, Inc. and Alcatel Canada Wire Inc. Combined Balance Sheets - December
31, 1994 and 1993 with respect to the Business and the audited Copper Cable
Group of Alcatel NA Cable Systems, Inc. and Alcatel Canada Wire Inc. Combined
Statements of Operations with respect to the Business for the years ended
December 31, 1992, December 31, 1993 and December 31, 1994 (collectively, the
"FINANCIAL STATEMENTS").
Except as set forth in the notes thereto or as disclosed in SCHEDULE 5.05
hereof, the Financial Statements (i) were prepared from the accounting books and
records of Sellers in accordance with GAAP and (ii) fairly present the financial
condition and results of operations of the Business as of the respective dates
thereof and for the respective periods covered thereby.
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Section 5.06 CHANGES OF FINANCIAL CONDITION. Except for the execution
and delivery of this Agreement and as disclosed on SCHEDULE 5.06 hereof, since
December 31, 1994 there has not been any material adverse change in the
Business, or any event or development which, individually or together with other
such events or developments, has resulted in or could reasonably be expected to
result in a material adverse change in the Business (financial or otherwise)
other than any such change, event or development occurring as a result of
general economic or financial conditions not unique to the Business or general
events affecting the industry or customers of the Business not unique to the
Business (a "MATERIAL ADVERSE CHANGE"). Since December 31, 1994, the Business
has been conducted by the Sellers in the Ordinary Course of Business, and, with
respect to the Business, Sellers have not:
(a) permitted or allowed any of the Assets to be mortgaged,
pledged or subjected to any Lien, other than Permitted Liens;
(b) cancelled or compromised any material claims, or waived any
other material rights relating to the Assets, or sold, transferred or
otherwise disposed of any properties or assets, real, personal or mixed,
tangible or intangible, in the aggregate material to the Business, other
than in the Ordinary Course of Business of the Business;
(c) granted any increase in the compensation of any Employee
other than in the Ordinary Course of Business of the Business; or
(d) materially increased or decreased the level of Inventory
other than in the Ordinary Course of Business of the Business.
Neither Seller is aware of any matter that could reasonably be expected to
result in a Material Adverse Change that has not been disclosed in writing to
Purchasers.
Section 5.07 REAL PROPERTY.
(a) DESCRIPTION OF OWNED AND LEASED REAL PROPERTY. SCHEDULE 2.01(b)(i)
hereof contains a true and correct description of each parcel of real property
owned by U.S. Seller and used or held for use in connection with the Business,
except for the parcel of real property owned by U.S. Seller and located in
Claremont, North Carolina, U.S.A. (the real property of U.S. Seller reflected in
such SCHEDULE 2.01(b)(i) is referred to herein as the "U.S. OWNED REAL
PROPERTY"). SCHEDULE 2.01(b)(ii)(B) hereof contains a true and correct
description of each parcel of real property leased by U.S. Seller (as lessee)
and used or held for use in connection with the Business (the "U.S. LEASED REAL
PROPERTY"). SCHEDULE 2.01(b)(i) hereof contains a true and correct description
of each parcel of real
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property owned by Canadian Seller and used or held for use in connection with
the Business ("CANADIAN OWNED REAL PROPERTY").
(b) TITLE. Except as disclosed in SCHEDULE 5.07(b)(i) hereof, U.S.
Seller has good, marketable fee simple and insurable title to the U.S. Owned
Real Property, free and clear of all Liens other than Permitted Liens. Except
as disclosed on SCHEDULE 5.07(b)(i) hereof, no easements, rights-of-way, or
utility lines encroach upon any Improvements built on the U.S. Owned Real
Property and any such easements, rights-of-way, utility lines and other matters
of record or otherwise affecting the U.S. Owned Real Property shall not result
in forfeiture or reversion of title. Except as disclosed in SCHEDULE
5.07(b)(ii) hereof, U.S. Seller is in possession of the U.S. Owned Real
Property. Except as disclosed in SCHEDULE 5.07(b)(iii) hereof, Canadian Seller
has good and marketable fee simple title to the Canadian Owned Real Property,
free and clear of all Liens other than Permitted Liens. Except as disclosed on
SCHEDULE 5.07(b)(iii) hereof, no easements, rights-of-way, or utility lines
encroach upon any Improvements built on the Canadian Owned Real Property and any
such easements, rights-of-way, utility lines and other matters of record or
otherwise affecting the Canadian Owned Real Property shall not result in
forfeiture or reversion of title. Except as disclosed on SCHEDULE 5.07(b)(iv)
hereof, Canadian Seller is in possession of the Canadian Owned Real Property.
(c) LEASEHOLD INTERESTS. U.S. Seller has a valid leasehold estate in
the U.S. Leased Real Property subject to the terms of the Real Property Leases
relating thereto. Each Real Property Lease relating to U.S. Leased Real
Property is a legal, valid and binding agreement of U.S. Seller, enforceable
against U.S. Seller in accordance with its terms, and except as set forth in
SCHEDULE 5.07(c)(i) hereof, to the Knowledge of U.S. Seller, there is no default
(or any event which, after notice or lapse of time or both, would constitute a
default) thereunder.
(d) CONDITION OF IMPROVEMENTS. Except as disclosed in SCHEDULE 5.07(d)
hereof, the Improvements are in all material respects in good condition and
repair, ordinary wear and tear excepted and consistent with their age and use,
and, to the Knowledge of each Seller, there are no condemnation proceedings
pending or threatened against any of the Real Property or the Improvements.
Section 5.08 TANGIBLE PERSONAL PROPERTY. Each Seller is in possession of
and has good title to, or has valid leasehold interests in or valid rights under
Contract to use, all the Tangible Personal Property used by such Seller in and,
individually or in the aggregate with other such property material to, the
Business. Except as disclosed in SCHEDULE 5.08 hereof, all the Tangible
Personal Property is free and clear of all Liens other than Permitted Liens and
is in all material respects in good condition in the aggregate, ordinary wear
and tear excepted and consistent with its age and use.
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The sale of the Tangible Personal Property by each Seller to the relevant
Purchaser pursuant to this Agreement will effectively transfer to such Purchaser
all tangible assets and properties used by such Seller in connection with the
Business as heretofore conducted by such Seller, except with respect to the
tangible personal property described on Schedule 5.25 hereof and tangible
personal property located at the Quebec and British Columbia sales offices of
the Business.
Section 5.09 INVENTORY AND ACCOUNTS RECEIVABLE.
(a) INVENTORY. The Inventory (other than Inventory held by either
Seller on consignment from any supplier thereof) consists of a quality and
quantity usable and salable in the Ordinary Course of Business of the Business,
subject to the reserve therefor established pursuant to the accounting policies
of such Seller on the financial books and records of such Seller. Each Seller
has good title to the Inventory (other than Inventory held by either Seller on
consignment from any supplier thereof) used or held for use by such Seller in
the Business, free and clear of all Liens except Permitted Liens. Except as
described in SCHEDULE 5.09(a) hereof all Inventory is located at the facilities
from which the Business is operated.
(b) ACCOUNTS RECEIVABLE. Except as set forth in SCHEDULE 5.09(b)
hereof, the Accounts Receivable arose from BONA FIDE sales transactions in the
Ordinary Course of Business of the Business, are payable on terms consistent
with the relevant Seller's accounts receivable policy with respect to the
Business, and are not the subject of any actions or proceedings brought by or on
behalf of either Seller. Each Seller has good title to the Accounts Receivable
of such Seller relating to the Business free and clear of all Liens except
Permitted Liens.
Section 5.10 VEHICLES. SCHEDULE 2.01(b)(xii) hereof contains a true and
complete list of all vehicles owned or leased by each Seller and used or held
for use in the Business. Each Seller has good and valid title to, or has valid
leasehold interests in or valid rights under Contract to use, all Vehicles used
or held for use by such Seller in the Business, free and clear of all Liens
other than Permitted Liens.
Section 5.11 INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 5.11 hereof
describes all registered Business Intellectual Property owned by each Seller and
used in, or formerly used in, and individually or in the aggregate with other
such Business Intellectual Property material to, the Business (other than the
Intellectual Property described in Section 2.01(c)(viii) hereof). Each Seller
has all right, title and interest in the registered Business Intellectual
Property of such Seller disclosed on SCHEDULE 5.11 hereof. Except as disclosed
in SCHEDULE 5.11 hereof, (i) all registrations with and applications to
Governmental Authorities in respect of Business Intellectual Property owned by
each Seller are valid and in full force and effect, and (ii) to the Knowledge of
each Seller, no Business
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Intellectual Property is being infringed by any other Person in any material
respect. Neither Seller has received notice that such Seller is infringing any
Intellectual Property of any other Person in connection with the Business, to
the Knowledge of each Seller no claim is pending to such effect that has not
been resolved and, to the Knowledge of each Seller, such Seller is not
infringing any Intellectual Property of any other Person the effect of which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Business. The transfer of the Business
Intellectual Property by each Seller to the relevant Purchaser hereunder and the
license to be granted by Sellers pursuant to Section 10.09 hereof will
effectively provide to Purchasers rights to use in connection with the Business
all Intellectual Property used by such Sellers in connection with the Business
as heretofore conducted by Sellers except with respect to any Intellectual
Property acquired or used by either Seller under or pursuant to any cross-
license agreement between such Seller (or any of its Affiliates) and third
parties and except with respect to any other Intellectual Property rights of
third parties, and except with respect to the Intellectual Property described in
Section 2.01(c)(viii) hereof. To the Knowledge of each Seller, such Seller is
not using in connection with the Business any Intellectual Property obtained by
such Seller under any cross-license referred to above.
Section 5.12 MATERIAL CONTRACTS.
(a) DESCRIPTION OF MATERIAL CONTRACTS. SCHEDULE 5.12(a) hereof
contains a true and complete list of the following Contracts (collectively, the
"MATERIAL CONTRACTS") (other than Benefit Plans and Insurance Programs) to which
each Seller is a party or by which any of the Assets is bound:
(i) all Contracts providing for a commitment of employment
or personal services to the Business other than any such Contracts which
are terminable at will or subject only to termination requirements imposed
by law for the provision of notice and the payment of severance;
(ii) all Business Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of such Seller to
engage in any business activity, or compete with any Person, in connection
with the Business or prohibiting or limiting the ability of any Person to
compete with such Seller in connection with the Business;
(iii) all partnership, joint venture, shareholders' or other
similar Business Contracts with any Person in connection with the Business;
(iv) all Business Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchises with whom such
Seller deals in connection with the Business which in any case involve the
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payment or potential payment, pursuant to the terms of any such Contract,
by or to such Seller of more than US$100,000 annually;
(v) all Business Contracts relating to the future
disposition or acquisition of any Assets exceeding, in the aggregate,
U.S.$100,000 in value, other than dispositions or acquisitions of Inventory
in the ordinary course of business;
(vi) all collective bargaining or similar labor Contracts
covering any Employee; and
(vii) all other Contracts with respect to the Business
(including, without limitation, Contracts with customers and suppliers)
that (A) involve the payment or potential payment, pursuant to the terms of
any such Contract, by or to such Seller of more than US$100,000 annually or
(B) cannot be terminated by such Seller within thirty (30) days after
giving notice of termination without resulting in any material cost or
penalty to such Seller.
(b) STATUS OF MATERIAL CONTRACTS. Except as disclosed in SCHEDULE
5.12(b) hereof, to the Knowledge of each Seller, neither it nor any other party
to any Material Contract is in violation or breach of or default under such
Material Contract (or with notice or lapse of time or both, would be in
violation or breach of or default under such Material Contract) the effect of
which, individually or in the aggregate with any such other violations or
breaches, could reasonably be expected to have a material adverse effect on the
Business. Each Material Contract to which such Seller is a party is in full
force and effect and constitutes a legal, valid and binding agreement of such
Seller, enforceable against such Seller in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity. All Material Contracts have been entered into on an arms-
length basis.
(c) WARRANTY CLAIMS. There are no claims pending against either Seller
for the violation of any product warranties given by such Seller with respect to
products of the Business sold prior to the Closing Date and, to the knowledge of
each Seller, there is no basis for any such claim, except for the China Warranty
Claim. Neither Seller has granted any warranty terms to customers which are
outside the Ordinary Course of Business of the Business or outside of prevailing
market conditions and customer requirements or prevailing industry practices.
Section 5.13 TAX MATTERS.
(a) TAX RETURNS AND TAXES. All Taxes owed in connection with the
Business with respect to its operations prior to Closing
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(whether or not shown on any Tax Return) and all income Taxes of Sellers arising
out of the transactions contemplated hereby have been or will be paid or
otherwise provided for by Sellers. There are no Liens on any of the Assets that
arose as a result of any failure (or alleged failure) to pay any Tax.
(b) EMPLOYMENT TAXES. Each Seller has withheld and paid or will
withhold and pay all Taxes required to have been or to be withheld and paid in
connection with amounts paid or owing by such Seller to any Employee, creditor,
or independent contractor of the Business prior to Closing.
(c) GST REGISTRATION. Canadian Seller is a registrant within the
meaning of Part IX of the Excise Tax Act (Canada) and its registration number is
as follows 129825931.
Section 5.14 LITIGATION AND CLAIMS. SCHEDULE 5.14 hereof discloses each
instance in which each Seller (a) is subject to any unsatisfied Order with
respect to the Business or (b) is a party to or, to the knowledge of such Seller
is threatened to be made a party to, any charge, complaint, action, suit,
arbitration, proceeding, hearing, or investigation with respect to the Assets or
the Business which, individually or in the aggregate with all other such items,
could reasonably be expected to have a material adverse effect on the Business.
Section 5.15 COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed in
SCHEDULE 5.15 hereof, neither Seller is in violation of or in default under any
Law or Order applicable to the Business or the Assets the effect of which,
individually or in the aggregate with other such violations and defaults, could
reasonably be expected to have a material adverse effect on the Business.
Section 5.16 LABOR MATTERS. Except for the U.S. Union Contract and the
Canadian Union Contract, neither Seller is a party to or bound by any collective
bargaining agreement with respect to any Employee, and neither Seller has
experienced, within the past four (4) years, any strikes or lockouts with
respect to the Business.
Section 5.17 EMPLOYEE BENEFITS.
(a) DEFINITION OF U.S. SELLER BENEFIT PLAN. For purposes of this
Agreement, the term "U.S. SELLER BENEFIT PLAN" means any plan, program,
arrangement, fund, policy, practice or contract which, through which, or under
which the U.S. Seller or U.S. Seller ERISA Affiliate provides benefits or
compensation to or on behalf of current or former U.S. Seller Employees, whether
formal or informal, whether or not written, including but not limited to the
following:
(i) ARRANGEMENTS - any bonus, incentive compensation, stock
option, deferred compensation,
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commission, severance pay, golden parachute, or other compensation plan or
rabbi trust;
(ii) ERISA PLANS - any "employee benefit plan" (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), including, but not limited to, any multiemployer plan
(as defined in Section 3(37) and Section 4001(a)(3) of ERISA), defined
benefit plan, profit sharing plan, money purchase pension plan, 401(k)
plan, savings or thrift plan, stock bonus plan, employee stock ownership
plan, or any plan, fund, program, arrangement or practice providing for
medical (including post-retirement medical), hospitalization, accident,
sickness, disability, or life insurance (including post-retirement life)
benefits; and
(iii) OTHER EMPLOYEE FRINGE BENEFITS - any stock purchase,
vacation, scholarship, day care, prepaid legal services, dependent care, or
other fringe benefit Plans, programs, arrangements, contracts, or
practices.
(b) U.S. SELLER ERISA AFFILIATE. For purposes of this Agreement, the
term "U.S. SELLER ERISA AFFILIATE" means each trade or business (whether or not
incorporated) which together with the U.S. Seller is treated as a single
employer under Section 414(b), (c), (m), or (o) of the Code.
(c) IDENTIFICATION OF U.S. SELLER BENEFIT PLANS. Except as set forth
on SCHEDULE 5.17(c), and except for the U.S. Seller Benefit Plans which have
been terminated and with respect to which neither the U.S. Seller nor any U.S.
Seller ERISA Affiliate has any financial, administrative, or other liability,
obligation, or responsibility, neither the U.S. Seller nor any U.S. Seller ERISA
Affiliate maintains, nor have they at any time established or maintained, nor
have they at any time been obligated to make, or otherwise made, contributions
to or under or otherwise participated in any U.S. Seller Benefit Plan.
(d) U.S. COMPLIANCE. To the Knowledge of the U.S. Seller, none of the
following have occurred:
(i) Any material violation, in form or in operation, of any
term, provision, or condition of any U.S. Seller Benefit Plan.
(ii) Any material violation, in form or in operation, of any
law applicable to any U.S. Seller Benefit Plan, including without
limitation the minimum funding requirements of Title I, Part 3 of ERISA and
the prohibited transaction and other fiduciary responsibility provisions of
Title I, Part 4 of ERISA.
(iii) Any material violation of the Code requirements
regarding any U.S. Seller Benefit Plan,
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including without limitation the prohibited transaction excise tax
provisions of Section 4975 thereof.
(iv) Any failure to file timely any reports and returns with
respect to any U.S. Seller Benefit Plan required to be filed with any
Governmental Authority, or any failure to furnish of such documents to
participants or beneficiaries as required by Law, either of which could
subject the U.S. Seller or any of its Affiliates to any material civil or
any criminal sanction.
(v) Any actions, audits, suits, or claims which are pending
or threatened against any U.S. Seller Benefit Plan, any fiduciary of any of
U.S. Seller Benefit Plans with respect to the U.S. Seller Benefit Plans, or
against the assets of any of the U.S. Seller Benefit Plans, except claims
for benefits made in the ordinary course of the operation of such plans.
(vi) Each U.S. Seller Benefit Plan which is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) which is
intended to be qualified under Section 401(a) of the Code is (and has at
all times been) so qualified and has received a favorable determination
letter from the IRS with respect to "TRA" (as defined in Rev. Proc. 93-39),
or will file for such a determination letter prior to the expiration of the
remedial amendment period for such U.S. Seller Benefit Plan, and there are
no circumstances likely to result in the revocation or granting, as the
case may be, of any such favorable determination letter. No "reportable
event" (as defined in Section 4043 of ERISA) has been required to be filed
for any U.S. Seller Benefit Plan subject to Title IV of ERISA within the
twelve month period ending on the date hereof.
(vii) Neither the U.S. Seller nor any U.S. Seller ERISA
Affiliate has incurred, nor expects to incur, any material withdrawal
liability with respect to a "multiemployer plan" (within the meaning of
Section 3(37) of ERISA) under Title IV of ERISA or any material liability
in connection with the reorganization or termination of any multiemployer
plan that could result in Liability to the U.S. Purchaser.
(viii) All contributions required to be made under the terms
of any U.S. Seller Benefit Plan have been timely made or adequate reserves
in respect thereof have been established on the books of the U.S. Seller.
No U.S. Seller Benefit Plan or plan of any U.S. Seller ERISA Affiliate has
an "accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA that could
result in Liability to the U.S. Purchaser, and all required payments to the
PBGC with respect to each U.S Seller Benefit Plan subject to Title IV of
ERISA has been made on or before their due
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dates. No assets of the U.S. Seller or the U.S. Seller ERISA affiliate
have provided, or is required to provide, as security for any U.S. Seller
Benefit Plan pursuant to Section 401(a)(29) of the Code.
(ix) With respect to each U.S. Seller Benefit Plan, U.S.
Seller has made available to U.S. Purchaser, if applicable, true and
complete copies of (A) all U.S. Seller Benefit Plan documents and all
amendments thereto; (B) all trust instruments and insurance contracts
related thereto; (C) the last two Forms 5500 filed with the IRS; (D) the
most recent actuarial report and financial statement related thereto; (E)
the most recent summary plan description related thereto; and (F) the most
recent determination letter issued by the IRS related thereto.
(x) The consummation of the transactions contemplated by
this Agreement will not accelerate the timing of any payment or the vesting
of any rights or increase the amount of any compensation due any employee
of the Business.
(e) CANADIAN SELLER BENEFIT PLANS.
(i) SCHEDULE 5.17(e)(i) lists all the employee benefits,
health, welfare, supplemental unemployment benefit, bonus, pension, profit
sharing, deferred compensation, stock compensation, stock purchase,
retirement, hospitalization insurance, medical, dental, legal, disability
and similar plans or arrangements or practices relating to the Canadian
Seller Employees or former Canadian Seller Employees which are currently
maintained (the "CANADIAN SELLER BENEFIT PLANS").
(ii) All of the Canadian Seller Benefit Plans are and have
been established, registered, qualified, invested and administered, in all
respects, in accordance with all laws, regulations, orders or other
legislative, administrative or judicial promulgations applicable to the
Canadian Seller Benefit Plans ("APPLICABLE EMPLOYEE BENEFIT LAWS"). No
fact or circumstance exists that could adversely affect the tax-exempt
status, if any, of any Canadian Seller Benefit Plan.
(iii) All obligations regarding the Canadian Seller Benefit
Plans have been satisfied, there are no outstanding defaults or violations
by any party to any Canadian Seller Benefit Plan and no Taxes, penalties or
fees are owing or exigible under any of the Canadian Seller Benefit Plans.
(iv) No Canadian Seller Benefit Plan, nor any related trust
or other funding medium thereunder, is subject to any pending
investigation, examination or other proceeding, action, or claim initiated
by any governmental
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agency or instrumentality, or by any other party (other than routine claims
for benefits), and there exists no state of facts which after notice or
lapse of time or both could reasonably be expected to give rise to any such
investigation, examination, or other proceeding, action, or claim or to
affect the registration of any Canadian Seller Benefit Plan required to be
registered. Should any matter arise which could affect the registration of
any of the Canadian Seller Benefit Plans, the Canadian Seller will, in a
timely fashion, take all steps required to ensure the registration is not
affected.
(v) All contributions or premiums required by the Canadian
Seller under the terms of each Canadian Seller Benefit Plan or by
Applicable Employee Benefit Laws have been made in a timely fashion in
accordance with Applicable Employee Benefit Laws and the terms of the
Canadian Seller Benefit Plans, and the Canadian Seller does not have, and
as of the Closing Date will not have, any liability (other than liabilities
accruing after the Closing Date) with respect to any of the Canadian Seller
Benefit Plans. Contributions or premiums will be paid by the Canadian
Seller on an accrual basis for the period up to the Closing Date even
though not otherwise required to be made until a later date.
(vi) No amendments have been made to any Canadian Seller
Benefit Plan and no improvements to any Canadian Seller Benefit Plan have
been promised and no amendments or improvements to any Canadian Seller
Benefit Plan will be made or promised prior to the Closing Date other than
as disclosed in the documents provided pursuant to this Section 5.17.
(vii) There have been no improper withdrawals, applications,
or transfers of assets from the Canadian Hourly Pension Plan (as defined in
Section 7.03(b) hereof) or the trust or other funding medium relating
thereto, and neither the Canadian Seller, nor any of its agents, has been
in breach of any fiduciary obligation with respect to the administration of
the Canadian Hourly Pension Plan or the trust or other funding medium
related thereto.
(viii) The Sellers have furnished to the Canadian Purchaser
true, correct, and complete copies of the Canadian Hourly Pension Plan as
amended as of the date hereof together will all related documentation
including, without limitation, funding agreements, actuarial reports,
funding, and financial information returns and statements, all professional
opinions (whether or not internally prepared) and all material internal
memoranda concerning the Canadian Hourly Pension Plan, copies of material
correspondence with all regulatory authorities with respect to the Canadian
Hourly Pension Plan, and plan summaries, booklets, and personnel manuals.
No material changes other
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than disclosed benefit improvements have occurred to the Canadian Hourly
Pension Plan or are expected to occur which would affect the actuarial
reports or financial statements required to be provided to the Canadian
Purchaser pursuant to this Section 5.17(e)(viii). The Sellers have
furnished to the Canadian Purchaser true, correct, and complete copies of
the most recent plan text, funding agreement, actuarial report, and
employee booklet for the Canadian Seller Pension Plan (as defined in
Section 7.03(c) hereof). The Sellers have furnished to the Canadian
Purchaser a correct and complete listing of all benefits provided under the
Canadian Seller Non-Pension Benefit Plans (as defined in Section 7.03(a)
hereof).
(ix) All employee data pertaining to coverage for Canadian
Transferred Employees under each Canadian Seller Benefit Plan has been or
will be provided by the Canadian Seller to the Canadian Purchaser and is or
will be true and correct as of the date of this Agreement and the Canadian
Seller will notify the Canadian Purchaser of any changes thereto.
(x) Except as disclosed in SCHEDULE 5.17(e)(x), none of the
Canadian Seller Benefit Plans provides benefits to retired employees or to
the beneficiaries or dependents of retired employees. There is no program,
plan, or arrangement sponsored by the Canadian Seller that provides
severance or similar termination benefits in effect for the Canadian Seller
Employees.
Section 5.18 LICENSES. Each Seller has obtained all material Business
Licenses required to be obtained by such Seller in connection with the Business.
Section 5.19 INSURANCE PROGRAMS. SCHEDULE 5.19 hereof, contains a true
and complete list of all material Insurance Programs. Each such Insurance
Program is in full force and effect, no premiums due thereunder have not been
paid. Neither Seller has received any notice of cancellation or termination
with respect to any such Insurance Program and neither Seller is in default
thereunder in any material respect. Such material Insurance Programs provide
insurance coverage for the Assets and operations of the Business in amounts
consistent with industry standards and the past insurance practices of the
Business. Since January 1, 1990, neither Seller has been denied any insurance
coverage which it has requested.
Section 5.20 ENVIRONMENTAL MATTERS.
(a) COMPLIANCE. Except as disclosed on SCHEDULE 5.20(a) hereof, each
Seller has obtained, and, to its Knowledge, complied with all the terms and
conditions of, all Licenses required to be obtained by such Seller pursuant to
any Environmental Law in connection with the Business or the Assets. Each such
License obtained by each Seller is in full force and effect. To its
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Knowledge, each Seller is in compliance with all Environmental Laws applicable
to such Seller with respect to the Business.
(b) LISTINGS. None of the Real Property is listed on the NPL, CERCLIS
or any similar state or local list of sites requiring investigation or clean-up.
(c) NO NOTICE. No written notice or, to the Knowledge of each Seller,
any other communication from any Governmental Authority of any alleged violation
of any Environmental Law in connection with the Business or the Assets has been
communicated to either Seller, except for such notices or communications that
have been complied with in all material respects or otherwise addressed to the
satisfaction of such Governmental Authority in all material respects and
pursuant to which such Seller has no continuing obligations and with respect to
which no further action by the Governmental Authority is pending or, to the
Knowledge of such Seller, threatened.
(d) NO CONTAMINATION. To the Sellers' knowledge, neither Seller has
caused as the result of an intentional or unintentional action or omission, a
disposal, discharge, omission, release or threatened release of a Hazardous
Material at, from, under, over, in or on the Real Property other than in
compliance with the terms and conditions of a License or the Environmental Laws,
and, to the knowledge of Sellers, there are no conditions existing at any of the
Real Property that, at the date hereof, require, or which with the giving of
notice would require investigation, remedial or corrective action, monitoring,
removal or closure pursuant to the Environmental Laws.
Section 5.21 RELATIONSHIP WITH AFFILIATES. Except as set forth in
SCHEDULE 5.21 hereof, no Affiliate or division of either Seller provides or
supplies assets, technology, services or facilities used or held for use in
connection with the Business which are individually or in the aggregate material
to the Business, and the Business does not provide or supply any assets,
services or facilities to any Affiliate or division of either Seller which are
individually or in the aggregate material to the Business. Except as disclosed
in SCHEDULE 5.21 hereof, each of the transactions listed in SCHEDULE 5.21 hereof
is engaged in on an arm's-length basis. SCHEDULE 5.21 hereof describes all
arrangements under which goods are supplied to the Business by any division or
Affiliate of either Seller and all arrangements under which goods are sold by
the Business to any division or Affiliate of either Seller.
Section 5.22 BROKERS. No broker or other representative has acted on
behalf of either Seller in connection with the transactions contemplated hereby
in such manner as to give rise to any valid claim by any Person against either
Purchaser for a finder's fee, brokerage commission or similar payment.
Section 5.23 NO GUARANTEES. Except as set forth on SCHEDULE 5.23 hereof
and except for the endorsement of negotiable
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instruments in the ordinary course of business, to the Knowledge of each Seller,
no Assumed Liability is guaranteed by or subject to a similar contingent
obligation provided by any Affiliate of either Seller, and neither Seller has
guaranteed or become subject to a similar contingent obligation in respect of
the Liabilities of any customer, supplier or other Person to whom such Seller
sells goods or provides services in the conduct of the Business or with whom
such Seller otherwise has significant business relationships in the conduct of
the Business.
Section 5.24 SUBSTANTIAL CUSTOMERS AND SUPPLIERS. SCHEDULE 5.24 hereof
lists the ten (10) largest customers of the Business, on the basis of revenues
for goods sold or services provided for the fiscal year ending December 31,
1994. SCHEDULE 5.24 hereof lists the ten (10) largest suppliers of the
Business, on the basis of cost of goods or services purchased for the fiscal
year ending December 31, 1994. Except as disclosed in Schedule 5.12(b), neither
Seller is engaged in any material dispute with a customer or a supplier.
Section 5.25 JOINTLY USED PROPERTY. Schedule 5.25 hereof lists (i) all
Material Contracts of each Seller which such Seller uses jointly in connection
with the Business and in connection with any other business maintained or
operated by such Seller (the "JOINT CONTRACTS") and (ii) all material tangible
personal property used solely in connection with the Business by U.S. Seller and
all material tangible personal property used jointly in connection with the
Business and in connection with any other businesses maintained or operated by
U.S. Seller, in each case located at the Claremont, North Carolina, U.S.A.
facility of U.S. Seller (the "CLAREMONT TANGIBLE ASSETS").
Section 5.26 RESIDENCY. Canadian Seller is not a non-resident of Canada
within the meaning of the Income Tax Act (Canada).
Section 5.27 CERTAIN BUSINESS MATTERS. SCHEDULE 5.27 hereof discloses
certain additional matters relating to the Business.
Section 5.28 DISCLOSURE. The representations and warranties of each
Seller contained in this Agreement, the Schedules hereto and in any certificate
or document delivered at Closing by either Seller to either Purchaser do not
contain any untrue statement of a material fact and do not omit to state a
material fact necessary in order to make the statements herein or therein, in
the light of the circumstances under which they were made, not misleading.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchasers hereby jointly and severally represent and warrant to Sellers as
of the date hereof as follows:
Section 6.01 CORPORATE ORGANIZATION AND AUTHORITY. U.S. Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Georgia, with full corporate power and authority to conduct
its business as now conducted and to own, lease and use its Assets and
Properties. Canadian Purchaser is a corporation incorporated, existing and in
good standing under the laws of the Province of Ontario, with full corporate
power and authority to conduct its business as now conducted and to own, lease
and use its Assets and Properties. Each Purchaser has the power to enter into
and perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by each Purchaser and the consummation of the
transactions contemplated hereby by such Purchaser, including, without
limitation, the purchase of the Assets from the relevant Seller and the
execution and performance of the Related Agreements to which such Purchaser is a
party by such Purchaser have been duly authorized by all requisite corporate
action on the part of such Purchaser. This Agreement constitutes, and the
Related Agreements to which each Purchaser is a party and the other instruments
and documents to be executed and delivered by each Purchaser hereunder will,
when executed and delivered, constitute, the legal, valid and binding
obligations of each Purchaser enforceable against such Purchaser in accordance
with their respective terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws or general
principles of equity.
Section 6.02 FOREIGN QUALIFICATION. U.S. Purchaser is duly qualified or
registered to do business as a foreign corporation and is in good standing in
the states of North Carolina, and Kentucky. Canadian Purchaser is duly
qualified or registered to do business and is in good standing in the province
of Manitoba.
Section 6.03 NO CONFLICTS AND CONSENT REQUIREMENTS. The execution and
delivery of this Agreement by each Purchaser do not, and the execution and
delivery by each Purchaser of the Related Agreements to which such Purchaser is
a party, the performance by each Purchaser of its obligations under this
Agreement and such Related Agreements, and the consummation of the transactions
contemplated hereby and thereby will not:
(a) conflict with or violate any provision of the Certificate of
Incorporation or Articles of Incorporation, as the case may be, or Bylaws
of such Purchaser;
(b) subject to obtaining the consents and approvals and to
making the filings and giving the notices
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set forth in SCHEDULE 6.03(b) hereof, conflict with, violate or breach any
Law or Order applicable to such Purchaser or any of its Assets and
Properties, other than any such conflict, violation or breach which,
individually or in the aggregate with any other such conflicts, violations
or breaches, could not reasonably be expected to have an adverse effect on
the validity or enforceability of this Agreement or any Related Agreement;
or
(c) (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require such Purchaser to obtain any consent, approval or
action of, make any filing with or give any notice to any Person as a
result or under the terms of, or (iv) result in the creation or imposition
of any Lien upon such Purchaser or any of its Assets and Properties under,
any Contract or License to which such Purchaser is a party or by which any
of its Assets and Properties is bound, except as could not reasonably be
expected to have an adverse effect on the validity or enforceability of
this Agreement or any Related Agreement.
Section 6.04 GOVERNMENTAL APPROVALS AND FILINGS. Except as required by
the HSR Act, the Investment Canada Act and the Competition Act, neither the
execution, delivery, or performance of this Agreement or any Related Agreement
to which it is a party by either Purchaser nor the consummation of the
transactions contemplated hereby or thereby will require the consent of, filing
with or notice to any Governmental Authority on the part of such Purchaser. The
Canadian Purchaser is an "American" as that term is used in the Investment
Canada Act (Canada).
Section 6.05 LITIGATION AND CLAIMS. Neither Purchaser is subject to any
unsatisfied Order and neither Purchaser is a party to or, to the knowledge of
such Purchaser, threatened to be made a party to, any charge, complaint, action,
suit, arbitration, proceeding, hearing, or investigation which, individually or
in the aggregate with all other such items, could reasonably be expected to have
an adverse effect on the ability of such Purchaser to enter into or perform its
obligations under this Agreement or any Related Agreement to which such
Purchaser is a party or to consummate the transactions contemplated hereby or
thereby.
Section 6.06 COMPLIANCE WITH LAWS AND ORDERS. Neither Purchaser is in
violation of or in default under any Law or Order applicable to such Purchaser
the effect of which, individually or in the aggregate with other such violations
and defaults, could reasonably be expected to have an adverse effect on the
ability of such Purchaser to enter into or perform its obligations under this
Agreement or any Related Agreement to which such Purchaser is a party or to
consummate the transactions contemplated hereby or thereby.
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Section 6.07 BROKERS. No broker or other representative has acted on
behalf of either Purchaser in connection with the transactions contemplated
hereby in such manner as to give rise to any valid claim by any Person against
either Seller for a finder's fee, brokerage commission or similar payment.
Section 6.08 FINANCING. Attached as SCHEDULE 6.08 hereof is a true and
correct copy of a commitment letter provided to Purchasers by Nomura Holding
America Inc. (the "LENDER") with respect to the financing to be provided to
Purchasers in connection with this transaction (the "COMMITMENT").
Section 6.09 ACKNOWLEDGEMENT. Purchasers acknowledge that they have not
received from Sellers the internal budgets of Sellers or any information
regarding the prices charged by Sellers to their customers.
Section 6.10 GST REGISTRATION. Canadian Purchaser is a registrant within
the meaning of Part IX of the Excise Tax Act (Canada).
Section 6.11 DISCLOSURE. The representations and warranties of each
Purchaser contained in this Agreement, the Schedules hereto and in any
certificate or document delivered at Closing by either Purchaser to either
Seller do not contain any untrue statement of a material fact and do not omit to
state a material fact necessary in order to make the statements herein or
therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE VII
EMPLOYEE MATTERS
Section 7.01 EMPLOYMENT.
(a) U.S. EMPLOYEES. U.S. Purchaser shall offer employment to all U.S.
Seller Employees actively employed by the Business as of the Closing Date. If
as of the Closing Date a U.S. Seller Employee is on a disability or authorized
temporary leave from the U.S. Seller, the U.S. Purchaser shall offer employment
to such person at such time he is capable and ready to return to active status.
Such offers of employment shall be: (A) in the case of unionized employees, on
the same terms and conditions of employment as are enjoyed by them under the
U.S. Union Contract in effect immediately prior to the Closing Date (or, with
respect to a U.S. Seller Employee on a disability or authorized temporary leave
as of the Closing Date, any successor collective bargaining agreement in effect
for other Unionized U.S. Transferred Employees when he is capable and ready to
return to active status); and (B) in the case of non-unionized employees, at the
same location and salary/wages as they enjoyed with U.S. Seller immediately
prior to the Closing Date (or, with respect to a U.S. Seller Employee on a
disability or temporary
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leave as of the Closing Date, on substantially the same terms and conditions of
employment, in the aggregate, then enjoyed by similarly situated non-unionized
employees of the U.S. Purchaser), except, in each case, as otherwise provided in
this Article VII. Notwithstanding the foregoing, with the mutual consent of
U.S. Seller and U.S. Purchaser, U.S. Seller may transfer U.S. Seller's employees
in the Business to another position within the U.S. Seller outside of the
Business during the period between the signing of this Agreement and the Closing
Date, and such employees shall not be considered U.S. Seller Employees. As of
the Closing Date, the U.S. Purchaser shall be bound by the terms and conditions
of the U.S. Union Contract, as a successor employer. U.S. Purchaser shall bear
and discharge any and all Liability relating to claims of U.S. Seller Employees
who allege termination of their employment on or after the Closing Date as a
result of the transactions contemplated by this Agreement or otherwise. The
U.S. Purchaser shall recognize accumulated service with the U.S. Seller and its
predecessors in the U.S. Business who accept the U.S. Purchaser's offer of
employment as provided in this Section 7.01(a) (the "U.S. TRANSFERRED
EMPLOYEES") for purposes of eligibility and vesting under U.S. Purchaser's
employee benefit plans, practices, and programs (but not for benefit accrual
purposes, unless required by Law or any provision of this Agreement), and for
purposes of determining any severance and termination costs and any damages
arising out of or resulting from any dismissal of such U.S. Seller Employees.
U.S. Purchaser and U.S. Seller shall agree to execute a successor/predecessor
agreement substantially in the form attached as SCHEDULE 7.01(a) regarding the
parties' respective obligations for Form W-2, Wage and Tax Statement, filing
with respect to the U.S. Transferred Employees.
(b) CANADIAN EMPLOYEES. Canadian Purchaser shall offer employment to
all Canadian Seller Employees actively employed by the Business as of the
Closing Date. If as of the Closing Date a Canadian Seller Employee is on a
disability or authorized temporary leave from the Canadian Seller, the Canadian
Purchaser shall offer employment to such person at such time he is capable and
ready to return to active status. Such offers of employment to Canadian Seller
Employees who are actively employed by the Business as of the Closing Date shall
be on the same terms and conditions of employment as are enjoyed by them under
their collective agreements immediately prior to the Closing Date (in the case
of unionized employees) or on substantially the
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same terms and conditions of employment, in the aggregate, as are enjoyed by
them immediately prior to the Closing Date (in the case of the non-unionized
employees), except as otherwise provided in this Article VII. Such offers of
employment to Canadian Seller Employees who are on disability or authorized
temporary leave from the Canadian Seller as of the Closing Date shall be on the
same terms and conditions of employment as are enjoyed by other unionized
Canadian Transferred Employees (as defined in this Section 7.01(b)) under the
collective agreement(s) in force at the time such offers of employment are made
(in the case of unionized employees) or on substantially the same terms and
conditions of employment, in the aggregate, as are enjoyed by other similarly
situated non-unionized Canadian Transferred Employees at the time such offers of
employment are made (in the case of the non-unionized employees), except as
otherwise provided in this Article VII. As of the Closing Date, the Canadian
Purchaser shall be bound by the terms and conditions of the collective agreement
applicable to the unionized Canadian Seller Employees, as identified in
Section 2.01(b)(viii), as a successor employer. The Canadian Purchaser shall
bear and discharge any and all Liability relating to claims of Canadian Seller
Employees who allege an actual or constructive termination of their employment
on or after the Closing Date as a result of the transactions contemplated by
this Agreement. The Canadian Purchaser shall recognize accumulated service with
the Canadian Seller and its predecessors in the Business of the Canadian Seller
Employees who accept the Canadian Purchaser's offer of employment as provided in
this Section 7.01(b) (the "CANADIAN TRANSFERRED EMPLOYEES") for all purposes,
including determining any severance and termination costs and any damages
arising out of resulting from any dismissal of such Canadian Transferred
Employees.
Section 7.02 EMPLOYEE BENEFITS - US.
(a) WELFARE PLAN BENEFITS.
(i) Subject to the reimbursement obligations set forth in
Section 7.02(a)(ii), U.S. Seller and its Affiliates or, where appropriate,
their U.S. Seller Benefit Plans shall pay with respect to U.S. Seller's
present or former employees (and their eligible dependents) of the
Business: (A) all covered and eligible claims for medical and dental
benefits attributable to "qualified beneficiaries" entitled to
"continuation coverage" as of the Closing Date (as such quoted terms are
defined in Section 4980B of the Code), regardless of when services are
rendered or expenses incurred, (B) all covered and eligible claims for
medical and dental benefits (excluding any post-retirement benefits other
than to the extent provided under Section 4980B of the Code) incurred, but
are either not paid or not reported, or both, prior to the Closing Date,
(C) all covered and eligible claims for short-term disability benefits with
respect to or arising out of occurrences prior to the Closing Date, (D) to
the extent consistent with its current administrative practice, all covered
and eligible claims for medical and dental benefits incurred after the
Closing Date by or with respect to any disabled U.S. Seller Employee, whose
disability arose out of occurrences prior to the Closing Date, and (E) all
covered and eligible claims for workers' compensation benefits with respect
to or arising out of occurrences prior to the Closing Date.
(ii) U.S. Purchaser and its Affiliates or, where
appropriate, their successor benefit plans shall (A) be liable for and be
responsible for the payment of all
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covered and eligible claims for medical, dental, disability, and workers'
compensation benefits (excluding any post-retirement benefits other than to
the extent provided under Section 4980B of the Code) incurred on or after
the Closing Date, and (B) promptly reimburse the U.S. Seller for any
amounts paid by the U.S. Seller and its Affiliates or, where appropriate,
their U.S. Seller Benefit Plans under Section 7.02(a)(i) (itemized by the
type of benefits paid), including any reasonable administrative expenses
incurred in making these transitional period payments, net of the value
received by the U.S. Seller from any stop-loss insurance coverage related
to its payment of such claim.
(iii) To the extent not otherwise provided herein, the U.S.
Purchaser and its Affiliates or, where appropriate, their successor welfare
or fringe benefit plans shall be liable for and be responsible for the
payment of any claims for vacation pay, holiday pay, or bonuses to the
extent accrued but not paid by the U.S. Seller prior to the Closing Date.
(b) UNION HOURLY PENSION PLAN.
(i) Effective as of the Closing Date, U.S. Purchaser shall
assume and adopt the U.S. Seller Benefit Plan that provides defined benefit
retirement benefits qualified under Section 401(a) of the Code to all
current and former collectively bargained U.S. Seller Employees at its
Elizabethtown, Kentucky facility, currently known as the Alcatel NA Cable
Systems, Inc. Hourly Pension Plan - Elizabethtown (the "UNION HOURLY
PENSION PLAN"), and shall fully succeed to all U.S. Seller's and its U.S.
Seller ERISA Affiliates' rights and shall fully perform, pay, and discharge
all of U.S. Seller's and its U.S. Seller ERISA Affiliates' duties,
liabilities, and obligations, as a successor employer under and with
respect thereto and the related trust agreements and the assets thereof,
which assets (the "UNION HOURLY PENSION BENEFITS AMOUNT") shall be equal to
the market value of the assets of such plan as of the Union Hourly Pension
Transfer Date (as defined in Section 7.02(b)(ii)). Subject to the written
authorization of the U.S. Purchaser, the assets with respect to the Union
Hourly Pension Plan shall remain invested in the investment arrangements
selected by the U.S. Seller.
(ii) As soon as practicable following (A) the determination
of the Union Hourly Pension Benefit Amount, and (B) the designation (or
establishment, if necessary) of a trust that is exempt from federal income
taxation under Section 501(a) of the Code, U.S. Seller shall cause to be
transferred from the trust for U.S. Seller's Union Hourly Pension Plan to
the U.S. Purchaser's trust for the Union Hourly Pension Plan (the date of
such transfer being hereinafter referred to as the "UNION HOURLY PENSION
BENEFIT TRANSFER DATE") an amount in cash equal to the Union Hourly
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Pension Benefit Amount, reduced, as and when paid, by benefit payments made
by U.S. Seller's Union Hourly Pension Plan during such period.
(iii) In the event that benefits become payable to any
participant in the Union Hourly Pension Plan after the Closing Date and
prior to the Union Hourly Pension Benefit Transfer Date, U.S. Seller shall
take such action as shall be necessary to ensure that those benefits
accrued by such participants shall be paid directly to such participants by
the U.S. Seller's Union Hourly Pension Plan and U.S. Seller shall furnish
U.S. Purchaser evidence reasonably satisfactory to U.S. Purchaser of such
payment. The amount to be transferred to the U.S. Purchaser's trust in
accordance with subparagraph (ii) above shall be adjusted in the manner set
forth in such subparagraph to reflect the payment of such benefits, and any
reasonable administrative expenses incurred by the U.S. Seller or its trust
in making these transitional period benefit payments.
(iv) From and after the Union Hourly Pension Benefit
Transfer Date, U.S. Purchaser shall cause its Union Hourly Pension Plan to
assume and fully perform, pay, and discharge all obligations and
liabilities to and with respect to participants under the U.S. Seller's
Union Hourly Pension Plan and U.S. Purchaser shall indemnify and hold U.S.
Seller, its Affiliates, and U.S. Seller's Union Hourly Pension Plan, and
each of them, harmless from and against any and all Losses which may be
asserted against or incurred by U.S. Seller, its Affiliates, and/or U.S.
Seller's Union Hourly Pension Plan with respect to any such obligations and
liabilities (except to the extent such Losses relate to a breach of U.S.
Seller's representations and warranties pertaining to the Union Hourly
Pension Plan contained in Section 5.17 hereof).
(c) NON-UNION HOURLY PENSION PLAN.
(i) As soon as practicable, but effective as of the Closing
Date, U.S. Purchaser shall extend coverage under a new or existing defined
benefit pension plan qualified under Section 401(a) of the Code maintained
or established by U.S. Purchaser or an Affiliate (the "TRANSFEREE NON-UNION
HOURLY PENSION PLAN") for U.S. Transferred Employees (and U.S. Seller
Employees on a disability or temporary leave as of the Closing Date) who
are classified as hourly employees and who are not subject to a collective
bargaining agreement, subject to the transfer of assets to the Transferee
Non-Union Hourly Pension Plan as provided for in Section 7.02(c)(ii).
Under such Transferee Non-Union Hourly Pension Plan, U.S. Transferred
Employees shall be credited with service, for eligibility and vesting
purposes, equal to the service credited to them for such purposes, as of
the Closing Date, under the terms of the Alcatel NA Cable Systems, Inc.
Hourly
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Pension Plan maintained by the U.S. Seller covering such U.S. Transferred
Employees (the "U.S. SELLER'S NON-UNION HOURLY PENSION PLAN") as of the
Closing Date.
(ii) As soon as practicable following (A) the Closing Date,
(B) the designation (or establishment, if necessary) of the Transferee Non-
Union Hourly Pension Plan, (C) the furnishing by U.S. Purchaser to U.S.
Seller of a favorable determination letter for the Transferee Non-Union
Hourly Pension Plan or an opinion of counsel of U.S. Purchaser reasonably
satisfactory to U.S. Seller opining that the Transferee Non-Union Hourly
Pension Plan is a qualified plan under Section 401(a) of the Code, (D) the
receipt by U.S. Purchaser of information satisfactory to U.S. Purchaser
that the U.S. Seller's Non-Union Hourly Pension Plan is a qualified plan
under Section 401(a) of the Code, and (E) the expiration of thirty days
after both U.S. Seller and U.S. Purchaser have filed Form 5310-A, if
necessary, with the IRS, U.S. Seller shall cause to be transferred from the
trust for U.S. Seller's Non-Union Hourly Pension Plan to the trust for the
Transferee Non-Union Hourly Pension Plan (the date of such transfer being
hereinafter referred to as the "NON-UNION HOURLY PENSION BENEFIT TRANSFER
DATE") an amount in cash equal to the projected benefit obligation under
U.S. Seller's Non-Union Hourly Pension Plan, determined as of the Closing
Date with respect to U.S. Transferred Employees (and U.S. Seller Employees
on a disability or temporary leave as of the Closing Date) covered under
such plan, in accordance with Statement of Financial Accounting Standards
No. 87 based on the assumptions utilized by the U.S. Seller for financial
statement footnote disclosure purposes as of December 31, 1994 (the "NON-
UNION HOURLY PENSION BENEFIT AMOUNT"), augmented at the rate of 8% on the
daily balances of the Non-Union Hourly Pension Benefit Amount during the
period from the Closing Date to the Union Hourly Pension Benefit Transfer
Date and reduced, as and when paid, by any benefit payments made by U.S.
Seller's Non-Union Hourly Pension Plan during such period. Such Non-Union
Hourly Pension Benefit Amount shall be deemed to be in accordance with
Section 414(l) of the Code and the regulations thereunder.
(iii) Within sixty days after the Closing Date, (A) U.S.
Seller shall cause its actuaries to determine and certify to U.S. Purchaser
the Non-Union Hourly Pension Benefit Amount, and (B) the U.S. Seller's
actuaries shall deliver to U.S. Purchaser a complete copy of their
determinations and the material and information necessary to prepare such
determinations (including, without limitation, participant census data,
actuarial assumptions, methodologies and such other information as U.S.
Purchaser's actuaries may reasonably request). U.S. Purchaser may, at its
expense, permit U.S. Purchaser's actuaries to review the determinations
made by the U.S. Seller's actuaries solely for the purpose of verifying
accuracy of computation, but
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(A) compliance with the applicable legal requirements and actuarial methods
and assumptions specified above shall be determined solely by the U.S.
Seller's actuaries in accordance with this Section and (B) absent clear
arithmetic or data-related error, which results in a material difference in
the amount determined, the calculation by U.S. Seller's actuary shall be
presumed correct.
(iv) In the event that benefits become payable to any U.S.
Transferred Employee in the Non-Union Hourly Pension Plan after the Closing
Date and prior to the Non-Union Hourly Pension Benefit Transfer Date, U.S.
Seller shall take such action as shall be necessary to ensure that those
benefits accrued by such participants shall be paid directly to such
participants by the U.S. Seller's Non-Union Hourly Pension Plan and U.S.
Seller shall furnish U.S. Purchaser evidence reasonably satisfactory to
U.S. Purchaser of such payment. The amount to be transferred to the U.S.
Purchaser's trust in accordance with subparagraph (ii) above shall be
adjusted in the manner set forth in such subparagraph to reflect the
payment of such benefits, and any reasonable administrative expenses
incurred by the U.S. Seller or its trust in making these transitional
period benefit payments.
(v) From and after the Non-Union Hourly Pension Benefit
Transfer Date, U.S. Purchaser shall cause the Transferee Non-Union Hourly
Pension Plan to assume and fully perform, pay, and discharge all
obligations and liabilities to and with respect to U.S. Transferred
Employees under the U.S. Seller's Non-Union Hourly Pension Plan and U.S.
Purchaser shall indemnify and hold U.S. Seller, its Affiliates, and U.S.
Seller's Non-Union Hourly Pension Plan, and each of them, harmless from and
against any and all Losses which may be asserted against or incurred by
U.S. Seller, its Affiliates, and/or U.S. Seller's Non-Union Hourly Pension
Plan with respect to any such obligations and liabilities (except to the
extent such Losses relate to a breach of U.S. Seller's representations and
warranties pertaining to the Non-Union Hourly Pension Plan contained in
Section 5.17 hereof).
(vi) Notwithstanding any provision in this Section 7.02(c)
to the contrary, if the U.S. Purchaser's actuary reasonably disagrees with
the determination of the Non-Union Hourly Pension Benefit Amount, then the
U.S. Purchaser may elect not to accept the transfer of assets and
assumption of liabilities as provided for in Section 7.02(c)(ii). In such
event, U.S. Seller shall cause each U.S. Transferred Employee to have a
fully (100%) vested nonforfeitable right to such employee's accrued
benefits, if any, under the U.S. Seller's Non-Union Hourly Pension Plan,
and shall cause such plan to pay to each U.S. Transferred Employee their
vested accrued benefits thereunder when and as provided in such plan.
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(d) SALARIED PENSION PLAN.
(i) As soon as practicable, but effective as of the Closing
Date, U.S. Purchaser shall extend coverage under a new or existing defined
benefit pension plan qualified under Section 401(a) of the Code maintained
or established by U.S. Purchaser or an Affiliate (the "TRANSFEREE SALARIED
PENSION PLAN") for U.S. Transferred Employees (and U.S. Seller Employees on
a disability or temporary leave as of the Closing Date) who are classified
as salaried employees, subject to the transfer of assets to the Transferee
Salaried Pension Plan as provided for in Section 7.02(d)(ii). Under such
Transferee Salaried Pension Plan, Transferred Employees shall be credited
with service, for eligibility and vesting purposes, equal to the service
credited to them for such purposes, as of the Closing Date, under the terms
of the Alcatel NA Cable Systems, Inc. Salaried Pension Plan maintained by
the U.S. Seller covering such U.S. Transferred Employees (the "U.S.
SELLER'S SALARIED PENSION PLAN") as of the Closing Date.
(ii) As soon as practicable following (A) the Closing Date,
(B) the designation (or establishment, if necessary) of the Transferee
Salaried Pension Plan, (C) the furnishing by U.S. Purchaser to U.S. Seller
of a favorable determination letter for the Transferee Salaried Pension
Plan or an opinion of counsel of U.S. Purchaser reasonably satisfactory to
U.S. Seller opining that the Transferee Salaried Pension Plan is a
qualified plan under Section 401(a) of the Code, (D) the receipt by U.S.
Purchaser of information satisfactory to U.S. Purchaser that the U.S.
Seller's Salaried Pension Plan is a qualified plan under Section 4.01(a) of
the Code, and (E) the expiration of thirty days after both U.S. Seller and
U.S. Purchaser have filed Form 5310-A, if necessary, with the IRS, U.S.
Seller shall cause to be transferred from the trust for U.S. Seller's
Salaried Pension Plan to the trust for the Transferee Salaried Pension Plan
(the date of such transfer being hereinafter referred to as the "SALARIED
PENSION BENEFIT TRANSFER DATE") an amount in cash equal to the projected
benefit obligation under U.S. Seller's Salaried Pension Plan, determined as
of the Closing Date with respect to U.S. Transferred Employees (and U.S.
Seller Employees on a disability or temporary leave as of the Closing Date)
covered under such plan, in accordance with Statement of Financial
Accounting Standards No. 87 based on the assumptions utilized by the U.S.
Seller for financial statement footnote disclosure purposes as of December
31, 1994 (the "SALARIED PENSION BENEFIT AMOUNT"), augmented at the rate of
8% credited to the U.S. Seller's Salaried Pension Plan on the daily
balances of the Salaried Pension Benefit Amount during the period from the
Closing Date to the Salaried Pension Benefit Transfer Date and reduced, as
and when paid, by any benefit payments made by U.S. Seller's Salaried
Pension Plan during such period. Such Salaried
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Pension Benefit Amount shall be deemed to be in accordance with Section
414(l) of the Code and the regulations thereunder.
(iii) Within sixty days after the Closing Date, U.S. Seller
shall cause its actuaries to determine and certify to U.S. Purchaser the
Salaried Pension Benefit Amount. The U.S. Seller's actuaries shall deliver
to U.S. Purchaser a complete copy of their determinations and the material
and information necessary to prepare such determinations (including,
without limitation, participant census data, actuarial assumptions, and
methodologies). U.S. Purchaser may, at its expense, permit U.S.
Purchaser's actuaries to review the determinations made by the U.S.
Seller's actuaries solely for the purpose of verifying accuracy of
computation, but (A) compliance with the applicable legal requirements and
actuarial methods and assumptions specified above shall be determined
solely by the U.S. Seller's actuaries in accordance with this Section and
(B) absent clear arithmetic or data-related error, which results in a
material difference in the amount determined, the calculation by U.S.
Seller's actuary shall be presumed correct.
(iv) In the event that benefits become payable to any U.S.
Transferred Employee in the Salaried Pension Plan after the Closing Date
and prior to the Salaried Pension Benefit Transfer Date, U.S. Seller shall
take such action as shall be necessary to ensure that those benefits
accrued by such participants shall be paid directly to such participants by
the U.S. Seller's Salaried Pension Plan and U.S. Seller shall furnish U.S.
Purchaser evidence reasonably satisfactory to U.S. Purchaser of such
payment. The amount to be transferred to the U.S. Purchaser's trust in
accordance with subparagraph (ii) above shall be adjusted in the manner set
forth in such subparagraph to reflect the payment of such benefits, and any
reasonable administrative expenses incurred by the U.S. Seller or its trust
in making these transitional period benefit payments.
(v) From and after the Salaried Pension Benefit Transfer
Date, U.S. Purchaser shall cause the Transferee Salaried Pension Plan to
assume and fully perform, pay, and discharge all obligations and
liabilities to and with respect to U.S. Transferred Employees under the
U.S. Seller's Salaried Pension Plan and U.S. Purchaser shall indemnify and
hold U.S. Seller, its Affiliates, and U.S. Seller's Salaried Pension Plan,
and each of them, harmless from and against any and all Losses which may be
asserted against or incurred by U.S. Seller, its Affiliates, and/or U.S.
Seller's Salaried Pension Plan with respect to any such obligations and
liabilities (except to the extent such Losses relate to a breach of U.S.
Seller's representations and warranties pertaining to the Salaried Pension
Plan contained in Section 5.17 hereof).
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<PAGE>
(vi) Upon the mutual consent of U.S. Seller and U.S.
Purchaser, the transfer of assets and assumption of liabilities as provided
for in Section 7.02(d)(ii) may be transferred, in aggregate, with the
transfer of assets and assumption of liabilities as provided for in Section
7.02(c)(ii), in an aggregate amount equal to the sum of the Salaried
Pension Amount and the Non-Union Hourly Pension Benefit Amount to a single,
new or existing defined benefit pension plan qualified under Section 401(a)
of the Code maintained or established by the U.S. Purchaser or an
Affiliate.
(vii) Notwithstanding any provision in this Section 7.02(d)
to the contrary, if the U.S. Purchaser's actuary reasonably disagrees with
the determination of the Salary Pension Benefit Amount, then the U.S.
Purchaser may elect not to accept the transfer of assets and assumption of
liabilities as provided for in Section 7.02(d)(ii). In such event, U.S.
Seller shall cause each U.S. Transferred Employee to have a fully (100%)
vested nonforfeitable right to such employee's accrued benefits, if any,
under the U.S. Sellers Salaried Pension Plan and shall cause such plan to
pay to each U.S. Transferred Employee their vested accrued benefits
thereunder when and as provided in such plan.
(e) SAVINGS PLAN.
(i) Effective as of the Closing Date, U.S. Seller shall
cause each U.S. Transferred Employee to have a fully (100%) vested
nonforfeitable right to such employee's account balances, if any, under the
Alcatel NA Cable Systems, Inc. Investment and Savings Plan ("U.S. SELLER'S
SAVINGS PLAN"), and shall cause the U.S. Seller's Savings Plan to pay to
each U.S. Transferred Employee their vested accrued benefits thereunder
when and as provided in such plan. For purposes of determining when such
benefits become payable, the affected U.S. Transferred Employees shall be
deemed to have separated from service on the Closing Date, consistent with
the terms of Section 401(k)(10) of the Code.
(ii) U.S. Seller shall cause to be made to U.S. Seller's
Savings Plan any and all contributions that are required under U.S.
Seller's Savings Plan for the period prior to the Closing Date.
(iii) As soon as practicable, U.S. Purchaser shall extend
coverage under a new or existing defined contribution plan ("U.S.
PURCHASER'S SAVINGS PLAN") to the U.S. Transferred Employees who have
account balances under U.S. Seller's Savings Plan as of the Closing Date.
Such employees shall be credited under the U.S. Purchaser's Savings Plan
with service, for eligibility and vesting purposes, equal to the service
credited to them for such purposes under the terms of the U.S. Seller's
Savings Plan as of the Closing Date.
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<PAGE>
(f) INDEMNIFICATION. The obligation of the U.S. Purchaser to indemnify
the U.S. Seller set forth in Section 13.03(b) shall include, without limitation,
any Losses suffered or incurred by U.S. Seller as a result of or arising out of:
(A) failure by U.S. Purchaser to offer employment to all U.S. Seller Employees
actively employed by the Business as of the Closing Date, or to any U.S. Seller
Employee who is disabled or on an authorized temporary leave as of the Closing
Date, once they are capable and ready to return to active status, pursuant to
the provisions of Section 7.01(a), (B) failure of U.S. Purchaser to abide by the
terms of the U.S. Union Contract which U.S. Purchaser has agreed to assume, (C)
failure by U.S. Purchaser to bear and discharge any and all liabilities relating
to claims by any U.S. Seller Employee alleging termination of their employment
on or after the Closing Date as a result of the transactions contemplated by the
Agreement, or otherwise pursuant to the provisions of Section 7.01(a), (D)
failure by U.S. Purchaser to reimburse U.S. Seller for any amounts payable to
U.S. Seller and its Affiliates or, where appropriate, their U.S. Seller Benefit
Plans, pursuant to the provisions of Section 7.02(a)(ii), and (E) failure by
U.S. Purchaser to pay when due any vacation pay, holiday pay or bonuses accrued
but not paid by the U.S. Seller prior to the Closing Date, pursuant to the
provisions of Section 7.02(a)(iii).
Section 7.03 EMPLOYEE BENEFITS - CANADA.
(a) BENEFIT PLANS. Effective as of the Closing Date, the Canadian
Purchaser shall establish or cause to be established, at its own expense,
benefit plans (the "CANADIAN PURCHASER BENEFIT PLANS") to provide group non-
pension benefits which are substantially similar in the aggregate to the
benefits provided by the Canadian Seller Benefit Plans other than pension plans
(the "CANADIAN SELLER NON-PENSION BENEFIT PLANS") for the Canadian Transferred
Employees in connection with any and all claims of Canadian Transferred
Employees incurred after the Closing Date. Effective as of the Closing Date,
such Canadian Transferred Employees who participate in the Canadian Seller Non-
Pension Benefit Plans according to the terms thereof shall cease to participate
in and accrue benefits under the Canadian Seller Non-Pension Benefit Plans and
shall commence participation in and accrue benefits under the Canadian Purchaser
Benefit Plans in accordance with, and subject to, the membership, eligibility,
and coverage requirements of the Canadian Seller Benefit Plans. Canadian
Transferred Employees who are not participants in the Canadian Seller Non-
Pension Benefit Plans as at the Closing Date shall become participants in and
accrue benefits under the Canadian Purchaser Benefit Plans as and from the
Closing Date in accordance with, and subject to, the membership, eligibility,
and coverage requirements thereof. Except as otherwise provided in this
Section 7.03(a), the Canadian Seller shall retain responsibility under the
Canadian Seller Non-Pension Benefit Plans for all amounts payable by reason of
or in connection with any and all claims incurred by the Canadian Seller
Employees prior to the Closing Date. For the purposes of this
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<PAGE>
Section 7.03(a), a claim shall be deemed to have been "incurred" on the date of
occurrence of any injury, the diagnosis of an illness, or any other event giving
rise to such claim or series of related claims. Subject to the reimbursement
obligation set forth in this Section 7.03(a), the Canadian Seller shall pay with
respect to the Canadian Seller Employees all covered and eligible claims for
short-term disability benefits with respect to or arising out of occurrences
prior to the Closing Date. The Canadian Purchaser shall promptly reimburse the
Canadian Seller or, where appropriate, the applicable Canadian Seller Non-
Pension Benefit Plan for any such short-term disability benefits paid on or
after the Closing Date in respect of the Canadian Seller Employees together with
any reasonable administrative expenses incurred in making these transitional
period payments.
(b) HOURLY PENSION PLAN.
(i) Effective as of the Closing Date, the Canadian Seller
shall assign and transfer to the Canadian Purchaser its rights,
obligations, and liabilities with respect to the Winnipeg Negotiated Non-
Contributory Pension Plan (the "CANADIAN HOURLY PENSION PLAN") and its
related funding medium (the "FUND"). Notwithstanding anything to the
contrary in this Section 7.03(b), on or before the Closing Date the
Canadian Seller shall make a contribution to the Fund in the amount
necessary to bring the assets of the Canadian Hourly Pension Plan up to the
projected benefit obligation using (A) the same methodologies and
assumptions as utilized by the U.S. Seller for financial footnote
disclosure purposes for the Canadian Hourly Pension Plan and the Canadian
Seller Pension Plan as at December 31, 1994, and (B) employee census data
as of the Closing Date. Effective as of the Closing Date, the Canadian
Purchaser shall accept such assignment and transfer and shall assume the
obligations, liabilities, duties, and responsibilities required of it as
the successor sponsor of the Canadian Hourly Pension Plan and the Fund
pursuant to the terms thereof and applicable Laws; provided, however, that
any required approvals of an employee association or bargaining agent are
obtained. The Canadian Seller agrees to cause to be filed with the
applicable federal and provincial regulatory authorities, as soon as
possible after the Closing Date, such documentation as may be required by
applicable Laws or under the terms of the Canadian Hourly Pension Plan and
the Fund with respect to the assumption of sponsorship of the Canadian
Hourly Pension Plan and the Fund as provided for hereunder. The Canadian
Purchaser agrees to do all things required of it under applicable Laws to
establish that it is a successor sponsor to the Canadian Seller under the
terms of the Canadian Hourly Pension Plan as provided hereunder. Without
limiting the generality of the foregoing, the Canadian Purchaser agrees to
cause to be filed with the applicable federal and provincial regulatory
authorities, as soon as practicable following the Closing Date, such
documentation as may be required to establish the
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Canadian Purchaser in such capacity. With respect to the administration of
the Canadian Hourly Pension Plan from the Closing Date until sponsorship
and effective control and direction over the Canadian Hourly Pension Plan
and the Fund has transferred to the Canadian Purchaser, the Canadian Seller
shall direct, or cause to be directed, the funding agent of the Canadian
Hourly Pension Plan in accordance with the instructions given to the
Canadian Seller by the Canadian Purchaser in connection with this Section
7.03(b). The Canadian Seller shall indemnify and hold the Canadian
Purchaser harmless against and from any and all damages, claims, demands,
actions, liabilities, expenses, costs, or losses resulting from the
Canadian Seller's failure to direct the funding agent of the Canadian
Hourly Pension Plan as directed by the Canadian Purchaser, that the
Canadian Purchaser, the Canadian Hourly Pension Plan, or the Fund may
suffer or incur. Except as provided in this Section 7.03(b), after
sponsorship and effective control and direction over the Canadian Hourly
Pension Plan and the Fund has transferred to the Canadian Purchaser, the
Canadian Seller shall not have any further obligation or liability with
respect to the Canadian Hourly Pension Plan and the Fund in connection with
events occurring after such transfer of control and sponsorship. The
Canadian Seller shall be responsible for satisfying any and all
governmental reporting and/or disclosure requirements applicable to the
Canadian Hourly Pension Plan and the Fund with respect to plan years ending
six (6) months or more prior to the Closing Date, the Canadian Seller and
the Canadian Purchaser shall cooperate in satisfying any and all
governmental reporting and/or disclosure requirements applicable to the
Canadian Hourly Pension Plan and the Fund with respect to the plan year
ending immediately prior to the Closing Date, and the Canadian Purchaser
shall be responsible for satisfying any and all governmental reporting
and/or disclosure requirements applicable to the Canadian Hourly Pension
Plan and the Fund with respect to plan years ending after the Closing Date.
Prior to and following the Closing Date, the Canadian Seller agrees to use
all reasonable efforts to provide the Canadian Purchaser with such books,
records, and other relevant data within its control or access relating to
benefit matters with respect to the Canadian Seller Employees as the
Canadian Purchaser shall reasonably request.
(ii) Immediately following the Closing Date, the assets of
the Canadian Hourly Pension Plan shall remain invested in the Canadian
Seller's master trust fund. Within thirty (30) days of receipt of written
instructions from the Canadian Purchaser, but in no event later than six
(6) months following the Closing Date, the Canadian Seller shall cause the
funding agent for the Canadian Hourly Pension Plan to redeem the units of
the master trust in which the assets of the Canadian Hourly Pension Plan
have been invested and to forthwith deposit the cash value thereof in the
Fund.
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<PAGE>
The Canadian Seller shall not be responsible for any losses in the
investment occurring subsequently to the Closing Date, unless such losses
are the result of gross negligence or fraud on the part of the Canadian
Seller or its employees or agents including, without limitation, any
investment adviser or trustee of the Canadian Seller's master trust fund.
(c) SALARIED PENSION PLAN.
(i) Effective as of the Closing Date, the Canadian
Transferred Employees who participate in the Alcatel Canada Wire Inc.
Pension Plan for Salaried Employees (the "CANADIAN SELLER PENSION PLAN")
shall case to participate in and accrue benefits under the Canadian Seller
Pension Plan. Such Canadian Transferred Employees shall be referred to in
this Section 7.03(c) as "SALARIED EMPLOYEES".
(ii) Effective as and from the Closing Date, the Canadian
Purchaser shall establish and register, or shall cause to be established
and registered, with the appropriate federal and provincial regulatory
authorities, at its own expense, a pension plan to replace the Canadian
Seller Pension Plan in respect of the Salaried Employees. The new pension
plan for the Salaried Employees shall be referred to as the "CANADIAN
PURCHASER SALARIED PENSION PLAN".
(iii) The Canadian Purchaser Salaried Pension Plan shall
provide to the Salaried Employees benefits for their period of service with
the Canadian Seller prior to the Closing Date (to the extent benefits for
such period of service were provided to such employees under the Canadian
Seller Pension Plan) which are substantially similar in the aggregate to
the benefits provided for the Salaried Employees under the Canadian Seller
Pension Plans as construed at the Closing Date, and as modified by
amendments, if any, required by applicable Laws and shall provide pension
benefits to the Salaried Employees for their period of service with the
Canadian Purchaser after the Closing Date which are substantially similar
in the aggregate to the benefits provided for the Salaried Employees under
the Canadian Seller Pension Plan as constituted at the Closing Date, and as
modified by amendments, if any, required by applicable Laws. The Canadian
Purchaser intends to maintain the Canadian Purchaser Salaried Pension Plan
for at least two (2) years from and after the Closing Date.
(iv) As soon as practicable after the Closing Date, the
Canadian Seller shall cause its actuary to determine the liabilities in
respect of benefits which have accrued to the Salaried Employees (including
those on disability or authorized temporary leave from the Canadian Seller
who accept the Canadian Purchaser's offer of
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employment) and their respective beneficiaries under the Canadian Seller
Pension Plan as of the Closing Date. Such liabilities shall be determined
in accordance with the actuarial assumptions and methodology set out in
Schedule 7.03(c)(iv) hereof and shall be based on the provisions of the
Canadian Seller Pension Plan as in effect at the Closing Date.
Forthwith upon the determination of the liabilities for the
Salaried Employees as described in this Section 7.03(c)(iv), the Canadian
Seller shall make application to such regulatory authorities as may be
required for approval to transfer assets equal to these liabilities (the
"TRANSFER AMOUNT") to the Canadian Purchaser Salaried Pension Plan.
(v) Forthwith upon determination of the Transfer Amount in
accordance with Section 7.03(c)(iv), the Canadian Seller shall report the
Transfer Amount to the Canadian Purchaser and its actuary. The Canadian
Seller shall also furnish to both the Canadian Purchase and its actuary
such information and data as may reasonably be required to permit a review
of the determination of the Transfer Amount by the Canadian Purchaser and
its actuary. Within thirty (30) days of notification of the Transfer
Amount, the Canadian Purchaser shall provide written notice to the Canadian
Seller of any disagreement regarding the data pertaining to the Salaried
Employees or the application of the actuarial assumptions or methodology
applied in preparing the valuation. If the Canadian Seller and the
Canadian Purchaser cannot agree on the determination of the Transfer Amount
within sixty (60) days after notification of the Transfer Amount, such
determination shall be referred to and settled by such other independent
actuary as the parties may agree using the actuarial assumptions and
methodology set out in SCHEDULE 7.03(c)(iv) hereof and the cost and
expenses of such independent actuary shall be borne equally by the Canadian
Seller and the Canadian Purchaser. If such independent actuary agrees with
the Canadian Purchaser that modifications to the Transfer Amount are
required, the Canadian Seller shall ensure that the appropriate regulatory
authorities are advised of the revised Transfer Amount.
(vi) As soon as practicable following receipt by the
Canadian Seller of such regulatory approvals as may be required, as well as
evidence that the Canadian Purchaser Salaried Pension Plan has been
accepted for registration by Revenue Canada, the Canadian Seller shall
cause the funding agents of the Canadian Seller pension Plan to transfer
the Transfer Amount, adjusted in accordance with Sections 7.03(c) (vii) and
(ix) from the Closing Date to the date of such transfer to the funding
agent of the Canadian Purchaser Salaried Pension Plan. The date on which
such amount is transferred from the Canadian Seller Pension Plan to the
Canadian Purchaser Salaried Pension Plan pursuant to this Section
7.03(c)(vi) shall be referred to as the "TRANSFER
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DATE". Written confirmation of any and all such regulatory approvals and
evidence of such registration shall be forwarded by each party to the other
forthwith upon receipt.
(vii) From the Closing Date to the appropriate Transfer Date,
the Canadian Seller, on behalf of, and, to the extent such expenses are
reasonable, at the expense of, the Canadian Purchaser, for the account of
the Canadian Purchaser, shall cause the funding agent of the Canadian
Seller Pension Plan to accept and record as required all employee
contributions and disbursements (return of contributions or other periodic
or lump sum benefit payments and pro rata trustee or other funding agent
expenses) relating to the Salaried Employee in respect of and on behalf of
the Canadian Purchaser Salaried Pension Plan. The amount of the aforesaid
credits and disbursements, as adjusted in accordance with the rate
specified in Section 7.03(c)(ix), shall be added to or deducted from, as
the case may be, the appropriate Transfer Amount. The Canadian Seller
shall indemnify and hold the Canadian Purchaser harmless against and from
any and all damages, claims, demands, actions, losses, liabilities,
expenses or costs that the Canadian Purchaser may suffer or incur as a
result of the Canadian Seller's actions or omissions in contravention of
its obligations under this Section 7.03(c)(vii).
(viii) If the transfer amount with respect to the Canadian
Seller Pension Plan approved by the regulatory authorities shall exceed the
Transfer Amount, such excess shall be transferred to the funding agent for
the Canadian Purchaser Salaried Pension Plan without payment by the
Canadian Purchaser. If the Transfer Amount with respect to the Canadian
Seller Pension Plan shall exceed the transfer amount approved by the
regulatory authorities, the Transfer Amount shall be reduced to equal the
transfer amount approved by the regulatory authorities and the Canadian
Seller shall pay the Canadian Purchaser the difference between the Transfer
Amount and the transfer amount approved by the regulatory authorities.
(ix) Immediately following the Closing Date, the Transfer
Amount shall remain invested in the Canadian Seller's master trust fund.
As soon as practicable following both calculation of the Transfer Amount
and the agreement of the parties on the Transfer Amount under Section
7.03(c)(v), the Canadian Seller shall cause the funding agent for the
Canadian Seller Pension Plan to redeem units of the master trust which have
a cash value equal to the assets or other interests representing the
Transfer Amount at such time. The cash amount shall be held in a separate
account within the funding medium for the Canadian Seller Pension Plan and
shall be credited with interest at the rate of 8% per annum, calculated on
the daily balance of
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the Transfer Amount from the date of redemption to the Transfer Date.
Section 7.04 NO THIRD PARTY BENEFICIARY. The parties hereto do not
intend to create any third party beneficiary rights or remedies with respect to
any Employees, former employees of the Business, or other Person who is
providing, or has provided, services to the Business, as a result of the
provisions in the foregoing Article VII or elsewhere in this Agreement and
specifically hereby negate any such intention.
ARTICLE VIII
ADDITIONAL AGREEMENTS OF SELLERS
Section 8.01 OPERATION OF BUSINESS. From the date hereof until the
Closing Date except to the extent Purchasers otherwise agree in writing and
subject to Section 10.04:
(a) Except as provided on SCHEDULE 8.01(a) hereof, Sellers shall
operate the Business in the Ordinary Course of Business and use reasonable
commercial efforts to preserve the present Business organization and
present relationships with Persons (including customers and suppliers)
having material business dealings with the Business.
(b) Sellers shall give prompt written notice to Purchasers of
any Material Adverse Change or that any representation or warranty of
Sellers is no longer true, and Sellers shall give prompt written notice to
Purchasers of any material development affecting the ability of Sellers to
consummate the transactions contemplated by this Agreement.
Section 8.02 ACCESS TO BOOKS AND RECORDS OF BUSINESS. From the date
hereof until the Closing Date or any earlier termination of this Agreement,
Sellers shall give Purchasers and their officers, employees, counsel, financial
advisers, consultants, lenders and other representatives access upon reasonable
notice and during normal business hours to the Employees and such other
officers, and employees of either Seller responsible for the operations of the
Business facilities and to the Assets in the locations customarily located, and
shall furnish Purchasers with all such information concerning the Business,
Assets and Assumed Liabilities as Purchasers may reasonably request in order to
review the legal, financial and business condition and affairs of the Business
so long as such access does not unreasonably interfere with the operation of the
Business.
Section 8.03 GOVERNMENTAL FILINGS. U.S. Seller shall promptly make all
filings, reports and documents as may be necessary to comply with the HSR Act
with respect to the transactions contemplated hereby, and Canadian Seller shall
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promptly make all filings, reports and documents as may be necessary to comply
with the Competition Act with respect to the transactions contemplated hereby.
Sellers shall cooperate with and assist Purchasers and take such action as may
be reasonably required and as permitted under law in connection with such
filings or similar filings made by Purchasers (including cooperating with
additional requests for information and documents by the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act or by any Canadian Governmental Authority pursuant to the
Competition Act and arranging interviews of officers and personnel, in each case
if requested by any relevant Governmental Authority.)
Section 8.04 NOTICE OF ESTIMATED CANADIAN BUSINESS VALUE. Sellers shall
notify the Purchasers in writing of the amount of the Estimated Canadian
Business Value not less than five (5) business days prior to Closing.
Section 8.05 DELIVERY OF DOCUMENTS. Within ten (10) days following the
date hereof, Sellers shall deliver to Purchasers true and complete copies of (i)
all deeds, leases, mortgages, deeds of trust, certificates of occupancy, title
insurance policies, title reports and surveys with respect to the U.S. Owned
Real Property and the Canadian Owned Real Property in the possession of either
Seller and (ii) all material Business Licenses in the possession of either
Seller.
ARTICLE IX
ADDITIONAL AGREEMENTS OF PURCHASERS
Section 9.01 GOVERNMENTAL FILINGS. U.S. Purchaser shall promptly make
all filings, reports and documents as may be necessary to comply with the HSR
Act with respect to the transactions contemplated hereby, and Canadian Purchaser
shall promptly make all filings, reports and documents as may be necessary to
comply with the Competition Act with respect to the transactions contemplated
hereby. Purchasers shall cooperate with and assist Sellers and take such action
as may be reasonably required and as permitted under law in connection with such
filings or similar filings made by Sellers (including cooperating with
additional requests for information and documents by the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act or by any Governmental Authority pursuant to the Competition Act and
arranging interviews of officers and personnel, in each case if requested by any
relevant Governmental Authority.)
Section 9.02 RELEASE OF GUARANTIES, ETC. Before and after the Closing,
Purchasers shall use reasonable commercial efforts to obtain without cost to
Purchasers (except for the corresponding Assumed Liability), and shall cooperate
with each Seller in seeking, a release of such Seller or any Affiliate of
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such Seller from those guaranties or similar contingent obligations relating
specifically to any Assumed Liability (the "BUSINESS GUARANTIES"). Purchasers
shall indemnify and hold Sellers harmless from and against any Losses suffered
or incurred by either Seller following Closing in connection with the Business
Guaranties to the extent of the Assumed Liabilities and shall reimburse each
Seller for any amounts required to be paid by such Seller following Closing
under any Business Guaranty to the extent of the Assumed Liabilities.
Purchasers shall indemnify and hold Sellers harmless from and against any Losses
suffered or incurred by either Seller following Closing under or pursuant to
those Letters of Credit described on SCHEDULE 2.02(b)(xi) hereof (the "SELLER
LETTERS OF CREDIT") as a result of the failure by either Purchaser to perform
any Assumed Liability. Before and after Closing, Purchasers shall use
reasonable commercial efforts to obtain without cost to Purchasers (except for
the corresponding Assumed Liability), and shall cooperate with each Seller in
seeking, a release of Sellers from the Seller Letters of Credit. In no event
shall Purchasers be liable to Sellers for any nonperformance by Sellers with
respect to the Seller Letters of Credit prior to Closing or with respect to the
non-performance by either Seller of the obligations of such Seller covered by
the Business Guaranties prior to Closing.
Section 9.03 RESALE CERTIFICATES. Purchasers shall provide to Sellers at
or before Closing the Tax exemption certificates in connection with the sale of
the Assets which are described on SCHEDULE 9.03 hereof.
Section 9.04 SAFE HARBOR LEASE NOTICE. U.S. Purchaser will execute and
provide to U.S. Seller at Closing a notice with respect to each lessor under
each Safe Harbor Lease in the form attached as SCHEDULE 9.04 hereof to be given
by U.S. Seller to such lessors after Closing.
ARTICLE X
ADDITIONAL MUTUAL AGREEMENTS
Section 10.01 CONDITION OF ASSETS; NO WARRANTY. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, SELLERS ARE NOT MAKING IN CONNECTION WITH THIS
AGREEMENT ANY REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, WITH
RESPECT TO THE ASSETS, AND SELLERS DO NOT MAKE ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
ASSETS, ALL OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED.
Section 10.02 CONFIDENTIALITY. Prior to the Closing, each party hereto
will, and will cause its officers, directors, employees, agents, lenders,
representatives, advisers and Affiliates to, comply with all terms of that
certain Confidentiality Letter Agreement dated December 27, 1994, between
Alcatel NA Cable Systems, Inc. and Alcatel Canada Wire, Inc., on
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the one hand, and The Alpine Group, Inc. and its subsidiaries, on the other
hand. Following Closing, each party hereto shall, shall cause its Affiliates
to, and shall use reasonable commercial efforts to cause its representatives to
(a) hold in strict confidence and not utilize in its respective business all
information and documents concerning any other party hereto or any of its
Affiliates ("CONFIDENTIAL INFORMATION") furnished to it by such other party or
its representatives in connection with this Agreement or the transactions
contemplated hereby except where disclosure may be required by judicial or
administrative process or by law or as may be necessary for each party to
enforce its rights under this Agreement (or any documents or instruments
executed pursuant hereto). Notwithstanding the foregoing, the following will
not constitute "Confidential Information" for purposes of this Agreement: (i)
information which was already in the possession of the disclosing party or its
Affiliates prior to the date hereof and which was not acquired or obtained from
any other party or its Affiliates, (ii) information which is independently
developed by the disclosing party or any Affiliate thereof without access to the
Confidential Information, (iii) information which is obtained or was previously
obtained by the disclosing party or its Affiliates from a third person who,
insofar as is known to the disclosing party or its Affiliates, is not prohibited
from transmitting the information to the disclosing party or its Affiliates by a
contractual, legal or fiduciary obligation to any other party or its Affiliates,
and (iv) information which is or becomes generally available to the public other
than as the result of a disclosure by the disclosing party or any Affiliate
thereof or their agents or employees. Notwithstanding the foregoing, following
the Closing, the foregoing restrictions shall not apply to the use by either
Purchaser of documents and information concerning the Business, the Assets or
the Assumed Liabilities furnished by Seller hereunder.
Section 10.03 MAINTENANCE OF RECORDS. Inasmuch as certain of the Sellers'
books, records and documents are to be included as Assets and sold to Purchasers
hereunder, and certain other of Sellers' books, records and documents are to be
retained by Sellers, and Purchasers or Sellers may have need to have access to
the books, records and documents held by the other after the Closing, Purchasers
and Sellers agree that each shall maintain (or shall provide for a designated
representative to maintain) for at least six (6) years after the Closing Date
(or for such longer period as may be required by applicable law) the respective
books, records and documents sold or retained hereunder. Neither Sellers nor
Purchasers shall destroy or otherwise dispose of any of such books, records, or
documents after the end of the period referred to in the preceding sentence
without first giving ninety (90) days prior written notice to the other of its
intent to so destroy or otherwise dispose thereof, specifying the books, records
and documents involved and giving such other party thirty (30) days within which
such other party, at such other party's expense, may assume physical possession
thereof.
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During such six (6) year period, representatives of Purchasers shall be
permitted to inspect and make copies of any of such books, records, and
documents retained by Sellers which relate to the Business or the Assets during
normal business hours and upon reasonable notice for any reasonable business
purpose. During such period, representatives of Sellers shall be permitted to
inspect and make copies of books, records and documents sold to Purchasers
hereunder during normal business hours and upon reasonable notice for any
reasonable business purpose, and to give access to any Governmental Authority
which seeks such access in connection with an audit or other examination of
Sellers' operation of the Business.
Section 10.04 CONSENTS. To the extent that an attempted assignment or
transfer of any Business Contract or Personal Property Lease to be transferred
to and assumed by either Purchaser hereunder, without the consent of a Person
other than a Seller (that is a party thereto) would constitute a breach thereof,
this Agreement shall not constitute an assignment or attempted assignment
thereof. Prior to Closing, Sellers or, at Sellers' option, Sellers jointly with
Purchasers, shall initially notify any such Person whose consent is required
about the transactions contemplated hereby and the need for such consent, and
Sellers shall use reasonable commercial efforts with the cooperation of
Purchasers to obtain such consent of such Person. Following Closing, Purchasers
shall use commercially reasonable efforts with the cooperation of Sellers to
obtain the consent of such Person to the assignment of any such Contract. If
any such consent shall not be obtained, each Seller shall cooperate with the
Purchaser to which such Contract was to be assigned and each such Purchaser
shall cooperate with such Seller in any reasonable back-to-back arrangements in
order to:
(a) provide for such Purchaser the benefits intended to be
assigned under any such Contract (unless the third party thereto rightfully
terminates or cancels such Contract), including, without limitation, the
enforcement for the benefit of such Purchaser and at such Purchaser's
expense of any and all rights of such Seller against a third party to such
Contract arising out of the breach by such third party or otherwise;
provided that such Seller shall not be obligated to take any action that
would, in its reasonable opinion, risk material damage to its business or
properties; and
(b) provide for such Seller a supply of all products and
services provided by such Purchaser (and otherwise take all necessary or
appropriate actions) to enable such Seller to comply with its obligations
under such Contract, without cost to such Seller, in favor of any third
party to such Contract.
Section 10.05 COOPERATION IN LITIGATION. Each party hereto will fully
cooperate with all other parties hereto in the defense or prosecution of any
litigation or proceeding (or order or
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settlement in connection therewith) already instituted or which may be
instituted hereafter against or by any party hereto relating to or arising out
of the conduct of the Business prior to the Closing (other than litigation
arising out of the transactions contemplated by this Agreement). The party
requesting such cooperation shall pay the out-of-pocket expenses (including
reasonable legal fees and disbursements) of the party providing such cooperation
and of its employees and agents reasonably incurred in connection with providing
such cooperation, but shall not be responsible to reimburse the party providing
such cooperation for the salaries or costs of fringe benefits or other similar
expenses paid by the party providing such cooperation to its employees and
agents while assisting in the defense or prosecution of any such litigation or
proceeding. Notwithstanding the foregoing, this Section 10.05 shall not apply
to any litigation which is the subject of a claim for indemnification pursuant
to Article XIII hereof.
Section 10.06 ENVIRONMENTAL MATTERS.
(a) Prior to the Closing, Purchasers shall be permitted to conduct, at
their expense, a review of the business practices of the Business as they may
relate to compliance with Environmental Laws. Promptly following the date
hereof, Purchasers shall engage an environmental consulting firm reasonably
acceptable to Sellers (the "ENVIRONMENTAL CONSULTANT") to perform a Phase I
environmental assessment and/or audit of the condition of the Real Property and
the operation of the Business and to render a written report of its findings and
recommendations to Purchasers and to Sellers (the "PHASE I REPORT"). If the
Phase I Report recommends any further environmental assessment, audit or
investigation of any of the Real Property, or if either Purchasers or Sellers
reasonably believe that further assessment, audit or investigation is
appropriate, Purchasers shall engage the Environmental Consultant to complete
all such additional work (and any other assessment, audit or investigatory work
recommended by such Environmental Consultant) and to render a written report of
its findings and recommendations to the Purchasers and the Sellers (the "PHASE
II REPORT"). The cost of any assessment, audit and/or investigatory work, other
than the cost associated with the initial assessment and/or audit and the Phase
I Report related thereto, shall be shared equally by Purchasers and Sellers.
Both Purchasers and Sellers shall have the right to meet with the Environmental
Consultant prior to and during the foregoing assessments, audits and/or
investigations and to require the Environmental Consultant to address any
matters specified by Sellers or Purchasers as the case may be, when performing
such assessments, audits and/or investigations and in the Phase I Report and
Phase II Report and to verify the findings and conclusions in any such reports;
provided that, subject to the foregoing rights of Sellers, Purchasers shall have
the right to direct the work of the Environmental Consultant in connection with
the Phase I environmental assessment and/or audit. Subject to Section 12.05 and
Section 13.06(f) hereof, Sellers shall provide to Purchasers
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their written commitment to remediate to the levels presently required by any
relevant Governmental Authority any contamination or Hazardous Materials located
on the Real Property with respect to which remediation is recommended in the
Phase I Report or in the Phase II Report (the "REMEDIATION COMMITMENT"). The
form and content of such remediation shall be in the discretion of Sellers,
subject to Section 10.11, and shall not be required to incorporate the
remediation methods or procedures or to obligate Sellers to incur expenses at
the levels, if any, recommended in the Phase I Report or the Phase II Report.
Sellers shall allow Purchasers and the Environmental Consultant access to the
Real Property and to the books, records and documents of Sellers relating to
environmental matters, if any.
(b) Notwithstanding the fact that neither Purchaser has assumed any
Liabilities of either Seller with respect to the environmental matters described
in Section 2.02(c)(ii) hereof, each Purchaser agrees that it will reasonably
cooperate with each Seller in the investigation or defense of any alleged
Liability of such Seller for any environmental matters related to the Business,
subject to the payment by such Seller to such Purchaser of such Purchaser's
reasonable costs and expenses in connection therewith.
Section 10.07 BUSINESS DEALINGS POST-CLOSING. For a period of six (6)
years following Closing, and subject to an annual purchase agreement, Purchasers
agree to procure from Canadian Seller, and Canadian Seller agrees to sell to
Purchasers, a minimum of 50% of U.S. Purchaser's annual purchases for the
Tarboro, North Carolina, U.S.A., and Elizabethtown, Kentucky, U.S.A. facilities
of the Business and 100% of Canadian Purchaser's annual purchases of tolled
copper rod for the Winnipeg facility of the Business (to be certified by
Purchasers' senior purchasing manager at the end of each fiscal year of
Purchasers) subject only to Canadian Seller's available capacity and provided
that Canadian Seller's prices and payment terms offered to Purchasers are
competitive market prices and payment terms, and no less favorable than Canadian
Seller's best prices and payment terms to customers acquiring comparable
volumes, and provided further that Canadian Seller's quality meets industry
standards, it being understood that Purchasers shall supply or specify copper
cathode brands which are approved for use by Canadian Seller. Any additional
terms and conditions for each procurement shall be negotiated in good faith
between the parties according to market conditions.
Section 10.08 JOINT CONTRACTS AND CLAREMONT TANGIBLE ASSETS.
Notwithstanding any other term of this Agreement, the Joint Contracts will not
be transferred to either Purchaser pursuant to this Agreement. Between the date
hereof and the Closing Date, U.S. Seller and U.S. Purchaser will mutually
identify those Claremont Tangible Assets (i) which are used solely in the
Business and those Claremont Tangible Assets will be included within the
definition of Assets to be transferred to U.S. Purchaser hereunder and (ii)
which are used jointly in the
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Business and other businesses of Sellers which will be included within the
definition of Assets to the extent mutually agreed.
Section 10.09 LICENSE. Upon Closing, Sellers shall grant to Purchasers a
royalty-free, non-exclusive license to use for Purchasers' operation of the
Business any Intellectual Property owned by Sellers or Sellers' Affiliates which
Sellers used in Sellers' operation of the Business, except for the trademarks,
trade names and logos identified in Section 2.01(c)(viii) provided, however,
that Purchasers may sell any products which are acquired as Inventory and which
bear any such trademarks, tradenames or logos at the time of Closing and,
provided further, that neither Purchaser shall acquire pursuant to this Section
10.09 any rights under or pursuant to any cross license agreements between or
among either Seller and any of its Affiliates and third parties.
[Section 10.10 Intentionally left blank]
Section 10.11 ACCESS TO FACILITIES FOLLOWING CLOSING FOR ENVIRONMENTAL
REMEDIATION. Purchasers hereby grant to Sellers, their contractors, agents and
consultants the right to undertake and complete all necessary or appropriate
environmental investigations and remediation work with respect to the Real
Property following Closing provided that such work is to be performed in
connection with the Remediation Commitment or otherwise pursuant to any
obligation or Liability of either Seller under this Agreement ("REMEDIAL WORK"),
subject to the conditions of this Section 10.11. Remedial Work shall be
performed by qualified, licensed and professional engineers, contractors and
consultants maintaining appropriate levels of insurance reasonably acceptable to
Purchasers. Prior to conducting any Remedial Work, Sellers shall provide
Purchasers with a comprehensive work plan setting forth the Remedial Work to be
performed for Purchasers' approval, which approval shall not be unreasonably
withheld or delayed. Remedial Work shall only be conducted pursuant to such an
approved work plan. Sellers, their acceptable engineers, contractors and
consultants shall be permitted access to those areas of the Real Property
identified in the approved work plan at the times specified in such work plan
solely for the purpose of performing the Remedial Work set forth in such work
plan. Sellers, their acceptable engineers, contractors and consultants may be
allowed access at other times or to other portions of the Real Property upon the
prior approval of Purchasers. Modifications to the scope or nature of the
Remedial Work shall be made solely as a written modification to an approved work
plan, which shall be provided to Purchasers for their approval, which approval
shall not be unreasonably withheld. If either Seller is denied access to the
Real Property as required by the terms of this Section 10.11, any resulting
inability of such Seller to perform and complete Remedial Work shall not
constitute a breach or violation of this Agreement.
Any Remedial Work shall be performed in full compliance with applicable
Environmental Laws, rules and regulations, in a good,
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safe and workmanlike manner, and shall have no unreasonable negative impact on
the Business conducted at the Real Property to the extent that the Seller
performing such work can prevent any such impact through the exercise of
reasonable good faith efforts. Purchasers shall use their best efforts, and
shall otherwise cooperate with Sellers, to prevent or minimize the negative
impact on the Business of any Remedial Work performed by Sellers hereunder
(including, without limitation, shifting production and manufacturing activities
to locations of Purchasers not affected by such Remedial Work to the extent
capacity is available at such locations). Promptly upon completion of any
Remedial Work, the Seller conducting such work shall remove or cause to be
removed all associated remediation equipment, and restore or cause to be
restored the affected Real Property, to the extent commercially feasible to its
condition prior to such work.
Section 10.12 COLLECTION AND REPURCHASE OF U.S. ACCOUNTS RECEIVABLE. U.S.
Seller shall hold in trust for, and immediately remit to, U.S. Purchaser any
Accounts Receivable collected by U.S. Seller following Closing. Following
Closing, U.S. Purchaser shall use its best efforts to collect any Accounts
Receivable constituting a part of the U.S. Assets. Subject to the terms and
provisions set forth below, at the option of U.S. Purchaser, U.S. Seller agrees
to repurchase from U.S. Purchaser, for an amount equal to the unpaid balance
thereof (the "U.S. REPURCHASE AMOUNT"), such Accounts Receivable which were
included in the Assets acquired by U.S. Purchaser and which are not collected by
U.S. Purchaser within seventy-five (75) days after the Closing Date. U.S.
Purchaser may exercise its option hereunder by delivering written notice to U.S.
Seller within sixty (60) days following the expiration of such seventy-five (75)
day period, identifying with specificity those Accounts Receivable which have
not been collected and which U.S. Purchaser desires to have repurchased. U.S.
Seller shall have the right to verify the existence of the unpaid balance of
such Accounts Receivable. Subject to completing such verification, U.S. Seller
shall pay to U.S. Purchaser the U.S. Repurchase Amount with respect to such
Accounts Receivable within fifteen (15) days after the receipt by U.S. Seller of
the foregoing notice. U.S. Seller may offset against any payment to U.S.
Purchaser under this Section 10.12 the same amount of any payment then payable
by U.S. Purchaser to U.S. Seller under this Agreement. Any Accounts Receivable
repurchased by U.S. Seller shall be assigned and transferred to U.S. Seller by
U.S. Purchaser free and clear of any Liens together with any credit files or
related information which U.S. Purchaser may have pertaining thereto.
Section 10.13 COLLECTION AND REPURCHASE OF CANADIAN ACCOUNTS RECEIVABLE.
Canadian Seller shall hold in trust for, and immediately remit to, Canadian
Purchaser any Accounts Receivable collected by Canadian Seller following
Closing. Following Closing, Canadian Purchaser shall use its best efforts to
collect all Accounts Receivable constituting a part of the Canadian Assets.
Subject to the terms and provisions set forth
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below, at the option of Canadian Purchaser, Canadian Seller agrees to repurchase
from Canadian Purchaser, for an amount equal to the unpaid balance thereof
determined in U.S. Dollars at the exchange rate set forth in the Accounting
Policies (the "CANADIAN REPURCHASE AMOUNT"), such Accounts Receivable which were
included in the Assets acquired by Canadian Purchaser and which are not
collected by Canadian Purchaser within seventy-five (75) days after the Closing
Date. Canadian Purchaser may exercise its option hereunder by delivering
written notice to Canadian Seller, within sixty (60) days following the
expiration of such seventy-five (75) day period, identifying with specificity
those Accounts Receivable which have not been collected and which Canadian
Purchaser desires to have repurchased. Canadian Seller shall have the right to
verify the existence of the unpaid balance of such Accounts Receivable. Subject
to completing such verification, Canadian Seller shall pay to Canadian Purchaser
the Canadian Repurchase Amount with respect to such Accounts Receivable within
fifteen (15) days after the receipt by Canadian Seller of the foregoing notice.
Canadian Seller may offset against any payment to Canadian Purchaser under this
Section 10.13 the same amount of any payment then payable by Canadian Purchaser
to Canadian Seller under this Agreement. Any Accounts Receivable repurchased by
Canadian Seller shall be assigned and transferred to Canadian Seller by Canadian
Purchaser free and clear of any Liens together with any credit files or related
information which Canadian Purchaser may have pertaining thereto.
Section 10.14 UPDATING SCHEDULES. Sellers may update the Schedules to
this Agreement after the date hereof and prior to Closing (the "UPDATE PERIOD")
to reflect factors, circumstances or events first arising or (in the case of
representations given to the knowledge of either Seller) becoming known to
Sellers during the Update Period by providing Purchasers with written notice
setting forth the proposed update and specifying the Schedule or Schedules to be
updated thereby.
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF PURCHASERS
The obligations of each Purchaser to consummate the transactions provided
for herein on the Closing Date are subject to the fulfillment on or before the
Closing Date of each of the following conditions, except to the extent that such
Purchaser may, in its absolute discretion, waive one or more thereof in writing
in whole or in part:
Section 11.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each Seller contained herein (as updated
pursuant to Section 10.14) shall be true in all material respects on and as of
the Closing Date with the same force and effect as if made on and as of such
date, and the facts, circumstances or events disclosed in any update provided
under Section 10.14 shall not indicate a material adverse change
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in the Business, taken as a whole, as conducted at the date hereof.
Section 11.02 PERFORMANCE OF AGREEMENTS. Each Seller shall have performed
in all material respects all obligations and agreements, and complied in all
material respects with all covenants, contained in this Agreement, to be
performed and complied with by such Seller at or prior to the Closing Date.
Section 11.03 BRING-DOWN CERTIFICATE. Each Seller shall have furnished
each Purchaser with a certificate in the form of EXHIBIT A hereto executed on
its behalf by its duly authorized executive officer, dated the Closing Date, to
the effect that such Seller has fulfilled the conditions specified Sections
11.01 and 11.02 hereof.
Section 11.04 TITLE DOCUMENTS.
(a) U.S. DEEDS. U.S. Seller shall have executed and delivered to U.S.
Purchaser a deed in customary form for the location in which each parcel of U.S.
Real Property is located (each such form is attached as EXHIBIT B hereto), with
any required transfer stamps attached, conveying to U.S. Purchaser all of U.S.
Seller's rights, title and interest in and to each parcel of U.S. Owned Real
Property.
(b) CANADIAN TITLE DOCUMENTS. Canadian Seller shall have executed and
delivered to Canadian Purchaser a duly registerable transfer of land, together
with such other evidences on title as may reasonably be required including
duplicate title no. 1212537, Winnipeg Land Titles Office, which shall, upon
registration in the Winnipeg Land Titles Office, vest a fee simple title in the
name of the Canadian Purchaser, subject only to Caveat No. 165130.
Section 11.05 SELLERS' DOCUMENTS. Sellers shall have delivered to
Purchasers the following documents which, except for any such document the form
of which is attached as an Exhibit hereto, shall be reasonably satisfactory in
form and content to Purchasers and their counsel:
(a) GOOD STANDING CERTIFICATES. A good standing certificate or
a certificate of compliance, as the case may be, with respect to each
Seller issued as of the date of Closing by the appropriate official of the
state or jurisdiction of incorporation of such Seller.
(b) CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation or the Articles of Incorporation, as the case may be, of each
Seller, certified by the relevant official of the jurisdiction of
incorporation of such Seller, and the Bylaws or other governing instruments
of each Seller, together with a certificate of a duly authorized officer of
such Seller in the form of EXHIBIT C hereto dated the Closing Date,
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certifying as to the accuracy and completeness of such corporate documents.
(c) CORPORATE RESOLUTIONS. Copies of resolutions of the Board
of Directors (and, if legally required, the Stockholders) of each Seller,
duly certified by the Secretary of such Seller in the form of the
certificate attached as EXHIBIT D hereto, authorizing the execution,
delivery and performance of this Agreement, all Related Agreements to which
such Seller is a party, and all other documents, instruments, and
certificates to which such Seller is a party contemplated hereby or thereby
and the consummation of transactions contemplated hereby and thereby.
(d) INCUMBENCY CERTIFICATES. An incumbency certificate of the
President or any duly authorized Vice President of each Seller who will be
executing this Agreement, any Related Agreement or any other agreement or
instrument to be delivered pursuant to the terms hereof or thereof
(including the name, title and signature of each such officer) in the form
of EXHIBIT E hereto.
(e) VEHICLE TITLES. A certificate of title or other evidence of
transfer for each Vehicle owned by Seller, duly endorsed for transfer to
U.S. Purchaser or Canadian Purchaser, as the case may be.
(f) OPINIONS OF COUNSEL. The opinion of Moore & Van Allen,
PLLC, U.S. counsel to Sellers, substantially in the form of EXHIBIT F
hereto and the opinion of Stikeman, Elliott, Canadian counsel to Sellers,
substantially in the form of EXHIBIT G hereto.
(g) FIRPTA CERTIFICATE. A certificate in form and substance
reasonably satisfactory to Purchasers and their counsel that U.S. Seller is
not a foreign person pursuant to Section 1445 of the Code.
Section 11.06 RELATED AGREEMENTS. Each Seller shall have executed and
delivered all Related Agreements to which such Seller is a party and shall have
caused each Affiliate of such Seller to execute and deliver all Related
Agreements to which such Affiliate is a party, and each Seller and all
Affiliates of such Seller shall have made all payments required of such Seller
and such Affiliates on the Closing Date pursuant to any such Related Agreement.
Section 11.07 MATERIAL ADVERSE CHANGE. There shall have been no Material
Adverse Change since the date hereof.
Section 11.08 NO ADVERSE PROCEEDINGS. No action, suit or proceeding
before any Governmental Authority shall have been commenced, no investigation by
any Governmental Authority shall have been commenced, and no action, suit or
proceeding by any
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Governmental Authority shall have been threatened, against any of the parties to
this Agreement, or any of the principals, officers or directors of any of them,
or any of the Assets wherein an unfavorable judgment, order, decree, stipulation
or injunction would (a) prevent consummation of any of the transactions
contemplated by this Agreement, (b) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation (and no such judgment,
order, decree, stipulation, injunction, or charge shall be in effect) or (c)
require the divestiture of any portion of the Assets or the Purchasers' Assets
and Properties or impose any condition on the consummation of the transactions
contemplated hereby.
Section 11.09 OTHER ASSURANCES. Sellers shall have delivered, and shall
have caused their Affiliates to deliver, to Purchasers such other and further
certificates, assurances and documents as Purchasers may reasonably request in
order to evidence the accuracy of the representations and warranties of Sellers,
the performance of covenants and agreements to be performed by Sellers pursuant
hereto at or prior to the Closing, and the fulfillment of the conditions to the
obligations of Purchasers.
Section 11.10 CONSENTS AND APPROVALS. The following consents, waivers,
authorizations and approvals of Governmental Authorities required in connection
with the execution, delivery and performance of this Agreement shall have been
obtained and shall be in full force and effect on the Closing Date:
(a) The applicable waiting period under the HSR Act with respect
to the transfer of any Assets by U.S. Seller to U.S. Purchaser shall have
expired or been terminated.
(b) The applicable waiting period under the Competition Act with
respect to the transfer of any Assets by Canadian Seller to Canadian
Purchaser shall have expired or been terminated or Canadian Purchaser shall
have received a written confirmation from the Director of Investigation and
Research under the Competition Act that such Director has no present
intention to challenge the purchase and sale of the Canadian Assets and the
Canadian Business herein contemplated.
Section 11.11 REMEDIATION COMMITMENT. Purchasers shall have received the
Phase I Report and, if required, the Phase II Report and the Remediation
Commitment from Sellers, if required.
Section 11.12 SATISFACTION OF COMMITMENT CONDITIONS. The conditions
precedent to the Lender's obligation to provide financing to Purchasers as set
forth in Section 2 of the Commitment shall have been satisfied or waived;
provided, however, that Purchasers shall use their best efforts to cause such
conditions to be satisfied.
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ARTICLE XII
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of each Seller to consummate the transactions provided for
herein on the Closing Date are subject to the fulfillment on or before the
Closing Date of each of the following conditions, except to the extent that such
Seller may, in its absolute discretion, waive one or more thereof in writing in
whole or in part:
Section 12.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each Purchaser contained herein shall be true
in all material respects on and as of the Closing Date with the same force and
effect as if made on and as of such date.
Section 12.02 PERFORMANCE OF AGREEMENTS. Each Purchaser shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants, contained in this Agreement, to be
performed and complied with by such Purchaser at or prior to the Closing Date.
Section 12.03 BRING-DOWN CERTIFICATE. Each Purchaser shall have furnished
each Seller with a certificate in the form of EXHIBIT H hereto executed on its
behalf by its duly authorized executive officer, dated the Closing Date, to the
effect that such Purchaser has fulfilled the conditions specified in Sections
12.01 and 12.02 hereof.
Section 12.04 PURCHASER'S DOCUMENTS. Purchasers shall have delivered to
Sellers the following documents which, except any such documents the form of
which is attached as an Exhibit hereto, shall be reasonably satisfactory in form
and content to Sellers and their counsel:
(a) GOOD STANDING CERTIFICATES. A good standing certificate or
a certificate of compliance, as the case may be, with respect to each
Purchaser issued as of the date of Closing by the appropriate official of
the state or jurisdiction of incorporation of such Purchaser.
(b) CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation or Articles of Incorporation, as the case may be, of each
Purchaser, certified by the relevant official of the jurisdiction of
incorporation of such Purchaser, and the Bylaws or other governing
instruments of each Purchaser, together with a certificate of a duly
authorized officer of such Purchaser in the form of EXHIBIT I hereto dated
the Closing Date, certifying as to the accuracy and completeness of such
corporate documents.
(c) CORPORATE RESOLUTIONS. Copies of resolutions of the Board
of Directors (and, if legally required, the Stockholders) of each
Purchaser, duly certified by the
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Secretary of such Purchaser in the form of the certificate attached as
EXHIBIT J hereto, authorizing the execution, delivery and performance of
this Agreement, all Related Agreements to which such Purchaser is a party,
and all other documents, instruments, and certificates contemplated hereby
or thereby to which such Purchaser is a party and authorizing the
consummation of transactions contemplated hereby.
(d) INCUMBENCY CERTIFICATES. An incumbency certificate of the
President or any duly authorized Vice President of each Purchaser who will
be executing this Agreement, any Related Agreement or any other document,
instrument or certificate to be delivered pursuant to the terms hereof or
thereof (including the name, title and signature of each such officer) in
the form of EXHIBIT J hereto.
(e) OPINION OF COUNSEL. The opinion of Proskauer Rose Goetz &
Mendelsohn, counsel to Purchasers, substantially in the form of EXHIBIT L
hereto, and the opinion of Canadian counsel to Purchasers in form and
content reasonably satisfactory to Sellers and their counsel and customary
for transactions of this type.
(f) RESALE CERTIFICATES. The resale certificates required to be
obtained by Purchasers pursuant to Section 9.03 hereof.
(g) SAFE HARBOR LEASES. All notices referred to in Section 9.04
hereof.
Section 12.05 ENVIRONMENTAL INVESTIGATION. The Phase I Report and the
Phase II Report shall have been completed and provided to Sellers, and Sellers
shall not have concluded, within a period of fifteen (15) days from the
completion of all environmental assessments, audits, investigations and reports
pursuant to Section 10.06 hereof, in their reasonable judgment that the
remediation recommended in either the Phase I Report or the Phase II Report (if
any) would significantly interfere with or impair the production or
manufacturing processes of the Business for a period of longer than ninety (90)
days from the commencement of such remediation. If Sellers reach the foregoing
conclusion in their reasonable judgment, the condition contained in this Section
12.05 shall not be satisfied unless the Purchasers provide to the Sellers a
written, unconditional and irrevocable waiver of all and any claims or rights of
the Purchasers (and/or either of them) pursuant to this Agreement or otherwise
for any Losses (including, without limitation, any Losses related to business
interruption) incurred or suffered by such Purchasers (or either of them) as a
result of or arising out of the performance by Sellers of the Remediation
Commitment and all Remedial Work undertaken by Sellers in connection therewith,
except (a) any claims or rights of Purchasers to recover the actual cost of the
remediation which is the subject of the
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Remediation Commitment and which is not completed by the Sellers pursuant to the
Remediation Commitment, (b) any claims or rights of the Purchasers for any
Losses caused by or arising out of any negligent or wrongful act by Sellers or
their consultants or contractors in performing the Remedial Work, and (c) any
fines, penalties or other assessments imposed by any Governmental Authority
related to such Remedial Work.
Section 12.06 RELATED AGREEMENTS. Each Purchaser shall have executed and
delivered all Related Agreements to which such Purchaser is a party and shall
have caused each Affiliate of such Purchaser to execute and deliver all Related
Agreements to which such Affiliate is a party, and each Purchaser and all
Affiliates of such Purchaser shall have made all payments required of such
Purchaser or such Affiliates on the Closing Date pursuant to any such Related
Agreement.
Section 12.07 NO ADVERSE PROCEEDINGS. No action, suit or proceeding
before any Governmental Authority shall have been commenced, no investigation by
any Governmental Authority shall have been commenced, and no action, suit or
proceeding by any Governmental Authority shall have been threatened, against any
of the parties to this Agreement, or any of the principals, officers or
directors of any of them, or any of the Assets wherein an unfavorable judgment,
order, decree, stipulation or injunction would (a) prevent consummation of any
of the transactions contemplated by this Agreement, or (b) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such judgment, order, decree, stipulation, injunction, or
charge shall be in effect.)
Section 12.08 OTHER ASSURANCES. Purchasers shall have delivered, and
shall have caused their Affiliates to deliver, to Sellers such other and further
certificates, assurances and documents as Sellers may reasonably request in
order to evidence the accuracy of the representations and warranties of
Purchasers, the performance of covenants and agreements to be performed by
Purchasers pursuant hereto at or prior to the Closing, and the fulfillment of
the conditions to the obligations of Sellers.
Section 12.09 CONSENTS AND APPROVALS. The following consents, waivers,
authorizations and approvals of any Governmental Authorities required in
connection with the execution, delivery and performance of this Agreement shall
have been obtained and shall be in full force and effect on the Closing Date:
(a) The applicable waiting period under the HSR Act with respect
to the transfer of any Assets by U.S. Seller to U.S. Purchaser shall have
expired or been terminated.
(b) The applicable waiting period under the Competition Act with
respect to the transfer of any Assets by Canadian Seller to Canadian
Purchaser shall have expired
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or been terminated or Canadian Purchaser shall have received a written
confirmation from the Director of Investigation and Research under the
Competition Act that such Director has no present intention to challenge
the purchase and sale of the Canadian Assets and the Canadian Business
herein contemplated.
ARTICLE XIII
SURVIVAL AND INDEMNIFICATION
Section 13.01 SURVIVAL. Subject to Section 13.08 hereof, the parties
hereto agree that their respective representations, warranties, covenants and
agreements contained in this Agreement shall survive the Closing,
notwithstanding any investigation at any time by or on behalf of any other party
hereto, and shall not be considered waived by the consummation of the
transactions contemplated hereby with the knowledge by any party of any breach
of any such representation, warranty, covenant or agreement.
Section 13.02 INDEMNIFICATION BY SELLERS. Subject to the other provisions
of this Article XIII, Sellers shall, jointly and severally, indemnify and hold
harmless Purchasers from and against any and all Losses suffered or incurred by
Purchasers as a result of or arising out of:
(a) the falsity or incorrectness of or breach of any
representation or warranty of either Seller in this Agreement or in any
Related Agreement;
(b) the failure by either Seller to perform any covenant or
agreement of such Seller under this Agreement;
(c) any Retained Liability; or
(d) any liability arising under any Safe Harbor Lease at any
time whether prior to, on or after Closing, and whether or not due to any
action or omission by Purchasers (other than any knowing violation by
either Purchaser of any Safe Harbor Lease) including, without limitation,
any breach by either Seller of any Safe Harbor Lease prior to Closing.
Section 13.03 INDEMNIFICATION BY PURCHASERS. Subject to the other
provisions of this Article XIII, Purchasers shall, jointly and severally,
indemnify and hold harmless Sellers from and against any and all Losses suffered
or incurred by Sellers as a result of or arising out of:
(a) the falsity or incorrectness of or breach of any
representation or warranty of either Purchaser in this Agreement or in any
Related Agreement;
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(b) the failure by either Purchaser to perform any covenant or
agreement of such Purchaser under this Agreement; or
(c) any Assumed Liability.
Section 13.04 METHOD OF ASSERTING CLAIMS. All claims for indemnification
by any Indemnified Party under this Article XIII shall be asserted and resolved
as follows:
(a) THIRD PARTY CLAIMS. If any claim or demand in respect of
which an Indemnified Party might seek indemnity under this Article XIII is
asserted against such Indemnified Party by a Person other than Seller or
Purchaser (a "THIRD PARTY CLAIM"), the Indemnified Party shall give written
notice and the details thereof including copies of all relevant pleadings,
documents and information (collectively a "THIRD PARTY CLAIM NOTICE") to
the Indemnifying Party within a period of thirty (30) days following the
assertion of the Third Party Claim against the Indemnified Party (the
"THIRD PARTY CLAIM NOTICE PERIOD"). The failure by the Indemnified Party
to provide the Third Party Claim Notice within the Third Party Claim Notice
Period shall not impair the Indemnified Party's rights hereunder except to
the extent that the Indemnifying Party demonstrates that the Indemnifying
Party's ability to defend has been irreparably prejudiced by such failure
of the Indemnified Party. The Indemnifying Party shall notify the
Indemnified Party within a period of thirty (30) days after its receipt of
the Third Party Claim Notice (the "THIRD PARTY CLAIM RESPONSE PERIOD"):
(i) whether the Indemnifying Party disputes its
liability (or the amount thereof) to the Indemnified Party under
this Article XIII with respect to such Third Party Claim; and
(ii) whether the Indemnifying Party desires, at its
sole cost and expense, to defend the Indemnified Party against such
Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party within the
Third Party Claim Response Period that the Indemnifying Party desires to
defend the Indemnified Party against the Third Party Claim (irrespective of
the notice, or the content thereof, required by Section 13.04(a)(i) above),
then the Indemnifying Party at its sole cost and expense shall defend, with
counsel reasonably satisfactory to the Indemnified Party, such Third Party
Claim by all appropriate proceedings, which proceedings will be vigorously
and diligently prosecuted to a final conclusion or will be settled at the
discretion of the Indemnifying Party (with the consent of the Indemnified
Party which, in the case of a monetary settlement only, shall not be
unreasonably withheld and, in the case of all other
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settlements, may be withheld in the discretion of the Indemnified Party).
The Indemnified Party will cooperate in such defense at the sole cost and
expense of the Indemnifying Party. The Indemnified Party may, at its sole
cost and expense, at any time prior to the Indemnifying Party's delivery of
the notice referred to in the last sentence of the preceding paragraph,
file any pleadings or take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate to protect its
interests. The Indemnified Party, at its expense, may participate in, but
not control, any defense or settlement of any Third Party Claim conducted
by the Indemnifying Party pursuant to this Section 13.04.
If the Indemnifying Party fails to notify the Indemnified Party
within the Third Party Claim Response Period that the Indemnifying Party
desires to defend the Third Party Claim or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently or settle the
Third Party Claim (irrespective of the notice, or the content thereof,
required by Section 13.04(a)(i) above), then the Indemnified Party shall
defend, at the sole cost and expense of the Indemnifying Party, the Third
Party Claim by all appropriate proceedings, which proceedings will be
prosecuted by the Indemnified Party in a reasonable manner and in good
faith or will be settled at the discretion of the Indemnified Party (with
the consent of the Indemnifying Party which shall not be unreasonably
withheld). The Indemnifying Party will, at its sole cost and expense,
cooperate in such defense. Notwithstanding the foregoing provisions of
this paragraph, if the Indemnifying Party is determined not to be required
to indemnify for such Third Party Claim pursuant to the last paragraph of
this Section 13.04(a) and Section 13.04(c), the Indemnifying Party will not
be required to bear the costs and expenses of the Indemnified Party's
defense or the Indemnifying Party's participation therein pursuant to this
paragraph, and the Indemnified Party will reimburse the Indemnifying Party
in full for all reasonable costs and expenses incurred by the Indemnifying
Party in connection with such litigation.
If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its liability (or the amount thereof) to the Indemnified
Party with respect to the Third Party Claim under this Article XIII or
fails to notify the Indemnified Party within the Third Party Claim Response
Period whether the Indemnifying Party disputes its liability (or the amount
thereof) to the Indemnified Party with respect to such Third Party Claim
(irrespective of the notice, or the content thereof, required by Section
13.04(a)(ii) above), the Losses in the amount specified in the Third Party
Claim Notice will be conclusively deemed a liability of the Indemnifying
Party under this Article XIII, and the Indemnifying Party shall pay the
amount of such Losses to the Indemnified Party on demand. If the
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Indemnifying Party notifies the Indemnified Party within the Third Party
Claim Response Period that the Indemnifying Party disputes its liability to
the Indemnified Party with respect to such Third Party Claim (irrespective
of the notice, or the content thereof, required by Section 13.04(a)(ii)
above), the Indemnifying Party and the Indemnified Party will proceed in
good faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within a period of thirty (30) days from the date of
such notice, either party may resort to litigation in accordance with
Section 13.04(c) hereof.
(b) OTHER CLAIMS. In the event any Indemnified Party should
have a claim under this Article XIII against any Indemnifying Party that
does not involve a Third Party Claim, the Indemnified Party shall promptly
give written notice and the details thereof, including copies of all
relevant information and documents (collectively, an "INDEMNITY NOTICE"),
to the Indemnifying Party within a period of thirty (30) days following the
discovery of the claim by the Indemnified Party (the "CLAIM NOTICE
PERIOD"). The failure by any Indemnified Party to give the Indemnity
Notice within the Claim Notice Period shall not impair the Indemnified
Party's rights hereunder except to the extent that an Indemnifying Party
demonstrates that it has been irreparably prejudiced thereby. The
Indemnifying Party shall notify the Indemnified Party within a period of
thirty (30) days after the receipt of the Indemnity Notice by the
Indemnifying Party (the "INDEMNITY RESPONSE PERIOD") whether the
Indemnifying Party disputes its liability to the Indemnified Party under
this Article XIII with respect to such claim. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim described
in such Indemnity Notice or fails to notify the Indemnified Party within
the Indemnity Response Period whether the Indemnifying Party disputes the
claim described in such Indemnity Notice, the Losses in the amount
specified in the Indemnity Notice will be conclusively deemed to be a
liability of the Indemnifying Party under this Article XIII and the
Indemnifying Party shall pay the amount of such Losses to the Indemnified
Party on demand. If the Indemnifying Party notifies the Indemnified Party
within the Indemnity Response Period that the Indemnifying Party disputes
its liability with respect to such claim, the Indemnifying Party and the
Indemnified Party will proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through negotiations within a period of
thirty (30) days from the date of such notice, either party may resort to
litigation in accordance with Section 13.04(c) hereof.
(c) RESOLUTION OF DISPUTES. Any dispute submitted to litigation
pursuant to this Section 13.04(c) shall be finally and conclusively
determined by litigation in a court of competent jurisdiction. Each party
to this
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Agreement agrees that the state and federal courts located in the States of
North Carolina and Georgia shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may arise
out of or in connection with Article XIII of this Agreement and, for such
purposes, irrevocably submit to the jurisdiction of such courts. The
Purchasers agree that the process by which any suit, action or proceeding
is begun may be served on either of them by being given to such Purchaser
in accordance with Section 16.01 hereof, and the Sellers agree that the
process by which any suit, action or proceeding is begun may be served on
either of them by being given to such Seller in accordance with Section
16.01 hereof.
Section 13.05 CONTINUED LIABILITY FOR INDEMNITY CLAIMS. The liability of
any Indemnifying Party hereunder with respect to claims hereunder shall continue
for so long as any claims for indemnification may be made hereunder pursuant to
Section 13.08 hereof and, with respect to any such indemnification claims duly
and timely made, thereafter until the Indemnifying Party's liability therefor is
finally determined and satisfied.
Section 13.06 LIMITATIONS ON INDEMNIFICATION.
(a) CERTAIN TYPES OF DAMAGES. Neither Sellers nor Purchasers shall be
required to provide indemnification hereunder for Losses other than actual
Losses (including, without limitation, Losses which are speculative or remote).
Sellers shall not be required to provide indemnification hereunder for Losses
based upon the failure of the Business to achieve any particular level of
profitability following Closing.
(b) AGGREGATE THRESHOLD AMOUNT. No amount of indemnity shall be
payable in the case of a claim by Purchasers (or either of them) under Section
13.02(a) hereof unless, until and only to the extent that Purchasers have
suffered or incurred Losses as a result of or arising out of the matters
described in Section 13.02(a) in excess of U.S.$150,000.00 in the aggregate;
PROVIDED HOWEVER that this Section 13.06(b) shall not apply to any such Losses
suffered or incurred by Purchasers as a result of or arising out of a breach by
Sellers of their representations, and warranties in Section 5.13 hereof or
Section 5.20 hereof.
(c) INDIVIDUAL THRESHOLD AMOUNT. No claim for Losses of less than
US$20,000.00 may be made by Purchasers (or either of them) pursuant to Section
13.02(a) hereof; provided that, the Losses related to any such claim for less
than U.S.$20,000.00 shall be included when determining if the U.S.$150,000.00
amount referred to in Section 13.06(b) has been satisfied.
(d) CEILING AMOUNT. In no event shall the aggregate Liability of
Sellers under Section 13.02(a) hereof exceed US$9,000,000.00; provided that this
Section 13.06(d) shall not apply with respect to the Liability of Sellers under
this Article
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XIII for a breach by Sellers of their representations and warranties in
Section 5.13 hereof or Section 5.20 hereof.
(e) INTERPRETATION. For purposes of this Section 13.06, Purchasers
shall be considered as a single party and, as a result, all Losses suffered by
either or both Purchasers shall be aggregated for purposes of satisfying the
threshold amounts in Section 13.06(b) and Section 13.06(c). For purposes of
this Section 13.06, Sellers shall be considered as a single party and, as a
result, Liabilities of either or both Sellers under this Article XIII shall be
aggregated for purposes of satisfying the ceiling amount under Section 13.06(d).
(f) CERTAIN ENVIRONMENTAL CLAIMS. Notwithstanding any other term of
this Agreement, any claim by Purchasers (or either of them) against Sellers (or
either of them) pursuant to this Article XIII or otherwise for Losses suffered
or incurred by Purchasers (or either of them) as a result of or arising out of
any interruption in, or interference with, the Business caused by any Hazardous
Materials, contamination or other environmental conditions on, in or under the
Real Property discovered following Closing, for which Sellers are expressly
liable under this Agreement, or arising out of or in connection with any
Remedial Work undertaken by Sellers in connection therewith shall be limited to
any such Losses incurred or suffered by Purchasers, collectively, during the one
(1) year period commencing on the first date on which such interruption in, or
interference with, the Business occurs.
Section 13.07 EXCLUSIVE REMEDIES. If the Closing occurs, the remedies
provided in this Article XIII constitute the sole and exclusive remedies
available to each party hereto for recoveries against another party hereto for
breaches or failures to comply with or nonfulfillments of the representations,
warranties, covenants and agreements in this Agreement or in the Exhibits and
Schedules hereto, except that nothing in this Agreement shall limit the right of
any party to pursue any appropriate remedy at equity.
Section 13.08 TIME LIMITS ON CLAIMS. Notwithstanding anything in this
Agreement to the contrary, a claim by any Indemnified Party under this Article
XIII may be made only:
(a) if with respect to the violation of a representation or
warranty, within twenty-eight (28) months following the Closing Date with
the exception of the representations and warranties of Sellers under
Section 5.13 hereof and Section 5.20 hereof with respect to which such
representations and warranties shall survive and claims thereon may be made
until the expiration of one year following the expiration of any applicable
statute of limitations; and
(b) if with respect to the violation of a covenant or agreement,
within one (1) year following the
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last day upon which such covenant or agreement is required to be performed.
Notwithstanding anything in this Agreement to the contrary, any claim not
made within the foregoing relevant time period shall expire and be forever
barred.
Section 13.09 SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges that the rights of each other party to consummate the transactions
contemplated by this Agreement are special, unique and of extraordinary
character and that, in the event that a party violates or fails and refuses to
perform any covenant or agreement made by it in this Agreement, then each other
party may be without an adequate remedy at law. Each party agrees, therefore,
that in the event it violates or fails and refuses to perform any covenant or
agreement made by it in this Agreement, each other party may, in addition to any
remedies hereunder for damages or other relief, institute and prosecute an
action in any court of competent jurisdiction to enforce specific performance of
such covenant or agreement or seek any other equitable relief.
ARTICLE XIV
TERMINATION
Section 14.01 GENERAL. This Agreement may be terminated and the Closing
abandoned at any time prior to the Closing:
(a) by mutual agreement of the Purchasers and the Sellers;
(b) by the Sellers, if neither Seller is in breach in any
material respect of any of its representations, warranties, covenants and
agreements in this Agreement and if the Closing has not occurred on or
prior to June 30, 1995; provided that, if there is a second request made by
any Governmental Authority pursuant to the HSR Act in connection with the
transaction contemplated hereby and the Commitment is similarly extended,
this date shall be extended to August 31, 1995; or
(c) by the Purchasers, if neither Purchaser is in breach in any
material respect of any of its representations, warranties, covenants and
agreements in this Agreement and if the Closing has not occurred on or
prior to June 30, 1995; provided that, if there is a second request made by
any Governmental Authority pursuant to the HSR Act in connection with the
transaction contemplated hereby and the Commitment is similarly extended,
this date shall be extended to August 31, 1995.
Section 14.02 CONTINUING OBLIGATIONS ON TERMINATION. The continuing
liability of the parties to this Agreement with
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respect to any breach or nonperformance of any representation, warranty,
covenant or agreement contained in this Agreement shall not be affected by such
termination or abandonment, unless this Agreement is terminated or abandoned by
agreement of the parties pursuant to Section 14.01(a) of this Agreement.
ARTICLE XV
DEFINITIONS
As used in this Agreement, the following defined terms have the meanings
indicated below:
"ACCOUNTING POLICIES" shall have the meaning set forth in Section
3.02(a).
"ACCOUNTS RECEIVABLE" shall have the meaning set forth in Section
2.01(b)(iv).
"AFFILIATE" means any Person that directly, or indirectly, controls
or is controlled by or is under common control with the Person specified.
For purposes of this definition, control of a Person means the power,
direct or indirect, to direct or cause the direction of the management and
policies of such Person whether by Contract or otherwise and, in any event
and without limitation of the previous sentence, any Person owning fifty
percent (50%) or more of the voting securities of another Person shall be
deemed to control that Person.
"AGREEMENT" shall have the meaning set forth in the recitals.
"ARTHUR ANDERSEN-GREENSBORO" shall have the meaning set forth in
Section 3.02(a).
"ARTHUR ANDERSEN REPORT" shall have the meaning set forth in
Section 3.02(a).
"ASSETS" shall have the meaning set forth in Section 2.01(a).
"ASSETS AND PROPERTIES" of any Person means all assets, properties,
rights and privileges of every kind and nature (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever located), including the
goodwill related thereto, owned or leased by such Person.
"ASSUMED CANADIAN LIABILITIES" shall have the meaning set forth in
Section 2.02(a).
"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.02(a).
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"ASSUMED U.S. LIABILITIES" shall have the meaning set forth in
Section 2.02(a).
"BENEFIT PLAN" means all U.S. Seller Benefit Plans and Canadian
Seller Benefit Plans.
"BUSINESS" shall have the meaning set forth in the recitals.
"BUSINESS CONTRACTS" shall have the meaning set forth in Section
2.01(b)(vii).
"BUSINESS GUARANTIES" shall have the meaning set forth in Section
9.02.
"BUSINESS INTELLECTUAL PROPERTY" shall have the meaning set forth
in Section 2.01(b)(x).
"BUSINESS LICENSES" shall have the meaning set forth in Section
2.01(b)(xi).
"BUSINESS RECORDS" shall have the meaning set forth in Section
2.01(b)(xiv).
"CANADIAN ASSETS" shall have the meaning set forth in Section
2.01(a).
"CANADIAN BUSINESS" shall have the meaning set forth in the
recitals.
"CANADIAN LEASED REAL PROPERTY" shall have the meaning set forth in
Section 5.07(a).
"CANADIAN OWNED REAL PROPERTY" shall have the meaning set forth in
Section 5.07(a).
"CANADIAN PURCHASER" shall have the meaning set forth in the
recitals.
"CANADIAN REPURCHASE AMOUNT" shall have the meaning set forth in
Section 10.13.
"CANADIAN SELLER" shall have the meaning set forth in the recitals.
"CANADIAN SELLER BENEFIT PLAN" shall have the meaning set forth in
Section 5.17(e).
"CANADIAN SELLER EMPLOYEE" means each employee of Canadian Seller
engaged in the conduct of the Business at the Winnipeg, Manitoba, Canada
facility of such Seller.
"CANADIAN TRANSFERRED EMPLOYEES" shall have the meaning set forth
in Section 7.01(b).
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"CANADIAN UNION CONTRACT" shall have the meaning set forth in
Section 2.01(b)(viii).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules and
regulations promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System, as provided for by 40 C.F.R.
Section 300.5.
"CHINA WARRANTY CLAIM" shall have the meaning set forth in Section
2.02(b)(viii).
"CLAIM NOTICE PERIOD" shall have the meaning set forth in Section
13.04(b).
"CLAREMONT TANGIBLE ASSETS" shall have the meaning set forth in
Section 5.25 hereof.
"CLOSING" shall have the meaning set forth in Section 4.01.
"CLOSING DATE" shall have the meaning set forth in Section 4.01.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed also to refer to any successor
sections.
"COMMITMENT" shall have the meaning set forth in Section 6.08.
"COMPETITION ACT" means Competition Act R.S.C. 1985 C-34 1985, as
amended, and the regulations promulgated thereunder.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in
Section 10.02.
"CONTRACT" means all written or oral contracts, agreements, license
agreements, sublicenses, assignments, purchase agreements, indentures,
mortgages, instruments of indebtedness, security agreements, guaranties,
purchase orders, sales orders, offers to sell, distribution agreements,
rights to discounts, maintenance agreements and rights under any of the
foregoing.
"COVENANT-NOT-TO-COMPETE" shall mean the Noncompetition Agreement
attached hereto as Exhibit Q.
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"EMPLOYEES" means all U.S. Seller Employees and all Canadian Seller
Employees.
"ENVIRONMENTAL CONSULTANT" shall have the meaning set forth in
Section 10.06.
"ENVIRONMENTAL LAW" means all Laws and Orders concerning pollution
or protection of the environment, public health and safety, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, groundwater, or lands
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or
wastes including, without limitation, CERCLA, the Resource Conservation and
Recovery Act, as amended, the Clean Air Act, as amended, the Clean Water
Act, as amended, the Toxic Substance Control Act, as amended, and similar
state, provincial, municipal and local laws, rules and regulations, in all
cases as in existence on the Closing Date.
"ESTIMATED CANADIAN BUSINESS VALUE" shall have the meaning set
forth in Section 3.01(a)(B).
"EXCLUDED ASSETS" shall have the meaning set forth in Section
2.01(c).
"FINAL CLOSING DATE SCHEDULE OF NET ASSETS" shall have the meaning
set forth in Section 3.02(a).
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
5.05.
"GAAP" means generally accepted accounting principles, consistently
applied.
"GOVERNMENTAL AUTHORITY" means any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the
United States, Canada, any other country or any domestic or foreign state,
county, city or other political subdivision.
"HAZARDOUS MATERIAL" means (A) any petroleum, hazardous or toxic
petroleum-derived substances or petroleum products, flammable explosives,
radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); and (B) any chemicals or other materials
or substances which are regulated, classified or defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
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materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants", "pollutant" or "contaminant" or any
similar denomination intended to classify substances by reason of toxicity,
carcinogenicity, ignitability, corrosivity or reactivity under any
Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"IMPROVEMENTS" shall have the meaning set forth in Section
2.01(b)(i).
"INDEMNIFIED PARTY" means any Person claiming indemnification under
any provision of Article XIII hereof.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of Article XIII.
"INDEMNITY NOTICE" shall have the meaning set forth in Section
13.04(b).
"INDEMNITY RESPONSE PERIOD" shall have the meaning set forth in
Section 13.04(b).
"INSURANCE PROGRAMS" shall have the meaning set forth in Section
2.01(c)(iv).
"INTELLECTUAL PROPERTY" means (a) inventions (whether patentable or
unpatentable and whether or not reduced to practice), improvements thereto,
and patents, patent applications, and patent disclosures, together with
reissuances, continuations, continuations-in-part, revisions, extensions,
and reexaminations thereof, (b) trademarks, service marks, trade dress,
logos, trade names, and corporate names, together with translations,
adaptations, derivations, and combinations thereof and applications,
registrations, and renewals in connection therewith, (c) copyrightable
works, copyrights, and applications, registrations and renewals in
connection therewith, (d) mask works and applications, registrations and
renewals in connection therewith, (e) all trade secrets and confidential
business information (including, but not limited to, ideas, research and
development, know-how, formulae, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, engineering notebooks, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals), (f)
computer software and firmware (including data and related documentation),
(g) industrial designs and applications therefor and (h) rights under and
remedies against infringement of any of the
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foregoing, and rights to protection of interests in any of the foregoing
under the laws of any jurisdiction.
"INVENTORY" shall have the meaning set forth in Section
2.01(b)(iii).
"IRS" means the Internal Revenue Service, and successor thereof.
"JOINT CONTRACTS" shall have the meaning set forth in Section 5.25
hereof.
"KNOWLEDGE OF SELLER" or "KNOWN TO SELLER" means the knowledge of
Olivier Houssin, Chairman of U.S. Seller and Canadian Seller, Marvin S.
Edwards, Jr., President of U.S. Seller and Vice President-Finance of
Canadian Seller, C. J. Phillips, President of Alcatel Telecommunications
Cable Division, Patrick J. Noonan, General Counsel and Secretary of
Canadian Seller and U.S. Seller, Ronald K. Boyd, Controller of U.S. Seller,
Glen Heiar, Controller of Canadian Seller, Richard P. Campbell, Tax
Director of U.S. Seller and Canadian Seller, and Kathy L. Isenhour,
Americas Risk Manager of U.S. Seller and Canadian Seller, Harold Karp,
General Manager, Copper Cable Business, Peter Voyer, Plant Manager,
Elizabethtown, Kentucky, U.S.A. facility, Paul Newhart, Plant Manager,
Tarboro, North Carolina, U.S.A. facility and William Van Duren, Plant
Manager, Winnipeg, Manitoba, Canada facility.
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, Canada,
any foreign country or any domestic or foreign state, province, county,
city, municipality or other political subdivision or of any Governmental
Authority.
"LENDER" shall have the meaning set forth in Section 6.08.
"LIABILITIES" means all indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether known or unknown, or whether due or to become due).
"LICENSES" means all licenses, permits, certificates of authority,
variances, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental Authority.
"LIENS" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind,
or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
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"LOSSES" means any and all damages, fines, costs, fees, penalties,
deficiencies, losses, amounts paid in settlement and expenses (including
without limitation interest, court costs, fees of attorneys, accountants,
consultants and other experts or other expenses of litigation or other
proceedings or of any claim, default or assessment).
"MATERIAL ADVERSE CHANGE" shall have the meaning set forth in
Section 5.06.
"MATERIAL CONTRACTS" shall have the meaning set forth in Section
5.12(a).
"NPL" means the National Priorities List under CERCLA.
"NET ASSET VALUE" shall have the meaning set forth in Section
3.02(a).
"NEUTRAL ACCOUNTANTS" shall have the meaning set forth in Section
3.02(a).
"NON-UNION HOURLY PENSION BENEFIT AMOUNT" shall have the meaning
set forth in Section 7.02(c)(ii).
"NON-UNION HOURLY PENSION BENEFIT TRANSFER DATE" shall have the
meaning set forth in Section 7.02(c)(ii).
"OBJECTION PERIOD" shall have the meaning set forth in Section
3.02(a).
"ORDER" means any writ, judgment, decree, injunction or similar
order, directive or other requirement of any Governmental Authority (in
each such case whether preliminary or final).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings,
(ii) any statutory Lien arising in the ordinary course of business by
operation of Law with respect to a Liability that is not yet due or
delinquent and (iii) any minor imperfection of title or recorded easements,
covenants or other restrictions which individually or in the aggregate with
other such items could not reasonably be expected to have a material
adverse effect on the Business or the use of the Assets in the Business as
currently conducted.
"PERSON" means any natural person, corporation, general
partnership, limited partnership, proprietorship,
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limited liability company, joint venture, other business organization,
trust, union, association or Governmental Authority.
"PERSONAL PROPERTY LEASES" shall have the meaning set forth in
Section 2.01(b)(vi).
"PHASE I REPORT" shall have the meaning set forth in Section 10.06.
"PHASE II REPORT" shall have the meaning set forth in Section
10.06.
"PRELIMINARY CLOSING DATE SCHEDULE OF NET ASSETS" shall have the
meaning set forth in Section 3.02(a).
"PREPAID EXPENSES" shall have the meaning set forth in Section
2.01(b)(ix).
"PROCEDURES" shall have the meaning set forth in Section 3.02(a).
"PURCHASE PRICE" shall have the meaning set forth in Section
3.01(a).
"PURCHASER" shall have the meaning set forth in the recitals.
"PURCHASERS" shall have the meaning set forth in the recitals.
"REAL PROPERTY" shall have the meaning set forth in Section
2.01(b)(i).
"REAL PROPERTY LEASES" shall have the meaning set forth in Section
2.01(b)(ii).
"RELATED AGREEMENTS" means, collectively, the U.S. Bill of Sale in
the form of EXHIBIT M hereto, the Canadian General Conveyance in the form
of EXHIBIT N hereto, the U.S. Assumption Agreement in the form of EXHIBIT O
hereto, the Canadian Assumption Agreement in the form of EXHIBIT P hereto,
and the Noncompetition Agreement in the form of EXHIBIT Q hereto.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor environment, including, without limitation, the
movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.
"REMEDIAL WORK" shall have the meaning set forth in Section 10.11.
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"REMEDIATION COMMITMENT" shall have the meaning set forth in
Section 10.06.
"RETAINED CANADIAN LIABILITIES" shall have the meaning set forth in
Section 2.02(c).
"RETAINED LIABILITIES" shall have the meaning set forth in Section
2.02(c).
"RETAINED U.S. LIABILITIES" shall have the meaning set forth in
Section 2.02(c).
"REVIEW PERIOD" shall have the meaning set forth in Section
3.02(a).
"SAFE HARBOR EQUIPMENT" shall have the meaning set forth in Section
2.02(b)(iii).
"SAFE HARBOR LEASES" shall have the meaning set forth in Section
2.02(b)(iii).
"SALARIED PENSION BENEFIT AMOUNT" shall have the meaning set forth
in Section 7.02(d)(ii).
"SALARIED PENSION BENEFIT TRANSFER DATE" shall have the meaning set
forth in Section 7.02(d)(ii).
"SELLER" shall have the meaning set forth in the recitals.
"SELLER LETTERS OF CREDIT" shall have the meaning set forth in
Section 9.02.
"SELLERS" shall have the meaning set forth in the recitals.
"TANGIBLE PERSONAL PROPERTY" shall have the meaning set forth in
Section 2.01(b)(v).
"TAX" means any federal, state, local, provincial, municipal or
foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Section 59A), customs duties, capital stock,
employer health, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, goods and services,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"TAX RETURNS" means any return, declaration, report, claim for
refund, or information return or statement
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relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section
13.04(a).
"THIRD PARTY CLAIM NOTICE" shall have the meaning set forth in
Section 13.04(a).
"THIRD PARTY CLAIM NOTICE PERIOD" shall have the meaning set forth
in Section 13.04(a).
"THIRD PARTY CLAIM RESPONSE PERIOD" shall have the meaning set
forth in Section 13.04(a).
"TRANSFEREE NON-UNION HOURLY PENSION PLAN" shall have the meaning
set forth in Section 7.02(c)(i).
"TRANSFEREE SALARIED PLAN" shall have the meaning set forth in
Section 7.02(d)(i).
"U.S. ASSETS" shall have the meaning set forth in Section 2.01(a).
"U.S. BUSINESS" shall have the meaning set forth in the recitals.
"U.S. LEASED REAL PROPERTY" shall have the meaning set forth in
Section 5.07(a).
"U.S. OWNED REAL PROPERTY" shall have the meaning set forth in
Section 5.07(a).
"U.S. PURCHASER" shall have the meaning set forth in the recitals.
"U.S. PURCHASER'S SAVINGS PLAN" shall have the meaning set forth in
Section 7.02(e)(iii).
"U.S. REPURCHASE AMOUNT" shall have the meaning set forth in
Section 10.12.
"U.S. SELLER" shall have the meaning set forth in the recitals.
"U.S. SELLER BENEFIT PLAN" shall have the meaning set forth in
Section 5.17(a).
"U.S. SELLER EMPLOYEE" means each employee of U.S. Seller engaged
in the conduct of the Business at the Elizabethtown, Kentucky, U.S.A. or
Tarboro, North Carolina, U.S.A. facilities of such Seller, or at the
Schaumberg, Illinois, U.S.A., Overland Park, Kansas, U.S.A., or Greensboro,
North Carolina, U.S.A. sales offices of such Seller or identified on
SCHEDULE XV hereto.
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"U.S. SELLER ERISA AFFILIATE" shall have the meaning set forth in
Section 5.17(b).
"U.S. SELLER'S NON-UNION HOURLY PENSION PLAN" shall have the
meaning set forth in Section 7.02(c)(i).
"U.S. SELLER'S SALARIED PENSION PLAN" shall have the meaning set
forth in Section 7.02(d)(i).
"U.S. SELLER'S SAVINGS PLAN" shall have the meaning set forth in
Section 7.02(e)(i).
"U.S. TRANSFERRED EMPLOYEES" shall have the meaning set forth in
Section 7.01(a).
"U.S. UNION CONTRACT" shall have the meaning set forth in Section
2.01(b)(viii).
"UNION HOURLY PENSION PLAN" shall have the meaning set forth in
Section 7.02(b)(i).
"UNION HOURLY PENSION BENEFIT AMOUNT" shall have the meaning set
forth in Section 7.02(b)(i).
"UNION HOURLY PENSION BENEFIT TRANSFER DATE" shall have the meaning
set forth in Section 7.02(b)(ii).
"UPDATE PERIOD" shall have the meaning set forth in Section 10.14.
"VEHICLES" shall have the meaning set forth in Section
2.01(b)(xii).
ARTICLE XVI
MISCELLANEOUS
Section 16.01 NOTICES. All notices, requests and other communications
hereunder shall be in writing and will be deemed to have been duly given (a)
when personally delivered, (b) when sent by telefax to a party at the number
listed below for such party, (c) three (3) days after the day on which the same
has been delivered prepaid to a national (only in the case of notices within the
continental United States) or an international courier service or (d) three (3)
days after the deposit in the United States mail, registered or certified,
return receipt requested, postage prepaid, in each case addressed to the party
to whom such notice is to be given at the following address for such party:
If to Purchaser: The Alpine Group, Inc.
1790 Broadway
New York, New York 10019
Attn: Chairman of the Board
Facsimile No.: (212) 757-3423
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and
Superior Teletec Inc.
150 Interstate North Parkway
Suite 300
Atlanta, Georgia 30339
Attn: President
Facsimile No.: (404) 984-3218
With copies to: Proskauer Rose Goetz & Mendelsohn
LLP
1585 Broadway
New York, New York 10036
Attn: Ronald R. Papa, Esq.
Facsimile No.: (212) 969-2900
If to Sellers: Alcatel NA Cable Systems, Inc.
39 Second Street, NW
Hickory, North Carolina 28601
Attn: Marvin S. Edwards, Jr.,
President
Facsimile No.: (704) 328-9117
With copies to: Alcatel Canada Wire Inc.
250 Ferrand Drive
North York, Ontario M3C 3J4
CANADA
Attn: Patrick J. Noonan, Esq.,
General Counsel
Facsimile No.: (416) 424-5192
Any party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
Section 16.02 BULK TRANSFER COMPLIANCE. Sellers and Purchasers hereby
waive compliance with the provisions of Article 6 of the Uniform Commercial
Code, entitled "Uniform Commercial Code - Bulk Transfers" or comparable Laws
relating to bulk transfers as adopted in the various jurisdictions in which the
Assets are located, to the extent applicable to the transactions contemplated
hereby. Sellers shall indemnify and save harmless Purchasers from and against
any and all Losses, arising out of Sellers' noncompliance with said bulk
transfer laws except to the extent arising out of Purchasers' failure to pay,
perform and discharge the Assumed Liabilities as and when due.
Section 16.03 FEES AND EXPENSES. Subject to the provisions of Section
3.02(a) with respect to the fees paid to the Neutral Accountants, and Section
10.06 with respect to the fees and costs of the Environmental Consultant,
Sellers, on the one hand, and the Purchasers, on the other hand, shall each bear
their own expenses in connection with the negotiation and preparation of this
Agreement, all documents and instruments contemplated
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hereby, the Related Agreements and the consummation of the transactions
contemplated hereby, including without limitation the fees and expenses of their
respective counsel, accountants, investment bankers and consultants.
Section 16.04 PUBLIC ANNOUNCEMENTS. Simultaneous with the execution of
this Agreement, the parties hereto shall issue the press release with respect to
the transactions contemplated hereby in the form of SCHEDULE 16.04 hereof.
Section 16.05 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements among the parties with respect to the subject matter
hereof and contains the sole and entire agreement among the parties hereto with
respect to the subject matter hereof.
Section 16.06 WAIVER; REMEDIES. Any term or condition of this Agreement
may be waived at any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion.
Section 16.07 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
Section 16.08 BENEFITS AND BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.
Section 16.09 CAPTIONS. The captions used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
Section 16.10 EXHIBITS AND SCHEDULES. All exhibits and schedules referred
to in this Agreement, all attachments to exhibits or schedules, and any other
attachment to this Agreement are hereby incorporated by reference into this
Agreement and hereby are made a part of this Agreement as if set out in full
herein.
Section 16.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of North Carolina applicable
to a contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
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Section 16.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
Section 16.13 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction, shall as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 16.14 NO THIRD PARTY BENEFICIARY. This Agreement shall not confer
any rights or remedies upon any person or entity other than the parties hereto
and their respective successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLERS:
ALCATEL NA CABLE SYSTEMS, INC.
By: /S/ M. S. EDWARDS, JR.
----------------------------
Name: M. S. Edwards, Jr.
--------------------------
Title: President
-------------------------
ALCATEL CANADA WIRE INC.
By: /S/ M. S. EDWARDS, JR.
----------------------------
Name: M. S. Edwards, Jr.
--------------------------
Title: President
-------------------------
PURCHASERS:
SUPERIOR TELETEC INC.
By: /S/ JUSTIN F. DEEDY, JR.
----------------------------
Name: Justin F. Deedy, Jr.
--------------------------
Title: President
-------------------------
SUPERIOR CABLE CORPORATION
By: /S/ BRAGI F. SCHUT
----------------------------
Name: Bragi F. Schut
--------------------------
Title: President
-------------------------
The undersigned joins in this Asset Purchase Agreement as a party hereto for the
purpose of agreeing to be bound by Section 3.04 hereof and Section 13.04(c)
hereof.
THE ALPINE GROUP, INC.,
a Delaware corporation
By: /S/ BRAGI F. SCHUT
----------------------------
Name: Bragi F. Schut
--------------------------
Title: Executive Vice President
-------------------------
- 88 -
<PAGE>
INDEX OF EXHIBITS
Exhibit A Seller Bring-Down Certificate
Exhibit B Form of Deeds
Exhibit C Form of Officers' Certificate of Seller
Exhibit D Form of Secretary's Certificate of Seller
Exhibit E Form of Incumbency Certificate of Seller
Exhibit F Form of Moore & Van Allen, PLLC Opinion Letter
Exhibit G Form of Stikeman, Elliott Opinion Letter
Exhibit H Purchaser Bring-Down Certificate
Exhibit I Form of Officer's Certificate of Purchaser
Exhibit J Form of Secretary's Certificate of Purchaser
Exhibit K Form of Incumbency Certificate of Purchaser
Exhibit L Form of Proskauer Rose Goetz & Mendelsohn Opinion
Letter
Exhibit M U.S. Bill of Sale
Exhibit N Canadian General Conveyance
Exhibit O U.S. Assumption Agreement
Exhibit P Canadian Assumption Agreement
Exhibit Q Noncompetition Agreement
- 89 -
<PAGE>
AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT (the "AMENDMENT") is made and entered into as of the 11th
day of May, 1995 by and among ALCATEL NA CABLE SYSTEMS, INC., a Delaware
corporation with its principal place of business in Hickory, North Carolina,
U.S.A. (the "U.S. SELLER"), ALCATEL CANADA WIRE INC., an Ontario corporation
with its principal place of business in North York, Ontario, Canada (the
"CANADIAN SELLER"), SUPERIOR TELETEC INC., a Georgia corporation with its
principal place of business in Atlanta, Georgia, U.S.A. (the "U.S. PURCHASER")
and SUPERIOR CABLE CORPORATION, an Ontario Corporation with its principal place
of business in Ontario, Canada (the "CANADIAN PURCHASER").
W I T N E S S E T H:
WHEREAS, the parties hereto entered into that certain Asset Purchase
Agreement dated as of March 17, 1995 (the "ASSET PURCHASE AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the Asset Purchase Agreement
upon the terms and conditions set forth herein; and
WHEREAS, the parties hereto desire to supplement and update the Schedules
to the Asset Purchase Agreement pursuant to Section 10.14 thereof upon the terms
and conditions set forth herein; and
WHEREAS, the parties hereto desire to enter into certain additional
agreements upon the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
All capitalized terms used herein which are not defined herein shall have
the meanings set forth in the Asset Purchase Agreement.
ARTICLE II
AMENDMENTS TO ASSET PURCHASE AGREEMENT
Section 2.01 EFFECTIVE DATE. The amendments to the Asset Purchase
Agreement set forth in this Article II shall be effective as of March 17, 1995.
<PAGE>
Section 2.02 MISCELLANEOUS AMENDMENTS TO ASSET PURCHASE AGREEMENT. The
following provisions of the Asset Purchase Agreement are hereby amended as set
forth below:
(a) The second paragraph on page 1 of the Asset Purchase Agreement is
hereby amended by deleting the phrase "Schaumberg, Illinois, U.S.A." from the
ninth line thereof. Section 2.01(b)(v) of the Asset Purchase Agreement is
hereby amended by deleting the phrase "Schaumberg, Illinois, U.S.A." from the
tenth line thereof. The definition of "U.S. Seller Employee" in Article XV of
the Asset Purchase Agreement is hereby amended by deleting the phrase
"Schaumberg, Illinois, U.S.A." from the fourth and fifth lines thereof.
(b) Section 5.17(d)(v) of the Asset Purchase Agreement is hereby amended
by adding the phrase "and certain claims that have been raised against certain
fiduciaries of the Alcatel NA Cable Systems, Inc. Investment and Savings Plan
(or predecessor plans) concerning the investment of certain plan assets in a
contract with Executive Life Insurance Company" following the word "plans" at
the end of the first sentence thereof.
(c) Section 5.17(e)(v) of the Asset Purchase Agreement is hereby amended
by adding the phrase "to be made" following the word "required" on the first
line thereof.
(d) Section 7.01(a) and Schedule 7.01(a) of the Asset Purchase Agreement
are hereby amended (i) by deleting the last sentence of Section 7.01(a) in its
entirety, (ii) by deleting Schedule 7.01(a) in its entirety and (iii) by adding
the following as the new last sentence of Section 7.01(a):
U.S. Seller agrees to take those actions reasonably requested by U.S.
Purchaser to enable U.S. Purchaser to succeed to any and all experience
ratings of U.S. Seller with respect to the Business properly available
under the unemployment insurance tax laws of any state in which the
Business is conducted.
(e) Section 7.01(b) of the Asset Purchase Agreement is hereby amended by
adding the word "or" immediately following the word "of" on the next-to-the-last
line thereof.
(f) Section 7.02(a)(ii) of the Asset Purchase Agreement is hereby amended
by replacing such Section 7.02(a)(ii) in its entirety with Replacement Section
7.02 (a)(ii) attached hereto.
(g) Section 7.02(f) of the Asset Purchase Agreement is hereby amended by
replacing such section 7.02(f) in its entirety with Replacement Section 7.02(f)
attached hereto.
(h) Section 7.03(a) of the Asset Purchase Agreement is hereby amended by
changing the word "Seller" to "Purchaser" on the seventeenth line thereof.
- 2 -
<PAGE>
(i) Section 7.03(c)(i) of the Asset Purchase Agreement is hereby amended
by changing the word "case" to "cease" on the fourth line thereof.
(j) Section 7.03(c)(iii) of the Asset Purchase Agreement is hereby amended
by changing the word "construed" to "constituted" on the ninth line thereof.
(k) Section 10.08 of the Asset Purchase Agreement is hereby amended by
deleting the phrase "Closing Date" from the fifth line thereof and by inserting
in lieu thereof the date "May 26, 1995."
Section 2.03 REVISIONS TO SCHEDULES. The Schedules to the Asset Purchase
Agreement are hereby amended as follows:
(a) Schedule 2.01(b)(ii)(B) of the Asset Purchase Agreement is hereby
amended by deleting therefrom the first paragraph thereof (relating to the
Schaumberg, Illinois Lease) in its entirety.
(b) Schedule 2.01(b)(vi) of the Asset Purchase Agreement is hereby amended
(i) by deleting from the category thereof entitled "The following Safe Harbor
Leases" the following items: August 1, 1983, Phelps Dodge and Celwave
Technologies, Inc. and June 25, 1985, Phelps Dodge and Celwave Systems, Inc. and
(ii) by deleting from the category thereof entitled "Other Leased Vehicles" the
following item: 1990 Pontiac Bonneville, ID #1G2HX54CXL1230437 (NC).
(c) Schedule 2.01(b)(xii) of the Asset Purchase Agreement is hereby
replaced in its entirety with Replacement Schedule 2.01(b)(xii) attached hereto.
(d) Schedule 2.02(b)(iii)(A) of the Asset Purchase Agreement is hereby
amended by deleting therefrom the following items: August 1, 1983 Phelps Dodge
and Celwave Technologies, Inc. and June 25, 1985, Phelps Dodge and Celwave
Systems, Inc.
(e) Schedule 2.02(b)(xi) of the Asset Purchase Agreement is hereby amended
by deleting from the page contained therein entitled "International Exposure -
Letters of Credit" the letter of credit described as "Wachovia 968-034974" and
all entries related thereto.
(f) Schedule 5.12(a) of the Asset Purchase Agreement is hereby amended by
replacing the Existing Page of Schedule 5.12(a) attached hereto with the
Replacement Page of Schedule 5.12(a) attached hereto.
(g) Schedule 5.12(a) of the Asset Purchase Agreement is hereby further
amended by adding the following item to the first page thereof: Consulting
Agreement with Kelly Black at a rate of $1,143 per week which expires on
December 31, 1995.
- 3 -
<PAGE>
(h) Schedule 5.12(a) of the Asset Purchase Agreement is hereby further
amended by adding to the part thereof entitled "Customer Contract Information"
the following items:
Duraline Corp. (Service Wire)
Warwick Telephone
Venezuela (Phelps Dodge)
(i) Schedule 5.17(e)(i) of the Asset Purchase Agreement is hereby replaced
in its entirety by Replacement Schedule 5.17(e)(i) attached hereto.
(j) Schedule 5.17(e)(x) of the Asset Purchase Agreement is hereby replaced
in its entirety with Replacement Schedule 5.17(e)(x) attached hereto.
(k) Schedule 5.25 of the Asset Purchase Agreement is hereby amended by
replacing the Existing Page of Schedule 5.25 attached hereto with the
Replacement Page of Schedule 5.25 attached hereto.
(l) Schedule XV of the Asset Purchase Agreement is hereby replaced in its
entirety with Replacement Schedule XV attached hereto.
ARTICLE III
UPDATES TO SCHEDULES
Section 3.01 EFFECTIVE DATE. The supplements and updates to the
Schedules to the Asset Purchase Agreement set forth in this Article III shall be
effective as of the date hereof.
Section 3.02 SUPPLEMENTS TO AND UPDATES OF SCHEDULES. Pursuant to
Section 10.14 of the Asset Purchase Agreement, the Schedules thereto are hereby
supplemented and updated as follows:
(a) Schedule 2.02(b)(xi) of the Asset Purchase Agreement is hereby
supplemented and updated by replacing the page in such Schedule 2.02(b)(xi)
entitled "International Exposure - Letters of Credit" with the Replacement Page
International Exposure - Letters of Credit attached hereto.
(b) Schedule 2.02(b)(xii) of the Asset Purchase Agreement is hereby
supplemented and updated by replacing such Schedule 2.02(b)(xii) in its entirety
with Replacement Schedule 2.02(b)(xii) attached hereto.
(c) Schedule 2.02(c)(vi) of the Asset Purchase Agreement is hereby
supplemented and updated by adding the sentence "This matter has been settled."
as an additional sentence at the end of the matter entitled "Larry Williams v.
Alcatel" thereon and as an additional sentence at the end of the matter entitled
"Jackie Foushee v. Alcatel" thereon.
- 4 -
<PAGE>
(d) Schedule 3.02(a)(i) of the Asset Purchase Agreement is hereby
supplemented and updated by adding at the end thereof the Additional Page of
Schedule 3.02(a)(i) attached hereto.
(e) Section 5.06(b) of the Asset Purchase Agreement is hereby supplemented
and updated by adding the following phrase at the beginning thereof: "except
with respect to the settlement for an amount of approximately $210,000 of a
claim against Ameritech arising out of the failure of Ameritech to return steel
reels to U. S. Seller."
(f) Schedule 5.12(a) of the Asset Purchase Agreement is hereby
supplemented and updated by adding to the part thereof entitled "Alcatel
Telecommunications Cable Domestic - Outstanding" the following items:
City of Thunder Bay
Materials Management Office
Victoriaville Civic Center
111 South Syndicate Ave.
P.O. Box 800
Thunder Bay, Ontario PTC 5K4
Tender No. 33/95
ATU Telecommunications
600 Telephone Avenue
Anchorage, Alaska 99503-6091
90-564-1414
Invitation to bid #95-704
(g) Schedule 5.14 of the Asset Purchase Agreement is hereby supplemented
and updated (i) by adding thereto the Update to Schedule 5.14 attached hereto
and (ii) by adding thereto the action entitled West American Insurance Company
vs. Alcatel NA Cable Systems, Inc., 95-CI-00597 filed in the Circuit Court,
Division I, of Hardin County Kentucky, a copy of which is attached hereto.
(h) Schedule 5.20(a) of the Asset Purchase Agreement is hereby
supplemented and updated by replacing in its entirety existing Schedule 5.20(a)
with Replacement Schedule 5.20(a) attached hereto.
(i) Section 5.20(c) of the Asset Purchase Agreement is hereby supplemented
and updated by (i) adding the phrase "Except as disclosed on SCHEDULE 5.20(c)
hereof," at the beginning of Section 5.20(c) and (ii) by adding as a new
Schedule to the Asset Purchase Agreement Schedule 5.20(c) attached hereto.
(j) Schedule 5.23 of the Asset Purchase Agreement is hereby supplemented
and updated by replacing in its entirety existing Schedule 5.23 with Replacement
Schedule 5.23 attached hereto.
- 5 -
<PAGE>
ARTICLE IV
ADDITIONAL CONFIRMATIONS AND AGREEMENTS
Section 4.01 CONFIRMATION OF INVESTMENT. The parties hereto agree that
pursuant to Section 7.02(b) of the Asset Purchase Agreement the assets with
respect to the Union Hourly Pension Plan shall remain invested in the investment
arrangements selected by the U.S. Seller prior to the transfer of assets
pursuant to Section 7.02(b)(ii) of the Asset Purchase Agreement until the U.S.
Purchaser receives written authorization to the contrary.
Section 4.02 FIRST SUPPLEMENTAL PENSION PLAN. The parties hereto agree
that the previously granted ad hoc pension upgrades for the persons retired from
the Canadian Business that were heretofore funded out of the First Supplemental
Pension Plan of Alcatel Canada Wire Inc. and disbursed through the Canadian
Hourly Pension Plan shall, from and after the Closing Date, be solely the
obligation of and disbursed directly from the First Supplemental Pension Plan of
Alcatel Canada Wire Inc. and that neither the Canadian Purchaser nor the
Canadian Hourly Pension Plan shall have any obligations or liability with
respect to such pension upgrades.
ARTICLE V
MISCELLANEOUS
Section 5.01 ENTIRE AGREEMENT. This Amendment supersedes all prior
discussions and agreements among the parties with respect to the subject matter
hereof and contains the sole and entire agreement among the parties with respect
to the subject matter hereof.
Section 5.02 WAIVER; REMEDIES. Any term or condition of this Amendment
may be waived at any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Amendment, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Amendment on any future occasion.
Section 5.03 AMENDMENT. This Amendment may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
Section 5.04 BENEFITS AND BINDING EFFECT. Neither this Amendment nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void. Subject to the preceding sentence, this Amendment is
binding
- 6 -
<PAGE>
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.
Section 5.05 CAPTIONS. The captions used in this Amendment have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
Section 5.06 EXHIBITS AND SCHEDULES. All exhibits and schedules referred
to in this Amendment, all attachments to exhibits or schedules, and any other
attachment to this Amendment are hereby incorporated by reference into this
Amendment and hereby are made a part of this Amendment as if set out in full
herein.
Section 5.07 GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the Laws of the State of North Carolina applicable
to a contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
Section 5.08 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
Section 5.09 SEVERABILITY. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction, shall as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 5.10 NO THIRD PARTY BENEFICIARY. This Amendment shall not confer
any rights or remedies upon any person or entity other than the parties hereto
and their respective successors and permitted assigns.
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
pursuant to Section 16.07 of the Asset Purchase Agreement as of the date first
above written.
SELLERS:
ALCATEL NA CABLE SYSTEMS, INC.
By: /S/ M. S. EDWARDS, JR.
----------------------------
Name: M. S. Edwards, Jr.
--------------------------
Title: President
-------------------------
ALCATEL CANADA WIRE INC.
By: /S/ M. S. EDWARDS, JR.
----------------------------
Name: M. S. Edwards, Jr.
--------------------------
Title: Vice President
-------------------------
PURCHASERS:
SUPERIOR TELETEC INC.
By: /S/ BRAGI F. SCHUT
----------------------------
Name: Bragi F. Schut
--------------------------
Title: Senior Vice President
-------------------------
SUPERIOR CABLE CORPORATION
By: /S/ BRAGI F. SCHUT
----------------------------
Name: Bragi F. Schut
--------------------------
Title: Secretary
-------------------------
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<PAGE>
The undersigned joins in this Amendment as a party hereto for the purpose of
agreeing to the terms hereof as required by Section 16.07 of the Asset Purchase
Agreement.
THE ALPINE GROUP, INC.,
a Delaware corporation
By: /S/ BRAGI F. SCHUT
----------------------------
Name: Bragi F. Schut
--------------------------
Title: Secretary
-------------------------
- 9 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE PURCHASE AGREEMENT
SUPERIOR TELETEC INC.
BORROWER
THE ALPINE GROUP, INC.
AND
SUPERIOR CABLE CORPORATION
GUARANTORS
Up to $85,000,000
Variable Rate Senior Secured Guaranteed Extendible Revolving Notes,
Series A, Due 1997
$55,000,000
Senior Secured Guaranteed Extendible Notes, Series B, Due 1997
Dated as of May 10, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
Section Heading Page
- ------- ------- ----
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . . . . . . 26
1.3. RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . 27
2. SALE AND PURCHASE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . 27
2.1. AUTHORIZATION OF NOTES. . . . . . . . . . . . . . . . . . . . . . 27
2.2. SALE AND PURCHASE OF REVOLVING NOTES. . . . . . . . . . . . . . . 29
2.3. SALE AND PURCHASE OF TERM NOTES . . . . . . . . . . . . . . . . . 31
2.4. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.5. PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.6. FEES AND OTHER AMOUNTS. . . . . . . . . . . . . . . . . . . . . . 32
2.7. INTEREST RATE LIMITATION. . . . . . . . . . . . . . . . . . . . . 33
2.8. REPLACEMENT OF A PURCHASER. . . . . . . . . . . . . . . . . . . . 33
2.9. REDUCED RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . 34
3. PAYMENTS AND PREPAYMENTS OF NOTES, ETC . . . . . . . . . . . . . . . . . 34
3.1. PAYMENTS AT MATURITY. . . . . . . . . . . . . . . . . . . . . . . 34
3.2. MANDATORY PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . 35
3.3. OPTIONAL PREPAYMENTS OF THE NOTES . . . . . . . . . . . . . . . . 40
3.4. CERTAIN MATTERS RELATING TO PAYMENTS AND PREPAYMENTS. . . . . . . 40
3.5. REDUCTIONS IN MAXIMUM AGGREGATE REVOLVING COMMITMENT. . . . . . . 41
3.6. NO ACQUISITIONS OF NOTES. . . . . . . . . . . . . . . . . . . . . 42
4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 42
4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PARENT. . . 42
4.2. REPRESENTATION OF EACH PURCHASER. . . . . . . . . . . . . . . . . 59
5. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.1. PROCEEDINGS SATISFACTORY. . . . . . . . . . . . . . . . . . . . . 60
5.2. OPINION OF PURCHASER'S SPECIAL COUNSEL. . . . . . . . . . . . . . 61
5.3. OPINIONS OF COUNSEL TO THE COMPANY, ETC . . . . . . . . . . . . . 61
5.4. REPRESENTATIONS AND WARRANTIES TRUE, ETC.; CERTIFICATES . . . . . 62
5.5. ABSENCE OF MATERIAL ADVERSE CHANGE, ETC.. . . . . . . . . . . . . 62
5.6. CONSENTS AND APPROVALS. . . . . . . . . . . . . . . . . . . . . . 63
5.7. ABSENCE OF LITIGATION, ORDERS, ETC. . . . . . . . . . . . . . . . 63
5.8. NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.9. SECURITY DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . 63
5.10. ENVIRONMENTAL AUDIT. . . . . . . . . . . . . . . . . . . . . . . 66
5.11. INITIAL NOTE PURCHASE REQUESTS . . . . . . . . . . . . . . . . . 67
<PAGE>
ii
5.12. ACQUISITION TRANSACTIONS . . . . . . . . . . . . . . . . . . . . 67
5.13. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
5.14. PROCESS AGENT ACCEPTANCE . . . . . . . . . . . . . . . . . . . . 67
5.15. WIRE INSTRUCTIONS. . . . . . . . . . . . . . . . . . . . . . . . 67
5.16. DISCHARGE OF EXISTING NON-PERMITTED DEBT . . . . . . . . . . . . 67
5.17. APPRAISALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
5.18. LEGAL PROHIBITIONS . . . . . . . . . . . . . . . . . . . . . . . 68
5.19. MINIMUM AGGREGATE PRINCIPAL AMOUNT OF REVOLVING NOTES. . . . . . 68
5.20. MAXIMUM PRINCIPAL AMOUNT OF REVOLVING NOTES. . . . . . . . . . . 68
6. ADDITIONAL CONDITIONS TO OBLIGATIONS TO PURCHASE REVOLVING NOTES . . . . 68
6.1. NOTE PURCHASE REQUEST . . . . . . . . . . . . . . . . . . . . . . 69
6.2. REPRESENTATIONS AND WARRANTIES TRUE . . . . . . . . . . . . . . . 69
6.3. NO DEFAULT OR EVENT OF DEFAULT. . . . . . . . . . . . . . . . . . 69
6.4. LEGAL PROHIBITIONS. . . . . . . . . . . . . . . . . . . . . . . . 69
6.5. DELIVERY OF REVOLVING NOTES . . . . . . . . . . . . . . . . . . . 69
6.6. MINIMUM PRINCIPAL AMOUNT OF REVOLVING NOTES . . . . . . . . . . . 69
6.7. MAXIMUM PRINCIPAL AMOUNT OF REVOLVING NOTES . . . . . . . . . . . 69
6.8. OTHER SALES OF REVOLVING NOTES. . . . . . . . . . . . . . . . . . 70
6.9. OTHER REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . . . 70
7. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . . . . . . . . . . . 70
8. INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.1. INSPECTION OF BOOKS AND RECORDS . . . . . . . . . . . . . . . . . 76
8.2. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . 77
9. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.1. PAYMENT OF PRINCIPAL, PREPAYMENT CHARGE AND INTEREST. . . . . . . 77
9.2. PAYMENT OF TAXES AND CLAIMS . . . . . . . . . . . . . . . . . . . 78
9.3. MAINTENANCE OF PROPERTIES, RECORDS AND CORPORATE EXISTENCE. . . . 79
9.4. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
9.5. AFTER-ACQUIRED REAL PROPERTY. . . . . . . . . . . . . . . . . . . 82
9.6. NEW DEPOSIT ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . 83
9.7. EARLY REFINANCING . . . . . . . . . . . . . . . . . . . . . . . . 83
9.8. CONTRIBUTIONS BY THE PARENT . . . . . . . . . . . . . . . . . . . 83
9.9. FUTURE GUARANTEEING AND SECURING SUBSIDIARIES . . . . . . . . . . 84
10. NEGATIVE AND MAINTENANCE COVENANTS. . . . . . . . . . . . . . . . . . . 85
10.1. RESTRICTIONS ON DEBT . . . . . . . . . . . . . . . . . . . . . . 85
10.2. RESTRICTIONS ON LIENS. . . . . . . . . . . . . . . . . . . . . . 86
10.3. LIMITATION ON SALES AND LEASEBACKS . . . . . . . . . . . . . . . 88
10.4. CONSOLIDATION, MERGER OR DISPOSITION OF PROPERTIES;
ACQUISITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.5. SALE OR DISCOUNT OF RECEIVABLES. . . . . . . . . . . . . . . . . 89
10.6. CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . 89
<PAGE>
iii
10.7. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS . . . . . . . . . 89
10.8. ISSUANCE OF CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . 90
10.9. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . 90
10.10. COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . . . . . . . 91
10.11. CAPITAL EXPENDITURES. . . . . . . . . . . . . . . . . . . . . . 91
10.12. OPERATING LEASES. . . . . . . . . . . . . . . . . . . . . . . . 92
10.13. CERTAIN CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . 93
10.14. LIMITATION ON DIVIDEND RESTRICTIONS AFFECTING SUBSIDIARIES. . . 93
10.15. NO AMENDMENT OF CHARTER, BY-LAWS. . . . . . . . . . . . . . . . 94
10.16. AMENDMENTS TO CERTAIN DOCUMENTS . . . . . . . . . . . . . . . . 94
10.17. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . 94
11. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
11.1. EVENTS OF DEFAULT; REMEDIES. . . . . . . . . . . . . . . . . . . 97
11.2. SUITS FOR ENFORCEMENT: REMEDIES AGAINST COLLATERAL . . . . . . . 101
11.3. REMEDIES CUMULATIVE. . . . . . . . . . . . . . . . . . . . . . . 101
11.4. REMEDIES NOT WAIVED. . . . . . . . . . . . . . . . . . . . . . . 102
12. REGISTRATION, EXCHANGE, AND TRANSFER OF NOTES . . . . . . . . . . . . . 102
13. LOST, STOLEN, DAMAGED AND DESTROYED NOTES . . . . . . . . . . . . . . . 102
14. THE COLLATERAL AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . 103
14.1. AUTHORIZATION AND ACTION . . . . . . . . . . . . . . . . . . . . 103
14.2. COLLATERAL AGENT'S RELIANCE, ETC . . . . . . . . . . . . . . . . 103
14.3. NOMURA TRUST AND AFFILIATES. . . . . . . . . . . . . . . . . . . 104
14.4. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 104
14.5. SUCCESSOR COLLATERAL AGENT . . . . . . . . . . . . . . . . . . . 105
14.6. FEES AND EXPENSES OF THE COLLATERAL AGENT. . . . . . . . . . . . 105
14.7. RELEASE OF COLLATERAL. . . . . . . . . . . . . . . . . . . . . . 105
14.8. LIMITATION ON LIABILITY. . . . . . . . . . . . . . . . . . . . . 105
15. PARENT AND CANADIAN SUBSIDIARY GUARANTEE. . . . . . . . . . . . . . . . 105
15.1. GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
15.2. GUARANTEE ABSOLUTE.. . . . . . . . . . . . . . . . . . . . . . . 106
15.3. WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
15.4. SUBROGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 107
15.5. CONTINUING GUARANTEE; ASSIGNMENTS. . . . . . . . . . . . . . . . 107
15.5. MATTERS RELATING TO THE CANADIAN SUBSIDIARY. . . . . . . . . . . 108
16. ASSIGNMENTS BY PURCHASERS . . . . . . . . . . . . . . . . . . . . . . . 109
17. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
17.1. AMENDMENT AND WAIVER.. . . . . . . . . . . . . . . . . . . . . . 111
17.2. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
<PAGE>
iv
17.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . 113
17.4. SUCCESSORS AND ASSIGNS; ADMINISTRATIVE AGENT.. . . . . . . . . . 114
17.5. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
17.6. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 116
17.7. PUBLIC ANNOUNCEMENTS.. . . . . . . . . . . . . . . . . . . . . . 117
17.8. NO FIDUCIARY RELATIONSHIP. . . . . . . . . . . . . . . . . . . . 117
17.9. INTEGRATION AND SEVERABILITY . . . . . . . . . . . . . . . . . . 117
17.10. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . 117
17.11. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . . 117
17.12. SUBMISSION TO JURISDICTION; WAIVER OF SERVICE AND VENUE.. . . . 118
17.13. WAIVER OF RIGHT TO TRIAL BY JURY. . . . . . . . . . . . . . . . 118
17.14. POST-CLOSING CONDITIONS.. . . . . . . . . . . . . . . . . . . . 119
<PAGE>
v
SCHEDULES
Schedule A - Purchasers
Schedule 4.1(e ) - Capital Stock Ownership
Schedule 4.1(g) - Litigation
Schedule 4.1(i) - Consents
Schedule 4.1(j)(i) - Existing Debt
Schedule 4.1(j)(ii) - Existing Guarantees
Schedule 4.1(j)(iv) - Existing Investments
Schedule 4.1(k) - Real Property
Schedule 4.1(l) - Taxes
Schedule 4.1(p) - Labor Matters
Schedule 4.1(q) - Environmental Matters
Schedule 4.1(s)(i) - Plans, Programs, Agreements & Arrangements
Schedule 4.1(t) - Material Contracts
Schedule 4.1(u) - Insurance
Schedule 4.1(x) - Deposit Accounts
Schedule 4.1(cc) - Related Party Transactions
Schedule 10.14 - Limitations on Dividends
Schedule 16(a)(i) - Potential Purchasers
EXHIBITS
Exhibit A-1 - Form of Revolving Note
Exhibit A-2 - Form of Term Note
Exhibit B - Form of Deposit Account Agreement
Exhibit C - Form of Estoppel Letter
Exhibit D - Form of Note Purchase Request
Exhibit E-1 - Form of Opinion of Counsel to the Company
Exhibit E-2 - Form of Opinion of Special Ontario Counsel to the
Company
Exhibit E-3 - Form of Opinion of Special Manitoba Counsel to the
Company
Exhibit E-4 - Form of Opinion of Special Georgia Counsel to the
Company
Exhibit E-5 - Form of Opinion of Special Texas Counsel to the Company
Exhibit E-6 - Form of Opinion of Special North Carolina Counsel to the
Company
Exhibit E-7 - Form of Opinion of Special Kentucky Counsel to the
Company
Exhibit F - Form of Company Security Agreement
Exhibit G - Form of Parent Pledge Agreement
Exhibit H - Form of Canadian Subsidiary Security Agreement
Exhibit I - Form of Mortgage
Exhibit J - Form of Investment Account Agreement
Exhibit K - Form of Assignment and Acceptance
Exhibit L - Form of Subsidiary Guarantee
<PAGE>
NOTE PURCHASE AGREEMENT
UP TO $85,000,000
VARIABLE RATE SENIOR SECURED GUARANTEED EXTENDIBLE
REVOLVING NOTES, SERIES A, DUE 1997
$55,000,000
SENIOR SECURED GUARANTEED EXTENDIBLE NOTES, SERIES B, DUE 1997
NOTE PURCHASE AGREEMENT (this "AGREEMENT") dated as of May 10, 1995 by
and among SUPERIOR TELETEC INC., a Georgia corporation (together with its
successors, the "COMPANY"), THE ALPINE GROUP, INC., a Delaware corporation
(together with its successors, the "PARENT"), SUPERIOR CABLE CORPORATION, an
Ontario corporation (together with its successors, the "CANADIAN SUBSIDIARY"),
NOMURA INTERNATIONAL TRUST COMPANY ("NOMURA TRUST"), as collateral agent
(together with its successors, the "COLLATERAL AGENT"), and each person listed
on the attached Schedule A (together with their respective successors, and their
respective assigns and transferees in accordance with the terms of this
Agreement, each a "PURCHASER" and together the "PURCHASERS").
RECITALS
A. The Company has proposed to issue and sell to the Purchasers (i)
its Variable Rate Senior Secured Guaranteed Extendible Revolving Notes, Series
A, Due 1997 (such promissory notes, together with all notes of like tenor
hereafter delivered in substitution or exchange for any thereof, being
collectively the "REVOLVING NOTES" and individually a "REVOLVING NOTE") in an
aggregate principal amount not to exceed $85,000,000 at any time outstanding,
and (ii) its Senior Secured Guaranteed Extendible Notes, Series B, Due 1997
(such promissory notes, together with all notes of like tenor hereafter
delivered in substitution or exchange for any thereof, being collectively the
"TERM NOTES" and individually a "TERM NOTE", the Revolving Notes and the Term
Notes collectively being the "NOTES" and individually a "NOTE") in the aggregate
principal amount of $55,000,000, all for the consideration and upon the terms
and conditions hereinafter provided.
B. The proceeds of the issuance and sale of the Notes are to be used
(i) to pay the aggregate cash purchase price to be paid pursuant to the Asset
Purchase Agreement, and certain related fees, costs and expenses, (ii) to
refinance existing debt of the Company up to an aggregate principal amount not
to exceed $25,000,000, (iii) to provide up to $10,000,000 to be distributed to
the Parent and (iv) for working capital and other general corporate purposes.
<PAGE>
2
C. The issuance and sale of the Notes are intended to provide
temporary bridge financing for the Company and its Subsidiaries (as hereinafter
defined), to be refinanced and replaced by the Company or the Parent at the
earliest practicable date.
NOW, THEREFORE, the Company, the Parent, the Canadian Subsidiary, the
Collateral Agent and the Purchasers agree as follows:
Section 1. DEFINITIONS.
Section 1.1. DEFINED TERMS. For the purposes of this Agreement, the
following terms shall have the following respective meanings:
"ACCOUNTANTS" has the meaning specified in Section 7.
"AFFILIATE" means, as to any Person, any Person that directly or
indirectly controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" of a Person means the power,
direct or indirect,
(a) to vote or direct the voting of 10% or more of the outstanding
shares of Voting Stock of such Person, or
(b) to direct or cause the direction of the management and policies
of such Person, whether by ownership of Capital Stock, by contract or
otherwise;
PROVIDED that no institutional investor holding shares of Voting Stock of the
Parent shall be deemed to be an Affiliate of the Parent solely by reason of
clause (a) of this sentence. No Purchaser shall be deemed to be an Affiliate of
the Company or the Parent solely by reason of ownership of Notes or by reason of
having the benefits of any agreements or covenants of the Company contained in
this Agreement.
"AGREEMENT" has the meaning specified in the introductory paragraph
hereof.
"APPLICABLE MARGIN" means, in respect of interest accrued on the
Revolving Notes during each of the following periods, a rate per annum
(expressed as a percentage) equal to the percentage amount set forth below
opposite such period:
<PAGE>
3
Period Percentage
------ ----------
From the Closing Date to
and including November 10, 1995 1.50%
From November 11, 1995 to and
including May 10, 1996 1.75%
From May 11, 1996 to and
including November 10, 1996 2.25%
From November 11, 1996 to and
including May 10, 1997 2.75%
At all times on and after May 11, 1997 3.00%
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement dated as
of March 17, 1995, as amended as of May 11, 1995, by and among Alcatel NA Cable
Systems, Inc., Alcatel Canada Wire Inc., the Company and the Canadian
Subsidiary.
"ASSET PURCHASE DOCUMENTS" means the Asset Purchase Agreement and all
escrow agreements, instruments of assignment, sale or transfer of stock or
Properties, and other agreements, instruments and documents executed pursuant
thereto or in connection therewith, as any of the foregoing may from time to
time be amended, modified or supplemented in accordance with the terms hereof
and thereof.
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in Section
16(a)(iii).
"BANKRUPTCY CODE" means 11 U.S.C. Sec. 101 ET SEQ., as amended, and
any similar federal statute then in effect.
"BASE RATE" means with respect to each calendar month (or portion
thereof) the percentage amount per annum shown as the Bank Prime Rate on the
display designated as "Page 5" on the Telerate Access Service (or such other
display as may replace Page 5 on the Telerate Access Service) on the last
Business Day of the immediately preceding calendar month; PROVIDED that the Base
Rate during the period from the Closing Date to and including the last day of
the calendar month in which the Closing Date occurs shall be the amount shown as
the Bank Prime Rate on such display on the Closing Date. The Company
acknowledges that the Base Rate as herein defined is not necessarily the lowest
rate of interest charged by any Purchaser in connection with promissory notes
and other debt instruments purchased by it.
"BUSINESS DAY" means any day except a Saturday, a Sunday or a legal
holiday in New York City.
<PAGE>
4
"CANADIAN PENSION PLAN" means any plan, program, arrangement or
understanding that is a pension plan for the purposes of any applicable pension
benefits or tax laws of Canada or a province or territory thereof (whether or
not registered under any such laws) that is maintained, administered or
contributed to by (or to which there is or may be an obligation to contribute
by) the Canadian Subsidiary in respect of any Person's employment in Canada or a
province or territory thereof with the Canadian Subsidiary, and all related
agreements, arrangements and understandings in respect of, or related to, any
benefits to be provided thereunder or the effect thereof on any other
compensation or remuneration of any employee.
"CANADIAN SUBSIDIARY" has the meaning specified in the introductory
paragraph of this Agreement.
"CANADIAN SUBSIDIARY SECURITY AGREEMENT" has the meaning specified in
Section 5.9(c).
"CAPITAL EXPENDITURES" means the expenditures of any Person that
should be capitalized on the balance sheet of such Person in accordance with
GAAP (including that portion of Capitalized Lease Obligations that should be
capitalized on a consolidated balance sheet of such Person in accordance with
GAAP) and that are made in connection with the purchase, construction or
improvement of items properly classified on such balance sheet as property,
plant, equipment or other fixed Properties or intangibles.
"CAPITAL STOCK" means any and all shares, interests, participations,
rights in, or other equivalents of (however designated and whether voting or
non-voting) capital stock, including without limitation shares of preferred or
preference stock, outstanding at any time and from time to time, and any and all
rights, warrants or options exchangeable for or convertible into such capital
stock.
"CAPITALIZED LEASE" means, as to any Person, a lease of (or other
agreement conveying the right to use) real and/or personal Property to such
Person as lessee, with respect to which the obligations of such Person to pay
rent or other amounts are required to be classified and accounted for as a
capital lease on a balance sheet of such Person in accordance with GAAP
(including Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board), or with respect to which the amount of the asset
and liability thereunder as if so capitalized is required to be disclosed in a
note to such balance sheet.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the obligation
of such Person to pay rent or other amounts under a Capitalized Lease and, for
purposes of this Agreement, the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with GAAP.
<PAGE>
5
"CASH EQUIVALENTS" means
(a) any of the following:
(i) marketable obligations maturing within 12 months after
acquisition thereof issued or fully guaranteed or insured by the
United States of America or an instrumentality or agency thereof
(PROVIDED that the full faith and credit of the United States of
America is pledged in support thereof);
(ii) open-market commercial paper, maturing within 270 days after
acquisition thereof, that has the highest credit-rating grade of
either Standard & Poor's Corporation or Moody's Investors Service,
Inc.;
(iii) securities
(A) with maturities of one year or less from the date of
acquisition,
(B) issued or fully guaranteed by any state, commonwealth
or territory of the United States of America or by any political
subdivision or taxing authority of any such state, commonwealth
or territory and
(C) rated at least A by Standard & Poor's Corporation or A
by Moody's Investors Service, Inc.; and
(iv) securities with maturities of one year or less from the date
of acquisition backed by standby letters of credit issued by Nomura
Trust or any commercial bank satisfying the requirements of clause
(b)(i) below,
but only if and to the extent that the foregoing Investments are held on
behalf of the Company or one of its Subsidiaries by Trust Company Bank in
an investment account as to which the Company or such Subsidiary and Trust
Company Bank shall have entered into an Investment Account Agreement;
(b) any of the following:
(i) certificates of deposit or bankers acceptances or other
obligations maturing within six months after acquisition thereof
issued by any commercial bank
(A) organized under the laws of the United States of
America or any state thereof,
(B) that is a member of the Federal Reserve System,
<PAGE>
6
(C) that has capital and surplus and undivided profits in
excess of $100,000,000 and
(D) that issues, or the parent of which issues, commercial
paper described in clause (b) above, and
(ii) other certificates of deposit maturing within 12 months
after acquisition thereof in respect of deposits fully insured by the
Federal Deposit Insurance Corporation,
but only if and to the extent that the Company or the Subsidiary thereof
making such investment
(1) has pledged or otherwise granted a Lien on such certificate
of deposit in compliance with Section 10.2(i) (or Section 10.2(j)
insofar as it relates to Section 10.2(i)), or
(2) shall have delivered any certificates and other evidence of
the same, endorsed in blank for transfer or otherwise in form for
transfer satisfactory to the Collateral Agent, to the Collateral Agent
within three Business Days after having made such investment; and
(c) repurchase obligations of Nomura Trust, of any commercial bank
satisfying the requirements of clause (b)(i) above or of Merrill Lynch &
Co. having a term of not more than 30 days with respect to obligations
described in clause (a) above.
"CASUALTY" has the meaning specified in Section 9.4(b).
"CHANGE OF CONTROL" means any transaction, event or condition as a
result of which
(a) any Person (other than Steven S. Elbaum) or two or more Persons
acting in concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the SEC under the Exchange Act), directly or
indirectly, of Voting Stock of the Parent (or other instruments convertible
into or exchangeable for such Voting Stock) representing 20% or more of the
combined voting power of all Voting Stock of the Parent;
(b) during any period of up to 12 consecutive months, commencing
after the date of this Agreement, individuals who at the beginning of such
12-month period were directors of the Parent (together with any new
directors whose election to the Board of Directors or whose nomination for
election by the Parent's stockholders was approved by a vote of at least
two-thirds of the members of the Board of Directors at the beginning of
such period or whose election or nomination for election was
<PAGE>
7
previously so approved) shall cease for any reason to constitute a majority
of the Board of Directors of the Parent;
(c) any Person (other than Steven S. Elbaum) or two or more Persons
acting in concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of, control over Voting Stock of the
Parent (or other instruments convertible into or exchangeable for such
securities) representing 20% or more of the combined voting power of all
Voting Stock of the Parent;
(d) the Parent shall own less than 100% of the outstanding shares of
Capital Stock of the Company; or
(e) the Company shall own less than 100% of the outstanding shares of
Capital Stock of the Canadian Subsidiary.
"CLOSING DATE" has the meaning specified in Section 2.4.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"COLLATERAL" means, collectively, all Property of the Parent, the
Company and their respective Subsidiaries in which any of such Persons is
granting or may hereafter grant a Lien to the Collateral Agent pursuant to the
Security Documents.
"COLLATERAL AGENT" has the meaning specified in the introductory
paragraph of this Agreement.
"COMPANY" has the meaning specified in the introductory paragraph of
this Agreement.
"COMPANY SECURITY AGREEMENT" has the meaning specified in Section
5.9(a).
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period,
(a) Consolidated Interest Expense of the Company and its Subsidiaries
accrued during such period, PLUS
(b) all Consolidated Interest Expense of the Company and its
Subsidiaries accrued during any other period but paid during such period
(other than any such payment made by issuance of additional securities of
the same class as that in respect of which such interest accrued), MINUS
(c) all Consolidated Interest Expense accrued during such period the
payment of which is
<PAGE>
8
(i) deferred to another period or
(ii) made during such period solely by issuance of additional
securities of the same class as that in respect of which such interest
accrued, MINUS
(d) all amounts included in Consolidated Interest Expense for such
period that constitute deferred financing fees or amortization of discounts
or premiums,
all as determined with respect to such period for the Company and its
Subsidiaries on a consolidated basis in accordance with GAAP.
"CONSOLIDATED EBITDA" means, for any period,
(a) Consolidated Net Income (Loss), PLUS
(b) in each case to the extent deducted in determining such
Consolidated Net Income (Loss),
(i) Consolidated Interest Expense,
(ii) Consolidated Income Tax Expense,
(iii) depreciation expense and
(iv) amortization expense,
all as determined with respect to the Company and its Subsidiaries for such
period on a consolidated basis in accordance with GAAP.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of the
following
(a) Consolidated Interest Expense, and
(b) all minimum or guaranteed net rentals as lessee under any
Operating Lease;
all as determined with respect to the Company and its Subsidiaries for such
period on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INCOME TAX EXPENSE" means, for any period, the amount that,
in conformity with GAAP, would be shown as provision for current and deferred
income taxes on a consolidated income statement of the Company and its
Subsidiaries for such period.
<PAGE>
9
"CONSOLIDATED INTEREST EXPENSE" means, for any period, all amounts that, in
conformity with GAAP, should be included as interest expense on a consolidated
income statement of the Company and its Subsidiaries for such period (including
without limitation amortization of debt discount and expense and imputed
interest on Capital Lease Obligations).
"CONSOLIDATED NET INCOME AVAILABLE FOR FIXED CHARGES" means, for any
period,
(a) Consolidated Net Income (Loss), PLUS
(b) in each case to the extent deducted in determining such
Consolidated Net Income (Loss),
(i) Consolidated Interest Expense,
(ii) Consolidated Income Tax Expense and
(iii) all minimum or guaranteed net rentals as lessee under
any Operating Lease,
all as determined with respect to the Company and its Subsidiaries for such
period on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME (LOSS)" means, for any period, the net income
(or loss) of the Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period, determined in accordance with GAAP;
PROVIDED that in determining Consolidated Net Income (Loss) there shall be
excluded
(a) the income (or loss) of any Person that is not a Subsidiary of
the Company, except to the extent of the amount of dividends or other
distributions actually paid to the Company or its Subsidiaries by such
Person during such period;
(b) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of the Company or is merged into or consolidated with
the Company or any of its Subsidiaries or that Person's Properties are
acquired by the Company or any of its Subsidiaries;
(c) the proceeds of any life insurance policy;
(d) gains (but not losses) from the sale, exchange, transfer or other
disposition of Property not in the ordinary course of business of the
Company and its Subsidiaries;
<PAGE>
10
(e) any other extraordinary gains (but not losses) of the Company or
its Subsidiaries;
(f) the income of any Subsidiary of the Company to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or of any agreement, instrument, judgment, decree,
Order or Statute applicable to that Subsidiary;
(g) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of income accrued
during such period;
(h) any gain resulting from the acquisition of any securities or the
extinguishment under GAAP of any indebtedness of the Company or any of its
Subsidiaries;
(i) any write-up of any asset;
(j) any net income or gain (but not any loss) during such period
resulting from any change in accounting, from any discontinued operations
or the disposition thereof, from any extraordinary items or from any prior-
period adjustments;
(k) any deferred credit representing the excess of equity in any
Subsidiary or the Company at the date of acquisition over the cost of the
investment in such Subsidiary;
(l) any net income or gain resulting from intercompany transactions;
(m) any income properly attributable to minority interests, if any,
in the stock and surplus of Subsidiaries of the Grantor; and
(n) in the case of a successor to the Company by way of consolidation
or merger or a transferee of its Properties, any earnings of the successor
corporation prior to such consolidation, merger or transfer.
"CONSOLIDATED NET WORTH" means, as of any date,
(a) stated capital attributable to the Capital Stock of the Company,
PLUS
(b) the amount of surplus attributable to the Capital Stock of the
Company and retained earnings (or, in the case of a deficit in the amount
of surplus or retained earnings, minus the amount of such deficit), MINUS
(c) cost of treasury shares, if any, MINUS
<PAGE>
11
(d) minority interests in consolidated Subsidiaries, if any, PLUS
(e) any non-cash reductions in the consolidated net worth of the
Company as a result of purchase-accounting adjustments in connection with
any acquisitions by the Company and its Subsidiaries occurring after the
date of this Agreement (and, to the extent the amounts thereof shall be
reasonably acceptable to the Required Purchasers, any similar adjustments
arising in connection with the transactions effected pursuant to the Asset
Purchase Agreement), MINUS
(f) any non-cash increases in the consolidated net worth of the
Company as a result of purchase accounting adjustments in connection with
any acquisitions by the Company and its Subsidiaries occurring after the
date of this Agreement (and, to the extent the amounts thereof shall be
reasonably acceptable to the Required Purchasers, any similar adjustments
arising in connection with the transactions effected pursuant to the Asset
Purchase Agreement), MINUS
(g) the amount of any Debt owing by the Parent to the Company, to the
extent the same would otherwise be included in Consolidated Net Worth,
all as determined as of such date for the Company and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means, on any date, the total
liabilities appearing on the liabilities side of a consolidated balance sheet of
the Company and its Subsidiaries, MINUS Consolidated Net Worth, all as
determined as of such date in accordance with GAAP.
"CONSOLIDATED WORKING CAPITAL" means, on any date,
(a) the total assets of the Company and its Subsidiaries that may
properly be classified as current assets in accordance with GAAP on a
consolidated basis, after eliminating all intercompany transactions;
PROVIDED that in determining such current assets
(i) notes and accounts receivable shall be included only if good
and collectible and payable on demand or within one year from such
date (and if not by their terms or by the terms of any instrument or
agreement relating thereto directly or indirectly renewable or
extendible at the option of the debtor beyond such year) and shall be
taken at their face value less reserves determined to be sufficient in
accordance with GAAP,
(ii) life insurance policies (other than the cash surrender value
of unencumbered policies) shall be excluded,
(iii) Restricted Investment shall be excluded and
<PAGE>
12
(iv) the aggregate amount of all cash and Cash Equivalents held
by the Company and its Subsidiaries as of such date shall be excluded,
MINUS
(b) the total liabilities of the Company and its Subsidiaries that
may properly be classified as current liabilities in accordance with GAAP
on a consolidated basis, after eliminating all intercompany transactions,
but in any event
(i) including as current liabilities without limitation (except
as provided in clause (ii) below) any portion of the Debt of the
Company and its Subsidiaries outstanding on such date that by its
terms or the terms of any instrument or agreement relating thereto
matures on demand or within one year from such date (whether by way of
any sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible or
refundable, at the option of the debtor under an agreement or firm
commitment in effect on such date, to a date more than one year from
such date, and
(ii) excluding Debt evidenced by the Notes.
"CONTAMINANT" and "CONTAMINANTS" mean as follows:
(a) any substance, solid, liquid or gaseous matter, fuel (including
without limitation petroleum or petroleum products, crude oil, natural gas,
natural gas liquid, liquefied natural gas, synthetic fuel or any
combination of the above), micro-organism, sound, vibration, ray, heat,
odor, radiation, energy vector, plasma, organic or inorganic matter,
whether or not animate or inanimate, container, transient reaction
intermediate or any combination of the above, that in any case may be
deemed hazardous, toxic, a pollutant or deleterious substance, a hazardous
material, a contaminant or a source of pollution or contamination under any
Environmental Laws applicable to the businesses and Properties of the
Company, the Company and their respective Subsidiaries; and
(b) any nuclear materials within the meaning of any Environmental
Laws applicable to the businesses and Properties of the Company, the
Company and their respective Subsidiaries.
"DEBT" with respect to any Person means, without duplication,
(a) all indebtedness of such Person for borrowed money;
(b) any obligation incurred for all or any part of the deferred
purchase price of Property or services, other than accounts payable not
overdue by more than 90 days and accrued expenses included in current
liabilities in accordance with GAAP and incurred in respect of Property or
services purchased in the ordinary course of business;
<PAGE>
13
(c) indebtedness or obligations evidenced by bonds, notes or similar
written instruments;
(d) all reimbursement obligations of such Person (whether contingent
or otherwise) in respect of letters of credit, surety and appeal bonds,
performance, indemnity and return-of-money bonds and similar obligations;
(e) Capitalized Lease Obligations of such Person;
(f) all obligations, contingent or otherwise, of such Person with
respect to any interest rate swap, cap or collar agreement or similar
arrangement between such Person and one or more financial institutions
providing for the transfer or mitigation of interest rate or expense risks
either generally or under specific contingencies;
(g) all obligations, contingent or otherwise, of such Person under
any foreign exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect such Person against
fluctuations in currency values; and
(h) all Guarantees by such Person of obligations of any other Person
of the types described in clauses (a) through (g) of this definition,
inclusive.
"DEFAULT" means any event or condition that, with notice or lapse of
time or both, would become an Event of Default.
"DEPOSIT ACCOUNT" means with respect to any Person any demand, time,
savings, passbook, money market or other depositary account maintained by such
Person with any bank, savings and loan association, credit union or other
depositary institution, other than an account evidenced by a certificate of
deposit.
"DEPOSIT ACCOUNT AGREEMENT" means an agreement substantially in the
form attached hereto as Exhibit B.
"DOLLARS" and "$" mean lawful money of the United States of America.
"ENVIRONMENT" means all components of the earth including without
limitation all layers of the atmosphere, air, land (including without limitation
all underground spaces and cavities and all land submerged under water), soil,
water (including without limitation surface and underground water), all organic
and inorganic matter and living organisms, animal life, vegetation and property,
and the interacting natural systems that include components referred to above in
this definition.
"ENVIRONMENTAL LAWS" means the following:
<PAGE>
14
(a) any and all federal, state, local, and foreign Statutes, Orders,
permits, authorizations, concessions, grants, franchises, licenses,
agreements or governmental restrictions relating to pollution, the
protection of the Environment or the generation, treatment, storage, use,
maintenance, recycling, transportation, release or disposal of Hazardous
Materials, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and
Recovery Act, the Emergency Planning and Community Right to Know Act, the
Safe Drinking Water Act, the Hazardous Materials Transportation Act, the
Clean Air Act, the Clean Water Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Noise Control Act, the Occupational Safety and Health
Act, the Toxic Substances Control Act, any so-called "Superfund" or
"Superlien" law, and any regulation promulgated under any of the foregoing,
all as now or at any time hereafter may be in effect; and
(b) any and all federal, provincial, municipal, and foreign Statutes,
Orders, permits, authorizations, concessions, grants, franchises, licenses,
agreements or governmental restrictions applicable to the businesses and
Properties of the Company and the Canadian Subsidiary relating in whole or
in part to the Environment or its protection including without limitation
any Statutes, Orders, permits, authorizations, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to
(i) the natural or accidental release, emission, discharge,
deposit, issuance, spraying, injection, inoculation, abandonment,
burial, spilling, incineration, disposal, leaking, seeping, pouring,
emptying, throwing, dumping, placing or exhausting of any Contaminant
into the Environment or affecting or likely to affect the Environment
or any threat to do any of the above in connection with any
Contaminant,
(ii) preventive or remedial measures in connection with any event
or occurrence referred to in clause (b)(i) of this definition,
(iii) the storage, disposal, destruction, incineration,
burial, recycling, handling, transportation, importation, use,
manufacture, processing, advertising, display packaging, labeling or
sale of any Contaminant or any solicitation or offer to do any of the
foregoing activities in connection with any Contaminant, or
(iv) any nuisance or abuse of right in connection with the
Environment;
and "ENVIRONMENTAL LAW" means any one of the foregoing.
"ENVIRONMENTAL MATTER" means any claim, investigation, litigation or
administrative proceeding, whether pending or threatened, or judgment or Order,
asserted, arising or entered under or pursuant to any Environmental Law, or
relating to any Hazardous
<PAGE>
15
Materials or Contaminants, in each case against or pertaining to the Parent, the
Company, any of their respective Subsidiaries, the respective operations of such
Persons, or any Properties owned, leased or used by any of such Persons.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of the Company, or under common
control with the Company, within the meaning of Section 414 of the Code.
"ERISA EVENT" means
(a) (i) the occurrence of a reportable event, within the meaning of
Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the
PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of
ERISA (without regard to subsection (2) of such Section) are met with
respect to a contributing sponsor, as defined in Section 4001(a)(13)
of ERISA, of a Plan, and an event described in paragraph (9), (10),
(11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected
to occur with respect to such Plan within the following 30 days;
(b) the application for a minimum funding waiver with respect to a
Plan;
(c) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA);
(d) the cessation of operations at a facility of the Company or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA;
(e) the withdrawal by the Company or any ERISA Affiliate from a
Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA;
(f) the conditions for imposition of a lien under Section 302(f) of
ERISA shall have been met with respect to any Plan;
(g) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA; or
(h) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in
<PAGE>
16
Section 4042 of ERISA that constitutes grounds for the termination of, or
the appointment of a trustee to administer, such Plan.
"ESTOPPEL LETTER" means a letter agreement substantially in the form
attached hereto as Exhibit C, or such other form as is acceptable to each
Purchaser.
"EVENT OF DEFAULT" has the meaning specified in Section 11.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar statute then in effect, and a reference to a particular section
thereof shall include a reference to the comparable section, if any, of any such
similar statute.
"EXISTING NON-PERMITTED DEBT" means all Debt of the Parent, the
Company and the Parent's other Subsidiaries identified in Schedule 4.1(j)(i) as
Existing Non-Permitted Debt.
"EXCLUDED SUBSIDIARY" means (i) until July 31, 1995, Information
Display Technology, Inc., Alpine PolyVision, Inc. and Posterloid Corporation,
and (ii) any Person that has Properties with a Fair Market Value of less than
$1,000 and liabilities of less than $1,000 and conducts no business.
"FAIR MARKET VALUE" means what a willing buyer would pay to a willing
seller in an arm's-length transaction.
"FINANCIAL STATEMENTS" has the meaning specified in Section 4.1(f)(i).
"GAAP" has the meaning specified in Section 1.2(a).
"GOVERNMENTAL BODY" means any federal, state, provincial, county,
city, town, village, municipal or other government or governmental department,
commission, council, board, bureau, agency, authority or instrumentality, of or
within the United States of America, Canada or their respective territories or
possessions, or of or within any other country, or of any international
community established by treaty.
"GUARANTEE" means any guarantee, suretyship or other contingent
liability (other than any endorsement for collection or deposit in the ordinary
course of business), direct or indirect, of a Person with respect to any
obligations of another Person, through an agreement or otherwise, including
without limitation
(a) any endorsement or discount with recourse or undertaking
substantially equivalent to or having economic effect similar to a
guarantee in respect of any such obligations, and
(b) any agreement
<PAGE>
17
(i) to purchase, or to advance or supply funds for the payment
or purchase of, any such obligations,
(ii) to purchase, sell or lease Property, products, materials or
supplies, or transportation or services, in respect of enabling such
other Person to pay any such obligation or to assure the owner thereof
against loss regardless of the delivery or nondelivery of the
Property, products, materials or supplies or transportation or
services,
(iii) to make any loan, advance or capital contribution to or
other investment in, or to otherwise provide funds to or for, such
other Person in respect of enabling such other Person to satisfy any
obligation (including any liability for a dividend, stock liquidation
payment or expense) or to assure any financial ratio, minimum net
worth, working capital or other balance sheet condition in respect of
any such obligation or
(iv) pursuant to which such Person grants or permits to exist a
Lien on any of its Property as security for any obligation of such
other Person.
The amount of any Guarantee shall be equal to the outstanding amount of the
obligations directly or indirectly guaranteed.
"GUARANTOR" means any of the Parent, the Canadian Subsidiary and each
other Subsidiary of the Company that shall have entered into a Guarantee
pursuant to Section 9.9.
"HAZARDOUS MATERIAL" and "HAZARDOUS MATERIALS" mean as follows:
(a) any "hazardous substance" as defined in, or for purposes of, the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C.A. Sections 9601 & 9602, as amended from time to time, or any other
so-called "superfund" or "superlien" law and any judicial interpretation of
any of the foregoing;
(b) any "regulated substance" as defined pursuant to 40 C.F.R. Part
280;
(c) any "pollutant or contaminant" as defined in 42 U.S.C.A. Section
9601(33);
(d) any "hazardous waste" as defined in, or for purposes of, the
Resource Conservation and Recovery Act;
(e) any "hazardous chemical" as defined in 29 C.F.R. Part 1910;
(f) any "hazardous material" as defined in, or for purposes of, the
Hazardous Materials Transportation Act;
<PAGE>
18
(g) any other substance, regardless of physical form, or form of
energy or pathogenic agent that is subject to any other past, present or
future law or requirement of any Governmental Body regulating, relating to,
or imposing obligations, liability, or standards of conduct concerning the
protection of human health, plant life, animal life, natural resources,
Property or the reasonable enjoyment of life or Property from the presence
in the Environment of any solid, liquid, gas, odor, pathogen or form of
energy, from whatever source; and
(h) any substance, solid, liquid or gaseous matter that, by reason of
its properties, is a hazard to human health or to the Environment and is
considered hazardous or toxic under any Environmental Laws applicable to
the businesses and Properties of the Company, the Parent and their
respective Subsidiaries located in Canada, or a Contaminant, waste,
pollutant, source of contamination, ray, material wave, plasma, substance,
organic or inorganic matter, whether or not animate or inanimate,
container, transient reaction intermediate or any combination of the above
deemed hazardous or toxic under any Environmental Laws applicable to the
businesses and Properties of the Company, the Parent and their respective
Subsidiaries located in Canada.
Without limiting the generality of the foregoing, the term "Hazardous Material"
includes without limitation any material, waste or substance that contains
petroleum or any fraction thereof, asbestos, asbestos-containing materials or
polychlorinated biphenyls, or that is flammable, explosive or radioactive.
"INFORMATION MEMORANDUM" means the information memorandum dated April
18, 1995 prepared by the Company relating to the proposed issuance and sale of
Notes by it hereunder.
"INTERNAL REVENUE SERVICE" means the United States Internal Revenue
Service and any successor or similar agency performing similar functions.
"INVESTMENT" when used with reference to any investment of any Person
means any investment of such Person so classified under GAAP, and, whether or
not so classified, includes
(a) any Debt owed by any other Person to such Person,
(b) any Guarantee or other contingent obligation of such Person of
Debt or other obligations of any other Person and
(c) any Capital Stock of, partnership interest in, or other ownership
or similar interest held by such Person in, any other Person,
<PAGE>
19
and the amount of any Investment shall be the original principal or capital
amount thereof less all cash returns of principal or equity thereof (and without
adjustment by reason of the financial condition of such other Person).
"INVESTMENT ACCOUNT AGREEMENT" means an agreement substantially in the
form attached hereto as Exhibit J.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
lien, easement, claim, charge, prior claim, encumbrance, assignment, resolutory
right, trust, conditional sale or title retention agreement, lessor's interest
under a Capitalized Lease or analogous instrument, in, of or on any of a
Person's Property (whether held on the date hereof or hereafter acquired), or
any signed or filed financing statement (other than true lease and consignment
notices not intended to evidence a security interest) that names such Person as
the debtor, or the execution of any security agreement or the like authorizing
any other Person as the secured party thereunder to file such a financing
statement.
"MATERIAL ADVERSE EFFECT" means any change or changes or effect or
effects that individually or in the aggregate are materially adverse to
(a) the Properties, business, operations, income, prospects or
condition (financial or otherwise) of either the Parent and its
Subsidiaries taken as a whole or the Company and its Subsidiaries taken as
a whole;
(b) the legality, validity or enforceability of this Agreement, the
Notes and the Related Documents; or
(c) the ability of each of the Parent, the Company and the Canadian
Subsidiary to fulfill their respective obligations under this Agreement,
the Notes, the other Related Documents and the Asset Purchase Documents.
"MATURITY DATE" has the meaning specified in Section 3.1(e).
"MAXIMUM AGGREGATE REVOLVING COMMITMENT" means as of any time of
determination
(a) $85,000,000, MINUS
(b) the aggregate amount of all reductions therein (if any) pursuant
to Section 3.5.
"MAXIMUM REVOLVING COMMITMENT" means, for any Purchaser on any date,
the maximum aggregate principal amount of Revolving Notes that such Purchaser
may be required to hold on such date. The Maximum Revolving Commitment of each
Purchaser on the date hereof is specified opposite such Purchaser's name on
Schedule A under the heading "Maximum Revolving Commitment".
<PAGE>
20
"MORTGAGE POLICIES" has the meaning specified in Section 5.9(d)(iii).
"MORTGAGES" has the meaning specified in Section 5.9(d).
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that
(a) is maintained for employees the Company or any ERISA Affiliate
and at least one Person other than the Company and the ERISA Affiliates or
(b) was so maintained and in respect of which the Company or any
ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated.
"NET CASH PROCEEDS" means, with respect to
(a) an incurrence by the Parent, the Company or any of the Parent's
other Subsidiaries of any Debt, or
(b) the issuance and sale by the Parent, the Company or any of the
Parent's other Subsidiaries of any of their respective Capital Stock,
warrants or other securities,
the aggregate amount of cash consideration received by the Parent, the Company
and the Parent's other Subsidiaries in connection with such transaction
(directly or indirectly and including without limitation after the sale or other
disposition of Property other than cash received in consideration of such
incurrence or issuance and sale) after deduction of all fees, costs and expenses
directly incurred by the Parent, the Company and the Parent's Subsidiaries and
paid in cash in connection therewith, including without limitation
(i) underwriting discount, brokerage or selling commissions, if any,
(ii) taxes paid or reasonably anticipated to be payable as a result of
such transaction, and
(iii) the fees and disbursements of counsel paid by the Parent,
the Company and the Parent's Subsidiaries in connection therewith.
"NOMURA TRUST" has the meaning specified in the introductory paragraph
of this Agreement.
<PAGE>
21
"NOTE" and "NOTES" have the meanings specified in Recital A.
"NOTE PURCHASE REQUEST" has the meaning specified in Section 2.2(b).
"OBLIGATIONS" means, collectively,
(a) the obligations of the Company to pay any and all of the unpaid
principal of, and interest on (including without limitation interest
accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to the Company, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Notes, and all fees, expenses,
costs, reimbursements, indemnities, contributions and other amounts,
whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, that may arise under, out of, or in
connection with, this Agreement, the Notes, the Security Documents or any
other Related Document, and
(b) the obligations of the Parent and the Company to perform,
discharge, observe and comply with any and all covenants, agreements and
other obligations required to be performed, discharged, observed or
complied with by the Parent or the Company, including without limitation to
cause each of their Subsidiaries to perform, discharge, observe and comply
with all covenants, agreements and other obligations required to be
performed, discharged, observed or complied with by such Subsidiary, under
this Agreement, the Notes, the Security Documents or any other Related
Document.
"OFFICER'S CERTIFICATE" means, with respect to any corporation, a
certificate signed by the President, the Chief Executive Officer, the Chief
Financial Officer or the Treasurer of such corporation.
"OPERATING LEASE" means any lease of any property (real, personal or
mixed) that is not a Capital Lease
"ORDER" means any order, writ, injunction, decree, judgment, award,
determination or written direction or demand of any court, arbitrator or
Governmental Body or regulatory authority.
"PARENT" has the meaning specified in the introductory paragraph of
this Agreement.
"PARENT PLEDGE AGREEMENT" has the meaning specified in Section 5.9(b).
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor agency or Governmental Body performing similar functions.
<PAGE>
22
"PERMITTED LIEN" has the meaning specified in Section 10.2.
"PERSON" means and includes an individual, a partnership, an
association, a joint venture, a corporation, a limited liability company, a
trust, a syndicate, an unincorporated organization and any Governmental Body.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PROPERTY" with respect to any Person, means any interest in any kind
of property or asset, whether real, personal or mixed, movable or immovable,
tangible or intangible, corporeal or incorporeal, of such Person.
"PURCHASER" and "PURCHASERS" have the meanings specified in the
introductory paragraph of this Agreement.
"RELATED DOCUMENTS" means the Notes, the Security Documents, each
Guarantee delivered pursuant to Section 9.9, the letter agreement referred to in
Section 2.6(b), the letter agreement dated March 17, 1995 between the Company
and the Parent and Nomura Securities International, Inc. and all other
agreements, instruments and documents now or hereafter executed pursuant to this
Agreement or pursuant thereto or in connection with this Agreement or therewith,
as any of the foregoing may from time to time be amended, modified or
supplemented in accordance with its terms and this Agreement.
"REQUIRED PURCHASERS" means, on any date, subject to Section 17.1, the
holder or holders of at least 51% of the sum of
(a) the aggregate principal amount of the Notes outstanding on such
date, and
(b) the unpurchased Maximum Aggregate Revolving Commitment,
but excluding any Notes held by the Parent, the Company and any of their
respective Subsidiaries or Affiliates in violation of Section 3.6.
"RESTRICTED INVESTMENT" means any Investment other than
(a) any Investment in Cash Equivalents;
(b) any Investment existing on the Closing Date after giving effect
to the transactions contemplated to occur on the Closing Date, and
described in Schedule 4.1(e) and 4.1(j)(iv);
(c) any Investment by the Company or any of its Subsidiaries in the
Capital Stock (including without limitation a contribution to capital in
respect of already-outstanding capital stock) of, or loan or advance to or
Guarantee of the obligations of,
<PAGE>
23
the Canadian Subsidiary or any other Wholly Owned Subsidiary of the Company
as to which the Company or such Subsidiary, prior to the date on which such
Investment is made, shall have complied with its obligations under Section
9.9 and any loan or advance to, or Guarantee of the obligations of, the
Company by the Canadian Subsidiary or such other Wholly Owned Subsidiary;
(d) stock, obligations or securities received in settlement of debts
(created in the ordinary course of business) owing to the Company or any
such Subsidiary;
(e) advances to employees of the Company and its Subsidiaries in the
ordinary course of business, including for reasonable relocation expenses
and travel expenses and pursuant to company credit cards, and loans to
employees pursuant to the Company's Supplemental Employee Retirement Plan;
and
(f) Debt permitted under Sections 10.1(c)(i) and Debt owing by the
Parent to the Company, to the extent permitted under Section 10.7.
"RESTRICTED PAYMENT" means, with respect to any Person,
(a) the declaration or payment of any dividend or other distribution
on, or the incurrence of any liability to make any other payment in respect
of, Capital Stock of such Person (other than one payable solely in Capital
Stock of such Person);
(b) any payment or distribution on account of the purchase,
redemption, defeasance (including in-substance or legal defeasance) or
other retirement by any Person of any Capital Stock of such Person, or of
any warrant, option or other right to acquire such Capital Stock (whether
directly or indirectly, and including without limitation any purchase or
other acquisition of such Capital Stock, or of any warrant, option or other
right to acquire such Capital Stock, by any Subsidiary of such Person);
(c) any other payment or distribution by such Person in respect of
its Capital Stock, whether directly or indirectly or through any Subsidiary
of such Person;
(d) any payment or distribution by such Person on account of
(i) the principal of or prepayment charge, if any, or, upon the
occurrence and during the continuance of any Event of Default,
interest or other amounts, with respect to any Debt of the Parent, the
Company or any of their respective Subsidiaries that is subordinated
in right of payment to the prior payment of the Notes, or
(ii) the principal of or prepayment charge, if any, or interest
or other amounts with respect to any Debt of the Company or any of its
<PAGE>
24
Subsidiaries owing to any of the Company's Affiliates (other than the
Company or a Wholly Owned Subsidiary of the Company),
(e) any loan by the Company or any of it Subsidiaries to the Parent
or any of its Subsidiaries (other than the Company and its Subsidiaries)
and
(f) any management fee, consulting fee, advisory fee, investment
banking or transaction fee or commission or similar remuneration paid or
payable to any holder of Capital Stock of such Person or to any Affiliate
of any such holder, excluding directors' fees and executive compensation
and benefits payable in the ordinary course of business and in accordance
with past practice.
The amount of any Restricted Payment made in the form of Property shall be
deemed to be the greater of the Fair Market Value and the net book value of such
Property.
"REVOLVING NOTE" and "REVOLVING NOTES" have the meanings specified in
Recital A.
"SEC" means the Securities and Exchange Commission and any successor
agency, authority, commission or Governmental Body.
"SECURITIES ACT" means as of any date the Securities Act of 1933, as
amended, and any similar federal statute then in effect, and a reference to a
particular section thereof shall include a reference to the comparable section,
if any, of any such similar federal statute.
"SECURITY DOCUMENTS" means the Company Security Agreement, the
Canadian Subsidiary Security Agreement, the Parent Pledge Agreement, the Deposit
Account Agreements, the Mortgages, each security agreement delivered pursuant to
Section 9.9 and all financing statements, fixture filings, short form mortgages,
hypothecations, assignments and other agreements, instruments and documents that
may now or hereafter be executed, delivered, filed or recorded pursuant thereto
or in connection therewith, as any of the foregoing may from time to time be
amended, modified or supplemented in accordance with the terms thereof.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that
(a) is maintained for employees of the Company or any ERISA Affiliate
and no Person other than the Company and the ERISA Affiliates, or
(b) was so maintained and in respect of which the Company or any
ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
<PAGE>
25
"SOLVENT" means, when used with respect to any Person, that
(a) the fair value of the property of such Person is greater than the
total amount of liabilities (including without limitation contingent
liabilities) of such Person,
(b) the present fair salable value of the Properties of such Person
is not less than the amount that will be required to pay the probable
liabilities of such Person on its debts as they become absolute and
matured,
(c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature and
(d) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
Properties would constitute unreasonably small capital.
For such purposes, any contingent liability (including without limitation
pending litigation, Guarantees, pension plan liabilities and claims for federal,
state, local and foreign taxes, if any) is valued at the amount that, in light
of all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
"STATUTE" means any statute, ordinance, code, treaty, directive, law,
rule or regulation of any Governmental Body.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, trust or estate, other than an Excluded Subsidiary, of which (or in
which) more than 50% of
(a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency),
(b) the interest in the capital or profits of such partnership or
joint venture or
(c) the beneficial interest in such trust or estate
is at the time directly or indirectly owned or controlled by such Person, by
such Person and one or more of its other Subsidiaries or by one or more of such
Person's other Subsidiaries.
<PAGE>
26
"TAKING" means the taking of title to, or the use of, any Property or
any part thereof pursuant to eminent domain or condemnation proceedings, or any
settlement or compromise of such proceedings.
"TERM NOTE" and "TERM NOTES" have the meanings specified in Recital A.
"TEXAS LEASE" means the Lease Agreement dated as of December 16, 1993
between ALP (TX) QRS 11-28, Inc. and the Company, as amended through the Closing
Date.
"TRIGGER EVENT" has the meaning specified in Section 3.2(c)(ii).
"VOTING STOCK" means, with respect to any Person, Capital Stock of
such Person of any class or classes, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of members of the
Board of Directors (or Persons performing similar functions) of such Person.
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, any
Subsidiary of such Person all of the shares of Capital Stock (and all rights and
options to purchase such shares) of which, other than directors' qualifying
shares, are owned, beneficially and of record, by such Person and/or one or more
Wholly Owned Subsidiaries of such Person.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
Section 1.2. ACCOUNTING TERMS.
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Purchasers hereunder shall (unless otherwise disclosed to the Purchasers in
writing at the time of delivery thereof in the manner described in
subsection (b) below) be prepared, in accordance with U.S. generally accepted
accounting principles applied on a basis consistent with those used in the
preparation of the latest financial statements furnished to the Purchasers
hereunder (which, prior to the delivery of the first financial statements under
Section 7, shall mean the audited financial statements as at April 30, 1994).
All calculations made for the purposes of determining compliance with this
Agreement shall (except as otherwise expressly provided herein) be made by
application of generally accepted accounting principles applied on a basis
consistent with those used in the preparation of such latest financial
statements, unless
(i) either
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27
(A) the Parent or the Company shall have objected to determining
such compliance on such basis at the time of delivery of such
financial statements or
(B) the Required Purchasers shall so object in writing within
180 days after delivery of such financial statements, and
(ii) the Parent, the Company and the Required Purchasers have not
agreed upon amendments to the financial covenants contained herein to
reflect any change in such basis,
in which event such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made (such principles being referred to herein as
"GAAP").
(b) The Parent and the Company will deliver to the Purchasers, at the
same time as the delivery of any annual or quarterly financial statement under
Section 7,
(i) a description in reasonable detail of any material variation
between the application of accounting principles employed in the
preparation of such statement and the application of accounting principles
employed in the preparation of the next preceding annual or quarterly
financial statements as to which no objection has been made in accordance
with the last sentence of subsection (a) above, and
(ii) reasonable estimates of the difference between such statements
arising as a consequence thereof.
Section 1.3. RULES OF CONSTRUCTION. The words "herein", "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Section or subsection. Reference herein to any
Section or subsection refers to such Section or subsection (as the case may be)
hereof, unless otherwise specified. Words in the singular include the plural,
and words in the plural include the singular. Each covenant or agreement
contained herein shall be construed (absent express provision to the contrary)
as being independent of each other covenant or agreement contained herein, so
that compliance with any one covenant or agreement shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant or agreement. If any provision herein refers to action to be taken by
any Person, or that such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
Section 2. SALE AND PURCHASE OF NOTES.
Section 2.1. AUTHORIZATION OF NOTES. The Company has duly authorized
the issue, sale and delivery of:
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28
(a) its Revolving Notes,
(i) in an aggregate principal amount at any time outstanding not
to exceed $85,000,000,
(ii) to be dated the date of issue thereof,
(iii) to bear interest from such date on the unpaid principal
amount thereof (calculated on the basis of a 360-day year consisting
of 12 30-day months) at a variable rate PER ANNUM equal at any time to
the sum of
(A) the Base Rate in effect at such time, PLUS
(B) the Applicable Margin in effect at such time,
such interest to be payable monthly in arrears on the last day of each
month (commencing May 31, 1995), and at maturity, and to bear interest
(so calculated), payable on demand, on any overdue principal and, to
the extent permitted by applicable law, on any overdue interest until
the same shall be paid, at a variable rate PER ANNUM equal to 2% PLUS
the rate that would at the time be applicable under the foregoing
provisions to principal amounts not overdue,
(iv) to mature on the Maturity Date, and
(v) to be substantially in the form attached hereto as Exhibit
A-1; and
(b) its Term Notes,
(i) in the aggregate principal amount of $55,000,000,
(ii) to be dated the date of issue thereof,
(iii) to bear interest from such date on the unpaid principal
amount thereof (calculated on the basis of a 360-day year consisting
of 12 30-day months) during each period set forth below at a rate PER
ANNUM equal to the amount set forth below opposite such period:
<PAGE>
29
Period Percentage
------ ----------
From the Closing Date to
and including November 10, 1995 11.00%
From November 11, 1995 to and
including May 10, 1996 11.50%
From May 11, 1996 to and
including November 10, 1996 12.00%
From November 11, 1996 to and
including May 10, 1997 12.50%
At all times from
May 11, 1997 14.00%,
such interest to be payable quarterly in arrears on each January 31,
April 30, July 31 and October 31 of each year (commencing July 31,
1995), and at maturity, and to bear interest (so calculated), payable
on demand, on any overdue principal and, to the extent permitted by
applicable law, on any overdue interest until the same shall be paid,
at a variable rate PER ANNUM equal to 2% PLUS the rate that would at
the time be applicable under the foregoing provisions to principal
amounts not overdue, to mature on the Maturity Date, and to be
substantially in the form attached hereto as Exhibit A-2.
Section 2.2. SALE AND PURCHASE OF REVOLVING NOTES.
(a) Subject to the applicable terms and conditions set forth in this
Agreement, the Company will issue, reissue and sell to the Purchasers, and each
Purchaser, severally and not jointly, agrees to purchase from the Company, from
time to time during the period from and including the Closing Date to but not
including the Maturity Date, Revolving Notes, at a purchase price equal to 100%
of the principal amount thereof, in a principal amount requested by the Company
in its Note Purchase Request delivered pursuant to subsection (b) below, but not
to exceed, as to any Purchaser, the lesser of (i) its unpurchased Maximum
Revolving Commitment and (ii) the aggregate principal amount of Revolving Notes
to be sold to all Purchasers at such time, multiplied by a fraction, the
numerator of which is such Purchaser's Maximum Revolving Commitment and the
denominator of which is the Maximum Aggregate Revolving Commitment, in each case
as of the date of such purchase.
(b) Except as provided in Section 5.11, each sale of Revolving Notes
hereunder shall be made upon written notice by the Company to each Purchaser in
substantially the form attached hereto as Exhibit D (each such notice being a
"NOTE PURCHASE
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30
REQUEST") given to each Purchaser not later than 10:00 A.M. (New York City time)
on the third Business Day prior to the date such sale is to be effected. Each
Note Purchase Request will specify
(i) the requested date of such sale (which shall not be on or after
the 10th day prior to the Maturity Date),
(ii) the aggregate principal amount of Revolving Notes to be sold to
all Purchasers at such time and
(iii) the aggregate principal amount of Revolving Notes to be sold
to each Purchaser at such time.
(c) The Company will execute and deliver to each Purchaser either
(i) on the date of each sale of Revolving Notes, a Revolving Note
registered in the name of such Purchaser or its nominee, dated the date of
such sale and in the principal amount to be so purchased (or, if such
Purchaser shall so request, two or more such Revolving Notes in the same
aggregate principal amount in such denominations as such Purchaser shall
specify), with the Guarantee of the Parent and the Canadian Subsidiary duly
endorsed thereon, against such Purchaser's delivery to the Company of
immediately available funds in Dollars in the amount of 100% of the
purchase price thereof, or
(ii) if such Purchaser shall have so elected at or prior to the
Closing Date (or, if a Purchaser shall have become such after the Closing
Date, prior to the date on which the Company first delivers Revolving Notes
to such Purchaser), on the Closing Date a single Revolving Note registered
in the name of such Purchaser or its nominee, dated the Closing Date (or
such date of delivery) and in the principal amount of such Purchaser's
Maximum Revolving Commitment (or, if such Purchaser shall so request, two
or more such Revolving Notes in the same aggregate Maximum Revolving
Commitment in such denominations as such Purchaser shall specify), with the
Guarantee of the Parent and the Canadian Subsidiary duly endorsed thereon,
which Revolving Note (or Revolving Notes) shall evidence the initial sale
of Revolving Notes on the Closing Date and all subsequent sales of
Revolving Notes made hereunder.
Receipt by the Company of the purchase price for any Revolving Note at any time
on the date of its sale shall be deemed to be receipt of such purchase price on
the date of such sale.
(d) If a Purchaser shall have received a Revolving Note as provided
in subsection (c)(ii), such Purchaser will note on the schedule attached to such
Revolving Note or any extension thereof, at the time of each sale and purchase
of Revolving Notes,
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31
(i) the date and amount of each sale of Revolving Notes to such
Purchaser by the Company,
(ii) each payment or prepayment made on account of the principal
thereof and
(iii) the resulting aggregate unpaid principal balance thereof;
PROVIDED that failure by a Purchaser to make any such notation shall not affect
the obligations of the Company hereunder or under such Revolving Note. If two
or more Revolving Notes are delivered to a Purchaser as provided in subsection
(c)(ii) above, such Purchaser shall be permitted to make such notations on the
schedule to any of such Revolving Notes, consistent with this subsection (d), as
it shall determine to be appropriate. Each such notation by a Purchaser shall
be conclusive and binding for all purposes in the absence of manifest error.
(e) The failure of any Purchaser to purchase a Revolving Note on any
date on which it is obligated to do so hereunder shall not relieve the other
Purchasers of their respective obligations to purchase Revolving Notes on such
date, but the aggregate principal amount of Revolving Notes to be purchased by
such other Purchasers on such date shall not be increased as a result of such
failure.
(f) The principal amount of Notes to be purchased from each Purchaser
pursuant to any Note Purchase Request shall be rounded to the nearest dollar.
Section 2.3. SALE AND PURCHASE OF TERM NOTES. Subject to the
applicable terms and conditions set forth in this Agreement, on the Closing
Date, the Company will issue and sell to the Purchasers, and each Purchaser
severally, and not jointly, will purchase from the Company, Term Notes as
provided in Section 2.4 in an aggregate principal amount for each Purchaser
equal to the amount set forth opposite such Purchaser's name in Schedule A under
the heading "Term Notes", at a purchase price equal to 100% of the principal
amount thereof. The failure of any Purchaser to purchase a Term Note on the
Closing Date on which it is obligated to do so hereunder shall not relieve the
other Purchasers of their respective obligations to purchase Term Notes on such
date, but the aggregate principal amount of Term Notes to be purchased by such
other Purchasers on such date shall not be increased as a result of such
failure.
Section 2.4. CLOSING. The initial closing of the sale and delivery
of Notes shall take place concurrently with the closing of the transactions
contemplated by the Asset Purchase Documents at the offices of Shearman &
Sterling at 10:00 A.M., New York City time, on May 11, 1995 or such other date
and location as the parties shall agree (the "CLOSING DATE"). On the Closing
Date, the Company will deliver to each Purchaser
(a) one or more Revolving Notes as provided in Section 2.2(c), and
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32
(b) one or more Term Notes (as specified by such Purchaser)
registered in the name of such Purchaser or its nominee, duly executed and
dated the Closing Date, in the aggregate principal amount specified
opposite such Purchaser's name in Schedule A attached hereto under the
heading "Term Notes", against such Purchaser's delivery to the Company of
immediately available funds in the amount of the purchase price of such
Term Notes to be sold to such Purchaser on the Closing Date.
Section 2.5. PAYMENTS. All payments by the Company hereunder of the
principal amount of the Notes, interest, fees, expenses and other amounts due
hereunder, thereunder or under any of the other Related Documents shall be made
in Dollars by wire transfer or other immediately available funds, without
deduction, set-off or counterclaim, to the address of each Purchaser specified
in Schedule A or at such other address as any Purchaser may from time to time
specify by notice to the Company, not later than 12:00 noon (New York City time)
on the date on which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the next-succeeding
Business Day), without the presentation or surrender of such Note or the making
of any notation thereon. Prior to any sale or other disposition of any Note
held by any Purchaser or its nominee such Purchaser will, at its election,
either endorse thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to the Company in
exchange for a new Note or Notes pursuant to Section 12. Whenever any payment
hereunder or under the Notes shall be stated to be due on a day other than a
Business Day, that payment shall be made on the next succeeding Business Day and
the extension of time shall be included in the computation of interest due
thereon.
Section 2.6. FEES AND OTHER AMOUNTS.
(a) On the Closing Date, the Company will pay to each Purchaser, as a
non-refundable funding fee, an amount equal to 2.00% of the aggregate principal
amount of the Notes being purchased by such Purchaser on such date. On each
date other than the Closing Date on which the Purchasers shall purchase
Revolving Notes from the Company and the aggregate principal amount of Revolving
Notes outstanding after giving effect to such purchase shall exceed the greatest
aggregate principal amount of Revolving Notes outstanding at any time
previously, the Company will pay to each Purchaser, as an additional non-
refundable funding fee, an amount equal to 2.00% of such excess, MULTIPLIED by a
fraction, the numerator of which is the aggregate principal amount of Revolving
Notes held by such Purchaser and the denominator of which is the aggregate
principal amount of all Revolving Notes then outstanding, in each case after
giving effect to such purchase.
(b) The Company will pay Nomura Holding America Inc. such fees as are
specified in a separate letter agreement of even date herewith between the
Company and such Person.
(c) The Company will, on demand, pay interest on any fees and other
amounts (other than overdue principal and interest on the Notes) that are not
paid when due
<PAGE>
33
hereunder or under any Related Documents at a rate PER ANNUM equal to the rate
of interest then applicable to overdue interest on the Term Notes, as specified
in Section 2.1(b)(iii), computed on the basis of 360-day year consisting of 12
30-day months.
(d) On the first date on which there shall be no Notes outstanding
and the Maximum Aggregate Revolving Commitment shall be zero, the Company will
pay to the Persons entitled to the same all unpaid fees, expenses and other
amounts payable under the provisions of this Agreement, the Notes and the
Related Documents.
Section 2.7. INTEREST RATE LIMITATION. Notwithstanding any
provisions of this Agreement, the Notes or the Related Documents, in no event
shall the amount of interest paid or agreed to be paid by the Company exceed an
amount computed at the highest rate of interest permissible under applicable
law. If, for any reason whatsoever, fulfillment of any provision of this
Agreement, the Notes or the Related Documents at the time performance of such
provision shall be due, shall involve exceeding the interest rate limitation
validly prescribed by law that a court of competent jurisdiction may deem
applicable hereto or thereto, then, IPSO FACTO, the obligations to be fulfilled
shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever any Purchaser
shall ever receive as interest an amount that would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of the Notes outstanding hereunder (whether or not then due and
payable), without prepayment charge, premium or penalty, or to the payment of
amounts owing to the Collateral Agent or other amounts (other than interest)
owing to the Purchasers, and not to the payment of interest, or shall be
refunded to the Company if such principal and all other obligations of the
Company to the Purchasers and the Collateral Agent have been paid in full.
Section 2.8. REPLACEMENT OF A PURCHASER.
(a) Subject to subsections (b) and (c) below, if a Purchaser becomes
insolvent, goes into receivership or fails to purchase any Revolving Notes
required to be purchased by it hereunder, then, so long as such condition occurs
and is continuing with respect to such Purchaser (a "REPLACED PURCHASER"), the
Company may designate a Person (a "REPLACEMENT PURCHASER") that is an
institutional investor that meets the requirements of Section 16(a)(ii) and is
not an Affiliate of the Company to assume such Replaced Purchaser's Maximum
Revolving Commitments hereunder and to purchase all Notes held by such Replaced
Purchaser and such Replaced Purchaser's rights hereunder, without recourse to or
representation or warranty by, or expense to, such Replaced Purchaser, for a
purchase price equal to the outstanding principal amount of the Notes held by
such Replaced Purchaser, PLUS any accrued but unpaid interest on such Notes and
unpaid fees, expenses and other amounts owing to such Replaced Purchaser.
(b) Subject to the execution and delivery to the Collateral Agent,
the Company and the Replaced Purchaser by the Replacement Purchaser of an
Assignment and Acceptance, the Replacement Purchaser shall succeed to the rights
and obligations of such
<PAGE>
34
Replaced Purchaser hereunder and such Replaced Purchaser shall no longer be a
party hereto or have any rights hereunder; PROVIDED that the obligations of the
Company to such Replaced Purchaser under Sections 17.2 and 17.6 with respect to
events occurring or obligations arising before or as a result of such
replacement shall survive such replacement. Promptly following its replacement
by the Replacement Purchaser, the Replaced Purchaser shall return to the Company
the Notes delivered by the Company to such Replaced Purchaser and the Company
will deliver new Notes to the Replacement Purchaser as provided in Section 12.
(c) The Company may not exercise its rights under this Section 2.8
with respect to any Purchaser (i) unless it exercises such rights with respect
to all Purchasers to which circumstances giving rise to the replacement of such
Purchaser apply, or (ii) if a Default or Event of Default has occurred and is
continuing.
Section 2.9. REDUCED RETURN. If a Purchaser shall have determined
that the applicability of any law, rule, regulation or guideline adopted
pursuant to or arising out of the July 1988 report of the Basle Committee on
Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards," or the adoption after
the date hereof of any other law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the enforcement or
interpretation or administration of any of the foregoing by any court or any
central bank or other Governmental Body, charged with the enforcement or
interpretation or administration thereof, or compliance by such Purchaser (or
any lending office of such Purchaser) or such Purchaser's holding company with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Body, has or would have the effect of
reducing the rate of return on such Purchaser's capital or on the capital of
such Purchaser's holding company, if any, as a consequence of its purchasing any
Notes or its obligations under this Agreement to a level below that which such
Purchaser or such Purchaser's holding company could have achieved but for such
applicability, adoption, change or compliance (taking into consideration such
Purchaser's policies and the policies of such Purchaser's holding company with
respect to capital adequacy) by an amount deemed by such Purchaser to be
material, THEN, upon demand by such Purchaser, the Company shall pay to such
Purchaser from time to time such additional amount or amounts as will compensate
such Purchaser or such Purchaser's holding company for any such reduction
suffered.
Section 3. PAYMENTS AND PREPAYMENTS OF NOTES, ETC.
Section 3.1. PAYMENTS AT MATURITY.
(a) The unpaid principal balance of each of the Notes shall mature on
April 30, 1997, unless, at least 14 days prior to such date, the Company have
delivered to each Purchaser a notice
(i) stating that the Company desires to extend the maturity date of
the Notes until October 31, 1997, and
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35
(ii) certifying to the effect set forth in Sections 6.2 and 6.3 as of
the date of such notice and as of April 30, 1997,
in which case the Notes shall, subject to the correctness of such certification
and subsection (b) below, mature on October 31, 1997.
(b) If the maturity date of the Notes shall have been extended until
October 31, 1997 pursuant to the preceding sentence the unpaid principal balance
of each of the Notes shall mature on such date, unless, at least 14 days prior
to such date, the Company have delivered to each Purchaser a notice
(i) stating that the Company desires to extend the maturity date of
the Notes until April 30, 1998, and
(ii) certifying to the effect set forth in Sections 6.2 and 6.3 as of
the date of such notice and as of April 30, 1997,
in which case the Notes shall, subject to the correctness of such certification,
mature on April 30, 1998.
(c) If the maturity date of the Notes shall have been extended until
April 30, 1998 pursuant to the preceding sentence the unpaid principal balance
of each of the Notes shall mature on such date, and such maturity shall not be
subject to any further extension.
(d) On the date on which the unpaid principal balance of the Notes
shall mature, the Company shall pay such balance, together with all accrued and
unpaid interest thereon to such date and all unpaid fees, expenses and other
amounts payable under the provisions of this Agreement, the Notes and the
Related Documents.
(e) The date on which the Notes shall mature as provided in this
Section 3.1 is referred to herein as the "MATURITY DATE".
Section 3.2. MANDATORY PREPAYMENTS.
(a) The Company will, not later than the 45th day after each October
31, January 31, April 30, and July 31 of each year (each such October 31,
January 31, April 30 and July 31 being a "PERIOD END DATE"), commencing October
31, 1995, prepay the Term Notes at 100% of the principal amount thereof, in an
aggregate principal amount equal to the lesser of (i) the aggregate principal
amount of the Term Notes outstanding on such date and (ii) 75% of
(A) Consolidated Net Income for the three-month period ending on the
Period End Date immediately preceding the date on which such prepayment is
to be made, PLUS
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36
(B) depreciation expense, amortization expense and all other non-cash
charges, to the extent deducted in computing such Consolidated Net Income
in accordance with GAAP, MINUS
(C) the amount of any Capital Expenditures actually made during such
period, but not more than the amount permitted for such period under
Section 10.11, PLUS, if the amount calculated pursuant to clause (D) below
is a positive number, and otherwise, MINUS
(D) an amount equal to
(1) Consolidated Working Capital as of the Period End Date
immediately preceding such Period End Date, MINUS
(2) Consolidated Working Capital as of such Period End Date,
and such principal amount, together with interest thereon to the prepayment
dates, shall become due on such prepayment dates.
(b) (i) The Company will, on any date on which the Parent, the
Company or any of the Parent's other Subsidiaries shall issue or sell any
of their respective Capital Stock, warrants or other securities or incur
any Debt, other than
(u) Debt incurred by Subsidiaries of the Parent other than the
Company and its Subsidiaries, except to the extent the proceeds
thereof shall have been received by the Parent;
(v) Debt owing by the Parent, but only to the extent that the
aggregate principal amount at any time outstanding does not exceed
$500,000,
(w) Capital Stock of the Parent, but only to the extent that the
Net Cash Proceeds of the issue or sale of which, together with the Net
Cash Proceeds of the issues of all other Capital Stock of the Parent
issued or sold after the date of this Agreement, do not exceed
$15,000,000,
(x) Debt owing to the Parent or any of the Parent's
Subsidiaries,
(y) Debt evidenced by the Notes and
(z) Debt permitted under Section 10.1(d), (e) or (g) or Debt
referred to in Schedule 4.1(j)(i) (other than Existing Non-Permitted
Debt) (and any extension or refinancing thereof or replacement of the
Debt referred to in such items in an aggregate principal amount not
exceeding the aggregate principal amount thereof outstanding
immediately prior to such extension, refinancing or replacement),
<PAGE>
37
prepay the Notes, at 100% of the principal amount thereof, in an aggregate
principal amount equal to
(A) in the case of any such issue, sale or incurrence by the
Parent or any of the Parent's Subsidiaries other than the Company and
its Subsidiaries, the Net Cash Proceeds of such issue, sale or
incurrence, up to the aggregate principal amount of the Notes
outstanding on such date, and
(B) in the case of any such issue, sale or incurrence by the
Company and its Subsidiaries, the aggregate principal amount of the
Notes outstanding on such date,
and such aggregate principal amount of the Notes, together with interest
thereon to the prepayment dates, shall become due on such prepayment dates.
(ii) Not later than five days prior to any date of any issue, sale or
incurrence that would give rise to a prepayment pursuant to this subsection
(b), the Company shall deliver to each Purchaser an Officer's Certificate
(A) setting forth in reasonable detail a description of such
issuance, sale or incurrence,
(B) stating the date such issuance, sale or incurrence of
Capital Stock, warrants or other securities or Debt is expected to
occur,
(C) stating the amount of the Net Cash Proceeds expected to be
received therefrom and
(D) stating the aggregate principal amount of Term Notes and
Revolving Notes that the Company believes will be prepaid on such
date.
(iii) Any prepayment of less than the entire aggregate principal
amount of the Notes pursuant to this subsection (b) shall be applied,
FIRST, to the Term Notes until the aggregate principal amount thereof shall
have been paid in full and, SECOND, to the Revolving Notes.
(iv) Nothing in this subsection shall be construed to permit, or to
waive any required consent with respect to, any transaction that is
prohibited by another provision of this Agreement or the Related Documents.
(c) (i) Promptly and in any event within five Business Days after
(x) the occurrence of a Change of Control, or
(y) July 31, 1995, unless either
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38
(A) (1) prior to such date the Parent shall have
distributed to its shareholders as a dividend
sufficient Capital Stock of Information Display
Technology, Inc. ("IDT") so that, after giving
effect to such dividend, at least 80% of the
outstanding Capital Stock of IDT is held by
shareholders other than the Parent and its
Subsidiaries, and
(2) at the time of such distribution
Posterloid Corporation shall be a Wholly Owned
Subsidiary of IDT and at least 98% of the shares
of Capital Stock (and all rights and options to
purchase, and all instruments convertible into or
exchangeable for, such shares) of Alpine
PolyVision Inc. shall be owned, beneficially and
of record, by IDT and/or one or more Wholly Owned
Subsidiaries of IDT, or
(B) (1) the representations and warranties
contained in Section 4.1 and elsewhere in this
Agreement and in the Related Documents shall be
true on and as of such date, with the same effect
as if such representations and warranties had been
made on and as of such date after giving effect to
the inclusion of the Persons identified in clause
(A) above as Subsidiaries of the Parent, and the
Company and the Parent each shall have delivered
to each Purchaser an Officer's Certificate
certifying to such effect, and
(2) the Company shall have made the
prepayment of the Term Notes required by
subsection (d) below,
(each of clause (x) and (y) above being a "TRIGGER EVENT") the Company will
give written notice thereof (a "TRIGGER EVENT PREPAYMENT NOTICE") to each
Purchaser, which notice shall
(A) refer specifically to and describe in reasonable detail the
rights of the Purchasers under this subsection (c),
(B) specify the Trigger Event Prepayment Date and the Initial
Trigger Event Response Date (as respectively defined below) in respect
thereof and
<PAGE>
39
(C) offer to prepay all Notes held by such Purchaser at the
price specified below on the date therein specified (the "TRIGGER
EVENT PREPAYMENT DATE"), which shall not be less than 30 nor more than
45 days after the date of such notice.
Each Purchaser may accept such offer with respect to all (and not a
portion) of the Notes held by it by notice to the Company at least 15 days
prior to the Trigger Event Prepayment Date (the "INITIAL TRIGGER EVENT
RESPONSE DATE"), except that no Purchaser may accept such offer (and any
acceptance theretofore tendered shall be ineffective) if the Required
Purchasers, prior to such 15th day, shall have waived the right of the
Purchasers to require the prepayment of the Notes pursuant to this
subsection (c).
(ii) If any Purchaser shall accept the offer contained in the Trigger
Event Prepayment Notice by the Initial Trigger Event Response Date,
promptly and in any event by the 12th day prior to the Trigger Event
Prepayment Date, the Company will notify each Purchaser that did not
initially accept such offer
(A) of the identity of the Purchasers accepting such offer,
(B) of the aggregate principal amount of the Notes held by the
Purchasers accepting such offer and
(C) that such Purchaser may accept the Company's offer until the
fifth day prior to the Trigger Event Prepayment Date.
Each Purchaser that did not initially accept such offer may accept such
offer with respect to all (and not a portion) of the Notes held by it by
notice to the Company by the date specified in clause (C) above.
(iii) On the Trigger Event Prepayment Date, the Company will prepay all
of the Notes held by each Purchaser accepting its offer pursuant to this
subsection (c), at a price equal to the principal amount of such Notes,
together with interest accrued thereon to the Trigger Event Prepayment
Date, PLUS an amount equal to 1% of the aggregate principal amount of the
Notes held by such Purchaser.
(iv) If any Purchaser shall not accept the Company's offer pursuant to
this subsection (c) as a result of any Trigger Event, such Purchaser shall
be deemed to have waived its rights under this subsection (c) to require
prepayment of all Notes held by it in respect of such Trigger Event but not
in respect of any subsequent Trigger Event.
(d) The Company will, not later than July 31, 1995, if the events
described in subsection (c)(i)(y)(A) above shall not have occurred by such date,
prepay the Term Notes at 100% of the principal amount thereof in an aggregate
principal amount equal to
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40
$5,000,000, and such principal amount, together with interest thereon to the
prepayment dates, shall become due on such prepayment date.
Section 3.3. OPTIONAL PREPAYMENTS OF THE NOTES.
(a) The Company, at its option, may prepay at any time all or from
time to time any part of the outstanding unpaid principal balance of
(i) the Revolving Notes, in an aggregate principal amount of at least
$1,000,000 or an integral multiple thereof, or such lesser amount as shall
be equal to the aggregate then-outstanding principal balance of the
Revolving Notes and/or
(ii) the Term Notes, in an aggregate principal amount of at least
$500,000 or an integral multiple thereof or such lesser amount as shall be
equal to the aggregate then-outstanding principal balance of the Term
Notes,
in either case without prepayment charge, premium or penalty; PROVIDED that the
Company shall not make more than one prepayment pursuant to this Section 3.3(a)
in any one calendar month. Such prepayment shall be made upon not less than
five Business Days' prior irrevocable written notice to each Purchaser, which
notice shall specify
(A) the date such prepayment is to be made,
(B) the aggregate principal amount of all Notes to be prepaid on such
date and
(C) the aggregate principal amount of the Notes held by each
Purchaser to be prepaid on such date.
The aggregate principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date, shall become due on the prepayment
date specified in such notice.
(b) Any prepayment of less than the entire aggregate principal amount
of the Notes pursuant to this Section 3.3 shall be applied, FIRST, to the
Revolving Notes until $40,000,000 aggregate principal amount of the Revolving
Notes shall have been prepaid pursuant to this Section 3.3 (whether or not such
Revolving Notes shall have been re-issued), SECOND, to the outstanding principal
amount of the Term Notes until the aggregate principal amount thereof shall have
been paid in full and, THIRD, to the Revolving Notes.
Section 3.4. CERTAIN MATTERS RELATING TO PAYMENTS AND PREPAYMENTS.
(a) If, at the time any payment or prepayment provided for herein
shall be applied to the Revolving Notes or the Term Notes, more than one
Revolving Note or more than one Term Note shall be outstanding, then such
payment or prepayment shall be applied
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41
to the Revolving Notes or the Term Notes (as the case may be) PRO RATA in
accordance with the respective outstanding principal amounts of the Notes of the
applicable type.
(b) Any prepayment made by the Company pursuant to any provision of
this Section 3 shall not reduce or otherwise affect its obligation to make any
prepayment required by any other provision of this Section 3.
(c) No Term Notes or portions thereof that shall have been prepaid
shall be reissued.
(d) On any date on which all Notes held by any Purchaser shall be
paid or prepaid in full, the Company also shall pay to such Purchaser all other
accrued and unpaid amounts then owing to such Purchaser under this Agreement or
any of the other Related Documents.
Section 3.5. REDUCTIONS IN MAXIMUM AGGREGATE REVOLVING COMMITMENT.
The Maximum Aggregate Revolving Commitment shall be reduced
(a) on the Maturity Date, to zero;
(b) on any date on which the Revolving Notes shall be prepaid
pursuant to Section 3.2(b), automatically and without any action on the
part of any Person, in an amount equal to the aggregate principal amount of
the Revolving Notes prepaid on such date;
(c) on the date on which a Trigger Event shall occur, to zero;
PROVIDED that
(i) if the Required Purchasers shall have delivered to the
Company a waiver described in Section 3.2(c)(i), the Maximum Revolving
Aggregate Commitment shall be reinstated in the amount in effect
immediately prior to the occurrence of such Trigger Event, and
(ii) subject to Section 3.2(c), such reduction shall not affect
the aggregate principal amount of the Revolving Notes then
outstanding;
(d) on the date on which the Purchasers, pursuant to Section 11.1,
shall no longer be required to purchase Revolving Notes, to zero; and
(e) at the option of the Company, by at least 14-days' prior notice
to each Purchaser specifying amount by which the Maximum Aggregate
Revolving Commitment is being reduced and the amount by which each
Purchaser's Maximum Revolving Commitment is being reduced, in the amount
specified in such notice, so long as, after giving effect to the reduction
specified in such notice, the Maximum
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42
Aggregate Revolving Commitment at least equals the aggregate principal
amount of the Revolving Notes outstanding on the date of such reduction.
Upon any reduction (or reinstatement) of the Maximum Aggregate Revolving
Commitment, the Maximum Revolving Commitment of each Purchaser shall be reduced
(or reinstated) PRO RATA in accordance with the respective outstanding Maximum
Revolving Commitments of all Purchasers.
Section 3.6. NO ACQUISITIONS OF NOTES. Neither the Company nor the
Parent will, or will permit any of its Subsidiaries or Affiliates to, purchase,
redeem or otherwise acquire any Note except upon the payment or prepayment
thereof in accordance with the terms of this Agreement and such Note. If the
Company, the Parent or any of their respective Subsidiaries or Affiliates
acquires any Notes pursuant to any such offer in violation of this Section 3.6
or in any other manner, such Notes shall thereafter be cancelled and shall not
be reissued, no Note shall be issued in substitution therefor, and such Notes
shall not be deemed to be outstanding for any purpose under this Agreement.
Section 4. REPRESENTATIONS AND WARRANTIES.
Section 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PARENT. The Company and the Parent jointly and severally represent and warrant
to the Purchasers and the Collateral Agent as follows:
(a) (i) The Parent, the Company and each of the Parent's other
Subsidiaries are corporations duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation
and are duly qualified to do business in each additional jurisdiction where
the failure to so qualify would have a Material Adverse Effect.
(ii) The Parent, the Company and each of the Parent's other
Subsidiaries have all requisite power and authority to own their respective
Properties and to carry on their respective businesses as now being
conducted and as proposed to be conducted, and, in the case of the Company
to execute, deliver and perform its obligations under this Agreement, the
Notes, the Related Documents and Asset Purchase Documents to which it is a
party, in the case of the Parent to execute, deliver and perform its
obligations under this Agreement and each of the Related Documents and
Asset Purchase Documents to which it is a party, and in the case of the
Canadian Subsidiary, to execute, deliver and perform its obligations under
this Agreement and each of the Related Documents and Asset Purchase
Documents to which it is a party.
(b) (i) The execution, delivery and performance by the Company of
this Agreement, the Notes and the Related Documents and Asset Purchase
Documents to which the Company is a party have been duly authorized by all
necessary corporate
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43
action on the part of the Board of Directors and (if necessary)
stockholders of the Company.
(ii) The execution, delivery and performance by the Parent of this
Agreement and the Related Documents and Asset Purchase Documents to which
the Parent is a party have been duly authorized by all necessary corporate
action on the part of the Board of Directors and (if necessary)
stockholders of the Parent.
(iii) The execution, delivery and performance by each Subsidiary
of the Company of the Related Documents and Asset Purchase Documents to
which it is respectively a party have been duly authorized by all necessary
corporate action on the part of the Board of Directors and (if necessary)
stockholders of such Subsidiary.
(c) (i) This Agreement and each of the Related Documents and Asset
Purchase Documents to which the Company is a party have been duly executed
and delivered by the Company and are, and the Notes when issued, executed
and delivered as contemplated herein will be, the legal, valid and binding
obligations of the Company, in each case enforceable against the Company in
accordance with their respective terms.
(ii) This Agreement and each of the Related Documents and Asset
Purchase Documents to which the Parent is a party have been duly executed
and delivered by the Parent and are the legal, valid and binding
obligations of the Parent, enforceable against the Parent in accordance
with their terms.
(iii) This Agreement and each of the Related Documents and Asset
Purchase Documents to which the Canadian Subsidiary is a party has been
duly executed and delivered by the Canadian Subsidiary and are the legal,
valid and binding obligation of the Canadian Subsidiary, in each case
enforceable against such Subsidiary in accordance with its terms.
(d) The authorized Capital Stock of the Company consists of 10,000
shares of common stock, par value $.01 per share, of which 1,000 shares are
issued and outstanding as of the date of this Agreement and 5,000 shares of
Series A Redeemable Preferred Stock, par value $1,000 per share, none of which
are issued or outstanding on the date hereof. All of the issued and outstanding
shares of Capital Stock of the Company are validly issued, fully paid and non-
assessable and owned of record and beneficially by the Parent, free and clear in
each case of any Lien (except Liens created by the Security Documents). There
are no securities outstanding that are convertible into or exchangeable for any
shares of Capital Stock of the Company, nor are there outstanding any rights to
subscribe for or purchase, or any options or warrants for the purchase of, or
any agreements (contingent or otherwise) providing for the issuance of, or any
calls, commitments or claims of any character relating to, any shares of Capital
Stock of the Company or any securities convertible into or exchangeable for any
such shares.
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44
(e) Set forth in Schedule 4.1(e) is a correct and complete list of
all direct and indirect Subsidiaries of the Company on the date hereof and on
the Closing Date, setting forth as to each such Subsidiary its jurisdiction of
incorporation and the percentage of each class of Capital Stock of such
Subsidiary owned by the Company. As of the Closing Date, immediately after
giving effect to the transactions to be effected on the Closing Date,
(i) the Company shall not own any shares of Capital Stock of, and,
except as set forth in Schedule 4.1(e), shall not have any direct or
indirect equity interest in, any Person other than Subsidiaries of the
Company listed in Schedule 4.1(e),
(ii) the Company will have good title to all of the shares of Capital
Stock it owns of each of its Subsidiaries free and clear in each case of
any Lien (except Liens created by the Security Documents),
(iii) all such shares of Capital Stock of each Subsidiary of the
Company will have been duly and validly issued, and will be fully paid and
non-assessable and owned of record or beneficially by the Company and/or
one or more other Subsidiaries of the Company(other than directors'
qualifying shares disclosed in Schedule 4.1(e)) and
(iv) there will be no securities outstanding that are convertible into
or exchangeable for any shares of Capital Stock of such Subsidiaries, nor
will there be outstanding any rights to subscribe for or purchase, or any
options or warrants for the purchase of, or any agreements (contingent or
otherwise) providing for the issuance of, or any calls, commitments or
claims of any character relating to, any shares of Capital Stock of such
Subsidiaries or any securities convertible into or exchangeable for any
such shares.
(f) (i) The Company has delivered to each Purchaser true and
complete copies of the following financial statements (collectively, the
"FINANCIAL STATEMENTS"):
(A) (1) the audited consolidated and unaudited consolidating
balance sheets of the Parent and its Subsidiaries as of April 30,
1994, 1993 and 1992, and the related audited consolidated and
unaudited consolidating statements of operations, stockholders'
equity and cash flows for the period from inception to that date,
together with the notes thereto and the report thereon of the
Accountants; and
(2) the unaudited consolidated and (as of March 31, 1995
only) consolidating balance sheets of the Parent and its
Subsidiaries as of January 31, 1995 and March 31, 1995, and the
related unaudited consolidated and consolidating statements of
income, stockholders' equity and (for the period ending January
31, 1995 only) cash flows for the period from inception to such
date, together with the notes thereto;
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45
(B) (1) the audited consolidated and unaudited consolidating
balance sheets of Superior TeleTec Inc. (inclusive of the Company
and its Subsidiaries) as of March 31, 1992 and 1993 and of the
Company and its Subsidiaries at May 1, 1994, and the related
audited consolidated statements of operations, stockholders'
equity and cash flows for the period from inception to that date,
together with the notes thereto and the report thereon of KPMG
Peat Marwick and the Accountants, respectively; and
(2) the unaudited consolidated balance sheet of the Company
and its Subsidiaries as of March 31, 1995, and the related
unaudited consolidated statements of income, stockholders' equity
and cash flows for the period from inception to such date,
together with the notes thereto;
(C) the unaudited consolidated pro-forma balance sheet of the
Company and its Subsidiaries as of November 30, 1994, prepared on the
assumption that the purchase of the Properties contemplated by the
Asset Purchase Documents had occurred on such date; and
(D) the audited combined balance sheet of the Copper Cable Group
of Alcatel NA Cable Systems, Inc. and Alcatel Canada Wire and Cable
Inc. as of December 31, 1994, the related audited combined statements
of operations, stockholders' equity and cash flows for the period from
inception to that date, together with the notes thereto and the report
thereon of Arthur Andersen LLP, and the unaudited combined statement
of operations of such Group and Alcatel Canada Wire and Cable Inc. for
the period January 1, 1995 through February 28, 1995.
The Financial Statements have been prepared in accordance with GAAP and,
subject in the case of each of the Financial Statements that are unaudited
to normal year-end audit adjustments and absence of certain of the notes
required by GAAP, present fairly in all material respects the consolidated
financial position and related results of income, earnings, retained
earnings, stockholders' equity and/or cash flows (as applicable) of the
Persons covered by such respective Financial Statements as at each of the
dates and for each of the periods respectively covered thereby.
(ii) As of the date of each of the balance sheets included in the
Financial Statements (including without limitation the pro-forma balance
sheets referred to in subsection (i)(C) above), none of the Parent, the
Company and their Subsidiaries had any Debt or liability, absolute or
contingent, liquidated or unliquidated, of a character required under GAAP
to be reflected or reserved against on such respective balance sheets or
described in the notes thereto, except for Debt and liabilities so
reflected or reserved against. Since April 30, 1994, no Material Adverse
Effect has occurred.
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46
(iii) All projections contained in the Information Memorandum were
prepared on the basis of assumptions that the Company and the Parent in
good faith believe to be reasonable and are fully disclosed in the
Information Memorandum, and on the date hereof and on the Closing Date
neither the Company nor the Parent is or will be aware of any reason why
(A) such assumptions may not be reasonable or (B) such projections may not
represent the good-faith estimate of the Company or the Parent as to the
future performance of the Company.
(g) (i) There are no actions, suits or proceedings pending, or, to
the knowledge of the Company or the Parent after due inquiry, threatened
against or affecting the Parent, the Company or any of their Subsidiaries
or any Properties or rights of any of them that either (A) the Company or
the Parent believes, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, or (B) except as disclosed in
Schedule 4.1(g)(i), would, individually or in the aggregate, if adversely
determined have a Material Adverse Effect.
(ii) There are no actions, suits or proceedings pending, or, to the
knowledge of the Company or the Parent after due inquiry, threatened
against or affecting the Parent, the Company or any of the Parent's other
Subsidiaries that seek to enjoin, or otherwise prevent the consummation of,
the transactions contemplated herein or to recover any damages or obtain
any relief as a result of any of the transactions contemplated herein in
any court or before any arbitrator of any kind or before or by any
Governmental Body.
(iii) None of the Parent, the Company and the Parent's other
Subsidiaries is in default under or in violation of any Order of any court,
arbitrator or Governmental Body or of any Statute of the United States of
America or any other country, which default or violation has or is
reasonably likely to have a Material Adverse Effect; and none of them is
subject to or a party to any Order of any court or Governmental Body
arising out of any action, suit or proceeding under any Statute respecting
antitrust, monopoly, restraint of trade, unfair competition or similar
matters.
(h) None of
(i) the execution and delivery by the Company of this Agreement, the
Notes or any of the Related Documents or Asset Purchase Documents to which
it is a party,
(ii) the execution and delivery by the Parent of this Agreement or any
of the Related Documents or Asset Purchase Documents to which it is a
party,
(iii) the execution and delivery by any Subsidiary of the Company
of any of the Related Documents or Asset Purchase Documents to which each
such Subsidiary is a party,
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47
(iv) the offering, issuance or sale of the Notes, and
(v) the fulfillment of or compliance with the terms and provisions
hereof or thereof,
will conflict with, or result in a breach or violation of the terms, conditions
or provisions of, or constitute a default under, or result in the creation of
any Lien (other than Liens created pursuant to the Security Documents) on any
Properties of the Parent, the Company or their respective Subsidiaries pursuant
to, the charter or by-laws of the Parent, the Company or any of such
Subsidiaries, or any material contract, agreement, mortgage, indenture, lease or
instrument to which any of them is a party or by which any of them is bound or
to which any of them or any of their respective Properties are subject
(including without limitation the Asset Purchase Documents), or any Order or
Statute to which any of them or any of their respective Properties are subject.
(i) No consent, waiver, approval or authorization of or declaration,
registration or filing with any Governmental Body or any nongovernmental Person
(including without limitation any creditor of the Parent, the Company or any of
the Parent's other Subsidiaries, and also including without limitation any
consent, approval, authorization, declaration or filing or the expiration of any
waiting period under the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976,
the Competition Act (Canada) and the Investment Canada Act) is required in
connection with the execution or delivery by the Company of this Agreement, the
Notes or the Related Documents or Asset Purchase Documents to which the Company
is a party, or in connection with the execution or delivery by the Parent of
this Agreement or the Related Documents or Asset Purchase Documents to which it
is a party, or in connection with the execution or delivery by any Subsidiary of
the Company of the Related Documents or Asset Purchase Documents to which such
Subsidiary is respectively a party, or in connection with the performance by the
Parent, the Company or such Subsidiary of its obligations hereunder or
thereunder, or as a condition to the legality, validity or enforceability of
this Agreement, the Notes or any such Related Document or Asset Purchase
Document or to the consummation of the transactions hereby or thereby
contemplated, except for filing of financing statements, filing of assignments
of patents, trademarks, copyrights and similar items, and recording of Mortgages
and fixture filings required in order to perfect the Liens of the Collateral
Agent in the Collateral, and except for such consents, approvals,
authorizations, declarations, registrations, filings and other actions as are
listed in Schedule 4.1(i), all of which listed consents, approvals,
authorizations, declarations, registrations, filings and other actions have
been, or will on or prior to the Closing Date be, obtained and are or will then
be in full force and effect, except where the failure of the Parent or any of
its Subsidiaries to obtain any such consent, approval, authorization,
declaration, registration, filing or other action on or prior to the Closing
Date shall have been expressly waived in writing by each Purchaser.
(j) (i) Schedule 4.1(j)(i) sets forth a correct and complete list
and brief description of all Debt for borrowed money of the Parent, the
Company and the Parent's other Subsidiaries (other than, in the case of the
Parent and its Subsidiaries
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48
other than the Company and its Subsidiaries, Debt in an aggregate principal
amount not exceeding $350,000), all Capitalized Leases of the Company and
its Subsidiaries and all Liens securing any Debt of the Company (excluding
any Debt evidenced by the Notes and any Liens created by the Security
Documents) existing on the Closing Date after giving effect to the
transactions contemplated to occur on the Closing Date. There exists no
material breach or default under the terms and provisions of any
instrument, agreement or contract pertaining to any such Debt and no event
or condition that, with notice or lapse of time or both, would constitute
such a breach or default. No Debt of the Company or any of its
Subsidiaries owed to the Parent is outstanding.
(ii) As of the Closing Date, the Company is not a party to any
Guarantee or other similar type of agreement, and the Company has not
offered its endorsement to any Person that would in any way create a
contingent liability (except by endorsement of negotiable instruments
payable at sight for deposit or collection or similar banking transactions
in the Company's ordinary course of business), except as set forth on
Schedule 4.1(j)(ii) attached hereto. As of the Closing Date, the Parent is
not a party to any Guarantee or other similar type of agreement, and has
not offered its endorsement to any person that would in any way create a
contingent liability (except by endorsement of negotiable instruments
payable at sight for deposit or collection or similar banking transactions
in the Parent's ordinary course of business), except as set forth on said
Schedule 4.1(j)(ii).
(iii) The Notes constitute a senior secured obligation of the
Company, rank PARI PASSU with all other unsubordinated Debt of the Company
and senior to any subordinated Debt of the Parent and as of the Closing
Date will constitute the only senior Debt, and the only secured Debt, of
the Company, other than the Debt of the Company under the Texas Lease and
Debt referred to in item II (2) of Schedule 4.1(j)(i). The Parent's
Guarantee in Section 15 constitutes a senior secured obligation of the
Parent and ranks PARI PASSU with all other unsubordinated Debt of the
Parent and senior to any subordinated Debt of the Parent. The Canadian
Subsidiary's Guarantee in Section 15 constitutes a senior secured
obligation of the Canadian Subsidiary and ranks PARI PASSU with all other
unsubordinated Debt of the Canadian Subsidiary and senior to any
subordinated Debt of the Canadian Subsidiary. The Guarantee of each other
Subsidiary of the Company pursuant to Section 9.9 will constitute a senior
secured obligation of such Subsidiary and will rank PARI PASSU with all
other unsubordinated Debt of such Subsidiary and senior to any subordinated
Debt of such Subsidiary.
(iv) Schedule 4.1(j)(iv) and 4.1(e) set forth a correct and complete
list and brief description of all Investments of the Company and the
Company's Subsidiaries as of the Closing Date after giving effect to the
transactions contemplated to occur on the Closing Date.
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49
(v) No Default or Event of Default has occurred and is continuing or
will occur after giving effect to the transactions contemplated to occur on
the Closing Date.
(k) (i) Schedule 4.1(k) sets forth a correct and complete list and
brief description of all real Property owned or leased by the Parent, the
Company or any of the Company's Subsidiaries, together with a correct and
complete list of all leases of real Property to which any of such Persons
is a party, identifying the parties to each such lease and the Property to
which it relates, as of the Closing Date after giving effect to the
transactions contemplated to occur on the Closing Date. Correct and
complete copies of all such leases, together with all amendments,
modifications and supplements thereto to the date of this Agreement, have
been delivered to the Purchasers' counsel and to each Purchaser requesting
the same. Each of the Parent, the Company and the Company's Subsidiaries
has
(A) good and marketable fee-simple title to its respective real
Properties (other than real Properties that are leased from others),
subject to no Lien of any kind except Permitted Liens, and
(B) good title to all of its other respective Properties (other
than Properties leased from others), subject to no Lien of any kind
except Permitted Liens.
(ii) The Properties owned, leased or used by the Parent, the Company
and the Company's Subsidiaries are
(A) in good operating condition and repair, ordinary wear and
tear excepted,
(B) except for the Liens created pursuant hereto and to the
Related Documents, free and clear of any known defects except for such
defects as do not materially interfere with the continued use thereof
in the conduct of normal operations of the Parent, the Company and
their Subsidiaries and
(C) able to serve the function for which they are currently
being used in all material respects.
The Properties owned, leased or used by the Parent, the Company and the
Company's Subsidiaries constitute all of the material Properties used in
the conduct of the business of the Parent, the Company and the Company's
Subsidiaries as presently conducted, and, except for the Liens created
pursuant hereto and to the Related Documents, none of this Agreement, any
Related Document or any transaction contemplated under any such agreement
or document, will materially adversely affect any right, title or interest
of the Parent, the Company or any of the Company's Subsidiaries in and to
any of such Properties.
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50
(iii) Each of the Parent, the Company and the Parent's other
Subsidiaries enjoys peaceful and undisturbed possession under all leases,
whether of realty or personalty, to which it is respectively a party, none
of which contains any unusual or burdensome provisions, and all such leases
are valid and subsisting and in full force and effect; and none of the
Parent, the Company and the Parent's other Subsidiaries is in breach or
violation of the terms of any such lease, and neither the Company nor the
Parent knows of any breach or violation of any of such leases by any third
party; except, in each case, for matters that would not in the aggregate
have a Material Adverse Effect.
(l) Each of the Parent, the Company and the Parent's other
Subsidiaries has filed, or on behalf of each of them there have been filed, all
federal and all other material tax returns and informational returns that are
required to have been filed prior to the date of this Agreement by or on behalf
of such Persons under the laws of the United States of America or any state or
local jurisdiction therein, or under the laws of any jurisdiction located
outside of the United States of America, and there have been paid all taxes
shown to be due and payable on such returns and all other material taxes and
assessments payable by any of them, except to the extent that any tax liability
is disclosed on Schedule 4.1(l) or is being diligently contested in good faith
and the Parent, the Company or any of the Parent's other Subsidiaries, as the
case may be, has adequately reserved against such tax liability on its books and
financial statements in accordance with GAAP. No material tax Liens have been
filed and no material claims are being asserted with respect to any such taxes
as of the date of this Agreement except as disclosed on Schedule 4.1(l). No
material tax assessment against the Parent, the Company or any of the Parent's
other Subsidiaries has been proposed as of the date of this Agreement except as
disclosed on Schedule 4.1(l), and all of their respective tax liabilities are
adequately provided for on their respective books and financial statements in
accordance with GAAP.
(m) None of this Agreement, the Information Memorandum or any other
document, certificate or statement furnished to any Purchaser by or on behalf of
the Company or the Parent in connection with the transactions contemplated
hereby contained, as of its respective date, or now contains, any untrue
statement of a material fact or as of any such date omitted, or now omits, to
state a material fact necessary in order to make the statements contained herein
and therein not misleading. Except as set forth in the Offering Memorandum,
neither the Company nor the Parent knows of any facts (other than matters of a
general economic or political nature) that individually or in the aggregate have
a Material Adverse Effect or, so far as the Company or the Parent can now
reasonably foresee, are likely to have a Material Adverse Effect in the future.
(n) None of the Company or its representatives has, directly or
indirectly, offered any of the Notes or any security similar to any of them for
sale to, or solicited any offers to buy any of the Notes or any security similar
to any of them from, or otherwise approached or negotiated with respect thereto
with, more than 10 Persons including the Purchasers, and none of the Company or
its representatives has taken or will take any action that would subject the
issuance or sale of any of the Notes to the provisions of Section 5 of
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51
the Securities Act, otherwise violate any provisions of the Securities Act or
the Exchange Act or violate the provisions of any securities or Blue Sky laws of
any applicable jurisdiction.
(o) Except for any fee referred to in Section 2.6, no broker's or
finder's fee or commission will be payable by the Parent, the Company or any of
the Parent's other Subsidiaries with respect to the issuance and sale of the
Notes or any of the transactions. The Company will indemnify each Purchaser and
hold it harmless against any loss, cost, claim or liability (including without
limitation reasonable attorneys' fees and disbursements for the investigation
and defense of claims) arising out of or relating to any such actual or alleged
fee or commission.
(p) During the three years preceding the date of this Agreement,
there has been no strike, work stoppage, slowdown or other labor dispute,
controversy or grievance involving the Company or any of its Subsidiaries, or
employees of any of such Persons, which has had or could reasonably be expected
to have a Material Adverse Effect, nor to the knowledge of the Company after due
inquiry is any such action, dispute, controversy or grievance pending or
threatened against the Company or its Subsidiaries as of the date of this
Agreement. Except as set forth in Schedule 4.1(p), none of the Company or its
Subsidiaries is a party to any collective bargaining agreement and none of them
has any knowledge after due inquiry of any pending or threatened effort to
organize any of their employees. There are currently no pending retaliatory or
wrongful discharge claims or employment discrimination charges or complaints or
administrative or judicial complaints arising therefrom pending against the
Company or any of its Subsidiaries, or against any employees of any of such
Persons, before any Governmental Body, which have had or could reasonably be
expected to have a Material Adverse Effect, nor to the knowledge of the Company
after due inquiry, are any such charges or complaints threatened against the
Company or any of its Subsidiaries. Each of the Company and its Subsidiaries is
in compliance with all applicable Statutes and Orders relating to the employment
of labor, including without limitation any provisions thereof relating to wages,
bonuses, collective bargaining agreements, equal pay, occupational safety and
health, equal employment opportunity and wrongful or retaliatory termination of
employment, except where non-compliance would not have a Material Adverse
Effect.
(q) Except as set forth in Schedule 4.1(q), as of the Closing Date:
(i) There is no pending Environmental Matter relating to the Parent,
the Company or any of the Parent's other Subsidiaries or any Properties of
any of such Persons. Neither the Company nor the Parent is aware of any
facts that could reasonably be expected to result in any Environmental
Matter. None of the Parent, the Company or any of the Parent's other
Subsidiaries has agreed to assume by contract or otherwise any liability of
any other Person for cleanup, compliance, or required capital expenditures
in connection with any Environmental Matter arising prior to the date
hereof.
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52
(ii) The Properties used, owned, leased, operated, managed or
controlled at any time by the Parent, the Company and each of the Parent's
other Subsidiaries are free of contamination from Hazardous Materials or
Contaminants, including without limitation any contamination of the
associated air, soil, groundwater or surface waters, that could reasonably
be expected to result in a Material Adverse Effect. There is no other
condition, circumstance or set of facts relating to health, safety, the
Environment, or pollution control that could reasonably be expected to
result in a Material Adverse Effect.
(iii) There is no contamination, or other condition, circumstance
or set of facts relating to health, safety, the Environment or pollution
control, that individually or in the aggregate could reasonably be expected
to be materially adverse to the operation, prospects, value or use of the
Properties used, owned, leased, operated, managed or controlled by the
Parent, the Company or any of the Parent's other Subsidiaries.
(iv) Each of the Parent, the Company and the Parent's other
Subsidiaries is currently in material compliance with all applicable
Environmental Laws, has cured any past violations or alleged violations of
Environmental Laws by any of them, is not currently in receipt of any
notice of violation, is not currently in receipt of any notice of any
potential liability for cleanup of Hazardous Materials or Contaminants and,
to the best of the Company's and the Parent's knowledge, is not now subject
to any investigation or information request by a Governmental Body
concerning Hazardous Materials, Contaminants or any Environmental Laws.
Each of the Parent, the Company and the Parent's other Subsidiaries holds
and is in compliance with all material governmental permits, licenses, and
authorizations necessary to operate their businesses that relate to siting,
wetlands, coastal zone management, air emissions, discharges to surface or
ground water, discharges to any sewer or septic system, noise emissions,
solid waste disposal or the generation, use, storage, transportation or
other management of Hazardous Materials or Contaminants. None of the
Parent, the Company or the Parent's other Subsidiaries ever has generated,
manufactured, refined, recycled, discharged, emitted, released, buried,
processed, produced, reclaimed, stored, treated, transported, or disposed
of any Hazardous Materials or Contaminants except in material compliance
with all applicable laws and regulations, including permit requirements.
(v) No Properties of the Parent, the Company or any of the Parent's
other Subsidiaries are subject to any Lien or claim for Lien in favor of
any Person as a result of any Environmental Matter or response thereto.
(vi) To the best knowledge of the Company and the Parent, no Hazardous
Materials or Contaminants, including leachate and effluents, generated,
stored, disposed of, transported, managed or released by the Parent, the
Company or any of the Parent's other Subsidiaries have caused or could
reasonably be expected to cause in whole or in part any contamination or
injury to the Environment, any Person, any
<PAGE>
53
natural resource or any Property, including without limitation Property
through which or to which such materials were shipped. None of the Parent,
the Company or any of the Parent's other Subsidiaries has handled, stored,
transported, disposed of or managed any Hazardous Material or Contaminant
in any manner that could reasonably be expected to form the basis for any
present or future claim, demand or action seeking cleanup of any site,
location, or body of water, surface or subsurface, and none of the Parent,
the Company or any of the Parent's other Subsidiaries has any material
liabilities, absolute or contingent, on the date hereof with respect
thereto.
(vii) To the best knowledge of the Company and the Parent, all
facilities where any Person has treated, stored, disposed of, reclaimed, or
recycled any Hazardous Material or Contaminant on behalf of the Parent, the
Company or any of the Parent's other Subsidiaries are in compliance in all
material respects with all applicable Environmental Laws.
(r) None of the Parent, the Company nor any other Subsidiary of the
Parent will, directly or indirectly, use any of the proceeds of the sale of the
Notes in a manner that would, or otherwise take or permit to be taken any action
that would, involve a violation of Regulation G (12 C.F.R. 207, as amended),
Regulation U (12 C.F.R. 221, as amended), Regulation T (12 C.F.R. 220, as
amended) or Regulation X (12 C.F.R. 224, as amended), or any other regulation,
of the Board of Governors of the Federal Reserve System. Following applications
of the proceeds of each sale of the Notes, no more than 25% of the value of the
Properties (of the Parent or the Company individually or of the Parent and its
Subsidiaries or the Company and its Subsidiaries on a consolidated basis)
subject to the provisions of Section 10.2 or 10.7(b) or subject to any
restriction contained in any agreement or instrument between any the Parent, the
Company or any such Subsidiary and any Purchaser or any affiliate of any
Purchaser will be "margin stock", within the meaning of such Regulation G.
(s) (i) Set forth in Schedule 4.1(s)(i) is a correct and complete
list of all bonus, deferred compensation, incentive compensation, stock
purchase, stock option, employment, consulting, severance or termination
pay, hospitalization or other medical, life or other insurance, or
retirement plan, program, agreement or arrangement, and each other Plan or
Multiemployer Plan or Canadian Pension Plan with respect to employees of
the Parent, the Company, their ERISA Affiliates and the Canadian Subsidiary
as of the Closing Date after giving effect to the transactions contemplated
to occur on the Closing Date; PROVIDED that, with respect to DNE
Technologies, Inc., Adience, Inc. and the Excluded Subsidiaries, Schedule
4.1(s)(i) shall include only each Plan and each Multiemployer Plan.
(ii) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan that has resulted in or is reasonably expected to
result in a material liability of the Company or any ERISA Affiliate.
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54
(iii) As of the last annual actuarial valuation date, the funded
current liability percentage, as defined in Section 302(d)(8) of ERISA, of
each Plan exceeds 90 percent, and there has been no material adverse change
in the funding status of any such Plan since such date.
(iv) Neither the Company nor any ERISA Affiliate has incurred or is
reasonably expected to incur any Withdrawal Liability to any Multiemployer
Plan.
(v) Neither the Company nor any ERISA Affiliate has been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(vi) Except as set forth in the financial statements referred to in
Section 4.01(f), the Company and its Subsidiaries have no material
liability with respect to "expected post retirement benefit obligations"
within the meaning of Statement of Financial Accounting Standards No. 106.
(vii) Neither the Company nor any ERISA Affiliate has engaged in a
prohibited transaction (as such term is defined in Section 4975 of the Code
or Section 406 of ERISA) that could subject the Company or any of its ERISA
Affiliates to any tax or penalty on prohibited transactions that is
reasonably likely to have a Material Adverse Effect.
(viii) The Company and its ERISA Affiliates are in compliance in
all respects with all applicable provisions of ERISA and the Code with
respect to all plans (as defined in Section 3(3) of ERISA), except, in each
case, where non-compliance would not have a Material Adverse Effect; each
such plan and its related trust intended to qualify under Section 401(a)
and Section 501(a) of the Code is so qualified and nothing has occurred to
cause the loss of such qualification. All required reports (including Form
5500 Annual Reports, Summary Annual Reports and Summary Plan Descriptions)
have been timely filed and distributed. Any notices required under ERISA
or the Code or any other state, federal or foreign law or any ruling or
regulation of any state, federal or foreign administrative agency with
respect to such plan, including any notices required by Section 204(h) and
Section 606 of ERISA and Section 4980B of the Code, have been appropriately
given.
(ix) None of the Company or any of its ERISA Affiliates is a party in
interest (as defined in Section 3(14) of ERISA) with respect to any
employee benefit plan (as defined in Section 3(3) of ERISA), other than a
plan identified in Schedule 4.1(s)(i).
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55
(x) Except to the extent that any one or more failures of the
representations and warranties contained in this clause (x) could not in
the aggregate reasonably be expected to have a Material Adverse Effect,
(A) each Canadian Pension Plan is in compliance in all material
respects with all applicable pension benefits and tax laws;
(B) no Canadian Pension Plan has any unfunded liabilities
(either on a "funding" or on a "solvency" basis and determined in
accordance with all applicable laws and using assumptions and methods
that are appropriate in the circumstances and in accordance with
generally accepted actuarial principles and practices in Canada as of
the effective date of the last actuarial report filed with the
regulatory authorities);
(C) all contributions (including any special payments to
amortize any unfunded liabilities and employee contributions made by
authorized payroll deductions) required to be made have been made to
the appropriate funding agency in accordance with all applicable laws
and the terms of each Canadian Pension Plan;
(D) no event has occurred and no condition exists with respect
to any Canadian Pension Plan that has resulted or could result in any
Canadian Pension Plan being ordered or required to be wound up in
whole or in part pursuant to any applicable pension benefits laws or
having its registration revoked or refused for the purposes of any
applicable pension benefits or tax laws or being placed under the
administration of any relevant pension benefits regulatory authority
or being required to pay any taxes or penalties under any applicable
pension benefits or tax laws;
(E) no order has been made and no notice has been given pursuant
to any applicable pension benefits or tax laws in respect of any
Canadian Pension Plan requiring (or proposing to require) any Person
to take or to refrain from taking any action in respect thereof or
that there has (or there are circumstances that indicate that there
has) been a contravention of any such applicable laws;
(F) no event has occurred and no condition exists that has
resulted or could result in any Canadian Subsidiary being required to
pay, repay or refund any amount (other than contributions required to
be made or benefits or expenses required to be paid in the ordinary
course) to or on account of any Canadian Pension Plan or a current or
former member thereof; and
(G) no event has occurred and no condition exists that has
resulted or could result in a payment of pension benefits being made
out of a guarantee
<PAGE>
56
fund established under any applicable pension benefits laws in respect
of a Canadian Pension Plan.
(xi) With respect to any pension, retirement or other deferred
compensation plan maintained by the Canadian Subsidiaries that is not a
Canadian Pension Plan, all required contributions have been made and there
are no unfunded liabilities in respect of such plans (either on a "funding"
or on a "solvency" basis and determined in accordance with all applicable
laws and using assumptions and methods that are appropriate in the
circumstances and in accordance with generally accepted actuarial
principles and practices in Canada), except to the extent that all such
unfunded liabilities and failures to make required contributions could not,
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(t) Schedule 4.1(t) contains a list of all material contracts to
which the Company or any of its Subsidiaries is a party as of the Closing Date
after giving effect to the transactions contemplated to occur on the Closing
Date. Correct and complete copies of each such contract, with all amendments,
modifications and supplements thereto to the date hereof, have previously been
furnished by the Company to counsel for the Purchasers and to each of the
Purchasers requesting the same. As of the Closing Date, with respect to the
material contracts in existence on the Closing Date and after giving effect to
the transactions contemplated to occur on the Closing Date:
(i) each of such material contracts is valid, subsisting and in full
force and effect; none of the Company or any of its Subsidiaries is in
material breach or violation of any of the terms, conditions or provisions
of any of such material contracts,
(ii) to the best knowledge of the Company, no third party to any of
the material contracts is in material breach or violation of any of the
terms, conditions or provisions thereof;
(iii) none of the Company or any of its Subsidiaries has
transferred or subordinated any of its rights or interests in any of the
material contracts, and such rights and interests are subject to no Liens
except Permitted Liens and Liens created by the Security Documents; and
(iv) none of the Company or any of its Subsidiaries is a party to any
material contract or is subject to any restriction contained in its charter
or by-laws that individually or in the aggregate has had or is reasonably
likely to have a Material Adverse Effect.
(u) Schedule 4.1(u) sets forth a correct and complete list and brief
descriptions of all policies of workers compensation, general liability, fire,
property, casualty, marine, business interruption, errors and omissions, flood,
earthquake and other insurance carried by the Company or its Subsidiaries as of
the Closing Date, after giving
<PAGE>
57
effect to the transactions contemplated to occur on the Closing Date, correct
and complete copies of which policies have been previously delivered to counsel
for the Purchasers. Such policies are on the date of this Agreement, or will be
on the Closing Date, in full force and effect, and none of the Company or any of
its Subsidiaries has received notice of cancellation with respect to any such
policy. All premiums payable with respect to such policies have been or will
then have been paid in respect of the coverage periods specified in Schedule
4.1(u).
(v) Each of the Company and its Subsidiaries possesses all
franchises, certificates, licenses, permits, registrations, approvals, waivers,
consents and other authorizations from Governmental Bodies (including without
limitation all necessary approvals of any Governmental Bodies having
jurisdiction over the telecommunications and the cable and wire business), free
from burdensome or unusual restrictions or limitations, that are necessary for
the ownership, maintenance and operation of their respective Properties and
Properties, and for the conduct of their respective businesses as now conducted,
and none of the Company and any of its Subsidiaries is in violation of any
thereof in any material respect.
(w) There are no patents, trademarks, service marks, trade names,
copyrights, licenses, other rights or other intellectual property that are,
individually or in the aggregate, material to the business of the Company and
its Subsidiaries. To the best knowledge of the Company and the Parent,
(i) none of the present or contemplated products or operations of the
Company or its Subsidiaries infringes or otherwise violates any patent,
trademark, service mark, trade name, copyright, license or other right,
owned by any other Person, and
(ii) there is no pending or threatened claim, demand, litigation,
investigation, arbitration or other proceeding against or affecting the
Company or any of its Subsidiaries contesting the right of any of them to
manufacture, distribute, sell or use any such product or to engage in any
such operation.
(x) Schedule 4.1(x) contains a correct and complete list of all
Deposit Accounts maintained or that will be maintained on the Closing Date,
after giving effect to the transactions contemplated to occur on the Closing
Date, by the Company or any of its Subsidiaries, setting forth the name and
address of each bank, savings institution or other depositary institution at
which each such account is maintained and stating the title and account number
of such account.
(y) The proceeds from the sale and issuance of the Notes will be used
solely
(i) to pay the aggregate cash purchase price to be paid pursuant to
the Asset Purchase Agreement, and certain related fees, costs and expenses,
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58
(ii) to refinance the Existing Non-Permitted Debt,
(iii) for distributions to the Parent in an aggregate amount not
exceeding $10,000,000 and
(iv) for working capital and other general corporate purposes.
(z) Since April 30, 1994,
(i) no significant customer (or group of customers that in the
aggregate is significant) or any distributor of the Company or any of its
Subsidiaries has given the Company or any of its Subsidiaries notice or, to
the knowledge of the Company or the Parent, has taken any other action that
has given the Company or the Parent any reason to believe that such
customer (or group of customers) or distributor will cease to purchase
products or services or reduce significantly the amount of products and
services purchased from the Company or such Subsidiary, and
(ii) no significant supplier or vendor (or group of suppliers or
vendors that in the aggregate is significant) of the Company or any of its
Subsidiaries has given the Company or any of its Subsidiaries notice or, to
the knowledge of the Company or the Parent, has taken any other action that
has given the Company or the Parent any reason to believe that such
supplier or vendor (or group of suppliers or vendors) will cease to supply
or restrict the amount supplied or adversely change its price or terms to
the Company or its Subsidiaries of any products or services.
For such purposes, a customer (or group of customers) or distributor shall be
deemed "significant" if such customer (or group of customers) or distributor has
accounted for more than 5% of the total net revenues of the Company and its
Subsidiaries on a consolidated basis during the current fiscal year (after
giving effect to the transactions contemplated hereby), and a supplier or vendor
(or group of suppliers or vendors) shall be deemed "significant" if such
supplier or vendor (or group of suppliers or vendors) has accounted for more
than 10% of the total cost of goods sold of the Company and its Subsidiaries on
a consolidated basis, during the current fiscal year (after giving effect to the
transactions contemplated hereby).
(aa) Neither the Parent, the Company nor any Subsidiary of any of them
is an "investment company" or a "person directly or indirectly controlled by or
acting on behalf of an investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended. Neither the Parent, the
Company nor any Subsidiary of any of them is subject to regulation as a "common
carrier" or "contract carrier" or any similar classification by the Interstate
Commerce Commission or under the laws of any state, or is subject to regulation
under any other Statute that limits its ability to incur Debt.
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59
(bb) Neither the Company nor any of its Subsidiaries nor, to the best
of the Company's knowledge after due inquiry, any Affiliate of the Company, is,
or will be after consummation of the transactions contemplated by this Agreement
and application of the proceeds of the Notes, by reason of being a "national" of
a "designated foreign country" or a "specially designated national" within the
meaning of the Regulations of the Office of Foreign Assets Control, United
States Treasury Department (31 C.F.R., Subtitle B, Chapter V), or for any other
reason, in violation of, any United States Federal Statute or Presidential
Executive Order concerning trade or other relations with any foreign country or
any citizen or national thereof or the ownership or operation of any Property.
(cc) On the date of this Agreement and on the Closing Date, none of
the Parent, the Company or the Company's Subsidiaries is indebted, directly or
indirectly, to any of their respective officers, directors or shareholders or to
any of the respective spouses or children of any of such Persons, except (i)
with respect to salaries and related employee compensation and expense
reimbursement and management fees accrued in the ordinary course of business, in
any amount whatsoever and (ii) as set forth in Schedule 4.1(cc). On the date of
this Agreement and on the Closing Date, none of such officers, directors or
shareholders, or any member of their immediate families, is indebted to the
Parent, the Company or the Company's Subsidiaries in any amount whatsoever. No
officer, director or shareholder of the Parent, the Company, or any of Company's
Subsidiaries, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Parent, the Company or
any of the Company's Subsidiaries.
(dd) Each of the Parent, the Company and the Company's Subsidiaries is
Solvent on the Closing Date after giving effect to the transactions to be
effected on the Closing Date and the application of the net proceeds of the
issuance and sale of the Notes to be issued on the Closing Date. None of the
Parent, the Company and the Parent's other Subsidiaries is contemplating either
the filing of a petition by it under any Federal, state or foreign bankruptcy or
insolvency law or the liquidation of all or a major portion of its Properties,
and neither the Parent nor the Company has knowledge of any Person contemplating
the filing of any such petition against any of them.
Section 4.2. REPRESENTATION OF EACH PURCHASER. Each Purchaser,
severally and not jointly,
(i) represents that it is purchasing the Notes hereunder for its own
account and not with a view to or for sale in connection with any
distribution thereof, except in a transaction for which registration is not
required under the Securities Act, and
(ii) acknowledges that
(A) it has reviewed the financial statements referred to in
Section 4.1(f) and such other documents and information as it has
deemed appropriate and independently and without reliance upon any
other Purchaser
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60
and based on its own credit analysis has decided to enter into this
Agreement, and
(B) the Notes have not been and will not be registered under the
Securities Act and may not be sold or otherwise transferred except in
a transaction for which such registration is not required.
Section 5. CLOSING CONDITIONS. Each Purchaser's obligation to
purchase and pay for the Notes to be purchased by it hereunder on the Closing
Date shall be subject to the satisfaction, on or before the Closing Date, of the
following conditions:
Section 5.1. PROCEEDINGS SATISFACTORY. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated to occur on the Closing Date and all documents incident thereto
shall be reasonably satisfactory in form and substance to such Purchaser and its
counsel, and such Purchaser and its counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request, including without limitation:
(a) certificates dated as of a recent date prior to the Closing Date
as to the good standing and payment of taxes of each of the Parent, the
Company and the Canadian Subsidiary, in each jurisdiction where any of such
Persons is organized (except for the Canadian Subsidiary) or is authorized
to do business as a foreign corporation;
(b) certified copies of the certificate or articles of incorporation
(or other comparable constituting document) of each of the Parent, the
Company and the Canadian Subsidiary, with all amendments thereto to the
Closing Date;
(c) certified copies of the by-laws (or other comparable constituting
document) of each of the Parent, the Company and the Canadian Subsidiary,
with all amendments thereto to the Closing Date;
(d) certified copies of resolutions of the Board of Directors and, if
applicable, shareholders, of the Parent, the Company and the Canadian
Subsidiary authorizing the execution, delivery and performance of this
Agreement, the Notes and the Related Documents to which each such Person is
a party;
(e) certified copies of resolutions of the Board of Directors of each
of the Parent, the Company and the Canadian Subsidiary authorizing the
execution, delivery and performance by each of such Persons of the
respective Related Documents to which they are respectively parties; and
(f) certificates as to the incumbency and signatures of each of the
officers of the Parent, the Company and the Canadian Subsidiary that shall
execute this Agreement or any Note or Related Document on behalf of such
respective party.
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61
Section 5.2. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser
and the Collateral Agent shall have received from Shearman & Sterling, special
counsel for the Purchasers, and Osler, Hoskin & Harcourt, special Ontario
counsel for the Purchasers, in connection with this transaction, a favorable
legal opinion dated the Closing Date and addressed to such Purchaser and the
Collateral Agent, covering such matters as such Purchaser or the Collateral
Agent may reasonably request.
Section 5.3. OPINIONS OF COUNSEL TO THE COMPANY, ETC. Such Purchaser
and the Collateral Agent shall have received from
(a) (i) Cummings & Lockwood, counsel to the Company,
(ii) McCarthy Tetrault, special Ontario counsel to the Company,
(iii) Thompson Dorfman Swettman, special Manitoba counsel to
the Company,
(iv) Rogers & Hardin, Georgia counsel to the Company,
(v) Massey, Shaw & West, special Texas counsel to the Company,
(vi) Battle, Winslow, Scott & Wiley, special North Carolina
counsel to the Company and
(vii) Skeeters, Bennett, Shumate & Wilson, special Kentucky
counsel to the Company,
favorable legal opinions, dated the Closing Date and addressed to such
Purchaser and the Collateral Agent, covering the matters specified in
Exhibit E-1 through E-7, respectively, and such other matters incident to
the transactions herein contemplated as such Purchaser or the Collateral
Agent may reasonably request, and
(b) (i) Proskauer Rose Goetz & Mendelsohn, counsel to the Company
and the Canadian Subsidiary in connection with the transactions
contemplated by the Asset Purchase Documents, and
(ii) McCarthy Tetrault, special Ontario counsel to the Company
and the Canadian Subsidiary in connection with such transactions,
letters in form and substance satisfactory to such Purchaser stating that
Purchaser and its assignees may rely on the opinions delivered by such
counsel pursuant to the Asset Purchase Documents as if such Purchaser were
an addressee thereof, and such opinions shall be in form and substance
satisfactory to such Purchaser.
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62
Such Purchaser and the Collateral Agent shall also have received such favorable
legal opinions of local or special counsel to the Company, each dated the
Closing Date and addressed to such Purchaser and the Collateral Agent, as such
Purchaser or the Collateral Agent may reasonably request, covering such matters
incident to the transactions herein contemplated as such Purchaser or the
Collateral Agent may reasonably request.
Section 5.4. REPRESENTATIONS AND WARRANTIES TRUE, ETC.; CERTIFICATES.
The representations and warranties contained in Section 4.1 and elsewhere in
this Agreement and in the Related Documents shall be true on and as of the
Closing Date with the same effect as if such representations and warranties had
been made on and as of the Closing Date after giving effect to the transactions
contemplated to occur on the Closing Date. The Company shall have performed all
agreements on its part required to be performed under this Agreement on or prior
to the Closing Date, and there shall exist no Default or Event of Default on the
Closing Date after giving effect to the transactions contemplated to occur on
the Closing Date. The Company shall have delivered to such Purchaser and the
Collateral Agent an Officer's Certificate, dated the Closing Date, to the effect
(a) of the matters stated in the foregoing sentences of this Section
5.4;
(b) that, since April 30, 1994, no changes have occurred to the
business, operations, Properties, income, results, prospects or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a
whole, or of the Parent and its Subsidiaries, taken as a whole, that,
individually or in the aggregate, constitute a Material Adverse Effect;
(c) that there is not pending or, to the knowledge of the Company
after due inquiry, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting any of the Parent, the
Company or the Parent's other Subsidiaries or their respective Properties
(and, as to any action, suit, proceeding, governmental investigation or
arbitration so disclosed, there has occurred since the date of this
Agreement any development) that seeks to enjoin or restrain any of the
transactions contemplated herein or is likely to have a Material Adverse
Effect;
(d) that no Order of any court, arbitrator or Governmental Body is in
effect that purports to enjoin or restrain any of the transactions
contemplated herein or that constitutes a Material Adverse Effect; and
(e) of the matters set forth in Section 5.6.
Section 5.5. ABSENCE OF MATERIAL ADVERSE CHANGE, ETC. Since April
30, 1994 no changes shall have occurred to the business, operations, Properties,
income, results, prospects or condition, financial or otherwise, of the Company
and its Subsidiaries, taken as a whole, or of the Parent and its Subsidiaries,
taken as a whole, that such Purchaser reasonably believes, individually or in
the aggregate, constitute a Material Adverse Effect or that, individually or in
the aggregate, are materially different from such Purchaser's
<PAGE>
62
reasonable expectations, based on the historical financial information and
operating forecasts provided to such Purchaser by or on behalf of the
Parent or the Company.
Section 5.6. CONSENTS AND APPROVALS. All necessary consents,
approvals and authorizations of, and declarations, registrations and filings
with, Governmental Bodies and non-governmental Persons required in order to
consummate the transactions contemplated herein shall have been obtained or made
and shall be in full force and effect.
Section 5.7. ABSENCE OF LITIGATION, ORDERS, ETC. There shall not be
pending or, to the knowledge of the Company after due inquiry, threatened, any
action, suit, proceeding, governmental investigation or arbitration against or
affecting any of the Parent, the Company or the Parent's other Subsidiaries or
their respective Property (and, as to any action, suit, proceeding, governmental
investigation or arbitration so disclosed, there shall not have occurred since
the date of this Agreement any development), that seeks to enjoin or restrain
any of the transactions contemplated herein or that such Purchaser reasonably
believes is likely to have a Material Adverse Effect. No Order of any court,
arbitrator or Governmental Body shall be in effect that purports to enjoin or
restrain any of the transactions contemplated herein or that such Purchaser
reasonably believes to constitute a Material Adverse Effect.
Section 5.8. NOTES. Such Purchaser shall have received the Revolving
Credit Notes and the Term Notes, duly executed by the Company, to be delivered
to such Purchaser pursuant to Section 2.2(c) and 2.3.
Section 5.9. SECURITY DOCUMENTS. The Collateral Agent shall have
received each of the following documents, which shall be satisfactory to such
Purchaser and the Collateral Agent in form and substance in all respects:
(a) A Pledge and Security Agreement in substantially the form
attached hereto as Exhibit F (as amended from time to time in accordance
with its terms, the "COMPANY SECURITY AGREEMENT"), duly executed by the
Company, together with
(i) duly executed financing statements in proper form for filing
and duly filed under the Uniform Commercial Code in all such
jurisdictions as such Purchaser may deem necessary or desirable in
order to perfect and protect the Liens created by the Company Security
Agreement, covering the Collateral described in the Company Security
Agreement;
(ii) stock certificates representing all of the issued and
outstanding shares of Capital Stock of each Subsidiary of the Company
owned by the Company (including without limitation any such shares
acquired by the Company on the Closing Date), accompanied by stock
powers duly executed by the Company in blank, and any notes of any
such Subsidiary held by the Company, each duly endorsed to the order
of the Collateral Agent or
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accompanied by a bond power satisfactory to the Collateral Agent duly
executed by the Company in blank; and
(iii) an acknowledgement from each consignee of inventory
identified in Schedule I to the Company Security Agreement as to the
perfection and priority of the Lien of the Collateral Agent.
(b) A Pledge Agreement in substantially the form attached hereto as
Exhibit G, duly executed by the Parent (as amended from time to time in
accordance with its terms, the "PARENT PLEDGE AGREEMENT"), together with
stock certificates representing all of the issued and outstanding shares of
Capital Stock of the Company, accompanied by stock powers satisfactory to
such Purchaser in form and substance duly executed by the Parent in blank.
(c) A Security Agreement, in substantially the form attached hereto
as Exhibit H, duly executed by the Canadian Subsidiary (as amended from
time to time in accordance with their terms, the "CANADIAN SUBSIDIARY
SECURITY AGREEMENT"), in each case accompanied by duly executed financing
statements in proper form for filing and duly filed under the appropriate
legislation of the relevant state, county or province as such Purchaser may
deem necessary or advisable in order to perfect the Liens created by the
Canadian Subsidiary Security Agreement, covering the Collateral described
in the Canadian Subsidiary Security Agreement.
(d) Deeds of trust, trust deeds and mortgages, each in substantially
the form attached hereto as Exhibit I (with appropriate local variations)
and covering Properties of the Company and each Subsidiary of the Company
(including without limitation leasehold Properties) at 2900 Morris Sheppard
Drive, Brownwood, Texas; 2801 Anaconda Road, Tarboro, North Carolina; and
1300 West Park Road, Elizabethtown, Kentucky and the Property of the
Canadian Subsidiary at 1395 and 1397 Buffalo Place, Winnipeg, Manitoba
(collectively, together with any such documents subsequently executed and
delivered pursuant to Section 9.5, as the same may be amended, modified or
supplemented from time to time in accordance with their terms, the
"MORTGAGES"), duly executed by the Company or the Canadian Subsidiary (as
the case may be) and duly acknowledged so as to be in proper recordable
form, together with:
(i) proof of recordation of such deeds of trust, trust deeds and
mortgages;
(ii) such certificates, affidavits, questionnaires or returns as
shall be required in connection with the recording or filing of the
Mortgages and evidence that all mortgage recording taxes, filing fees
and recording charges incurred in connection with the filing or
recording of the Mortgages and the financing statements described in
clause (iii) below have been paid;
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(iii) duly executed financing statements covering all fixtures
located on premises subject to the Mortgages, in proper form for
recording or filing and duly filed or recorded in all filing or
recording offices that such Purchaser may deem necessary or desirable
in order to create valid and perfected first priority Liens on the
Property described therein in favor of the Collateral Agent;
(iv) extended coverage (on extended ALTA form, where available)
title insurance policies ("MORTGAGE POLICIES") issued to the
Collateral Agent by such title insurer or insurers as shall be
acceptable to such Purchaser, in such forms, with such endorsements
and in such amounts as shall be acceptable to the Collateral Agent,
insuring each of the Mortgages to be valid and perfected first
priority Liens on the Property described therein, free and clear of
all defects (including, but not limited to, mechanics' and
materialmen's liens) and encumbrances, dated the Closing Date, paid
for by the Company and providing for such endorsements and such other
affirmative insurance and with such reinsurance with (and direct
access against) such other title insurers as the Collateral Agent may
deem necessary or desirable and with such affidavits, certificates and
instruments of indemnification as shall be reasonably required to
induce the title insurers to issue the Mortgage Policies;
(iv) ALTA surveys, dated not more than 30 days before the Closing
Date, certified to the Collateral Agent and the issuer of the Mortgage
Policies in a manner satisfactory to such Purchaser by a land surveyor
duly registered and licensed in the states in which the Property
described in such surveys is located and acceptable to the Collateral
Agent, showing all buildings and other improvements, any off-site
improvements, the location of any easements, parking spaces, rights of
way, building setback lines and other dimensional regulations and the
absence of encroachments, either by such improvements or on to such
Property, and other defects, other than encroachments and other
defects acceptable to such Purchaser;
(v) an appraisal of each real Property subject to a Mortgage by
an appraiser satisfactory to such Purchaser;
(vi) evidence satisfactory to such Purchaser that there does not
exist any violation of any law, regulation or order affecting the real
Properties subject to the Mortgages, including without limitation
those laws, regulations and Orders relating to zoning, subdivision and
building restrictions; and
(vii) evidence that all other action that such Purchaser may
deem necessary or desirable in order to create valid and perfected
first-priority Liens on the Property described in the Mortgages has
been taken.
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(e) A Deposit Account Agreement with each bank or other depositary
institution at which any Deposit Account of the Company or any of its
Subsidiaries is located as shown in Schedule 4.1(x), in each case duly
executed by such depositary institution and by the Company or the
applicable Subsidiary of the Company (as the case may be), together with,
if applicable, duly executed financing statements in proper form for filing
under the Uniform Commercial Code (as in effect in the jurisdiction in
which each such Deposit Account is located) and all other documents
required thereby or that may be necessary or appropriate and as the
Required Purchasers may request.
(f) An Investment Account Agreement with Trust Company Bank, duly
executed by such bank and by the Company or the applicable Subsidiary of
the Company (as the case may be), together with, if applicable, duly
executed financing statements in proper form for filing under the Uniform
Commercial Code (as in effect in any applicable jurisdiction) and all other
documents required thereby or that may be necessary or appropriate and as
the Required Purchasers may request.
(g) Such consents, approvals and authorizations of, and declarations,
registrations and filings with, Governmental Bodies, and such consents,
waivers, amendments, Estoppel Letters of bailees, lessors of real and
personal Property owned or used by the Company and its Subsidiaries, and of
other nongovernmental third parties, as such Purchaser may deem necessary
or desirable in connection with the use, occupancy or operation of the real
Properties subject to the Mortgages (including without limitation
certificates of occupancy) or otherwise in order to protect the rights and
interests of the Collateral Agent in the Collateral.
(h) Searches, by a Person satisfactory to such Purchaser, of the
Uniform Commercial Code (or the equivalent thereof in foreign
jurisdictions), judgment and tax lien filings that may have been filed with
respect to the Collateral confirming that all Collateral constituting
personal Property is (or will be upon release of the Liens securing the
Existing Non-Permitted Debt) subject to no Liens except Permitted Liens.
(i) Evidence satisfactory to such Purchaser that valid policies of
insurance are in full force and effect in accordance with the requirements
of this Agreement and the Security Documents, in each case naming the
Collateral Agent as loss payee and additional insured, as its interests may
appear.
Section 5.10. ENVIRONMENTAL AUDIT. Such Purchaser shall have
received an environmental site assessment report with respect to all real
Properties owned or leased by the Company and its Subsidiaries by environmental
engineers satisfactory to such Purchaser, which shall confirm to such
Purchaser's reasonable satisfaction that the aggregate exposure of the Company
and its Subsidiaries to liability (absolute or contingent) for actual or
potential Environmental Matters relating to such Properties shall not exceed
such amount as shall be acceptable to such Purchaser in its sole discretion.
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Section 5.11. INITIAL NOTE PURCHASE REQUESTS. On or prior to the
Closing Date, such Purchaser shall have received a Note Purchase Request with
respect to the Revolving Notes to be sold to such Purchaser on the Closing Date.
Section 5.12. ACQUISITION TRANSACTIONS. Prior to the Closing Date,
all conditions to the consummation of the transactions contemplated by the Asset
Purchase Agreement shall have been satisfied (or waived with the written
approval of such Purchaser), all governmental and regulatory consents referred
to in the Asset Purchase Agreement shall have been obtained to the satisfaction
of such Purchaser, and all such transactions shall have been consummated in
accordance with the terms of such agreement. Such Purchaser shall have received
such certificates and other evidence with respect to the foregoing as it shall
request.
Section 5.13. FEES. The fees required to be paid on the Closing Date
pursuant to Section 2.6(a) and the letter agreement referred to in Section
2.6(b) shall have been paid concurrently with the issuance and sale of Notes to
be sold on the Closing Date. The fees and out-of-pocket expenses and
disbursements incurred by Shearman & Sterling, Osler, Hoskin & Harcourt and any
local or special counsel to the Purchasers, and any other outside professionals
retained by such Purchaser, in connection with the preparation of this
Agreement, the Notes and the Related Documents and the transactions contemplated
hereby shall have been paid by the Company on the Closing Date.
Section 5.14. PROCESS AGENT ACCEPTANCE. Such Purchaser shall have
received evidence satisfactory to it that Corporation Service Company has
accepted its appointment as agent for purposes of accepting service of process
for the Company and the Canadian Subsidiary pursuant to Section 17.12.
Section 5.15. WIRE INSTRUCTIONS. Such Purchaser shall have received
not less than two Business Days prior to the Closing Date wire instructions
prepared by the Company as to all wire transfers or other payments to be
effected on the Closing Date in connection with the transactions to be
consummated on the Closing Date pursuant to this Agreement or the Asset Purchase
Documents, which wire instructions shall identify the payor and payee of each
such wire transfer or payment, shall describe the manner of transfer or payment
and shall otherwise be satisfactory in form and substance to such Purchaser.
Section 5.16. DISCHARGE OF EXISTING NON-PERMITTED DEBT. All
principal amounts, prepayment charge, if any, accrued interest, and fees,
charges and other obligations of the Parent, the Company and the Company's
Subsidiaries in respect of the Existing Non-Permitted Debt shall have been paid
and discharged in full (including without limitation all obligations in respect
of outstanding letters of credit issued in connection therewith), and such
Purchaser shall have received the originals or copies authenticated to its
satisfaction of
(a) all promissory notes outstanding in connection therewith, duly
cancelled by the respective payees thereof,
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(b) duly executed discharge letters and receipts evidencing payment
in full of all amounts due thereunder,
(c) duly executed releases and UCC-3 Termination Statements
satisfactory in form and substance to such Purchaser, effectively releasing
and discharging all Liens incurred in connection with such Existing Non-
Permitted Debt (including duly cancelled stock powers), in proper form for
filing or recording, as applicable and
(d) such other documents as such Purchaser may reasonably request in
order to evidence the discharge of such Existing Non-Permitted Debt and
obligations and the release of such Liens.
Section 5.17. APPRAISALS. Such Purchaser shall have received a copy
of the appraisals of the major facilities being acquired by the Company pursuant
to the Asset Purchase Documents.
Section 5.18. LEGAL PROHIBITIONS. Such purchase shall not violate
any Order of any court, arbitrator or Governmental Body or any Statute at the
time applicable to such Purchaser.
Section 5.19. MINIMUM AGGREGATE PRINCIPAL AMOUNT OF REVOLVING NOTES.
The aggregate principal amount of Revolving Notes to be purchased by all
Purchasers on the Closing Date shall be at least $60,000,000.
Section 5.20. MAXIMUM PRINCIPAL AMOUNT OF REVOLVING NOTES. After
giving effect to the sale and purchase of the Revolving Notes to be purchased on
the Closing Date (and disregarding the effects of any rounding pursuant to
Section 2.2(f)), the aggregate outstanding principal amount of
(a) all Revolving Notes shall not exceed the Maximum Aggregate
Revolving Commitment on such date, and
(b) all Revolving Notes held by each Purchaser and its nominees shall
not exceed an amount equal to the aggregate outstanding principal amount of
Revolving Notes held by all Purchasers on such date, MULTIPLIED by a
fraction, the numerator of which is such Purchaser's Maximum Revolving
Commitment on such date and the denominator of which is the Maximum
Aggregate Revolving Commitment on such date.
Section 6. ADDITIONAL CONDITIONS TO OBLIGATIONS TO PURCHASE REVOLVING
NOTES. The obligations of each Purchaser to purchase Revolving Notes at any
time (other than on the Closing Date) shall be subject to the satisfaction, at
or before the time of such purchase, of the following additional conditions:
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69
Section 6.1. NOTE PURCHASE REQUEST. Such Purchaser shall have
received a Note Purchase Request with respect to the Revolving Notes to be
purchased in accordance with the provisions of Section 2.2.
Section 6.2. REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties contained in Section 4.1 and elsewhere in this
Agreement and in the Related Documents shall be true and correct on and as of
the date of such purchase with the same effect as if such representations and
warranties had been made on and as of such date, except that any such
representation or warranty that is expressly made only as of a specified date
need be true only as of such date. No Material Adverse Effect shall have
occurred since April 30, 1994. Each request to purchase Revolving Notes shall
constitute, and each Note Purchase Request shall contain, a representation and
warranty by the Company on the date of such purchase as to the matters referred
to in this Section 6.2 and in Section 6.3.
Section 6.3. NO DEFAULT OR EVENT OF DEFAULT. On the date of such
purchase, both immediately before and immediately after giving effect thereto,
no Default or Event of Default shall have occurred and be continuing or would
result from such purchase.
Section 6.4. LEGAL PROHIBITIONS. Such purchase shall not violate any
Order of any court, arbitrator or Governmental Body or any Statute at the time
applicable to such Purchaser.
Section 6.5. DELIVERY OF REVOLVING NOTES. If such Purchaser shall
not have theretofore received a Revolving Note pursuant to Section 2.2(c)(ii),
such Purchaser shall have received a Revolving Note pursuant to Section 2.2(c).
Section 6.6. MINIMUM PRINCIPAL AMOUNT OF REVOLVING NOTES. The
aggregate principal amount of Revolving Notes to be purchased by all Purchasers
on the date of such purchase shall be at least $2,000,000.
Section 6.7. MAXIMUM PRINCIPAL AMOUNT OF REVOLVING NOTES. After
giving effect to the sale and purchase of Revolving Credit Notes on such date of
purchase (and disregarding the effects of any rounding pursuant to Section
2.2(f)), the aggregate outstanding principal amount of
(a) all Revolving Notes shall not exceed the Maximum Aggregate
Revolving Commitment on such date, and
(b) all Revolving Notes held by each Purchaser and its nominees shall
not exceed an amount equal to the aggregate outstanding principal amount of
Revolving Notes held by all Purchasers on such date, MULTIPLIED by a
fraction, the numerator of which is such Purchaser's Maximum Revolving
Commitment on such date and the denominator of which is the Maximum
Aggregate Revolving Commitment on such date.
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Section 6.8. OTHER SALES OF REVOLVING NOTES. Not more than one other
sale of Revolving Notes shall have theretofore occurred during the calendar
month in which such date falls.
Section 6.9. OTHER REQUIREMENTS. Such Purchaser shall have received,
in form and substance satisfactory to it, all certificates, orders,
authorizations, consents, affidavits, schedules, instruments, security
agreements, financing statements, Mortgages and other documents that are
provided for hereunder, or that such Purchaser may at any time reasonably
request after reasonable notice.
Section 7. FINANCIAL STATEMENTS AND INFORMATION. The Parent and the
Company will furnish to each Purchaser and the Collateral Agent, so long as it
shall be obligated to purchase or shall hold any Notes:
(a) as soon as available and in any event within 30 days after the
end of each month, copies of the consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such month and
the related consolidated and consolidating statements of income for such
month and for the portion of the fiscal year ended with the last day of
such month, and stating in comparative form the corresponding figures from
the consolidated budget of the Company and its Subsidiaries for such
period, all certified by the Chief Financial Officer or Chief Executive
Officer of the Company as having been prepared in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and
absence of the footnotes required by GAAP, and as presenting fairly in all
material respects the information contained therein as at the dates and for
the periods covered thereby;
(b) as soon as available and in any event within 45 days after the
end of each of the first three quarterly accounting periods in each fiscal
year of the Company,
(i) copies of the consolidated and consolidating balance sheets
of (A) the Company and its Subsidiaries and (B) the Parent and its
Subsidiaries, in each case as of the end of such accounting period,
together with, in each case, the related consolidated and
consolidating statements of income, shareholders' equity and cash
flows for such accounting period and for the portion of the fiscal
year ended with the last day of such accounting period, all in
reasonable detail and stating in comparative form (1) the consolidated
and consolidating figures as of the end of and for the corresponding
date and period in the previous fiscal year and (2) the corresponding
figures from the consolidated budget of the Company and its
Subsidiaries and of the Parent and its Subsidiaries for such period,
all certified by the Chief Financial Officer or Chief Executive
Officer of the Parent as having been prepared in accordance with GAAP
consistently applied, subject in the case of interim financial
information to normal year-end audit adjustments and absence of the
footnotes required by GAAP, and as presenting fairly in all material
respects the
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71
information contained therein as at the dates and for the periods
covered thereby, and
(ii) a written statement of such Chief Financial Officer or Chief
Executive Officer of the Parent setting forth computations in
reasonable detail showing whether or not as at the end of such fiscal
quarter there existed any Default or Event of Default resulting from a
breach or violation of any of Sections 10.1, 10.7, 10.11, 10.12 and
10.17;
(c) as soon as available and in any event within 90 days after the
end of each fiscal year of the Parent,
(i) copies of the audited consolidated and unaudited
consolidating balance sheets of the Parent and its Subsidiaries, in
each case as of the end of such fiscal year, together with, in each
case, the related audited consolidated and unaudited consolidating
statements of income, shareholders' equity and cash flows for such
fiscal year, and the notes thereto, all in reasonable detail and
stating in comparative form (A) the respective audited consolidated
and unaudited consolidating figures as of the end of and for the
previous fiscal year and (B) the corresponding figures from the
consolidated budget of the Company and its Subsidiaries for such
fiscal year,
(1) in the case of such audited consolidated financial
statements, accompanied by a report thereon of Arthur Andersen
LLP, or other independent public accountants of recognized
national standing selected by the Parent and acceptable to the
Required Purchasers (the "ACCOUNTANTS"), which report shall be
unqualified as to going concern and scope of audit and shall
state that such consolidated financial statements present fairly,
in all material respects, the consolidated financial position of
the Parent and its Subsidiaries as at the end of such fiscal year
and the consolidated income, shareholders' equity and cash flows
for such fiscal year in conformity with GAAP and that the
examination by the Accountants in connection with such
consolidated financial statements has been made in accordance
with generally accepted auditing standards, and
(2) in the case of such unaudited consolidating financial
statements, certified by the Chief Financial Officer or Chief
Executive Officer of the Parent as having been prepared in
accordance with GAAP consistently applied and as presenting
fairly in all material respects the information contained therein
as at the dates and for the periods covered thereby;
(ii) a written statement of the Accountants
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(A) setting forth computations in reasonable detail showing
whether or not as at the end of such fiscal year there existed
any Default or Event of Default resulting from a breach or
violation of any of Sections 10.1, 10.7, 10.11, 10.12 and 10.17,
and
(B) stating that in making the examination necessary for
their report on such financial statements they obtained no
knowledge of any default by the Parent or the Company in the
fulfillment of any of the terms, covenants, provisions or
conditions of this Agreement, or if such Accountants shall have
obtained knowledge of any such default, specifying the nature and
status thereof;
(d) concurrently with the financial statements furnished pursuant to
subsections (b) and (c) of this Section 7, an Officer's Certificate of the
Parent stating that, based upon such examination or investigation and
review of this Agreement as in the opinion of the signer is necessary to
enable the signer to express an informed opinion with respect thereto, no
default by the Parent or the Company in the fulfillment of any of the
terms, covenants, provisions or conditions of this Agreement exists or has
existed during such period or, if such a default shall exist or have
existed, the nature and period of existence thereof and what action the
Parent or the Company has taken, is taking or proposes to take with respect
thereto;
(e) concurrently with the financial statements furnished pursuant to
subsections (b) and (c) of this Section 7, a brief management discussion
and analysis of the financial condition and results of operations of the
Parent and its Subsidiaries as of the end of and for the period covered by
such financial statements (including a comparison thereof with the
financial condition and results of operations of the Parent and its
Subsidiaries as of the end of and for the comparable period in the prior
fiscal year), and describing any significant events relating to the Parent
or its Subsidiaries occurring during such period;
(f) promptly and in any event within 15 days after the same are
available, copies of all such proxy statements, financial statements,
notices and reports as the Parent, the Company or any of their Subsidiaries
shall send or make available generally to their security holders, and
copies of all regular and periodic reports and of all registration
statements (other than on Form S-8 or a similar form) that the Parent, the
Company or any of their Subsidiaries may file with the SEC or with any
securities exchange;
(g) promptly and in any event within 15 days after the receipt
thereof by the Parent or the Company or any of the Parent's other
Subsidiaries, copies of any management letters and any reports as to
material inadequacies in accounting controls (including reports as to the
absence of any such inadequacies) submitted to any such corporation by the
Accountants in connection with any audit of such corporation made by the
Accountants;
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73
(h) promptly and in any event within five days after becoming aware
of
(i) the existence of any Default or Event of Default on the part
of the Company or the Parent, an Officer's Certificate of the Company
or the Parent specifying the nature and period of existence thereof
and what action the Company or the Parent is taking or proposes to
take with respect thereto; or
(ii) any Debt of the Parent, the Company or any of the Parent's
other Subsidiaries being declared due and payable before its expressed
maturity, or any holder of such Debt having the right to declare such
Debt due and payable before its expressed maturity, because of the
occurrence of any default (or any event that, with notice and/or the
lapse of time, would constitute any such default) under such Debt,
an Officer's Certificate of the Company or the Parent describing the nature
and status of such matters and what action the Company, the Parent or such
Subsidiary is taking or proposes to take with respect thereto;
(i) promptly and in any event within 10 days after the Parent or the
Company knows or has reason to know that an ERISA Event has occurred, that
any Plan or Multiemployer Plan is or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA, or that the
Company or any of its ERISA Affiliates will or may incur any material
liability to or on account of a Plan or Multiemployer Plan under Title IV
of ERISA, or any other material liability under ERISA has been asserted
against the Company or any of its ERISA Affiliates, an Officer's
Certificate of the Parent or the Company setting forth information as to
such occurrence and what action, if any, the Company or such ERISA
Affiliate is required or proposes to take with respect thereto, together
with any notices concerning such occurrences that are required to be filed
by the Company or such ERISA Affiliate with the Internal Revenue Service or
the PBGC, or that are received by the Company or such ERISA Affiliate from
any Multiemployer Plan or the Internal Revenue Service or the PBGC;
(k) promptly and in any event within 10 days after the Company knows
or has reason to know of any of the following, an Officer's Certificate of
the Company setting forth information of any such occurrence or condition
and such action, if any, that is required or proposed to be taken, together
with any notices required to be filed by the Company or the Canadian
Subsidiary with any Purchaser, the relevant pension or tax regulatory
authority, a current or former member of a Canadian Pension Plan, an
administrator or member of an advisory committee of a Canadian Pension Plan
or a union representing current or former members of a Canadian Pension
Plan with respect thereto:
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74
(i) that a Canadian Pension Plan is not in substantial
compliance with any applicable pension benefits or tax laws;
(ii) that a Canadian Pension Plan has an unfunded liability
(either on a "funding" or on a "solvency" basis and determined in
accordance with all applicable laws and using assumptions and methods
that are appropriate in the circumstances and in accordance with
generally accepted actuarial principles and practices in Canada);
(iii) that an event has occurred or a condition exists with
respect to a Canadian Pension Plan that has resulted or could result
in the Canadian Pension Plan being ordered or required to be wound up
in whole or in part pursuant to any applicable pension benefits laws
or having its registration revoked or refused for the purposes of any
applicable pension benefits or tax laws or being placed under the
administration of any relevant pension benefits regulatory authority
or being required to pay any taxes or penalties under any applicable
pension benefits and tax laws;
(iv) that an Order has been made or notice has been given
pursuant to any applicable pension benefits or tax laws in respect of
any Canadian Pension Plan requiring (or proposing to require) any
Person to take or refrain from taking any action in respect thereof or
that there has (or there are circumstances that indicate that there
has) been a contravention of any such applicable laws; or
(v) that an event has occurred or a condition exists that has
resulted or could result in any Purchaser being required to pay, repay
or refund any amount (other than contributions required to be made or
expenses required to be paid in the ordinary course) to or on account
of any Canadian Pension Plan or a current or former member thereof;
or that an event has occurred or a condition exists that has resulted or
could result in a payment being made out of a guarantee fund established
under the applicable pension benefits laws in respect of a Canadian Pension
Plan;
(l) promptly after becoming aware of any Material Adverse Effect with
respect to which notice is not otherwise required to be given pursuant to
this Section 7, an Officer's Certificate of the Parent or the Company
setting forth the details of such Material Adverse Effect and stating what
action the Parent, the Company or any of the Parent's other Subsidiaries
has taken or proposes to take with respect thereto;
(m) promptly (and in any event within 15 days) after the Parent or
the Company knows of
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(i) the institution of, or threat of, any material action, suit,
proceeding, governmental investigation or arbitration against or
affecting the Parent, the Company or any of the Company's Subsidiaries
or any Property of any of them, or
(ii) any material development in any such action, suit,
proceeding, governmental investigation or arbitration,
that, in either case, if adversely determined, is likely to have a Material
Adverse Effect, an Officer's Certificate of the Parent or the Company
describing the nature and status of such matter in reasonable detail;
(n) as soon as available (and in any event not later than 30 days
after the beginning of each fiscal year of the Parent), a copy of a
consolidated and consolidating budget of the Parent and its Subsidiaries
prepared by the Parent for such fiscal year, and all amendments thereto
that may be in effect from time to time;
(o) on the Closing Date, at least once in each fiscal year and from
time to time on request by the Required Purchasers or the Collateral Agent,
a report of a reputable insurance broker with respect to all insurance
maintained by the Parent, the Company or the Parent's other Subsidiaries,
together with a certificate of insurance evidencing the effectiveness of
the policies of insurance required to be maintained by the provisions of
Section 9.4(a);
(p) promptly following, and in any event within 10 Business Days
after any Casualty or Taking involving Property of the Parent, the Company
or any of the Parent's other Subsidiaries with a value equal to or greater
than $250,000, an Officer's Certificate of the Company describing the
nature and status of such occurrence; and
(q) any other information, including financial statements and
computations, relating to the performance of obligations arising under this
Agreement and/or the affairs of the Parent, the Company or any of the
Parent's other Subsidiaries that such Purchaser may from time to time
reasonably request and that is capable of being obtained, produced or
generated by the Parent, the Company or such Subsidiary or of which any of
them has knowledge.
It is further understood and agreed that, for the purpose of effecting
compliance with Rule 144A promulgated by the SEC in connection with any resales
of Notes that may hereafter be effected pursuant to the provisions of such Rule,
(A) each prospective purchaser of Notes designated by a holder
thereof shall have the right to obtain from the Company, upon the written
request of such holder, copies of
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(w) the consolidated balance sheet of the Company and its
Subsidiaries as of the end of the then most recently completed fiscal
year of the Company (or, if such fiscal year shall have ended within
the preceding 90 days, as of the end of the next preceding fiscal
year), together with the related consolidated statements of income,
shareholders' equity and cash flows for the fiscal year then ended,
(x) similar financial statements for such part of the two
preceding fiscal years as the Company has been in operation (which
financial statements, and the financial statements referred to in
clause (i) of this paragraph, shall be audited to the extent
reasonably available),
(y) a consolidated balance sheet of the Company and its
Subsidiaries as of the end of the then most recently completed fiscal
quarter of the Company (or, if such fiscal quarter shall have ended
within the preceding 60 days, as of the end of the next preceding
fiscal quarter), together with the related consolidated statements of
income, shareholders' equity and cash flows for the portion of the
current fiscal year then ended, and
(z) any other information that is necessary to comply with such
Rule, and
(B) each such holder and each such prospective purchaser shall have
the right to obtain from the Company, upon the written request of such
holder, a brief statement of the nature of the business of the Company and
the products and services it offers, dated as of a date within 12 months
prior to the date of resale of such Notes.
The Company will keep at its principal executive office a true copy of
this Agreement, and cause the same to be available for inspection at said office
during normal business hours by any holder of Notes or by any prospective
purchaser of Notes designated in writing by the holder thereof.
Section 8. INSPECTION; CONFIDENTIALITY.
Section 8.1. INSPECTION OF BOOKS AND RECORDS. Each Purchaser, so
long as it shall be obligated to purchase or shall hold any Notes, shall have
the right, on not less than three Business Days' advance notice to the Company
and the Parent, to visit and inspect any of the Properties of the Parent, the
Company and the Parent's other Subsidiaries, to examine their books of account
and records, to make copies and extracts therefrom at their expense, and to
discuss their affairs, finances and accounts with, and to be advised as to the
same by, their officers and employees and their independent public accountants
(whose fees and expenses shall be paid by the Company, and by this provision
both the Parent and the Company authorize their accountants to discuss their
affairs, finances and accounts and those of their Subsidiaries, whether or not
any of such representatives is present, it being
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77
understood that nothing contained in this Section 8 is intended to confer any
right to exclude any such representative from such discussions), all at such
reasonable times and intervals as such Purchaser may desire. All expenses
incurred by a Purchaser in connection with the exercise of its rights pursuant
to this Section 8 shall be borne by such Purchaser, except that the Company
agrees to pay all out-of-pocket expenses incurred by such Purchaser in
connection with such exercise of rights at any time when a Default or Event of
Default has occurred and is continuing.
Section 8.2. CONFIDENTIALITY. Each Purchaser will use reasonable
precautions, in accordance with its customary procedures for handling
confidential information, to keep confidential information delivered to it by
the Company or the Parent pursuant to this Agreement that is clearly marked
confidential, except that any Purchaser, without the consent of the Company or
the Parent, may disclose such information
(a) to its officers, employees and attorneys, advisers and other
representatives,
(b) that is or becomes generally available to the public (other than
as a result of its violation of its obligations under this Section 8.2),
(c) that is or becomes available to it on a non-confidential basis
from a source entitled to disclose that information to it,
(d) to the extent required or appropriate in any report, statement or
testimony submitted to any municipal, state or United States federal or
other applicable regulatory body having or claiming to have jurisdiction
over it,
(e) as may be required or appropriate in response to any summons or
subpoena or in connection with any litigation,
(f) in order to comply with any law, order, regulation or ruling, or
with any request (whether or not having the force of law, so long as it is
customary for institutions such as such Purchaser to comply with such
request), applicable to it,
(g) to its auditors, accountants and other regulatory examiners,
(h) to other Purchasers and prospective Purchasers and
(i) in connection with the enforcement of its rights under this
Agreement or any Related Document.
Section 9. AFFIRMATIVE COVENANTS. The Company and the Parent jointly
and severally covenant and agree that so long as any of the Notes shall be
outstanding or any Purchaser shall have any obligation to purchase Notes
hereunder:
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Section 9.1. PAYMENT OF PRINCIPAL, PREPAYMENT CHARGE AND INTEREST.
The Company will duly and punctually pay the principal of and interest on the
Notes, and will timely pay and perform all of its other Obligations, in
accordance with the terms of such Notes, this Agreement and the other Related
Documents. The Company and the Parent will, and will cause their respective
Subsidiaries to, comply with all of the covenants, agreements and conditions
contained in this Agreement and the Related Documents.
Section 9.2. PAYMENT OF TAXES AND CLAIMS. The Parent and the Company
will, and will cause each of their Subsidiaries to, pay before they become
delinquent:
(a) all taxes, assessments and governmental charges or levies imposed
upon the Parent, the Company or any of the Parent's other Subsidiaries (or
any other Subsidiaries of the Parent or the Company that are part of any
affiliated group, within the meaning of Section 1504(a)(1) of the Code,
with the Parent, the Company or any of the Parent's other Subsidiaries) or
their income or profits or upon their Property, real, personal or mixed, or
upon any part thereof;
(b) all claims for labor, materials and supplies which, if unpaid,
would result in the creation of a Lien upon Property of the Parent, the
Company or any of the Parent's other Subsidiaries; and
(c) all claims, assessments, or levies required to be paid by the
Company or any of its ERISA Affiliates or the Canadian Subsidiary pursuant
to any Pension Plan, Multiemployer Plan or Canadian Pension Plan or any
agreement, contract, law, ordinance or governmental rule or regulation
governing or relating to any such plan;
PROVIDED that the taxes, assessments, claims, charges and levies described in
Section 9.2(a) and (b) need not be paid while being diligently contested in good
faith and by appropriate proceedings so long as
(i) adequate book reserves have been established with respect thereto
in accordance with GAAP and
(ii) neither the Parent's nor the Company's nor any such Subsidiary's
title to and right to use its Property is materially adversely affected by
such nonpayment.
The Parent and the Company will timely file, and will cause the Parent's other
Subsidiaries to file, all tax returns required to be filed in connection with
the payment of taxes required by this Section 9.2. If an Event of Default shall
have occurred and be continuing and any such contested items shall have resulted
in a Lien or claim upon any of the Parent's, the Company's or any of the
Parent's other Subsidiaries' Property, any Purchaser may, at its election (but
shall not be obligated to),
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79
(A) procure the release and discharge of any such Lien or claim and
any judgment or decree thereon, without inquiring into or investigating the
amount, validity or enforceability of such Lien or claim and
(B) effect any settlement or compromise of the same,
and any amounts expended by such Purchaser in connection therewith including
premiums paid or security furnished in connection with the issuance of any
surety company bonds, shall be reimbursed by the Company within five Business
Days of demand therefor by such Purchaser.
Section 9.3. MAINTENANCE OF PROPERTIES, RECORDS AND CORPORATE
EXISTENCE. The Parent and the Company will, and will cause each of their
Subsidiaries to:
(a) maintain their respective Properties that are used or useful in
the conduct of their respective businesses in good condition, reasonable
wear and tear excepted, and make all necessary renewals, repairs,
replacements, additions, betterments, and improvements thereto;
(b) keep books of records and accounts in which full and correct
entries will be made of all their respective business transactions and will
reflect in their financial statements adequate accruals and appropriations
to reserves, all in accordance with GAAP at the time in effect and
consistently applied;
(c) maintain the same fiscal year during and after the current fiscal
year ending April 30, 1995;
(d) do or cause to be done all things necessary to preserve and keep
in full force and effect their respective corporate existence, rights,
powers and franchises including without limitation any necessary
qualification or licensing in any foreign jurisdiction, except as otherwise
permitted by Section 10.4;
(e) comply in all material respects with all applicable Statutes,
franchises, and Orders of, and all applicable restrictions imposed by, any
Governmental Body, in respect of the conduct of its business and the
ownership of its Properties (including without limitation applicable
Statutes and Orders relating to Environmental Laws and occupational safety
and health); and
(f) take all measures to keep any Property owned or operated by them
free of material contamination from Hazardous Materials, Contaminants and
any other potentially materially harmful chemical or physical conditions,
and, without limiting the generality of the foregoing, comply with all of
the obligations of any such Person with respect to environmental
remediation incurred pursuant to any of the Acquisition Agreements.
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If the Parent, the Company or any of the Parent's other Subsidiaries receives
notice or becomes aware of any Environmental Matter or contamination with
Hazardous Materials or Contaminants that relates to any of them or their
respective Properties, then the Company will promptly provide written notice
thereof to each Purchaser and, upon written request from the Required
Purchasers, will provide the Purchasers with such reports, certificates,
engineering studies or other written material or data as the Required Purchasers
may request so as to satisfy the Required Purchasers that each of the Parent and
the Company is in compliance with their respective obligations under this
Agreement. If the Parent or the Company shall at any time fail to comply
promptly and fully with any such request, the Required Purchasers shall have the
right to employ at the Company's expense a qualified environmental consultant
acceptable to the Required Purchasers to conduct an environmental review, audit,
assessment or report concerning the Parent's, the Company's and the Parent's
other Subsidiaries' operations and Property. The Parent and the Company agree
to cooperate fully with such consultant in connection with any such review,
audit, assessment or report, including without limitation by providing such
access to the Parent's, the Company's and the Parent's other Subsidiaries'
books, records, Properties, employees and agents and by furnishing such written
and oral information as such consultant may reasonably request in connection
with any such review, audit, assessment or report.
Section 9.4. INSURANCE.
(a) The Company and the Parent will, and will cause each of the
Parent's other Subsidiaries to, carry and maintain in full force and effect at
all times with financially sound and reputable insurance companies or
associations rated A or better by A.M. Best & Co. or the foreign equivalent
thereof (or, as to workers' compensation or similar insurance, in an insurance
fund or by self-insurance authorized by the jurisdiction in which its operations
are carried on):
(i) insurance against loss or damage to the tangible real and
personal Property of the Parent, the Company and their Subsidiaries by
fire, theft, explosion, spoilage and all other hazards and risks ordinarily
insured against by other owners or users of such Property in similar
businesses,
(ii) all workers' compensation or similar insurance as may be required
under the laws of any jurisdiction,
(iii) commercial liability (including contractual indemnity)
insurance against claims for personal injury, death or property damage
suffered upon, in or about any premises occupied by them or occurring as a
result of the ownership, maintenance or operation by them of any
automobile, truck or other vehicle or as a result of the use of products
manufactured, constructed or sold by it, or services rendered by it,
(iv) business-interruption insurance covering risk of loss as a result
of the cessation for all or any part of one year of any substantial part of
the business conducted by them and
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(v) insurance against such other risks as are usually insured against
by corporations of established reputation engaged in the same or similar
businesses and similarly situated, and in any event such other risks as the
Company and its Subsidiaries have insured against as of the date of this
Agreement.
Insurance specified in clause (i) above shall be maintained in an amount at
least equal to the full insurable value of the Property covered thereby and
shall conform to the requirements of the Company Security Agreement and any
other applicable Related Documents. Insurance specified in clauses (iii), (iv)
and (v) above shall be maintained in such amounts (and with coinsurance,
deductibles and self-insured retention, if any) as are usually carried by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, and in any event in at least such amounts as are carried
on the date of this Agreement. Insurance specified in clauses (i), (iii), (iv)
and (v) above in respect of the Company and its Subsidiaries shall name the
Collateral Agent as loss payee and additional insured, as its interests may
appear. Each insurance policy shall
(w) name the Grantor and the Collateral Agent as insured parties
thereunder (without any representation or warranty by or obligation upon
the Collateral Agent), as their interests may appear,
(x) contain the agreement by the insurer that any loss thereunder
shall be payable to the Collateral Agent notwithstanding any action,
inaction or breach of representation or warranty by the Grantor,
(y) provide that there shall be no recourse against the Collateral
Agent for payment of premiums or other amounts with respect thereto and
(z) provide that at least 30 days' prior written notice of
cancellation or of lapse shall be given to the Collateral Agent by the
insurer.
(b) The Parent and the Company hereby direct, and shall cause each of
the Company's Subsidiaries to direct, all insurers under policies of insurance
described in subsection (a)(i) of this Section 9.4 and all Persons making any
payment with respect to any Taking of Property of the Company and its
Subsidiaries, to pay all proceeds of such insurance policies in the case of any
actual or constructive loss of any Property of the Company or any of its
Subsidiaries by reason of fire, explosion, theft or other casualty occurrence
(each a "CASUALTY") and all amounts payable in respect of any such Taking
directly to the Collateral Agent (and if the Company or any Subsidiary shall
receive any such proceeds or amounts, the Company will, and will cause its
Subsidiaries to, hold such proceeds and amounts in trust for the benefit of the
Collateral Agent and immediately pay the same to the Collateral Agent). The
Collateral Agent shall release such proceeds to the Company or the applicable
Subsidiary upon the written request of the Company when and as necessary to pay
for the repair, replacement or reconstruction of the Properties subject to such
casualty; PROVIDED that
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(i) at the time of any requested release of funds, the Required
Purchasers shall not have advised the Collateral Agent that no Default or
Event of Default has occurred (or, if the Required Purchasers shall have
delivered such advice as to any Default or Event of Default, the Required
Purchasers shall have advised the Collateral Agent that such Default or
Event of Default no longer is continuing); and
(ii) each release of funds shall be conditioned upon receipt by the
Collateral Agent of architect's certificates, completion certificates,
waivers of mechanics liens and such other documentation as any Purchaser or
the Collateral Agent may reasonably request.
(c) In the event of a Casualty or a Taking with respect to Property
of the Company and its Subsidiaries that is equal to or greater than $250,000,
the Required Purchasers shall have the right, but not the obligation, to settle
insurance claims (and condemnation proceeds or awards, as the case may be), with
respect to such Property; PROVIDED that the Required Purchasers shall have the
right, but not the obligation, to settle all such claims (and proceedings) with
respect to any Property of the Company and its Subsidiaries following the
occurrence and during the continuance of a Default or an Event of Default. If
the Required Purchasers elect not to settle such claim or proceeding, the
Company shall do so; PROVIDED that any settlement of any such claim or
proceeding reached by the Company shall be subject to the Required Purchasers'
prior written approval.
(d) If the Company or any of its Subsidiaries shall fail to obtain,
maintain or renew any insurance required pursuant to this Section 9.4, or to pay
the premiums therefor, or to deliver to any Purchaser proper evidence thereof
beyond any applicable notice and cure period, if any, for the performance of
such actions, any Purchaser, at its sole option and without any obligation to do
so, may procure and pay for such insurance, and any sums expended by it to
procure any such insurance shall be repaid by the Company, together with any
late charge imposed by any such insurer, if applicable, within five Business
Days after receipt of bills therefor from such Purchaser.
Section 9.5. AFTER-ACQUIRED REAL PROPERTY.
(a) Without affecting the obligations of any of the Parent, the
Company or any of the Company's Subsidiaries under any of the Security
Documents, if the Company or any Subsidiary of the Company at any time after the
date hereof acquires any interest having a Fair Market Value in excess of
$500,000 in any real Property (each such interest being an "AFTER-ACQUIRED REAL
PROPERTY"), the Company will immediately provide written notice thereof to the
Purchasers, setting forth with specificity a description of the interest
acquired, the identity of the acquiror, the location of the After Acquired Real
Property, any structures or improvements thereon and the Fair Market Value of
such real property (the "CURRENT VALUE").
(b) As soon as practicable thereafter, the Company will cause the
acquiror to execute and deliver to the Collateral Agent a mortgage,
hypothecation or trust deed
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substantially in the form attached hereto as Exhibit I (with appropriate local
variations) together with such of the other documents and instruments described
in Section 5.09(g), all as the Required Purchasers shall reasonably require.
(c) In no event shall the title insurance policy (where applicable)
for such After-Acquired Real Property be in an amount that is less than the
Current Value of such After-Acquired Real Property.
(d) The Company or such Subsidiary will also deliver to the
Collateral Agent and the Purchasers one or more opinions of counsel for the
Parent, the Company or such Subsidiary (including opinions of local counsel)
covering such legal matters with respect to such mortgages, trust deeds and
other instruments and documents as the Required Purchasers or the Collateral
Agent may reasonably request.
(e) The Company will pay all reasonable fees and expenses, including
without limitation attorneys' fees and expenses of counsel for the Purchasers
and the Collateral Agent, and all title insurance charges and premiums, in
connection with its obligations under this Section 9.5.
Section 9.6. NEW DEPOSIT ACCOUNTS. Simultaneously with the
establishment by the Company or any of its Subsidiaries of any new Deposit
Account not in existence on the Closing Date (which Deposit Account shall be
established only after written notice thereof to the Collateral Agent and the
Purchasers, stating the name and address of the bank or other depositary
institution at which such Deposit Account is to be established, and written
consent thereto by the Required Purchasers, which shall not be unreasonably
withheld), the Company or such Subsidiary shall deliver to the Collateral Agent
a Deposit Account Agreement with respect to that Deposit Account duly executed
by the Company or such Subsidiary (as the case may be) and such bank or
depositary institution, together with, if applicable, duly executed financing
statements in proper form for filing under the Uniform Commercial Code (as in
effect in the jurisdiction in which each such Deposit Account is located) and
all other documents required thereby or that may be necessary or appropriate to
grant to the Collateral Agent valid and perfected first-priority Liens in such
Deposit Accounts.
Section 9.7. EARLY REFINANCING. The Parent and the Company
acknowledge that the sale of the Notes to the Purchasers provided for herein is
intended solely to provide temporary financing for the Company and its
Subsidiaries, and is intended to be refinanced or otherwise replaced as soon as
possible after the Closing Date by means of a public or private offering of
equity, warrants or debt securities of the Parent, the Company or another
Subsidiary of the Parent or a commercial loan transaction with a bank or other
institutional lender or investor. The Parent and the Company will take all such
actions following the Closing Date as are reasonable and appropriate in order to
effect a replacement of the Debt represented by the Notes at the earliest
practicable date prior to the Maturity Date in light of the Parent's, the
Company's and the Parent's other Subsidiaries' ongoing business and financial
performance and the condition of the United States and foreign securities and
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84
financial markets and subject to the availability of financing terms reasonably
satisfactory to the Parent in light of such condition.
Section 9.8. CONTRIBUTIONS BY THE PARENT. If the aggregate
consideration (including assumed indebtedness, post-closing adjustments and
expenses) payable by the Company pursuant to and in connections with the
transactions contemplated by the Asset Purchase Documents exceeds $110,000,000,
the Parent will, on the date on which any such excess is payable, contribute to
the Company in cash as a contribution to capital an amount equal to such excess
as a contribution to capital.
Section 9.9. FUTURE GUARANTEEING AND SECURING SUBSIDIARIES.
(a) Promptly upon any Person becoming a direct or indirect Subsidiary
of the Company, the Company shall immediately provide written notice thereof to
the Purchasers and the Collateral Agent, setting forth with specificity a
description of such Subsidiary, and shall promptly cause such Subsidiary to
execute and deliver to the Purchaser a Subsidiary Guarantee substantially in the
form attached hereto as Exhibit L. If any Purchaser shall surrender any Note
held by it to the Company pursuant to Section 12, the Company will, pursuant to
such Section issue a new Note or Notes in such denominations as may be requested
by such Purchaser, of like tenor and in the same aggregate unpaid principal
amount as the aggregate unpaid principal amount of the Note or Notes so
surrendered, with the Guarantees of such Subsidiary duly endorsed thereon.
(b) The Company shall cause such new Subsidiary to execute and
deliver to the Collateral Agent a security agreement, together with such
financing statements, assignments and other documents as in the opinion of the
Required Purchasers shall be necessary or advisable in order that such
Subsidiary grant to the Collateral Agent valid and perfected first-priority
Liens in all of the personal Property of such Subsidiary. If such Subsidiary
shall own or lease any interest in real Property, such interest shall be deemed
to be After-Acquired Real Property and the Company shall promptly cause such
Subsidiary to comply with all of the provisions of Section 9.5 with respect
thereto.
(c) The Company will deliver, or will cause any other Subsidiary of
the Company that holds any Capital Stock of such new Subsidiary to deliver, to
the Collateral Agent all stock certificates representing outstanding Capital
Stock of such new Subsidiary held by the Company or by such other Subsidiary of
the Company (as the case may be), accompanied by stock powers duly executed in
blank (or, if required by the Required Purchasers, shall register such shares in
the name of the Collateral Agent or its nominee), and any notes of such new
Subsidiary held by the Parent, the Company or any of their Subsidiaries, each
duly endorsed to the order of the Collateral Agent or accompanied by a bond
power satisfactory to the Required Purchasers and the Collateral Agent duly
executed by the Parent, the Company or such other Subsidiary (as the case may
be) in blank. The Company also will, and will cause each of its Subsidiaries
to, enter into such amendments and modifications of the Security Documents as in
the judgment of the Required Purchasers
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85
are necessary or appropriate to grant to the Collateral Agent a valid and
perfected first-priority Lien on such Capital Stock and notes.
(d) The Company will also cause such Subsidiary to deliver to the
Collateral Agent Deposit Account Agreements with respect to all Deposit Accounts
maintained by such Subsidiary in the United States of America or Canada, duly
executed by such Subsidiary and the respective banks or depositary institutions
at which such Deposit Accounts are maintained and an Investment Account
Agreement with Trust Company Bank with respect to Investments described in
clause (a) of the definition of Cash Equivalents.
(e) The Company or such Subsidiary will also deliver to the
Purchasers and the Collateral Agent one or more opinions of counsel for the
Company or such Subsidiary (including without limitation opinions of local
counsel) covering such legal matters with respect to such agreements and other
instruments as the Collateral Agent or any Purchaser request.
(f) All of such agreements, instruments, opinions and documents
referred to in this Section 9.9 shall be satisfactory in form and substance in
all respects to the Collateral Agent and the Required Purchasers.
Section 10. NEGATIVE AND MAINTENANCE COVENANTS. The Company and the
Parent jointly and severally covenant and agree that, from the date hereof and
for so long as any of the Notes or any Maximum Revolving Commitment shall be
outstanding:
Section 10.1. RESTRICTIONS ON DEBT. The Company shall not, and shall
not permit any of its Subsidiaries to, incur, create, assume, guarantee or in
any way become liable for, or permit to exist, Debt other than:
(a) Debt incurred pursuant to this Agreement, the Notes and the
Related Documents;
(b) Debt of the Company existing on the Closing Date and described on
Schedule 4.1(j)(i) (but excluding in any event the Existing Non-Permitted
Debt);
(c) Debt of
(i) the Canadian Subsidiary owing to the Company in an aggregate
principal amount at any one time outstanding not exceeding
$15,000,000; PROVIDED that such Debt is not evidenced by a promissory
note or other instrument (within the meaning of the Uniform Commercial
Code in any applicable jurisdiction), and
(ii) the Company owing to the Parent, to the extent permitted
under Section 10.7;
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(d) (i) Debt secured by Liens permitted by Section 10.2(g), and
(ii) Debt consisting of reimbursement obligations of such Person
(whether contingent or otherwise) in respect of letters of credit,
surety and appeal bonds, performance, indemnity and return-of-money
bonds and similar obligations issued on behalf of the Company or a
Subsidiary of the Company under a contract pursuant to which the
Company is to supply products to a Person whose business operations
are primarily conducted outside of the United States; PROVIDED that
the aggregate amount of such reimbursement obligations at any one time
outstanding shall not exceed $2,500,000;
PROVIDED that the sum of the aggregate principal amount of such Debt and
the aggregate amount of such reimbursement obligations at any one time
outstanding shall not exceed $5,000,000;
(e) other Debt; PROVIDED that the aggregate outstanding principal
amount of Debt incurred pursuant to this subsection (e) shall not at any
time exceed $1,000,000; and
(g) foreign-currency contracts and copper futures contracts or
similar instruments; PROVIDED that (i) such contracts are entered into
solely as a BONA-FIDE hedge and are totally offset by existing obligations
owed to or by the Company in an equivalent amount, and (ii) the aggregate
U.S. dollar-equivalent of the amount of currency and copper to be purchased
or sold under such contracts at any one time outstanding shall not exceed
$5,000,000.
Section 10.2. RESTRICTIONS ON LIENS. The Parent and the Company
shall not, and shall not permit any of their Subsidiaries to, directly or
indirectly, create, assume or suffer to exist any Lien upon any of their
respective Properties whether now owned or hereafter acquired, except for the
following ("PERMITTED LIENS"):
(a) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by Section 9.2;
(b) statutory Liens of landlords, if any, and Liens of carriers,
warehousemen, mechanics, materialmen, if any, and other Liens imposed by
law incurred in the ordinary course of business for sums, the payment of
which is not at the time required by Section 9.2;
(c) Liens (other than any Lien imposed by ERISA or the foreign
equivalent thereof, and other than any Lien securing an obligation for the
payment of borrowed money) incurred or deposits made in the ordinary course
of business in connection with obligations not due or delinquent with
respect to workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases,
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government contracts, performance, indemnity and return-of-money bonds and
other similar obligations; PROVIDED that no such Lien shall be permitted to
the extent it encumbers any real Property of the Company or its
Subsidiaries;
(d) any attachment or judgment Lien (including judgment or appeal
bonds) that shall, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or that shall have
been discharged within 30 days after the expiration of any such stay, or
that is being diligently contested in good faith so long as a reserve or
other appropriate provision, if any, as shall be required by GAAP shall
have been made therefor;
(e) zoning restrictions, easements, licenses, reservations,
restrictions on the use of real Property or minor irregularities incident
thereto (and, with respect to leasehold interests, Liens and other
encumbrances that are incurred, created, assumed or permitted to exist on
or with respect to the leased Property and arise by, through or under or
are asserted by a landlord or owner of the leased Properly, with or without
consent of the lessee) that
(i) in the case of any such Lien encumbering real Property of
the Company or its Subsidiaries that is not also encumbered by a
Mortgage, were not incurred in connection with the borrowing of money
and that do not in the aggregate materially detract from the value of
the Property of the Company or any of its Subsidiaries, as the case
may be, or impair the use of such Property for the purposes for which
such Property is held by the Company or any such Subsidiary, or
(ii) in the case of any such Lien encumbering real Property that
is also encumbered by a Mortgage, constitute Permitted Liens (as
defined in such Mortgage);
(f) Liens (including Liens created pursuant to Capitalized Leases)
existing on the Closing Date and described in Schedule 4.1(j)(i) (in each
case after giving effect to the transactions contemplated to occur on the
Closing Date, but excluding in any event Liens securing Existing Non-
Permitted Debt);
(g) Liens (including Liens created pursuant to Capitalized Leases) in
respect of Property acquired, constructed or improved by the Company or any
of its Subsidiaries after the Closing Date, which Liens exist or are
created at the time of acquisition or completion of construction or
improvement of such Property or within six months thereafter, to secure
Debt permitted by Section 10.1(e) that is assumed or incurred to finance
all or any part of the purchase price or cost of acquisition or
construction or improvement of such Property, but any such Lien shall cover
only the Property so acquired or constructed and any improvements thereto
(and any real Property on which such Property is located, if such Property
is a building, improvement or fixture), and may not exceed the lesser of
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(i) 100% of the Fair Market Value of such Property or
(ii) the purchase price or cost of such acquisition, construction
or improvement, and any such Lien on any real Property that is subject
to a Mortgage shall be expressly subordinated in priority to the Lien
of such Mortgage on terms reasonably satisfactory to the Required
Purchasers;
(h) the Liens created by the Security Documents;
(i) Liens on cash and certificates of deposit securing the
performance of reimbursement obligations permitted under Section
10.1(d)(ii), so long as the sum of the aggregate amount of cash and the
aggregate face amount of all certificates of deposit as to which such Liens
shall exist at any one time shall not exceed the amount of Debt outstanding
at such time under such Section; and
(j) the extension, renewal or replacement of any Lien permitted by
subsection (f), (g), (h) or (i) of this Section 10.2, but only if the
principal amount of the Debt secured by such Lien immediately prior to such
extension, renewal or replacement is not increased and the Lien is not
extended to other Property.
Section 10.3. LIMITATION ON SALES AND LEASEBACKS. The Parent and the
Company shall not, and shall not permit any of the Parent's other Subsidiaries
to, enter into any arrangement whereby the Parent, the Company or any such
Subsidiary shall sell or transfer any Property owned by any of them to any
Person other than the Company or a Wholly Owned Subsidiary of the Company and
thereupon shall lease or intend to lease, as lessee, the same Property.
Section 10.4. CONSOLIDATION, MERGER OR DISPOSITION OF PROPERTIES;
ACQUISITIONS. The Parent shall not enter into any transaction of merger,
amalgamation or consolidation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), and the Company shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction of merger,
amalgamation or consolidation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, license,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of the business or Property (tangible or
intangible) of the Company or any such Subsidiary, whether now owned or
hereafter acquired, or acquire by purchase or otherwise any of the outstanding
Capital Stock of, or all or substantially all of the business or Property of,
any Person, except that
(a) any Subsidiary of the Company may merge, amalgamate or
consolidate with or into, or be dissolved or liquidated into, the Company
so long as in any merger or consolidation involving the Company, the
Company shall be the surviving or continuing corporation;
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89
(b) any Subsidiary of the Company may sell, lease or otherwise
dispose of all or any part of its Properties to the Company;
(c) the Company and its Subsidiaries may in the ordinary course of
business (i) sell inventory and other property owned by them, (ii) may
engage in licensing activities in the ordinary course of business and (iii)
may sell or otherwise dispose of Property that is obsolete or no longer
used or useful in their respective businesses; and
(d) the Company and its Subsidiaries may sell or otherwise dispose of
Property having a net book value at the time of such sale or disposition of
not more than $250,000; PROVIDED that the aggregate net book value of all
Property sold or disposed of after the date hereof pursuant to this clause
(d) shall not exceed $1,000,000.
Section 10.5. SALE OR DISCOUNT OF RECEIVABLES. The Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
sell with recourse, or discount or otherwise sell for less than the face value
thereof, any of their respective accounts or notes receivable.
Section 10.6. CONDUCT OF BUSINESS. The Company shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than in
telecommunications and the wire and cable business, substantially in the manner
engaged in on the date hereof by the Company and its Subsidiaries and any
businesses or activities substantially similar or related thereto.
Section 10.7. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make any Restricted Payment, except
(i) the declaration and payment of cash dividends and distributions
by a Wholly Owned Subsidiary of the Company on its Capital Stock to the
Company or to another Wholly Owned Subsidiary of the Company;
(ii) the payment of the principal of or interest on intercompany Debt
owed by
(A) a Wholly-owned Subsidiary of the Company to the Company or
to another Wholly Owned Subsidiary of the Company, or
(B) the Company to a Wholly Owned Subsidiary of the Company;
(iii) the payment of distributions, dividends or interest payments
on intercompany Debt owed to the Parent in an amount sufficient to make any
tax payment then required to be paid to any taxing authority or pursuant to
any tax
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90
sharing agreement or arrangement; PROVIDED that such payment is permitted
under Section 10.9;
(iv) the payment of dividends or other distributions by the Company to
the Parent in an aggregate amount, for the period beginning on the date
hereof and ending on the date of any such payment, not exceeding
$10,000,000; and
(v) the payment of dividends or other distributions by the Company to
the Parent during any fiscal quarter of the Company; PROVIDED that no such
distribution shall be made
(A) prior to the date on which the Company would be required to
make any prepayment of the Notes under Section 3.2(a) during such
fiscal quarter or if any prepayment required under such Section shall
not have been made,
(B) if, after giving effect thereto, a Default or an Event of
Default shall have occurred and be continuing or
(C) after excluding any dividend or other distribution permitted
under clause (iii) or (iv) above,
(1) the aggregate amount of all such distributions during
such fiscal quarter shall exceed 9.0% of Consolidated EBITDA for
the fiscal quarter of the Company immediately preceding the date
of such proposed distribution or
(2) the aggregate amount of all such distributions during
the period beginning on the date hereof shall exceed 9.0% of
Consolidated EBITDA for the period beginning on April 30, 1995
and ending on the last day of the fiscal quarter of the Company
immediately preceding the date of such proposed distribution.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, make any Restricted Investment.
Section 10.8. ISSUANCE OF CAPITAL STOCK. The Company shall not
issue, sell or otherwise dispose of any shares of its Capital Stock, or any
warrants, options, conversion rights or other rights to subscribe for, purchase
or acquire such Capital Stock, except to the Parent. The Parent shall not sell
or otherwise dispose of any Capital Stock of the Company. The Company shall not
permit any Subsidiary of the Company to
(a) issue, sell or otherwise dispose of any shares of its Capital
Stock, or any warrants, options, conversion rights or other rights to
subscribe for, purchase or acquire such Capital Stock, or
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91
(b) sell or otherwise dispose of any shares of Capital Stock of any
other Subsidiary,
except to the Company or to a Wholly Owned Subsidiary of the Company (except for
directors' qualifying shares).
Section 10.9. TRANSACTIONS WITH AFFILIATES. Except in the case of
transactions between or among the Company and its Wholly Owned Subsidiaries, the
Parent shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction (including without
limitation the purchase, sale, lease or exchange of any Property or the
rendering of any service), with any Affiliate of the Parent or such Subsidiary
unless
(a) such transaction is otherwise permitted under this Agreement, is
in the ordinary course of the Parent's, the Company's or such Subsidiary's
business and is on fair and reasonable terms that are not less favorable to
the Parent, the Company or such Subsidiary, as the case may be, than those
that would be obtainable at the time in an arms'-length transaction with a
Person that is not such an Affiliate, and
(b) the Board of Directors of the Parent (or the executive committee
thereof) shall have determined in writing that such transaction is
permitted under clause (a);
PROVIDED that the Company may make payments to the Parent as provided under a
tax-sharing agreement or arrangement, so long as the Company and its
Subsidiaries do not make any payments thereunder unless the cumulative sum of
such payments does not exceed the cumulative sum of income taxes that the
Company and its Subsidiaries would have paid if the Company and its Subsidiaries
had always filed income-tax returns on a consolidated basis as a separate
affiliated group (as such term is defined in Section 1504(a) of the Code) of
corporations consisting only of the Company and its Subsidiaries.
Section 10.10. COMPLIANCE WITH ERISA. The Parent shall not, and
shall not permit any ERISA Affiliate to,
(a) engage in any transaction in connection with which the Company or
any ERISA Affiliate could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code; or
(b) permit to exist any accumulated funding deficiency, within the
meaning of Section 412 of the Code, whether or not waived, with respect to
any Plan.
Section 10.11. CAPITAL EXPENDITURES. The Company shall not, and
shall not permit any of its Subsidiaries to, make any Capital Expenditure or
incur any contractual commitment with respect thereto, except that the Company
and its Subsidiaries may make Capital Expenditures and incur commitments
therefor during any fiscal year of the Company
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92
ending on a date specified below if and only if, after giving effect thereto,
the aggregate amount of all Capital Expenditures made or committed to be made by
the Company and its Subsidiaries for the period beginning on the date hereof and
ending on any date of determination during such fiscal year shall not exceed:
(a) for the fiscal year of the Company ending April 30, 1996,
$7,500,000;
(b) for the fiscal year of the Company ending April 30, 1997,
(i) $5,000,000, PLUS
(ii) the lesser of
(A) the difference between (1) the amount of all Capital
Expenditures permitted to be made or committed to be made by the
Company pursuant to clause (a) above during its fiscal year
ending April 30, 1996, and (2) the amount of all Capital
Expenditures actually made or committed to be made by the Company
during such fiscal year, and
(B) $2,500,000; and
(c) for the fiscal year of the Company ending April 30, 1998,
(i) $5,000,000, PLUS
(ii) the lesser of
(A) the difference between (1) the amount of all Capital
Expenditures permitted to be made or committed to be made by the
Company pursuant to clauses (a) and (b) above during its fiscal
years ending April 30, 1996 and April 30, 1997 and (2) the amount
of all Capital Expenditures actually made or committed to be made
by the Company during such fiscal years, and
(B) $5,000,000.
The Company shall not, and shall not permit any of its Subsidiaries to, make any
commitment for new Capital Expenditures at any time when a Default or Event of
Default shall have occurred and be continuing.
Section 10.12. OPERATING LEASES. The Company shall not, and shall
not permit any of its Subsidiaries to, enter into (as lessee) any Operating
Lease having a term greater than one year (including options to renew or extend
any term, whether or not exercised) ("LONG-TERM LEASES"), except that the
Company and its Subsidiaries may enter
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93
into such Long-Term Leases to the extent that, after giving effect thereto, the
aggregate amount of rentals and other payments required to be made by the
Company and its Subsidiaries during any fiscal year of the Company under all
such Long-Term Leases would not be greater than the lesser of
(a) $950,000 and
(b) the sum of
(i) $250,000 and
(ii) the aggregate PRO-FORMA amount of such payments that would
be reflected in the consolidated financial statements of the Company
and its Subsidiaries for their fiscal year ended April 30, 1995 if the
acquisition of the Properties contemplated by the Asset Purchase
Documents had occurred on the first day of such fiscal year.
Section 10.13. CERTAIN CONTRACTS. The Company shall not, and shall
not permit any of its Subsidiaries to, enter into or be a party to:
(a) any contract providing for the making of loans, advances or
capital contributions to any Person other than the Company or a Wholly
Owned Subsidiary of the Company, or for the purchase of any Property from
any Person, in each case primarily in order to enable such Person to
maintain working capital, net worth or any other balance sheet condition or
to pay debts, dividends or expenses;
(b) any contract for the purchase of materials, supplies or other
Property or services if such contract (or any related document) requires
that payment for such materials, supplies or other Property or services
shall be made regardless of whether or not delivery of such materials,
supplies or other Property or services is ever made or tendered;
(c) any contract to rent or lease (as lessee) any real or personal
Property if such contract (or any related document) provides that the
obligation to make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general use
or requires that the lessee purchase or otherwise acquire securities or
obligations of the lessor; PROVIDED, that this subsection (c) shall not be
construed to prevent the Company or any of its Subsidiaries from being a
party to or complying with any provision of any lease to which any of them
is a party on the date hereof;
(d) any contract for the sale or use of materials, supplies or other
Property, or the rendering of services, if such contract (or any related
document) requires that payment for such materials, supplies or other
Property, or the use thereof, or payment for such services, shall be
subordinated to any Debt (of the purchaser or user of such
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94
materials, supplies or other Property or the Person entitled to the benefit
of such services) owed or to be owed to any Person; or
(e) except as permitted by Section 10.1, and except for Investments
that are not Restricted Investments, any other contract that, in economic
effect, is substantially equivalent to a Guarantee.
Section 10.14. LIMITATION ON DIVIDEND RESTRICTIONS AFFECTING
SUBSIDIARIES. Except pursuant to this Agreement and as specified in Schedule
10.14, the Parent shall not permit any of its Subsidiaries directly or
indirectly to create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction that by its terms restricts the
ability of any such Subsidiary to
(a) pay dividends or make any other distributions on such
Subsidiary's Capital Stock,
(b) pay any Debt owed to the Parent, the Company or any other
Subsidiary of the Parent,
(c) make any loans or advances to the Parent, the Company or any
other Subsidiary of the Parent or
(d) transfer any of its Property to the Parent, the Company or any
other Subsidiary of the Company, except
(i) non-assignment provisions in leases and other agreements
entered into prior to the date of this Agreement, and
(ii) customary non-assignment provisions in leases and other
agreements entered into on or after the date of this Agreement in the
ordinary course of business.
Section 10.15. NO AMENDMENT OF CHARTER, BY-LAWS. The Parent and the
Company shall not effect any amendment to or modification of their respective
charter documents or by-laws, and shall not permit any Subsidiary of the Company
to effect any amendment to or modification of its charter documents, bylaws or
comparable constituting documents, in a manner that would adversely affect such
Subsidiary's ability to perform its obligations under the Related Documents to
which it is a party, except in each case with the prior written consent of the
Required Purchasers.
Section 10.16. AMENDMENTS TO CERTAIN DOCUMENTS. The Company and the
Parent shall not, and shall not permit any of the Parent's other Subsidiaries
to, consent to or request any amendment, modification or supplement to any
provision of the Asset Purchase Documents, without in each case having obtained
the specific prior written consent of the Required Purchasers.
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Section 10.17. FINANCIAL COVENANTS.
(a) MAINTENANCE OF CONSOLIDATED NET WORTH. The Company shall not
permit (x) its Consolidated Net Worth as of the end of any fiscal quarter, PLUS
(y) any amount theretofore distributed or advanced by the Company to the Parent
pursuant to Section 10.7(a)(iv), to the extent that such distribution or advance
has resulted in a decrease in Consolidated Net Worth, to be less than the sum of
(i) $42,000,000, PLUS
(ii) 100% of the amount of the Consolidated Net Income of the Company
for each fiscal quarter of the Company ending on or after July 31, 1995
with respect to which the Company's Consolidated Net Income was greater
than zero, MINUS
(iii) with respect to any third fiscal quarter in any fiscal year
of the Company, beginning with its fiscal year ended on April 30, 1996, if
the Company's Consolidated Net Income for such fiscal quarter was less than
zero, 100% of the amount by which such Consolidated Net Income was less
than zero, up to but not exceeding $500,000.
(b) MINIMUM CONSOLIDATED EBITDA. The Company shall not permit its
Consolidated EBITDA, measured as of each date set forth below for the period of
four consecutive full fiscal quarters of the Company ended on such date, to be
less than the corresponding amount set forth opposite such date; PROVIDED that
in the case of any such date that is earlier than April 30, 1996, the applicable
measuring period shall be the period from May 1, 1995 to and including such that
date:
Measuring Date Amount
-------------- ------
July 31, 1995 $ 6,310,000
October 31, 1995 13,710,000
January 31, 1996 18,910,000
April 30, 1996 26,410,000
July 31, 1996 27,000,000
October 31, 1996 27,200,000
January 31, 1997 28,300,000
April 30, 1997 28,200,000
July 31, 1997 28,300,000
October 31, 1997 29,000,000
January 31, 1998 29,200,000
July 31, 1998 30,000,000
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(c) INTEREST EXPENSE COVERAGE RATIO. The Company shall not permit
the ratio of
(i) Consolidated EBITDA for the period of four consecutive full
fiscal quarters of the Company ended on each date set forth below to
(ii) Consolidated Cash Interest Expense for such period,
to be less than the corresponding amount set forth opposite such date; PROVIDED
that in the case of any such date that is earlier than April 30, 1996, the
applicable measuring period for purposes of clauses (i) and (ii) shall be the
period from May 1, 1995 to and including such date:
Measuring Date: Ratio
--------------- -----
July 31, 1995 1.65:1.00
October 31, 1995 1.75:1.00
January 31, 1996 1.60:1.00
April 30, 1996 1.65:1.00
July 31, 1996 1.70:1.00
October 31, 1996 1.70:1.00
January 31, 1997 1.80:1.00
April 30, 1997 1.80:1.00
July 31, 1997 1.80:1.00
October 31, 1997 1.85:1.00
January 31, 1998 1.90:1.00
July 31, 1998 1.95:1.00
(d) FIXED-CHARGE COVERAGE RATIO. The Company shall not permit the
ratio of
(i) Consolidated Net Income Available for Fixed Charges for the
period of four consecutive full fiscal quarters of the Company ended on
each date set forth below to
(ii) Consolidated Fixed Charges for such period,
to be less than the corresponding amount set forth opposite such date; PROVIDED
that in the case of any such measuring date that is earlier than April 30, 1996,
the applicable measuring period for purposes of clauses (i) and (ii) above shall
be the period from May 1, 1995 to and including such date:
Measuring Date: Ratio
--------------- -----
July 31, 1995 1.05:1.00
October 31, 1995 1.10:1.00
January 31, 1996 1.00:1.00
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April 30, 1996 1.05:1.00
July 31, 1996 1.10:1.00
October 31, 1996 1.10:1.00
January 31, 1997 1.15:1.00
April 30, 1997 1.15:1.00
July 31, 1997 1.20:1.00
October 31, 1997 1.25:1.00
January 31, 1998 1.30:1.00
July 31, 1998 1.40:1.00
(e) CONSOLIDATED TOTAL LIABILITIES/EBITDA RATIO. The Company shall
not permit the ratio of
(i) Consolidated Total Liabilities as of each date set forth below to
(ii) Consolidated EBITDA for the period of four consecutive full
fiscal quarters of the Company ended on such date, PLUS, in the case of any
such date that is earlier than July 31, 1996, $390,000,
to be less than the corresponding amount set forth opposite such date; PROVIDED
that (x) in the case of any such date that is earlier than April 30, 1996, the
applicable measuring period for purposes of clause (ii) above shall be the
period from May 1, 1995, and (y) the amount calculated pursuant to clause (ii)
above and clause (x) of this proviso shall be MULTIPLIED by (1) if such date is
July 31, 1995, four, (2) if such date is October 31, 1995, two, and if such date
is January 31, 1996, 1-1/3, for purposes of calculating such ratio:
Measuring Date: Ratio
--------------- -----
July 31, 1995 7.50:1.00
October 31, 1995 7.20:1.00
January 31, 1996 7.50:1.00
April 30, 1996 7.20.:100
July 31, 1996 7.10:1.00
October 31, 1996 7.10:1.00
January 31, 1997 6.70:1.00
April 30, 1997 6.50:1.00
July 31, 1997 6.40:1.00
October 31, 1997 6.20:1.00
January 31, 1998 6.10:1.00
July 31, 1998 6.00:1.00
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Section 11. EVENTS OF DEFAULT.
Section 11.1. EVENTS OF DEFAULT; REMEDIES. If any of the following
events (herein called "EVENTS OF DEFAULT") shall have occurred and be continuing
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or by operation of law or otherwise):
(a) the Company or any Guarantor shall default in the due and
punctual payment or prepayment of all or any part of the principal of, or
prepayment charge (if any) on, any Note when and as the same shall become
due and payable, whether at stated maturity, by acceleration, by notice of
prepayment or otherwise; or
(b) the Parent, the Company, the Canadian Subsidiary or any other
Guarantor shall default in the due and punctual payment or prepayment of
any interest on any Note, or of any amount (other than principal of or
interest on any Note) due under this Agreement or any of the Related
Documents to which any of them is a party, when and as such interest or
amount shall become due and payable, and such default shall continue for a
period of five days; or
(c) the Parent or the Company shall default in the performance or
observance of any of the covenants, agreements or conditions contained in
Sections 10.1 through 10.17, inclusive (except for Sections 10.6, 10.9 and
10.10), of this Agreement or contained in the letter agreement dated March
17, 1995 between them and Nomura Securities International, Inc.; or
(d) the Parent or the Company shall default in the performance or
observance of any of the covenants, agreements or conditions contained in
this Agreement (other than those referred to in clauses (a) through (c),
inclusive, above), or the Parent, the Company, the Canadian Subsidiary or
any other Guarantor shall default in the performance or observance of any
of the covenants, agreements or conditions contained in any of the Related
Documents, and such default shall continue for a period of 30 days after
the Parent, the Company, the Canadian Subsidiary or such other Guarantor
shall have knowledge thereof; or
(e) (i) the Parent, the Company or any of the Parent's other
Subsidiaries shall fail to pay any principal of, premium or interest
on or any other amount payable in respect of Debt of such Person that
is outstanding in a principal amount of at least $250,000 in the
aggregate (excluding Debt represented by the Notes) when the same
becomes due and payable (whether at scheduled maturity, or by required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or
(ii) any other event shall occur or condition shall exist under
any agreement or instrument relating to any such Debt and shall
continue after the
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applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to permit the
acceleration of the maturity of such Debt (whether or not such
acceleration occurs); or
(iii) any such Debt shall be declared to be due and payable
or required to be prepaid (other than by a regularly scheduled
required prepayment), redeemed, purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof; or
(f) the Parent, the Company or any of the Parent's other Subsidiaries
shall
(i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its Property,
(ii) be generally unable to pay its liabilities as they become
due,
(iii) make a general assignment for the benefit of its
creditors,
(iv) commence a voluntary case under the Bankruptcy Code or the
foreign equivalent thereof,
(v) file a petition seeking to take advantage of any other law
providing for the relief of debtors,
(vi) fail to controvert in a timely or appropriate manner, or
acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or the foreign equivalent
thereof,
(vii) admit in writing its inability to pay its liabilities
generally as they become due,
(viii) take any action under the laws of its jurisdiction of
organization analogous to any of the foregoing, or
(ix) take any requisite action for the purpose of effecting any
of the foregoing; or
(g) a proceeding or case shall be commenced, without the application
or consent of the Parent, the Company or of any of the Parent's other
Subsidiaries in any court of competent jurisdiction, seeking
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(i) the liquidation, reorganization, dissolution, winding up of
the Parent, the Company or any of such Subsidiaries or composition or
readjustment of the Debt of any of them,
(ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of the Parent, the Company or any of such
Subsidiaries or of all or any substantial part of the Properties of
any of them, or
(iii) similar relief in respect of the Parent, the Company or
any of such Subsidiaries under any law providing for the relief of
debtors,
and such proceeding or case shall continue undismissed, or unstayed and in
effect, for a period of 45 days, or an order for relief shall be entered in
an involuntary case under the Bankruptcy Code, against the Parent, the
Company or any of such Subsidiaries; or action under the laws of the
jurisdiction of organization of any of the Parent, the Company or any of
such Subsidiaries analogous to any of the foregoing shall be taken with
respect to any of the Parent, the Company or any of such Subsidiaries and
shall continue undismissed, or unstayed and in effect, for a period of 45
days; or
(h) final judgment for the payment of money shall be rendered by a
court of competent jurisdiction against the Parent, the Company or any of
the Parent's other Subsidiaries, and the Parent, the Company or such
Subsidiary, as the case may be, shall not discharge the same or provide for
its discharge in accordance with its terms, or procure a stay of execution
thereof, within 30 days from the date of entry thereof and within said
period of 30 days, or such longer period during which execution of such
judgment shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal, and such judgment together with
all other such judgments shall exceed in the aggregate $250,000; or
(i) any representation, warranty or material statement made by or on
behalf of
(i) the Parent or the Company or any officer of the Parent or
the Company in this Agreement, or
(ii) the Parent, the Company or the Canadian Subsidiary or any
officer of the Parent, the Company or any of the Parent's other
Subsidiaries in any of the Related Documents, or in any financial
statement, certificate or other instrument or document now or
hereafter delivered pursuant to or in connection with any provision of
this Agreement or the Related Documents, or
(iii) any party to the Asset Purchase Agreement in the Asset
Purchase Agreement
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shall prove to be false or incorrect or breached in any material respect on
the date as of which made; or
(j) (i) an ERISA Event,
(ii) a reorganization or termination of any Multiemployer Plan or
a complete or partial withdrawal from any Multiemployer Plan by the
Company or any of its ERISA Affiliates;
(iii) any similar event in respect of a Canadian Pension Plan
shall occur, where the aggregate liability that the Company and its ERISA
Affiliates and Subsidiaries have incurred or are reasonably expected to
incur as a result of or in connection with all such events has or is
reasonably expected to have a Material Adverse Effect; or
(k) any provision of any of this Agreement, the Notes or the Related
Documents shall, for any reason, not be or shall cease to be in full force
and effect, or not be, or be asserted in writing by the Parent, the Company
or any of the Parent's other Subsidiaries not to be, valid, binding and
enforceable against any Person purported to be bound by it; or
(l) any of the Security Documents shall not give or shall cease to
give the Collateral Agent the Liens and the rights, powers and privileges
purported to be created thereby, including without limitation a valid,
enforceable and perfected first priority security interest in, and Lien on,
all of the Collateral subject thereto in favor of the Collateral Agent,
superior and prior to the rights of all third Persons (except as otherwise
expressly permitted by this Agreement or the Security Documents);
then
(i) upon the occurrence of any Event of Default described in
subsection (e) or (f), the unpaid principal amount of all Notes, together
with the interest accrued thereon, and all fees, costs, expenses and other
amounts payable hereunder or under the Related Documents shall
automatically become immediately due and payable, and all obligations of
the Purchasers to purchase Revolving Notes hereunder shall terminate, and
(ii) upon the occurrence of any Event of Default (other than an Event
of Default described in subsection (e) or (f)), the Required Purchasers
may, by written notice to the Company, declare the unpaid principal amount
of all Notes to be, and the same shall forthwith become, immediately due
and payable, together with the interest accrued thereon and all fees,
costs, expenses and other amounts payable hereunder or under the Related
Documents, and all obligations of the Purchasers to purchase Revolving
Notes hereunder shall terminate,
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in each case without presentment, demand, notice, declaration, protest or other
requirements of any kind, all of which are hereby expressly waived.
Section 11.2. SUITS FOR ENFORCEMENT: REMEDIES AGAINST COLLATERAL. If
any Event of Default shall have occurred and be continuing, each Purchaser may
proceed to protect and enforce its rights, either by suit in equity or by action
at law, or both, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the exercise of any power
granted in this Agreement, and may proceed to enforce the payment of all sums
due upon the Notes, and such further amounts as shall be sufficient to cover the
costs and expenses of collection (including without limitation reasonable
counsel fees and disbursements), or to enforce any other legal or equitable
right of a holder of the Notes. In addition, the Collateral Agent shall have
all of the rights and remedies of a secured creditor under the applicable
provisions of the Uniform Commercial Code or the foreign equivalent thereof, and
all rights and remedies provided for in the Security Documents or at law or in
equity or otherwise.
Section 11.3. REMEDIES CUMULATIVE. No remedy conferred herein or in
the Related Documents upon any Purchaser or the Collateral Agent is intended to
be exclusive of any other remedy and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or otherwise.
Section 11.4. REMEDIES NOT WAIVED. No course of dealing between the
Company and any Purchaser or the Collateral Agent, and no delay or failure in
exercising any rights hereunder or under such Note or the Related Documents in
respect thereof, shall operate as a waiver of any of the rights of any Purchaser
or the Collateral Agent.
Section 12. REGISTRATION, EXCHANGE, AND TRANSFER OF NOTES. The
Company will keep at its principal executive office a register, in which,
subject to such reasonable regulations as it may prescribe, but at its expense
(other than transfer taxes, if any), the Company will provide for the
registration and transfer of Notes. Whenever any Note or Notes shall be
surrendered either at the principal executive office of the Company, or at the
place of payment named in any such Note, for transfer or exchange, accompanied
(if so required by the Company) by a written instrument of, transfer in form
reasonably satisfactory to the Company duly executed by the holder thereof or by
such holder's attorney duly authorized in writing, and subject to the
fulfillment of the requirements set forth in Section 16, the Company will
execute and deliver in exchange therefor a new Note or Notes in such
denominations as may be requested by such holder, of like tenor and in the same
aggregate unpaid principal amount as the aggregate unpaid principal amount of
the Note or Notes so surrendered, with the Guarantees of each Guarantor duly
endorsed thereon. Any Note issued in exchange for any other Note or upon
transfer thereof shall carry the rights to unpaid interest and interest to
accrue that were carried by the Note so exchanged or transferred, and neither
gain nor loss of interest shall result from any such transfer or exchange. Any
transfer tax or governmental charge relating to such transaction shall be paid
by the holder requesting the exchange. The Company and any of its agents may
treat the Person in whose name any Note is registered as
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the sole and exclusive record and beneficial holder and owner of such Note for
the purpose of receiving payment of the principal of, prepayment charge (if any)
and interest and other amounts on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and such Person shall for all
purposes of this Agreement be treated as a Purchaser thereof.
Section 13. LOST, STOLEN, DAMAGED AND DESTROYED NOTES. At the
request of any holder of any Note, the Company will issue and deliver at its
expense, in replacement of any Note or Notes lost, stolen, damaged or destroyed,
upon surrender thereof, if mutilated, a new Note or Notes in the same aggregate
unpaid principal amount, and otherwise of the same tenor, as the Note or Notes
so lost, stolen, damaged or destroyed, duly executed by the Company and with the
Guarantee of each Guarantor duly endorsed thereon. The Company may condition
the replacement of a Note or Notes reported by the holder thereof as lost,
stolen, damaged or destroyed, upon the receipt from such holder of an indemnity
and/or security reasonably satisfactory to the Company; PROVIDED that if such
Purchaser shall be a financial institution or its nominee, such Purchaser's
unsecured agreement of indemnity shall be sufficient for purposes of this
Section.
Section 14. THE COLLATERAL AGENT.
Section 14.1. AUTHORIZATION AND ACTION. The Purchasers appoint and
authorize Nomura Trust to take action on their behalf, individually and
collectively, as the Collateral Agent and to exercise such powers and discretion
under this Agreement and the Related Documents as are delegated to it by the
terms hereof, together with such powers and discretion as are reasonably
incidental thereto in the Collateral Agent's judgment. Nomura Trust accepts
such appointment upon the terms and conditions hereof, to all of which the
Purchasers agree and to all of which the rights of the Purchasers shall be
subject. The Collateral Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) as specifically
provided herein, and any instructions to the Collateral Agent by any person
pursuant hereto shall be binding upon all parties hereto; PROVIDED that the
Collateral Agent shall not be required to take any action that exposes it or its
officers, directors, employees or agents to personal liability or that is
contrary to this Agreement or applicable law. The Collateral Agent will give to
each Purchaser prompt notice of each notice or instruction given to it by any
person pursuant to the terms of this Agreement, but the Collateral Agent shall
not be required to give such notice prior to taking any action pursuant to the
terms of this Agreement.
Section 14.2. COLLATERAL AGENT'S RELIANCE, ETC. Neither the
Collateral Agent nor any of its directors, officers, agents or employees shall
be liable for any action taken or omitted to be taken by (or on behalf of) it or
them under or in connection with this Agreement, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Collateral Agent:
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(a) may consult with legal counsel (including counsel for any party
hereto), independent public accountants and other experts selected by it,
and may rely on any opinion of counsel delivered under this Agreement or
any Related Documents, and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants or experts or any such opinion;
(b) makes no warranty or representation to any person and shall not
be responsible to any Purchaser for any statements, warranties or
representations made in or in connection with this Agreement or any Related
Documents or any other document relating thereto by any other person;
(c) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of
this Agreement or any Related Document on the part of any party hereto or
thereto or to inspect the property (including the books and records) of the
Parent, the Company or any of the Parent's other Subsidiaries;
(d) shall not be responsible to any Purchaser for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement or any Related Document or any other instrument or document
furnished pursuant hereto (other than its own execution and delivery
thereof) or the creation, attachment perfection or priority of any lien
purported to be created under or contemplated by this Agreement or any
Related Document;
(e) shall incur no liability under or in respect of this Agreement or
any Related Document by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telegram, telecopy, cable or
telex) believed by it to be genuine and signed or sent by the proper party
or parties;
(f) shall incur no liability or be responsible for any action taken
or omitted by any other Person;
(g) shall have no liability or responsibility to any party hereto for
any failure on the part of any other party to comply with any obligation to
be performed by such other party under this Agreement or any Related
Document;
(h) may act directly or through agents on its behalf; and
(i) shall have no obligation to take any action hereunder (including
without limitation any obligation to realize on, monitor or take any other
action with respect to any Collateral) except at the express written
direction of the Required Purchasers.
Section 14.3. NOMURA TRUST AND AFFILIATES. Nomura Trust and its
affiliates shall have the same rights and powers under this Agreement and the
Related Documents as
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any other Purchaser and may exercise the same as though it were not the
Collateral Agent; and the term "Purchaser" or "Purchasers", as used in this
Agreement, shall, unless otherwise expressly indicated, include Nomura Trust (if
a Purchaser) and its affiliates in their individual capacities. Nomura Trust
and its affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any party hereto, any of its subsidiaries and any
person who may do business with or own securities of any party hereto or any
such subsidiary, all as if Nomura Trust were not the Collateral Agent and
without any duty to account therefor to any party hereto.
Section 14.4. INDEMNIFICATION. Each Purchaser severally will
indemnify the Collateral Agent (to the extent not promptly reimbursed by the
Parent or the Company) from and against such Purchaser's ratable share of any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (including without limitation
fees and expenses of legal counsel consulted pursuant to Section 14.2(a) or
otherwise incurred in connection with this Agreement) of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the
Collateral Agent in any way relating to or arising out of this Agreement or any
of the Related Documents or any action taken or omitted by the Collateral Agent
under this Agreement or any Related Document; PROVIDED that no Purchaser shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the Collateral Agent's gross negligence or willful misconduct. For
purposes of this Section 14.4, the Purchasers' aggregate respective ratable
shares of any amount shall be determined, at any time, according to the
respective aggregate principal amounts of the Notes held by them.
Section 14.5. SUCCESSOR COLLATERAL AGENT. The Collateral Agent may
resign at any time by giving written notice thereof to the Purchasers and may be
removed at any time with cause by the Required Purchasers. Upon any such
resignation or removal, the Required Purchasers shall have the right to appoint
a successor Collateral Agent. If no successor Collateral Agent shall have been
so appointed by the Required Purchasers, and shall have accepted such
appointment, within 30 days after the retiring Collateral Agent's giving of
notice of resignation or the Required Purchasers' removal of the retiring
Collateral Agent, then the retiring Collateral Agent may, on behalf of the
Purchasers, appoint a successor Collateral Agent, that shall be a commercial
bank or other financial institution and having a combined capital and surplus of
at least U.S. $500,000,000. Upon the acceptance of any appointment as a
Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall be discharged from its duties and obligations
hereunder. After the retiring Collateral Agent's resignation or removal
hereunder, the provisions of this Section 14 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was a Collateral Agent
under this Agreement.
Section 14.6. FEES AND EXPENSES OF THE COLLATERAL AGENT. Nomura
Holding America Inc. will make separate arrangements with the Collateral Agent
for any fee payable to Nomura Trust for its services as Collateral Agent, and
the Company shall not pay be
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responsible for any such fee. If Nomura Trust shall resign as collateral agent,
the Company will pay the successor Collateral Agent a reasonable fee
satisfactory to such successor in connection with such successor's services as
Collateral Agent.
Section 14.7. RELEASE OF COLLATERAL. The Collateral Agent, at the
request and expense of the Company, shall take such action as the Company may
reasonably request to effect the release of the Lien of the Collateral Agent on
any Property of the Company or the Canadian Subsidiary sold or otherwise
disposed of in compliance with Section 10.4(c)(iii) and (d).
Section 14.8. LIMITATION ON LIABILITY. Notwithstanding any other
provision of this Agreement, the Purchasers agree that the Collateral Agent's
liability under this Agreement shall be limited to direct damages resulting from
the Collateral Agent's breach of this Agreement. In no event shall the
Collateral Agent be liable for special, incidental or consequential damages
incurred or suffered by the Purchasers or any third party.
Section 15. PARENT AND CANADIAN SUBSIDIARY GUARANTEE.
Section 15.1. GUARANTEE.
(a) Each of the Parent and the Canadian Subsidiary jointly and
severally unconditionally guarantees the due and punctual payment in full of the
Obligations, and agrees to pay any and all expenses (including reasonable
counsel fees and expenses) incurred by any Purchaser in enforcing any rights
under this Section 15. Without limiting the generality of the foregoing, each
of the Parent's and the Canadian Subsidiary respective liabilities shall extend
to all amounts that constitute part of the Obligations and would be owed by the
Company to the Collateral Agent or any Purchaser hereunder or under the Related
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Company.
(b) From time to time as provided herein, the Parent and the Canadian
Subsidiary each will endorse its Guarantee, substantially in the form included
in the form of Notes attached hereto as Exhibits A-1 and A-2, on the Notes
issued pursuant hereto and any Notes issued in exchange or replacement therefor.
Section 15.2. GUARANTEE ABSOLUTE. Each of the Parent and the
Canadian Subsidiary jointly and severally guarantees that the Obligations will
be paid strictly in accordance with the terms of this Agreement and the Related
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any Purchaser
with respect thereto and without deduction, counterclaim or setoff. The
obligations of each of the Parent and the Canadian Subsidiary under this Section
15 are independent of the Obligations, and a separate action or actions may be
brought and prosecuted against each such Guarantor to enforce this Section 15,
irrespective of whether any action is brought against the Company or whether the
Company is joined in any such
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action or actions. The liability of each of the Parent and the Canadian
Subsidiary under this Section 15 shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of this Agreement, any
Related Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to departure from this Agreement or any Related
Document, including without limitation any increase in the Obligations
resulting from the extension of additional credit to the Company or
otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition
of any Collateral for all or any of the Obligations or any other Properties
of the Company or any of the Parent's other Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Company or any of its Subsidiaries; or
(f) any other circumstance (including without limitation any statute
of limitations) that might otherwise constitute a defense available to, or
a discharge of, the Company or any other Guarantor.
This Section 15 shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned upon the insolvency, bankruptcy or reorganization of the
Company or otherwise, all as though such payment had not been made.
Section 15.3. WAIVERS. Each of the Parent and the Canadian
Subsidiary waives promptness, diligence, notice of acceptance and any other
notice with respect to any of the Obligations and this Section 15 and any
requirement that the Collateral Agent or any Purchaser protect, secure, perfect
or insure any Lien or any property subject thereto or exhaust any right or take
any action against the Company or any other Person or any Collateral. Each of
the Parent and the Canadian Subsidiary acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated hereby and by the Related Documents and that the waivers set forth
in this Section 15 are knowingly made in contemplation of such benefits.
Section 15.4. SUBROGATION. Notwithstanding any payment or payments
or any performance by either the Parent or the Canadian Subsidiary hereunder,
neither such
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Guarantor shall be entitled to be subrogated to any rights of any Purchaser
until the payment in full of the full amount of all Obligations guaranteed
hereunder. Any claim by either such Guarantor against the Company arising from
payments made by such Guarantor pursuant to this Agreement or any guarantee
endorsed on a Note shall be in all respects subordinate to the full and complete
payment or performance and discharge of the Obligations guaranteed hereunder,
and no payment hereunder by either such Guarantor shall give rise to any claim
of such Guarantor or any other Person against any Purchaser. Unless and until
all Obligations guaranteed hereunder have been paid in full, neither such
Guarantor shall assign or otherwise transfer any such claim against the Company
or any other Person to any other Person. If either such Guarantor shall have
paid more than its PRO-RATA share pursuant to this Section 15, then such
Guarantor, subject to the foregoing provisions of this Section 15.4, shall have
the right of contribution from any other Guarantor to the extent of its excess
payment.
Section 15.5. CONTINUING GUARANTEE; ASSIGNMENTS. This Section 15 is
a continuing guarantee and shall
(a) remain in full force and effect until the indefeasible cash
payment in full of the Obligations and all other amounts payable under this
Section 15,
(b) be binding upon each of the Parent and the Canadian Subsidiary
and their respective successors and assigns and
(c) inure to the benefit of and be enforceable by the Purchasers and
their successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Purchaser may
assign or otherwise transfer all or any portion of its rights and obligations
under this Agreement (including without limitation all or any portion of the
Notes owing to it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Purchaser
herein or otherwise, in each case as provided in Section 16.
Section 15.5. MATTERS RELATING TO THE CANADIAN SUBSIDIARY.
(a) All payments by the Canadian Subsidiary under this Agreement and
the Canadian Subsidiary's Guarantee endorsed on the Notes shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any nation or government, any state or other political
subdivision thereof or any entity exercising executive, legislative, judicial,
regulatory or administrative functions or pertaining to government (a
"GOVERNMENTAL AUTHORITY"), excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on any Purchaser as a result of
the present or former connection between such Purchaser and the jurisdiction of
the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from such Purchaser having executed, delivered or performed its
obligations or
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received a payment under, or enforced, this Agreement or the Guarantee endorsed
on the Notes. If any such non-excluded taxes, levies, imposts, duties, charges,
fees., deductions or withholdings ("NON-EXCLUDED TAXES") are required to be
withheld by the Canadian Subsidiary from any amounts payable to any Purchaser
hereunder or under the Notes, the amounts so payable to such Purchaser shall be
increased to the extent necessary to yield to such Purchaser (after payment of
all Non-Excluded Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Agreement. Whenever any Non-
Excluded Taxes are payable by the Canadian Subsidiary, as promptly as possible
thereafter the Canadian Subsidiary shall send to each Purchaser a certified copy
of an original official receipt received by the Canadian Subsidiary showing
payment thereof. If the Canadian Subsidiary fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to any Purchaser
the required receipts or other required documentary evidence, the Canadian
Subsidiary shall indemnify such Purchaser against any incremental taxes,
interest or penalties that may become payable by such Purchaser as a result of
such failure. The agreements contained in this subsection (a) shall survive the
termination of this Agreement and the repayment of the Notes and all other
amounts payable hereunder.
(b) For the purposes of disclosure pursuant to the Interest Act
(Canada), the yearly rate of interest to which any rate of interest payable
under this Agreement or the Notes, which is calculated on any basis other than a
full calendar year, is equivalent may be determined by multiplying such rate
(expressed as a percentage) by a fraction, the numerator of which is the actual
number of days in the calendar year in which such yearly rate of interest is to
be ascertained and the denominator of which is the number of days comprising
such other basis.
Section 16. ASSIGNMENTS BY PURCHASERS.
(a) Each Purchaser may assign to one or more institutional investors
all or a portion of its rights and obligations under this Agreement and the
Notes (including without limitation all or a portion of its Maximum Revolving
Commitment and the Notes held by it); PROVIDED that in the case of each such
assignment of a Note or Maximum Revolving Commitment,
(i) the assignor shall assign all of the Notes and Maximum Revolving
Commitments held by it or, if it shall assign only a portion thereof, shall
assign to the assignee thereof a portion of each Revolving Note and Term
Note and the Maximum Revolving Commitment held by the assignor equal to the
principal amount thereof (in the case of a Note) or the amount thereof (in
the case of the Maximum Revolving Commitment), MULTIPLIED by a fraction,
the numerator of which is the aggregate principal amount of the Maximum
Revolving Commitment being assigned to the assignee and the denominator of
which is the Maximum Revolving Commitment held by the assignor (before
giving effect to the assignment);
(ii) the assignee shall be any of (A) an affiliate of the assignor,
(B) a Person named in Schedule 16(a)(ii) or an affiliate or nominee thereof
or (C) a Person (or the
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nominee of a Person) that (1) has, or whose parent has, commercial paper
rated at least P2 by Standard & Poor's Corporation or A2 by Moody's
Investors Service, Inc. (or the then-applicable equivalent thereof by such
agency or another nationally recognized credit-rating agency), and (2) is
not engaged in, and does not have an affiliate engaged in, the business of
manufacturing, selling, distributing or installing copper
telecommunications wire and cable products;
(iii) the parties to each such assignment shall execute and
deliver to the Company, for its recording in the register kept by it
pursuant to Section 12, and the Collateral Agent, an assignment and
acceptance agreement (the "ASSIGNMENT AND ACCEPTANCE") substantially in the
form attached hereto as Exhibit K, together with any Revolving Note or
Notes subject to such assignment;
(iv) the sum of the aggregate principal amount of the Term Notes and
the aggregate Maximum Revolving Commitment so assigned to such assignee
shall be at least $5,000,000 or an integral multiple of $1,000,000 in
excess thereof (or the entire Maximum Revolving Commitment held by the
assignor); and
(v) if the assignor is Nomura Holding America Inc., unless either
(A) the Company shall have consented thereto (such consent not
to be unreasonably withheld), or
(B) at the time of such assignment a Default or Event of Default
under Section 11.1(a) or (b) shall have occurred and be continuing,
after giving effect to such assignment the Maximum Revolving Commitment
held by Nomura Holding America Inc. and its nominees and affiliates shall
equal at least a majority of the Maximum Aggregate Revolving Commitment.
No Purchaser may assign or otherwise transfer any Note or its Maximum Revolving
Commitment except together with each other Note and its Maximum Revolving
Commitment as provided in clause (i) above and as otherwise provided in this
subsection (a).
(b) Upon the assignment of Notes and a Maximum Revolving Commitment
and the execution and delivery of an Assignment and Acceptance to the Company
and the Collateral Agent,
(i) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder or under any Related Document
have been assigned to it pursuant to such Assignment and Acceptance, shall
have the rights and benefits and, with respect to its Maximum Revolving
Commitment, the duties and obligations, of a Purchaser hereunder, and
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(ii) the assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations
under this Agreement and under each Related Document (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Purchaser's rights and obligations under this Agreement, such
assigning Purchaser shall cease to be a party hereto; PROVIDED that the
obligations of the Company to such assigning Purchaser under Sections 17.2
and 17.6 with respect to events occurring or obligations arising before
such assignment shall survive such assignment).
(c) By executing and delivering an Assignment and Acceptance, the
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such
assignor makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with this Agreement or any Related Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement, any Related Document or any other instrument or document
furnished pursuant hereto;
(ii) such assigning Purchaser makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
the Company, the Parent or any of the Parent's other Subsidiaries or the
performance or observance by any party hereto or thereto of any of its
obligations under this Agreement, any Related Document or any other
instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Sections 4.1(f) and 7 (to the extent theretofore delivered) and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon any
Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement;
(v) such assignee appoints and authorizes the Collateral Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement as are delegated to the Collateral Agent by
the terms hereof, together with such powers and discretion as are
reasonably incidental thereto in the Collateral Agent's judgment; and
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(vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Agreement are
required to be performed by it as a Purchaser having a Maximum Revolving
Commitment.
Section 17. MISCELLANEOUS.
Section 17.1. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement, the Notes or (except as otherwise expressly
provided therein) any Related Document, or any consent to any departure by the
Parent, the Company or the Canadian Subsidiary, shall in any event be effective
unless the same shall be in writing and signed by the Required Purchasers,
except that, without the specific prior written consent of each Purchaser, no
such amendment, waiver or consent shall
(a) reduce the principal of, or the rate of interest on, any of the
Notes,
(b) extend the time for payment of all or any portion of the
principal of or interest on any of the Notes,
(c) modify the Maximum Revolving Commitment of any Purchaser or the
Maximum Aggregate Revolving Commitment,
(d) release or modify the Guarantee of any Guarantors in Section 15
or elsewhere or release any Collateral, except as specifically contemplated
herein, or
(e) reduce the percentage of Notes required with respect to any such
amendment or to effectuate any such waiver, or
(f) modify any provision of this Section 17.1,
and that, no amendment, waiver or consent shall, unless in writing and signed by
the Collateral Agent or any administrative agent appointed pursuant to Section
17.4(b), as the case may be, in addition to the Purchasers required above to
take such action, affect the rights or duties of such agent under this Agreement
or any Related Document.
Any such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Neither any failure nor any delay
on the part of any Purchaser in exercising any right, power or privilege
hereunder or under the Notes or any of the Related Documents shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. Except as otherwise provided herein or in the Notes or any Related
Document, no notice to or demand on the Parent, the Company or any of the
Parent's other Subsidiaries in any case shall entitle the Parent, the Company or
such Subsidiary to any other or further notice or demand in the same, similar or
other circumstances.
<PAGE>
113
Anything to the contrary in this Agreement notwithstanding, if any
Purchaser shall not fulfill its commitment to purchase a Revolving Note
hereunder, unless the Company, the Parent and each Purchaser otherwise consents,
such Purchaser shall not
(i) be deemed for any purpose relating to amendment, modifications,
waivers or consents under this Agreement or any Related Document to hold
any Notes or Maximum Revolving Commitments,
(ii) be treated as a "Purchaser" hereunder for purposes of determining
any computation of Required Purchasers and
(iii) have any rights under this Section 17.1, except that any
action taken by the other Purchasers with respect to matters referred to in
clauses (a) through (f), inclusive, of this Section 17.1 shall not be
effective as against such Purchaser.
Section 17.2. EXPENSES. The Company will, whether or not the
transactions hereby contemplated shall be consummated, pay and save each
Purchaser and the Collateral Agent harmless against any and all liability for a
payment of all out-of-pocket expenses arising in connection with
(a) the preparation, negotiation, execution and delivery of this
Agreement, the Notes, the Related Documents and the other instruments and
documents hereby and thereby contemplated and the closing of the
transactions contemplated hereby;
(b) all such expenses incurred with respect to the enforcement of any
provision of any such agreement or instrument;
(c) all reasonable expenses incurred in connection with the copying
and compilation of such agreements and instruments;
(d) all stamp and other similar taxes (together in each case with
interest and penalties, if any, to the extent permitted by applicable law)
that may be payable in respect of the execution and delivery of such
agreement or instruments;
(e) all fees, taxes and other charges incurred in connection with the
filing or recording of any Security Documents and in connection with any
Lien, tax and judgment searches, including appraisal, survey and other
title costs;
(f) the fees and disbursements of Shearman & Sterling and of any
special, local or foreign counsel in connection with the preparation of
such agreements and instruments and the transactions hereby and thereby
contemplated;
(g) all fees and disbursements required to be paid in connection with
the preparation and delivery of any environmental-site-assessment report;
and
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114
(h) the fees and disbursements of the Accountants.
The Company also will pay all expenses incurred by any Purchaser (including
counsel fees and disbursements) in connection with any amendment or requested
amendment of, or waiver or consent or requested waiver or consent under or with
respect to, this Agreement, the Notes or any of the Related Documents, whether
or not the same shall become effective, and all expenses incurred by any
Purchaser or the Collateral Agent (including fees and disbursements for counsel
and financial advisers) following the occurrence and during the continuance of
any Default or Event of Default or incident to the negotiation of any workout,
restructuring or similar arrangement relating to the Company or its
Subsidiaries. The obligations of the Company under this Section 17.2 shall
survive the payment or prepayment in full or transfer of any Note, the
termination of the Purchaser's obligations to purchase Revolving Notes, the
enforcement of any provision hereof or thereof, any such amendments, waivers or
consents, any such Default or Event of Default, and any such workout,
restructuring or similar arrangement.
Section 17.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by or on
behalf of any party to this Agreement or otherwise in connection herewith, shall
(a) survive the execution and delivery of this Agreement and the
delivery of the Notes to the Purchasers and shall continue in effect as
long as any of the Notes or any Maximum Revolving Commitment is outstanding
and thereafter as provided in Sections 17.2 and 17.6 (provided that such
representations and warranties need be true only as of the respective dates
such representations and warranties are made or are deemed made pursuant to
this Agreement or any Note Purchase Request or Related Document), and
(b) be deemed to be material and to have been relied upon by each
Purchaser, regardless of any investigation made by any Purchaser or on its
behalf.
Section 17.4. SUCCESSORS AND ASSIGNS; ADMINISTRATIVE AGENT.
(a) This Agreement shall be binding upon and inure to the benefit of
the Parent, the Company, the Canadian Subsidiary, the Purchasers, the Collateral
Agent, and their respective successors and assigns in accordance with this
Agreement; PROVIDED that the Parent, the Company and the Canadian Subsidiary
shall not have the right to assign their respective rights hereunder or any
interest herein or to delegate any of their respective duties hereunder without
the prior written consent of each Purchaser.
(b) The Required Purchasers may at their option and upon written
notice to the Company designate a Person (including without limitation the
Collateral Agent) to act as an administrative agent on their behalf for the
purposes of this Agreement, the Notes and the Related Documents, and in such
connection may direct that any or all notices, Note Purchase Requests and other
documents or information to be sent or given to or by the Purchasers under
<PAGE>
115
this Agreement or the Related Documents shall be given to or by such
administrative agent on behalf of all Purchasers, and may further direct that,
upon the written direction of the Required Purchasers, such administrative agent
may take any action on behalf of the holders of Notes that the Purchasers would
be entitled to take under the provisions of this Agreement, the Notes or the
Related Documents. Such holders may enter into such agency agreement or other
instrument as they may deem necessary or appropriate to carry out the provisions
of this subsection (b). The Company will pay such administrative agent a
reasonable fee satisfactory to such administrative in connection with its
services as such.
Section 17.5. NOTICES. All notices hereunder shall be in writing and
shall be conclusively deemed to have been received and shall be effective (a) on
the day on which delivered if delivered personally or transmitted by telecopier
(provided that any notice shall be subsequently confirmed by delivery
personally, by overnight courier or by first-class mail), (b) three Business Day
after the date on which the same is delivered to a nationally recognized
overnight courier service or (c) five Business Days after deposit in first-class
mail, and shall be addressed:
(i) in the case of the Parent or the Company, to:
The Alpine Group, Inc.
1790 Broadway, 15th Floor
New York, New York 10019-1412
Attention: Executive Vice President
Telecopy No.: (212) 757-3423;
AND
Superior TeleTec Inc.
150 Interstate North Parkway
Suite 300
Atlanta, Georgia 30339
Attention: Treasurer
Telecopy No.: (404) 989-3218;
<PAGE>
116
with a copy to:
Jeffrey B. Cobb, Esq.
Cummings & Lockwood
P.O. Box 120
107 Elm Street
Stamford, Connecticut 06904-0120
Telecopy No.: (203) 351-4534
(ii) in the case of the Canadian Subsidiary to:
Superior Cable Corporation
1397 Buffalo Place
Winnipeg, Manitoba R3T 1L6
Canada
(iii) in the case of the Collateral Agent, to:
Nomura International Trust Company
10 Exchange Place
Jersey City, New Jersey 07302
Attention: Joseph Ciborowski and George Gregor
Telecopy No.: (201) 332-0547
<PAGE>
117
with a copy to:
Mark Woodall, Esq.
Nomura Holding America Inc.
2 World Financial Center, Bldg. B
New York, NY 10281-1198
Telecopy No.: (212) 667-1024;
(iv) in the case of any Purchaser, to the address specified
in Schedule A (or as specified by such Purchaser at the
time it becomes a Purchaser);
or at such other address and/or telecopy number and/or to the attention of such
other Person as either of such Persons shall have advised the other by notice in
the manner herein specified.
Section 17.6. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by the Purchasers, the Parent and the Company jointly
and severally will defend, indemnify, exonerate and hold harmless each Purchaser
(whether acting as a Purchaser or in any other capacity), any other holder of
Notes, the Collateral Agent and any Person designated as an administrative agent
for the holders of Notes pursuant to Section 17.4(b), and each of their
respective officers, directors, stockholders, affiliates, trustees, employees
and agents, and each other Person, if any, controlling such Purchaser or any of
its Affiliates (herein collectively called the "INDEMNITEES") from and against
any and all actions, causes of action suits, losses, liabilities and damages,
and expenses in connection therewith, including without limitation reasonable
counsel fees and disbursements incurred in the investigation and defense of
claims and actions or otherwise (herein collectively called the "INDEMNIFIED
LIABILITIES"), incurred by the Indemnitees or any of them as a result of, or
arising out of or relating to:
(i) the execution, delivery and performance of the Asset Purchase
Documents and the consummation of the transactions contemplated thereby,
(ii) the execution, delivery, performance or enforcement of this
Agreement, the Notes, the Guarantees endorsed thereon, any other Related
Document, or any instrument or document contemplated hereby or thereby by
any of the Indemnitees, or any act, event or transaction related or
attendant thereto or contemplated hereby or thereby, or any action or
inaction by any Indemnitee under or in connection therewith, or the
falseness or any representation or warranty made by or on behalf of the
Company, the Parent or any other Guarantor (including without limitation
any representation or warranty in Section 4.1(m) or 4.1(n)), or
(iii) any Environmental Matter, any Environmental Law or the
actual or alleged existence or release of any Hazardous Material or
Contaminant,
<PAGE>
118
except for any such Indemnified Liabilities that are finally judicially
determined to have resulted from the respective Indemnitee's gross negligence or
willful misconduct, and if and to the extent that the foregoing undertaking may
be unenforceable for any reason, the Parent and the Company hereby agree to make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities that is permissible under applicable law. The
obligations of the Parent and the Company under this Section 17.6 shall be in
addition to any liability that the Parent or the Company may otherwise have and
shall survive the payment or prepayment in full or transfer of any Note, the
termination of the Purchaser's obligations to purchase Revolving Notes and the
enforcement of any provision hereof or thereof.
Section 17.7. PUBLIC ANNOUNCEMENTS. Neither the Parent nor the
Company will issue any press release or make any other public announcement,
statement or filing with regard to this Agreement, the Notes or the Related
Documents or the transactions hereby or thereby contemplated without the prior
approval of the Required Purchasers, which approval shall not be unreasonably
withheld and shall in no event be withheld in any case where such press release,
public announcement, statement or filing is required by applicable law
(including applicable rules and regulations of the SEC).
Section 17.8. NO FIDUCIARY RELATIONSHIP. The relationship between
the Purchasers and the Collateral Agent, on the one hand, and the Parent, the
Company and their Subsidiaries, on the other hand, is solely that of debtor and
creditor, and neither any Purchaser nor the Collateral Agent shall be deemed to
have any fiduciary or other special relationship with the Parent, the Company or
any of their Subsidiaries. No provision of this Agreement, the Notes or any of
the Related Documents shall be construed to create a fiduciary duty on the part
of any Purchaser or the Collateral Agent, any holder of Notes or any trustee or
agent therefor in favor of the Parent, the Company, any of their Subsidiaries or
Affiliates, or their respective directors, officers, employees, agents,
stockholders or creditors.
Section 17.9. INTEGRATION AND SEVERABILITY. This Agreement, the
Notes and the Related Documents (including the schedules and exhibits thereto)
embody the entire agreement and understanding among the Purchasers, the
Collateral Agent, the Parent, the Company and the Canadian Subsidiary, and
supersede all prior agreements and understandings relating to the subject matter
hereof. In case any one or more of the provisions contained in this Agreement,
the Notes or any Related Document, or any application thereof, shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein, and any
other application thereof, shall not in any way be affected or impaired thereby.
Section 17.10. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
<PAGE>
119
SECTION 17.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Section 17.12. SUBMISSION TO JURISDICTION; WAIVER OF SERVICE AND
VENUE. (a) Each of the Parent, the Company and the Canadian Subsidiary
consents and agrees to the jurisdiction of any state or federal court sitting in
the County of New York, State of New York, and waives any objection based on
venue or FORUM NON CONVENIENS with respect to any action instituted therein, and
agrees that, except with the written consent of each Purchaser, any dispute
concerning the relationship between any Purchaser, on the one hand, and the
Parent, the Company or the Canadian Subsidiary, on the other hand, or the
conduct of any party in connection with this agreement or otherwise, shall be
heard only in the courts described above.
(b) Each of the Parent, the Company and the Canadian Subsidiary
waives personal service of any and all process upon it and consents that all
such service of process may be made by hand delivery to the Parent at its
address set forth above, or, at the option of any Purchaser or the Collateral
Agent in the case of the Company or the Canadian Subsidiary, by service upon
Corporation Service Company, which each of the Company and the Canadian
Subsidiary irrevocably appoints as its agent for the purpose of accepting
service of process within the State of New York. If the Parent at any time
shall remove its principal executive offices from New York City, prior to such
removal it shall irrevocably appoint, in a manner in form and substance
satisfactory to the Required Purchasers, Corporation Service Company or another
Person satisfactory to the Required Purchasers as its agent for the purpose of
accepting service of process within the State of New York, and following such
appointment any Purchaser at its option may make service of process on the
Parent by service upon such Person. The Company, the Canadian Subsidiary and
the Parent each consents to service of process as aforesaid.
(c) Nothing in this Section 17.12 shall affect the right of any
Purchaser to serve legal process in any other manner permitted by law or affect
the right of any Purchaser to bring any action or proceeding against the Parent,
the Canadian Subsidiary or the Company or their respective properties in the
courts of any other jurisdiction.
SECTION 17.13. WAIVER OF RIGHT TO TRIAL BY JURY. EACH OF THE PARENT,
THE COMPANY, THE CANADIAN SUBSIDIARY AND EACH PURCHASER WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
(B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF
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120
THEM IN RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED HERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. THE PARENT, THE COMPANY, THE CANADIAN SUBSIDIARY
AND EACH PURCHASER AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY
PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
Section 17.14. POST-CLOSING CONDITIONS. Notwithstanding Sections 5.2
and 5.3, the Purchasers waive compliance by the Company on the Closing Date with
such Sections insofar as they relate to the delivery of the portions of the
opinions of Osler, Hoskin & Harcourt, special Ontario counsel to the Purchasers,
McCarthy Tetrault, special Ontario counsel to the Company, and Thompson Dorfman
Swettman, special Manitoba counsel to the Company, concerning matters relating
to title of the Canadian Subsidiary Subsidiary to the real Property in Manitoba,
the filing of the Mortgage in Winnipeg, Manitoba and the filing of PPSA
financing statements in connection with the Canadian Security Agreement and the
Mortgage. The failure of such counsel to advise the Purchasers and the
Collateral Agent that they may rely on such opinions with respect to such
matters by June 15, 1995 will consititute an Event of Default hereunder.
<PAGE>
IN WITNESS WHEREOF, the Parent, the Company, the Canadian Subsidiary,
the Purchasers and the Collateral Agent have executed this Agreement by their
duly authorized officers as of the date first written above.
THE ALPINE GROUP, INC. SUPERIOR TELETEC INC.
By By
------------------------- -------------------------
Title: Title:
SUPERIOR CABLE CORPORATION NOMURA INTERNATIONAL TRUST
COMPANY, as Collateral Agent
By By
------------------------- -------------------------
Title: Title:
PURCHASERS
NOMURA HOLDING AMERICA INC. CREDITANSTALT CORPORATE
FINANCE, INC.
By By
------------------------- -------------------------
Title: Title:
ORIX USA CORPORATION
By By
------------------------- -------------------------
Title: Title:
<PAGE>
EXHIBIT F
SECURITY AGREEMENT dated as of May 11, 1995, made by SUPERIOR TELETEC
INC., a Georgia corporation (together with its successors, the "GRANTOR"), to
NOMURA INTERNATIONAL TRUST COMPANY ("NOMURA TRUST"), as agent (together with its
successors and assigns, the "COLLATERAL AGENT") for the purchasers (the
"PURCHASERS") parties to the Note Purchase Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS:
(1) The Purchasers and the Collateral Agent have entered into a Note
Purchase Agreement dated as of May 10, 1995 (said Agreement, as it may hereafter
be amended or otherwise modified from time to time, being the "NOTE PURCHASE
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with the Grantor, The Alpine Group, Inc. and
Superior Cable Corporation. The Grantor will receive all of the proceeds of the
Notes under the Note Purchase Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Note Purchase
Agreement.
(2) The Grantor is the owner of the shares (the "PLEDGED SHARES") of
stock described in Schedule I hereto and issued by the corporation named
therein.
(3) It is a condition precedent to the purchase of Notes by the
Purchasers under the Note Purchase Agreement that the Grantor shall have made
the pledge and granted the security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Purchasers to purchase Notes under the Note Purchase Agreement, the
Grantor hereby agrees with the Collateral Agent for its benefit and the ratable
benefit of the Purchasers as follows:
SECTION 1. PLEDGE, ASSIGNMENT AND GRANT OF SECURITY. The Grantor
hereby assigns and pledges to the Collateral Agent for its benefit and the
ratable benefit of the Purchasers, and hereby grants to the Collateral Agent for
its benefit and the ratable benefit of the Purchasers a security interest in,
all of the Grantor's right, title and interest in and to the following, whether
now owned or hereafter acquired (the "COLLATERAL"):
(a) all equipment in all of its forms, wherever located, now or
hereafter existing (including but not limited to all machinery, specialty
tools and parts, motor vehicles, material handling equipment and all
manuals, computer programs, data bases and other materials relating to the
use of any equipment), all fixtures and all parts thereof and all
accessions thereto (any and all such equipment, fixtures, parts and
accessions being the "EQUIPMENT");
<PAGE>
2
(b) all inventory in all of its forms, wherever located, now or
hereafter existing (including but not limited to (i) all merchandise and
raw materials and work in process therefor, finished goods thereof, and
materials used or consumed in the manufacture or production thereof,
(ii) goods in which the Grantor has an interest in mass or a joint or other
interest or right of any kind (including, without limitation, goods in
which the Grantor has an interest or right as consignee), and (iii) goods
which are returned to or repossessed by the Grantor), and all accessions
thereto and products thereof and documents therefor (any and all such
inventory, accessions, products and documents being the "INVENTORY");
(c) all accounts, contract rights, chattel paper, instruments,
general intangibles and other obligations of any kind, now or hereafter
existing, whether or not arising out of or in connection with the sale or
lease of goods or the rendering of services, and all rights now or
hereafter existing in and to all security agreements, leases and other
contracts securing or otherwise relating to any such obligations (the
"AGREEMENT COLLATERAL"), including without limitation
(i) all rights of the Grantor to receive moneys due and to
become due under any such obligations (the "RECEIVABLES"),
(ii) all rights of the Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to any such
obligations,
(iii) claims of the Grantor for damages arising out of or for
breach of or default under any of such obligations and
(iv) the right of the Grantor to terminate any such obligations,
to perform thereunder and to compel performance and otherwise exercise
all remedies thereunder;
(d) all of the following (the "SECURITY COLLATERAL"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares; and
(ii) all additional shares of stock of any issuer of the Pledged
Shares, or of any corporation which is the successor of any such
issuer, and any securities exchangeable for, or convertible into,
shares of stock of any such issuer, from time to time acquired by the
Pledgor in any manner, and the certificates representing such
additional shares, and all dividends, cash,
<PAGE>
3
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such shares;
(e) all certificates of deposit (whether or not negotiable or
transferable), deposit accounts, securities (whether certificated or
uncertificated), investment accounts and cash, whether now or hereafter
existing; and
(f) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds which constitute property of the
types described in clauses (a) through (e) inclusive of this Section 1)
and, to the extent not otherwise included, all
(i) payments under insurance (whether or not the Collateral
Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral and
(ii) cash.
SECTION 2. SECURITY FOR THE GRANTOR OBLIGATIONS. This Agreement
secures the payment of all Obligations (as defined in the Note Purchase
Agreement) of the Grantor now or hereafter existing. Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
that constitute part of the Obligations and would be owed by the Grantor to the
Collateral Agent or the Purchasers under the Note Purchase Agreement, the Notes,
the Security Documents (including this Agreement) or any other Related Document
but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Grantor.
SECTION 3. GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding,
(a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as
if this Agreement had not been executed;
(b) the exercise by the Collateral Agent of any of the rights
hereunder shall not release the Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral;
and
(c) neither the Collateral Agent nor any Purchaser shall have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Collateral Agent or
any Purchaser be obligated to
<PAGE>
4
perform any of the obligations or duties of the Grantor thereunder or to
take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Security Collateral shall be delivered to and
held by or on behalf of the Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Collateral Agent. The Collateral Agent shall have the
right, at any time in its discretion and without notice to the Grantor, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Security Collateral, subject only to the revocable
rights specified in Section 10(a). For the better perfection of the Collateral
Agent's rights in and to the Security Collateral, the Grantor shall forthwith,
upon the pledge of any Security Collateral hereunder, cause such Security
Collateral to be registered in the name of such nominee or nominees of the
Collateral Agent as the Collateral Agent shall direct, subject only to the
revocable rights specified in Section 10(a). In addition, the Collateral Agent
shall have the right at any time to exchange certificates or instruments
representing or evidencing Security Collateral for certificates or instruments
of smaller or larger denominations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Grantor represents
and warrants as follows:
(a) All of the Equipment and Inventory are located at the places
specified in Schedule II hereto. The chief place of business and chief
executive office of the Grantor and the office where the Grantor keeps its
records concerning the Receivables and the originals of all chattel paper
that evidence Receivables are located at its address specified in
Section 20. None of the Receivables or other Contractual Obligations is
evidenced by a promissory note or other instrument.
(b) The Grantor is the legal and beneficial owner of the Collateral
free and clear of any lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement and
as permitted under the Note Purchase Agreement. No effective financing
statement or other document similar in effect covering all or any part of
the Collateral is on file in any recording office, except such as may have
been filed in favor of the Collateral Agent relating to this Agreement.
The Grantor has no trade names other than those identified in Schedule IV.
(c) Except for Inventory consigned to Persons identified in Schedule
III, the Grantor has exclusive possession and control of the Equipment and
Inventory. Each Person (other than the Person identified in item 3 of
Schedule III), and each creditor thereof having a security interest in the
goods thereof, has acknowledged the
<PAGE>
5
seniority of the Lien created hereunder in such consigned Inventory
pursuant to a letter substantially in the form attached hereto as Exhibit
1. The aggregate Fair Market Value of all Inventory consigned to all
consignees is less than $400,000 and the aggregate Fair Market Value of all
Inventory consigned to the Person identified in item 3 of Schedule III is
less than $30,000.
(d) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
(e) The Pledged Shares constitute the percentage of the issued and
outstanding shares of stock of the respective issuers thereof indicated on
Schedule I.
(f) This Agreement and the pledge of the Security Collateral pursuant
hereto create a valid and perfected first-priority security interest in the
Collateral, except as otherwise permitted in the Note Purchase Agreement,
securing the payment of the Obligations, and all filings and other actions
necessary or desirable to perfect and protect such security interest have
been duly taken.
(h) No consent of any other person or entity and no authorization,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for
(i) the pledge by the Grantor of the Security Collateral
pursuant to this Agreement, for the grant by the Grantor of the
assignment and security interest granted hereby or for the execution,
delivery or performance of this Agreement by the Grantor,
(ii) the perfection or maintenance of the pledge, assignment and
security interest created hereby (including the first-priority nature
of such pledge, assignment and security interest except those
permitted in Section 10.2 of the Note Purchase Agreement) or
(iii) the exercise by the Collateral Agent of the voting or
other rights provided for in this Agreement or the remedies in respect
of the Collateral pursuant to this Agreement (except as may be
required in connection with the disposition of any portion of the
Security Collateral by laws affecting the offering and sale of
securities generally).
(i) The Inventory has been produced by the Grantor in compliance in
all material respects with all requirements of the Fair Labor Standards
Act.
<PAGE>
6
(j) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(k) The Grantor has, independently and without reliance upon the
Collateral Agent or any Purchaser and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.
(l) The Grantor's tax-identification number is 58-163-0822 and its
mailing address is 150 Interstate North Parkway, Suite 300, Atlanta,
Georgia 30339.
SECTION 6. FURTHER ASSURANCES.
(a) The Grantor agrees that from time to time, at the expense of the
Grantor, the Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that the Collateral Agent may reasonably request, in order to perfect and
protect any pledge, assignment or security interest granted or purported to be
granted hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, the Grantor will:
(i) mark conspicuously each document included in the Inventory and
each chattel paper included in the Receivables, the Agreement Collateral
and, at the request of the Collateral Agent, each of its records pertaining
to the Collateral with a legend, in form and substance satisfactory to the
Collateral Agent, indicating that such document, chattel paper, Agreement
Collateral or Collateral is subject to the pledge, assignment and security
interest granted hereby;
(ii) if any Collateral shall be evidenced by a promissory note or
other instrument or chattel paper or shall be a certificated security,
deliver and pledge to the Collateral Agent hereunder such note or
instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
satisfactory to the Collateral Agent;
(iii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Collateral Agent may request, in order to
perfect and preserve the pledge, assignment and security interest granted
or purported to be granted hereby; and
(iv) in the event enter into any supply agreements in the future,
cause any other party thereto to enter into a consent agreement reasonably
acceptable in form
<PAGE>
7
and substance to the Purchasers and the Collateral Agent pursuant to the
Security Documents (including this Agreement).
(b) The Grantor authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of the Grantor where permitted
by law. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(c) The Grantor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Collateral Agent
may reasonably request, all in reasonable detail.
(d) Not later than the 120th day after the end of each of its fiscal
years, beginning with its fiscal year ending April 30, 1996, the Grantor, at the
Grantor's expense, will deliver to the Collateral Agent an opinion of counsel,
reasonably acceptable to the Required Purchasers, either stating that in the
opinion of each such counsel such action has been taken with respect to any
recording, filing, re-recording and refiling in respect of any Security Document
to which the Grantor is a party as is necessary to maintain the lien and
security interest of such Security Document, and reciting the details of such
action, or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such opinion of counsel
shall also state such actions as may be necessary or appropriate in order to
obtain and maintain a perfected security interest in or other Lien on the
Collateral, if such actions are other than as provided in the applicable
Security Document, or shall state that no such actions shall be necessary or
appropriate other than as provided in the applicable Security Document.
(e) The Grantor shall not hold any Property referred to in clause (a)
of the definition of Cash Equivalents in Section 1 of the Note Purchase
Agreement except in one or more investment accounts maintained with Trust
Company Bank in the manner described in such definition.
(f) If the Grantor shall enter into any supply contract described in
the letter agreement dated May 11, 1995 between the Grantor, the Parent and the
Canadian Subsidiary and Alcatel NA Cable systems Inc. ("ALCATEL") and Alcatel
Canada Wire Inc., at the time at which it enters into such supply contract it
shall cause the other parties thereto to consent, in a manner in form and
substance reasonably satisfactory to the Required Purchasers, to the grant of a
security interest in the Grantor's right and benefits therein pursuant to this
Agreement.
<PAGE>
8
SECTION 7. AS TO EQUIPMENT AND INVENTORY.
(a) The Grantor shall keep the Equipment and Inventory (other than
Inventory sold in the ordinary course of business) at the places therefor
specified in Section 5(a) or, upon 30-days' prior written notice to the
Collateral Agent, at such other places in jurisdiction where all action required
by Section 6 shall have been taken with respect to the Equipment and Inventory.
(b) The Grantor shall cause the Equipment to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer's manual, and
shall forthwith, or in the case of any loss or damage to any of the Equipment as
quickly as practicable after the occurrence thereof, make or cause to be made
all repairs, replacements, and other improvements in connection therewith which
are necessary or desirable to such end. The Grantor shall promptly furnish to
the Collateral Agent a statement respecting any loss or damage to any of the
Equipment.
(c) The Grantor shall pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except for taxes, assessments, charges and levies being
contested diligently in good faith and by appropriate proceedings as to which
adequate book reserves have been established with respect thereto in accordance
with GAAP and neither the Grantor's title to nor its right to use such Equipment
or Inventory is materially adversely affected by such nonpayment. In producing
the Inventory, the Grantor shall comply in all material respects with all
requirements of the Fair Labor Standards Act.
(d) The Grantor shall not consign Inventory to any Person other than
those identified in Schedule III and shall not permit the Fair Market Value of
all consigned Inventory to exceed $400,000 or the Fair Market Value of all
Inventory consigned to the Person identified in item 3 of Schedule III to exceed
$30,000.
SECTION 8. INSURANCE. The Grantor shall, at its own expense,
maintain insurance with respect to the Equipment and Inventory in such amounts,
against such risks, in such form and with such insurers, as are provided in
Section 9.4 of the Note Purchase Agreement. The Grantor will, at the request of
the Collateral Agent, duly execute and deliver instruments of assignment of such
insurance policies to comply with the requirements of Section 6 and cause the
insurers to acknowledge notice of such assignment.
SECTION 9. PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES.
<PAGE>
9
(a) The Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Receivables and other Collateral and the originals of all chattel paper that
evidences Receivables, at the location therefor specified in Section 5(a) or,
upon 30 days' prior written notice to the Collateral Agent, at any other
locations in a jurisdiction where all actions required by Section 6 shall have
been taken with respect to the Receivables. The Grantor will hold and preserve
such records and chattel paper and will permit representatives of the Collateral
Agent at any time during normal business hours to inspect and make abstracts
from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), the Grantor
shall continue to collect, at its own expense, all amounts due or to become due
the Grantor under the Receivables. In connection with such collections, the
Grantor may take (and, at the Collateral Agent's direction, shall take) such
action as the Grantor or the Collateral Agent may deem necessary or advisable to
enforce collection of the Receivables; PROVIDED that the Collateral Agent shall
have the right at any time, in the event that the Collateral Agent in good faith
believes that the prospect of payment of the Obligations in the normal course,
or the performance of collection of the Receivables, is impaired and upon
written notice to the Grantor of its intention to do so, to notify the account
debtors or obligors under any Receivables of the assignment of such Receivables
to the Collateral Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to the Grantor thereunder directly
to the Collateral Agent and, upon such notification and at the expense of the
Grantor, to enforce collection of any such Receivables, and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as the Grantor might have done. After receipt by the Grantor of the
notice from the Collateral Agent referred to in the PROVISO to the preceding
sentence,
(i) all amounts and proceeds (including instruments) received by the
Grantor in respect of the Receivables shall be received in trust for the
benefit of the Collateral Agent hereunder, shall be segregated from other
funds of the Grantor and shall be forthwith paid over to the Collateral
Agent in the same form as so received (with any necessary indorsement) to
be held as cash collateral and either (A) released to the Grantor so long
as no Event of Default shall have occurred and be continuing or (B) if any
Event of Default shall have occurred and be continuing, applied as provided
by Section 15(b), and
(ii) the Grantor shall not adjust, settle or compromise the amount or
payment of any Receivable, release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 10. VOTING RIGHTS; DIVIDENDS; ETC.
<PAGE>
10
(a) So long as no Event of Default or event which, with the giving
of notice or the lapse of time, or both, would become an Event of Default shall
have occurred and be continuing:
(i) The Grantor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights pertaining to the
Security Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement or the Note Purchase Agreement; PROVIDED
that the Grantor shall not exercise or refrain from exercising any such
right if, in the Collateral Agent's judgment, such action would have a
material adverse effect on the value of the Security Collateral or any part
thereof.
(ii) The Grantor shall be entitled to receive and retain any and all
dividends paid in respect of the Security Collateral, PROVIDED that any and
all
(A) dividends paid or payable other than in cash in respect of,
and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Security
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Security Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Security
Collateral,
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Security Collateral and shall, if received by the Grantor, be received
in trust for the benefit of the Collateral Agent, be segregated from the
other property or funds of the Grantor, and be forthwith delivered to the
Collateral Agent as Security Collateral in the same form as so received
(with any necessary indorsement or assignment).
(iii) The Collateral Agent shall execute and deliver (or cause to
be executed and delivered) to the Grantor all such proxies and other
instruments as the Grantor may reasonably request for the purpose of
enabling the Grantor to exercise the voting and other rights which it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends which it is authorized to receive and retain pursuant to
paragraph (ii) above.
<PAGE>
11
(b) Upon the occurrence and during the continuance of an Event of
Default or an event which, with the giving of notice or the lapse of time, or
both, would become an Event of Default:
(i) All rights of the Grantor (A) to exercise or refrain from
exercising the voting and other consensual rights which it would otherwise
be entitled to exercise pursuant to Section 10(a)(i) shall, upon notice to
the Grantor by the Collateral Agent, cease and (B) to receive the dividends
payments which it would otherwise be authorized to receive and retain
pursuant to Section 6(a)(ii) shall automatically cease, and all such rights
shall thereupon become vested in the Collateral Agent who shall thereupon
have the sole right to exercise or refrain from exercising such voting and
other consensual rights and to receive and hold as Security Collateral such
dividends.
(ii) All dividends which are received by the Grantor contrary to the
provisions of paragraph (i) of this Section 10(b) shall be received in
trust for the benefit of the Collateral Agent, shall be segregated from
other funds of the Grantor and shall be forthwith paid over to the
Collateral Agent as Security Collateral in the same form as so received
(with any necessary indorsement).
SECTION 11. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES.
(a) The Grantor shall not (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to, any of
the Collateral, except Inventory in the ordinary course of business, or
(ii) create or permit to exist any lien, security interest, option or other
charge or encumbrance upon or with respect to any of the Collateral, except for
the security interest under this Agreement.
(b) The Grantor will (i) cause each issuer of the Pledged Shares not
to issue any stock or other securities in addition to or in substitution for the
Pledged Shares issued by such issuer, except to the Grantor and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional shares of stock or other securities of each issuer of the
Pledged Shares.
SECTION 12. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The Grantor
hereby irrevocably appoints the Collateral Agent as the Grantor's attorney-in-
fact, with full authority in the place and stead of the Grantor and in the name
of the Grantor or otherwise, from time to time in the Collateral Agent's
discretion, at the Grantor's expense, to take any action and to execute any
instrument which the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent pursuant to Section 8 of the Note Purchase Agreement,
<PAGE>
12
(b) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in connection with the Collateral,
(c) to receive, indorse, and collect any drafts or other instruments,
documents and chattel paper, in connection therewith, and
(d) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce compliance
with the terms and conditions of any agreement included in the Agreement
Collateral or the rights of the Collateral Agent with respect to any of the
Collateral.
SECTION 13. COLLATERAL AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Collateral Agent may itself perform,
or cause performance of, such agreement, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by the Grantor under
Section 15(b).
SECTION 14. THE COLLATERAL AGENT'S DUTIES.
(a) The powers conferred on the Collateral Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral, as to ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Security Collateral, whether or not the
Collateral Agent or any Purchaser has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. The Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Nomura Trust accords its own
property. In no event shall the Collateral Agent have any liability in respect
of the Collateral, except in case of gross negligence or willful misconduct on
its part.
(b) The Collateral Agent shall have no obligation to take any action
permitted to be taken by it hereunder, except at the express written direction
of the Required Purchasers.
<PAGE>
13
SECTION 15. REMEDIES. If any Event of Default shall have occurred
and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code in effect in the State of New York at
that time (the "CODE") (whether or not the Code applies to the affected
Collateral), and also may
(i) require the Grantor to, and the Grantor hereby agrees that
it will at its expense and upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral as directed by the
Collateral Agent and make it available to the Collateral Agent at a
place to be designated by the Collateral Agent which is reasonably
convenient to both parties, and
(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms
as the Collateral Agent may deem commercially reasonable.
The Grantor agrees that, to the extent notice of sale shall be
required by law, at least 10-days' notice to the Grantor of the time and
place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall
not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
be applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 17) in whole or in part by the Collateral Agent for the
ratable benefit of the Purchasers against, all or any part of the
Obligations in such order as the Collateral Agent shall elect. Any surplus
of such cash or cash proceeds held by the Collateral Agent and remaining
after payment in full of all the Obligations shall be paid over to the
Grantor or to whomsoever may be lawfully entitled to receive such surplus.
<PAGE>
14
(c) The Collateral Agent may exercise any and all rights and remedies
of the Grantor under or in connection with any Agreement Collateral or
otherwise in respect of the Collateral, including without limitation any
and all rights of the Grantor to demand or otherwise require payment of any
amount under, or performance of any provision of, any obligation under the
Agreement Collateral.
(d) All payments received by the Grantor under or in connection with
any Agreement Collateral or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of the Grantor and shall be forthwith paid over
to the Collateral Agent in the same form as so received (with any necessary
indorsement).
SECTION 16. REGISTRATION RIGHTS. If the Collateral Agent shall
determine to exercise its right to sell all or any of the Security Collateral
pursuant to Section 12, the Grantor agrees that, upon request of the Collateral
Agent, the Grantor will, at its own expense:
(a) execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold, and the directors and officers thereof,
to execute and deliver, all such instruments and documents, and do or cause
to be done all such other acts and things, as may be necessary or, in the
opinion of the Collateral Agent, advisable to register such Security
Collateral under the provisions of the Securities Act, and to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Collateral Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Security Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Security Collateral, as
requested by the Collateral Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earning statement which will satisfy
the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Security Collateral or any part thereof
valid and binding and in compliance with applicable law. The Grantor
further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by the Collateral Agent or the Purchasers
by reason of the failure by the Grantor to
<PAGE>
15
perform any of the covenants contained in this Section and, consequently,
agrees that, if the Grantor shall fail to perform any of such covenants, it
shall pay, as liquidated damages and not as a penalty, an amount equal to
the value of the Security Collateral on the date the Collateral Agent shall
demand compliance with this Section.
SECTION 17. INDEMNITY AND EXPENSES. (a) The Grantor will indemnify
the Collateral Agent from and against any and all claims, losses and liabilities
(including attorneys' fees) growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting from the Collateral Agent's gross negligence or
willful misconduct.
(b) The Grantor will upon demand pay to the Collateral Agent the
amount of any and all expenses, including the fees and expenses of its counsels
and of any experts and agents, which the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Collateral Agent or the Purchasers hereunder or
(iv) the failure by the Grantor to perform or observe any of the provisions
hereof.
SECTION 18. AMENDMENTS; ETC. No amendment or waiver of any provision
of this Agreement, and no consent to any departure by the Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Collateral Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 19. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and mailed, telecopied, telegraphed,
telexed, cabled or delivered to it, if to the Grantor, at its address specified
in the Note Purchase Agreement, and if to the Collateral Agent, at its address
specified in the Note Purchase Agreement, or, as to either party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and other communications shall, when mailed,
telecopied, telegraphed, telexed or cabled, be effective when deposited in the
mails, telecopied, delivered to the telegraph company, confirmed by telex
answerback or delivered to the cable company, respectively.
SECTION 20. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER NOTE
PURCHASE AGREEMENT. This Agreement shall create a continuing security interest
in the Collateral and shall
(a) remain in full force and effect until the later of (A) the
payment in full of the Obligations and all other amounts payable under this
Agreement and (B) the
<PAGE>
16
date on which the Maximum Aggregate Revolving Commitment shall be equal to
zero (without possibility of reinstatement),
(b) be binding upon the Grantor, its successors and assigns and
(c) inure to the benefit of, and be enforceable by, the Collateral
Agent, the Purchasers and their respective successors, transferees and
assigns.
Without limiting the generality of the foregoing clause (c), any Purchaser may
assign or otherwise transfer all or any portion of its rights and obligations
under the Note Purchase Agreement (including without limitation all or any
portion of its Maximum Revolving Commitment and any Note held by it) to any
other person or entity, and such other person or entity shall thereupon become
vested with all the benefits in respect thereof granted to such Purchaser herein
or otherwise, subject, however, to the provisions of Section 16 of the Note
Purchase Agreement. Upon the later of the payment in full of the Obligations
and all other amounts payable under this Agreement and the date on which the
Maximum Revolving Amount shall be equal to zero, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
Grantor. Upon any such termination, the Collateral Agent will, at the Grantor's
expense, execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK , EXCEPT
TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless
otherwise defined herein or in the Note Purchase Agreement, terms used in
Article 9 of the Code are used herein as therein defined.
<PAGE>
17
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
SUPERIOR TELETEC INC.
By
----------------------------
Title:
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE STATED
NOMURA INTERNATIONAL TRUST
COMPANY, as Collateral Agent
By
---------------------------------
Title:
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage of
Stock Certificate Number Outstanding
Stock Issuer Class of Stock No(s). Par Value of Shares Shares
----------- -------------- ----------------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
Superior Cable Corporation
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE II
LOCATIONS OF EQUIPMENT:
LOCATIONS OF INVENTORY:
<PAGE>
SCHEDULE III
CONSIGNEES OF INVENTORY:
<PAGE>
PLEDGE AGREEMENT dated May 11, 1995, made by THE ALPINE GROUP, INC., a
Delaware corporation (together with its successors, the "GRANTOR"), to NOMURA
INTERNATIONAL TRUST COMPANY, as agent (the "COLLATERAL AGENT") for the
purchasers (the "PURCHASERS") parties to the Note Purchase Agreement (as
hereinafter defined).
PRELIMINARY STATEMENTS:
(1) The Purchasers and the Collateral Agent have entered into a Note
Purchase Agreement dated as of May 10, 1995 (said Agreement, as it may hereafter
be amended or otherwise modified from time to time, being the "NOTE PURCHASE
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with the Grantor, Superior TeleTec Inc., and
Superior Cable Corporation (the "COMPANY"). In the Note Purchase Agreement, the
Grantor has unconditionally guaranteed the due and punctual payment in full of
the obligations under the Note Purchase Agreement, may receive a portion of the
proceeds of the Advances under the Note Purchase Agreement and will derive
substantial direct and indirect benefit from the transactions contemplated by
the Note Purchase Agreement.
(2) The Grantor is the owner of the shares (the "PLEDGED SHARES") of
stock described in Part I of Schedule I hereto and issued by the Company.
(3) It is a condition precedent to the purchase of Notes by the
Purchasers under the Note Purchase Agreement that the Grantor shall have made
the pledge and granted the security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Purchasers to purchase Notes under the Note Purchase Agreement, the
Grantor hereby agrees with the Collateral Agent for its benefit and the ratable
benefit of the Purchasers as follows:
SECTION 1. PLEDGE. The Grantor hereby pledges to the Collateral
Agent for its benefit and the ratable benefit of the Purchasers, and grants to
the Collateral Agent for its benefit and the ratable benefit of the Purchasers a
security interest in, the following (the "PLEDGED COLLATERAL"):
<PAGE>
2
(i) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Shares;
(ii) all additional shares of stock of the Company and any securities
exchangeable for, or convertible into, shares of stock of the Company from
time to time acquired by the Grantor in any manner, and the certificates
representing such additional shares, and all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares;
(iii) all additional indebtedness from time to time owed to the
Grantor by the Company and the instruments evidencing such indebtedness,
and all interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such indebtedness; and
(iv) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described above).
SECTION 2. SECURITY FOR THE GRANTOR OBLIGATIONS. This Agreement
secures the payment of all obligations of the Grantor now or hereafter existing
under the Note Purchase Agreement and the Notes, whether for principal,
interest, fees, expenses, costs, indemnities or otherwise, and all obligations
of the Grantor now or hereafter existing under this Agreement (all such
obligations of the Grantor being the "SECURED OBLIGATIONS").
Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Grantor to the Collateral Agent or the
Purchasers under the Note Purchase Agreement and the Notes but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Grantor.
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of the Collateral Agent pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent.
The Collateral Agent shall have the right, at any time in its
discretion and without notice to the Grantor, to transfer to or to register in
the name of the Collateral Agent or any of its nominees any or all of the
Pledged Collateral, subject only to the revocable rights specified in
Section 6(a). For the better perfection of the Collateral Agent's rights in
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3
and to the Pledged Collateral, the Grantor shall forthwith, upon the pledge of
any Pledged Collateral hereunder, cause such Pledged Collateral to be registered
in the name of such nominee or nominees of the Collateral Agent as the
Collateral Agent shall direct, subject only to the revocable rights specified in
Section 6(a). In addition, the Collateral Agent shall have the right at any
time to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Grantor represents
and warrants as follows:
(a) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
(b) The Grantor is the legal and beneficial owner of the Pledged
Collateral free and clear of any lien, security interest, option or other
charge or encumbrance except for the security interest created by this
Agreement.
(c) The pledge of the Pledged Shares pursuant to this Agreement
creates a valid and perfected first-priority security interest in the
Pledged Collateral, securing the payment of the Secured Obligations.
(d) No consent of any other person or entity and no authorization,
approval, or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required (i) for the pledge by
the Grantor of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Grantor,
(ii) for the perfection or maintenance of the security interest created
hereby (including the first priority nature of such security interest) or
(iii) for the exercise by the Collateral Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required in
connection with any disposition of any portion of the Pledged Collateral by
laws affecting the offering and sale of securities generally).
(e) The Pledged Shares constitute all the issued and outstanding
shares of stock of the Company.
(f) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(g) The Grantor has, independently and without reliance upon the
Collateral Agent or any Purchaser and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.
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4
SECTION 5. FURTHER ASSURANCES. The Grantor agrees that at any time
and from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Collateral Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral.
SECTION 6. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no Event
of Default or event which, with the giving of notice or the lapse of time, or
both, would become an Event of Default shall have occurred and be continuing:
(i) The Grantor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement or the Note Purchase Agreement; PROVIDED
that the Grantor shall not exercise or refrain from exercising any such
right if, in the Collateral Agent's judgment, such action would have a
material adverse effect on the value of the Pledged Collateral or any part
thereof.
(ii) The Grantor shall be entitled to receive and retain any and all
dividends and interest paid in respect of the Pledged Collateral, PROVIDED
that any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Pledged
Collateral,
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Pledged Collateral and shall, if received by the Grantor, be received
in trust for the benefit of the Collateral Agent, be segregated from the
other property or funds of the Grantor, and be forthwith delivered to the
Collateral Agent as Pledged Collateral in the same form as so received
(with any necessary indorsement or assignment).
(iii) The Collateral Agent shall execute and deliver (or cause to
be executed and delivered) to the Grantor all such proxies and other
instruments as the Grantor
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5
may reasonably request for the purpose of enabling the Grantor to
exercise the voting any other rights which it is entitled to exercise
pursuant to paragraph (i) above and to receive the dividends or interest
payments which it is authorized to receive and retain pursuant to
paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default or an event which, with the giving of notice or the lapse of time, or
both, would become an Event of Default:
(i) All rights of the Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights which it would otherwise
be entitled to exercise pursuant to Section 6(a)(i) shall, upon notice to
the Grantor by the Collateral Agent, cease and (y) to receive the dividends
and interest payments which it would otherwise be authorized to receive and
retain pursuant to Section 6(a)(ii) shall automatically cease, and all such
rights shall thereupon become vested in the Collateral Agent who shall
thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights and to receive and hold as Pledged
Collateral such dividends and interest payments.
(ii) All dividends and interest payments which are received by the
Grantor contrary to the provisions of paragraph (i) of this Section 6(b)
shall be received in trust for the benefit of the Collateral Agent, shall
be segregated from other funds of the Grantor and shall be forthwith paid
over to the Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement).
SECTION 7. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES. (a) The
Grantor agrees that it will not (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to, any of
the Pledged Collateral, or (ii) create or permit to exist any lien, security
interest, option or other charge or encumbrance upon or with respect to any of
the Pledged Collateral, except for the security interest under this Agreement.
(b) The Grantor agrees that it will (i) cause the Company not to
issue any stock or other securities in addition to or in substitution for the
Pledged Shares issued by the Company, except to the Grantor and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional shares of stock or other securities of the Company.
SECTION 8. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The Grantor
hereby appoints the Collateral Agent the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the Grantor
or otherwise, from time to time in the Collateral Agent's discretion to take any
action and to execute any instrument which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of
<PAGE>
6
this Agreement (subject to the rights of the Grantor under Section 6), including
without limitation to receive, indorse and collect all instruments made payable
to the Grantor representing any dividend, interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same.
SECTION 9. COLLATERAL AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Collateral Agent may itself perform,
or cause performance of, such agreement, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by the Grantor under
Section 13.
SECTION 10. THE COLLATERAL AGENT'S DUTIES. The powers conferred on
the Collateral Agent hereunder are solely to protect its interest in the Pledged
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Pledged Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Pledged Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not the Collateral
Agent or any Purchaser has or is deemed to have knowledge of such matters, or as
to the taking of any necessary steps to preserve rights against any parties or
any other rights pertaining to any Pledged Collateral. The Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which the Company
accords its own property.
SECTION 11. REMEDIES UPON DEFAULT. If any Event of Default shall
have occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
on default under the Uniform Commercial Code in effect in the State of
New York at that time (the "CODE") (whether or not the Code applies to the
affected Collateral), and may also, without notice except as specified
below, sell the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at
any of the Collateral Agent's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Collateral Agent may
deem commercially reasonable. The Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to the
Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.
The Collateral Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Collateral
Agent may adjourn any public or private sale from time to time by
announcement at the time and
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7
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) Any cash held by the Collateral Agent as Pledged Collateral and
all cash proceeds received by the Collateral Agent in respect of any sale
of, collection from, or other realization upon all or any part of the
Pledged Collateral may, in the discretion of the Collateral Agent, be held
by the Collateral Agent as collateral for, and/or then or at any time
thereafter be applied (after payment of any amounts payable to the
Collateral Agent pursuant to Section 13) in whole or in part by the
Collateral Agent for the ratable benefit of the Purchasers against, all or
any part of the Secured Obligations in such order as the Collateral Agent
shall elect. Any surplus of such cash or cash proceeds held by the
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
SECTION 12. REGISTRATION RIGHTS. If the Collateral Agent shall
determine to exercise its right to sell all or any of the Pledged Collateral
pursuant to Section 11, the Grantor agrees that, upon request of the Collateral
Agent, the Grantor will, at its own expense:
(a) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof
to execute and deliver, all such instruments and documents, and do or cause
to be done all such other acts and things, as may be necessary or, in the
opinion of the Collateral Agent, advisable to register such Pledged
Collateral under the provisions of the Securities Act, and to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Collateral Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested
by the Collateral Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earning statement which will satisfy the
provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof
valid and binding and in compliance with applicable law.
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8
The Grantor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by the Collateral Agent or the Purchasers by
reason of the failure by the Grantor to perform any of the covenants contained
in this Section and, consequently, agrees that, if the Grantor shall fail to
perform any of such covenants, it shall pay, as liquidated damages and not as a
penalty, an amount equal to the value of the Pledged Collateral on the date the
Collateral Agent shall demand compliance with this Section.
SECTION 13. EXPENSES. The Grantor will upon demand pay to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsels and of any experts and agents,
which the Collateral Agent may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent or the Purchasers
hereunder or (iv) the failure by the Grantor to perform or observe any of the
provisions hereof.
SECTION 14. SECURITY INTEREST ABSOLUTE. The obligations of the
Grantor under this Agreement are independent of the Secured Obligations, and a
separate action or actions may be brought and prosecuted against the Grantor to
enforce this Agreement, irrespective of whether any action is brought against
the Company or whether the Company is joined in any such action or actions. All
rights of the Collateral Agent and security interests hereunder, and all
obligations of the Grantor hereunder, shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of the Note Purchase
Agreement, the Notes or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Note
Purchase Agreement, any of the other Asset Purchase Documents or the Notes,
including, without limitation, any increase in the Secured Obligations
resulting from the extension of additional credit to the Company or any of
its Subsidiaries or otherwise;
(iii) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition
of any collateral for all or any part of the Secured Obligations or any
other assets of the Company or any of its Subsidiaries;
<PAGE>
9
(v) any change, restructuring or termination of the corporate
structure or existence of the Company or any of its Subsidiaries; or
(vi) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Grantor or a third party pledgor.
SECTION 15. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, and no consent to any departure by the Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Collateral Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 16. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and mailed, telecopied, telegraphed,
telexed, cabled or delivered to it, if to the Grantor, at its address specified
in the Note Purchase Agreement and if to the Collateral Agent, at its address
specified in the Note Purchase Agreement, or, as to either party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and other communications shall, when mailed,
telecopied, telegraphed, telexed or cabled, be effective when deposited in the
mails, telecopied, delivered to the telegraph company, confirmed by telex
answerback or delivered to the cable company, respectively.
SECTION 17. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER NOTE
PURCHASE AGREEMENT. This Agreement shall create a continuing security interest
in the Pledged Collateral and shall (i) remain in full force and effect until
the later of (A) the payment in full of the Secured Obligations and all other
amounts payable under this Agreement and (B) the date on which the Maximum
Revolving Amount shall be equal to zero, (b) be binding upon the Grantor, its
successors and assigns, and (c) inure, together with the rights and remedies of
the Collateral Agent hereunder, to the benefit of, and be enforceable by, the
Collateral Agent, the Purchasers and their respective successors, transferees
and assigns.
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10
Without limiting the generality of the foregoing clause (c), any
Purchaser may assign or otherwise transfer all or any portion of its rights and
obligations under the Note Purchase Agreement (including, without limitation,
all or any portion of its Maximum Revolving Commitment and any Note held by it)
to any other person or entity, and such other person or entity shall thereupon
become vested with all the benefits in respect thereof granted to such Purchaser
herein or otherwise, subject, however, to the provisions of Section 16 of the
Note Purchase Agreement. Upon the later of the payment in full of the Secured
Obligations and all other amounts payable under this Agreement and the
expiration or the date on which the Maximum Revolving Amount shall be equal to
zero, the security interest granted hereby shall terminate and all rights to the
Pledged Collateral shall revert to the Grantor. Upon any such termination, the
Collateral Agent will, at the Grantor's expense, return to the Grantor such of
the Pledged Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof and execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination.
SECTION 18. GOVERNING LAW; TERMS. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York. Unless
otherwise defined herein or in the Note Purchase Agreement, terms defined in
Article 9 of the Code are used herein as therein defined.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
THE ALPINE GROUP, INC.
By
--------------------------------------
Title:
<PAGE>
SCHEDULE I
Attached to and forming a part of the Pledge
Agreement dated May 11, 1995, by THE ALPINE GROUP,
INC., as Grantor, to NOMURA INTERNATIONAL TRUST
COMPANY, as Collateral Agent
Part I
1,000 shares of common stock, par value $.01 per share, of Superior TeleTec
Inc., a Georgia corporation, evidenced by certificate no. 2.
