<PAGE>
EXHIBIT INDEX
AT PAGE 38.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
/X/ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED APRIL 30, 1995
OR
/ /
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-9078
------------------------
THE ALPINE GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 22-1620387
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
1790 BROADWAY
NEW YORK, NEW YORK 10019-1412
(Address of principal (Zip code)
executive offices)
</TABLE>
Registrant's telephone number, including area code 212-757-3333
------------------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
--------------------------------------------------------------- -----------------------------
<S> <C>
Common Stock, par value $.10 per share......................... American Stock Exchange
13 1/2% Senior Subordinated Debentures due 1996................ American Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
At July 24, 1995, the registrant had 17,742,362 shares of common stock, par
value $.10 per share, outstanding, and the aggregate market value of the
outstanding shares of voting stock held by non-affiliates of the registrant on
such date was $74,946,134.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant's definitive proxy statement relating to
the 1995 Annual Meeting of Stockholders of the registrant, which will be filed
within 120 days after April 30, 1995, are incorporated by reference in Part III
of this Form 10-K.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
The Alpine Group, Inc. (together with its subsidiaries, unless the context
otherwise requires, "Alpine") is a diversified industrial company principally
engaged in the manufacture and sale of copper wire and cable for the
telecommunications industry, specialty refractory products for the iron and
steel, aluminum and glass industries and data communications and other
electronic products for military and commercial applications. Alpine has
positioned itself as a major participant in these industries through a series of
strategic acquisitions. Alpine entered the copper wire and cable industry with
the acquisition (the "Superior Acquisition") in 1993 of Superior
Telecommunications Inc., formerly Superior TeleTec Inc. ("Superior"), the fourth
largest North American manufacturer of telephone copper wire and cable products.
In May 1995, Alpine became one of the two largest North American manufacturers
of telephone copper wire and cable products with the acquisition (the "Alcatel
Acquisition") of the U.S. and Canadian copper wire and cable business (the
"Alcatel Business") of Alcatel NA Cable Systems, Inc. and Alcatel Canada Wire,
Inc. (collectively, "Alcatel NA"). In December 1994, Alpine acquired (the
"Adience Acquisition") Adience, Inc. ("Adience"), one of the largest domestic
manufacturers and installers of specialty refractory products. Alpine entered
the data communications and electronics industry with its acquisition of DNE
Technologies, Inc. ("DNE") in February 1992.
TELECOMMUNICATIONS WIRE AND CABLE. Copper telephone wire and cable products
remain the most widely used medium for transmission in the "local loop" portion
of the telephone network. The local loop is comprised of (i) the connection
between a home or business and the nearest telephone pole or other outside
location and (ii) the connection between the telephone pole or outside location
and the nearest telephone company switch, either at the telephone company's
central office or at a remote location. While the use of optical fiber
predominates in the market for intercity and interoffice cables, use of copper
wire in the local loop continues to satisfy the telephone and data transmission
needs of a substantial majority of homes and businesses at a lower cost to
install and maintain and without the additional power source and electronics
required by optical fiber applications.
Alpine manufactures a wide variety of copper telephone cable, outside
telephone wire and inside (or premises) wire products, ranging in size from a
single twisted pair wire to a 4,200 pair cable. These products are variously
configured for use in aerial, underground and on-premise applications. During
the fiscal year ended April 30, 1995, 76% of Alpine's pro forma net sales of
telephone wire and cable products were to six of the seven regional Bell
operating companies ("RBOCs") and the three major independent telephone
companies, primarily under long-term contracts. In addition to providing copper
wire and cable for use in the local loop, Alpine has recently developed
performance-enhanced copper wire products, including unshielded twisted pair
wire ("UTP") used inside buildings for high speed data communications in
computer networks. This product is currently experiencing higher growth and is
generally sold at higher margins than traditional copper wire and cable
products.
As a result of the Alcatel Acquisition, Alpine's net sales of wire and cable
products for the fiscal year ended April 30, 1995 increased from $136.6 million
on an historical basis to $340.8 million on a pro forma basis. Based on the most
recently available data published by the U.S. Department of Commerce, Alpine
estimates that its pro forma share of the domestic production of copper
telephone cable and outside telephone wire was approximately 30% in 1993. Alpine
believes that its wire and cable business will benefit from the Alcatel
Acquisition through significant economies of scale, as well as through cost
savings from the reduction of certain freight, personnel and other costs. In
addition, Alpine's annual production capacity increased from 28 billion
conductor feet ("bcf") in one plant to 85 bcf in four plants. Alpine believes
that overcapacity in the industry, which has existed in recent years, has been
reduced as a result of the 1994 closure of a large plant operated by a
competitor and, more recently, as a result of greater demand for copper wire and
cable products. Alpine attributes this greater demand in large part to (i)
higher levels of
2
<PAGE>
spending on maintenance by telephone companies to offset their reduced
maintenance levels in the early 1990s, (ii) demand for new telephone lines
resulting from new construction and (iii) demand for second telephone lines and
lines dedicated to facsimile machines and computer modems.
REFRACTORIES. Alpine is one of the largest U.S. manufacturers and
installers of specialty refractory products, which are used primarily by the
iron and steel industry, with pro forma net sales for this business of $100.9
million for the fiscal year ended April 30, 1995. Specialty refractory products
are consumable materials used as insulation on surfaces exposed to high
temperatures such as those generated by molten metals. Over the past year,
Alpine has provided refractory products and services to every integrated steel
producer in the United States and Canada and Alpine believes that it is the only
major U.S. manufacturer that provides a full range of refractory products and
installation services to the iron and steel industry. Alpine also manufactures
specialty refractory products for use in the production of aluminum and glass
and is one of the few rebuilders of coke ovens in the United States.
DATA COMMUNICATIONS AND ELECTRONICS. Alpine, through DNE, designs,
manufactures and tests data communications and other electronic products for the
military, government and commercial markets. Net sales for this business were
$27.9 million for the fiscal year ended April 30, 1995. Alpine is the largest
supplier to the U.S. military of data and voice multiplexers used in tactical
secure military applications. Multiplexers are communication devices that
combine several information carrying channels into one line, thereby permitting
simultaneous multiple voice and data communications over a single line. Alpine
also produces military avionic products, including switches, dimmers, relays and
other electrical controllers, various sensors and refueling amplifiers. Since
1993, Alpine has reduced its dependence on the military market primarily through
the development of contract manufacturing services for governmental (non-
military) and commercial customers. For the fiscal year ended April 30, 1995,
sales to customers other than the U.S. military accounted for 42.8% of the net
sales of this business.
Alpine believes that, although the copper telephone wire and cable and
refractory products industries are mature, ongoing alignment of productive
capacity with market demand, industry consolidation and Alpine's emphasis on
new, higher margin product offerings will provide Alpine with the opportunity to
strengthen its profitability, cash flow and competitive position. Alpine's
strategy in the copper wire and cable business is to continue to provide a full
line of its traditional copper wire and cable products to its present customers;
expand into performance-enhanced, higher growth and higher margin copper wire
products for sale to existing and new customers; and expand its international
marketing efforts. Alpine's strategy in the refractories business is to complete
the restructuring and rationalization of this business; expand the types of
products and services that it supplies to its existing customers; and expand its
marketing efforts in order to sell its products to new domestic and foreign
customers. Alpine's strategy in its data communications and electronics business
is to maintain its dominant position as a supplier to the military of
multiplexers used in tactical secure applications; continue to adapt its
products for commercial applications; and increase its contract manufacturing
business.
On June 14, 1995, Alpine distributed to its stockholders (the "PolyVision
Spin-Off") shares of common stock of its information display subsidiary,
PolyVision Corporation ("PolyVision") (American Stock Exchange: "PLI"). Alpine
currently owns approximately 19.0% of the outstanding PolyVision common stock
and 98% of its preferred stock. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" for a description of
certain transactions which may result in the reduction of Alpine's ownership of
PolyVision common stock. PolyVision manufactures and sells custom-designed and
engineered writing and projection surfaces, and is developing a proprietary
electrochemical display technology with characteristics to address applications
in markets such as flat-panel displays and certain packaging applications.
PolyVision had net sales of $37.5 million for the fiscal year ended April 30,
1995 on a pro forma basis. Prior to the PolyVision Spin-Off, two other Alpine
subsidiaries, Alpine PolyVision, Inc. ("APV") and Posterloid Corporation
("Posterloid"), were merged into subsidiaries of PolyVision (the "PolyVision
Merger"). The PolyVision Merger and the PolyVision Spin-Off are collectively
referred to as the "PolyVision Transactions." For all periods presented herein,
APV and Posterloid are reflected as discontinued operations and PolyVision is
reflected as an asset held for disposition.
3
<PAGE>
Alpine was incorporated in New Jersey on May 7, 1957 and reincorporated in
Delaware on February 3, 1987. Its principal executive offices are located at
1790 Broadway, New York, New York 10019-1417 and its telephone number is (212)
757-3333.
RECENT DEVELOPMENTS; THE REFINANCING
On July 21, 1995, Alpine completed the private offering of $153.0 principal
amount of its 12 1/4% Senior Secured Notes due 2003 (the "Notes") at an initial
price to investors of 91.737% of the principal amount thereof, with net proceeds
of approximately $134.3 million (the "Offering"). In connection with the
Offering, Alpine entered into a new bank credit agreement (the "New Credit
Agreement") with certain institutional lenders, under which Alpine may borrow up
to $85.0 million at any one time, if certain conditions are met. Loans under the
New Credit Agreement constitute senior debt guaranteed by certain of Alpine's
subsidiaries. The loans and guarantees under the New Credit Agreement are
secured primarily by the inventory and accounts receivable of Alpine and such
subsidiaries.
Alpine has used, or intends to use, the net proceeds of the Offering,
together with borrowings under the New Credit Agreement and a portion of its
cash reserves, in the following transactions (collectively, the "Refinancing"):
(1) On July 21, 1995, Superior repaid in full the $140.0 million aggregate
principal amount of notes (the "Alcatel Acquisition Notes") issued in May 1995
to certain institutional investors. The net proceeds of the Alcatel Acquisition
Notes ($135.4 million after the payment of certain fees and expenses) were used
as follows: (i) to pay $93.0 million in cash to Alcatel NA as part of the
purchase price for the Alcatel Acquisition; (ii) to repay borrowings under
Superior's bank credit agreement in full, which amounted to $21.9 million at
April 30, 1995 and $22.6 million at the time of repayment; (iii) to pay
acquisition expenses estimated at $0.5 million; and (iv) to pay the balance (an
estimated $19.3 million) to Superior for working capital and general corporate
purposes. Superior's existing bank credit agreement was terminated.
(2) In connection with the Alcatel Acquisition, $10.3 million of the
purchase price was deferred. This deferred amount is subject to adjustment based
upon the completion of a closing balance sheet audit, does not bear interest and
is due on August 11, 1995. This amount will be paid on its due date as part of
the Refinancing.
(3) On July 21, 1995, Adience retired $44.1 million aggregate principal
amount of its 11% Senior Secured Notes due 2002 (the "Adience Senior Notes"),
plus accrued interest, for $36.8 million in cash (plus other non-cash
consideration) pursuant to a debt exchange agreement entered into in connection
with the Adience Acquisition in December 1994 (the "Debt Exchange Agreement")
with the holders of 89.8% of the Adience Senior Notes. The retired Adience
Senior Notes had an accreted value of $39.8 million at April 30, 1995. Adience
Senior Notes in the principal amount of $5.0 million (with an accreted value of
$4.6 million at April 30, 1995) remained outstanding after consummation of the
Offering.
(4) On July 21, 1995, Adience terminated its revolving credit facility (the
"Adience Credit Facility") and repaid all amounts outstanding thereunder, which
were $12.3 million at April 30, 1995 and were $10.1 million on July 21, 1995.
(5) Alpine acquired the 12.8% of Adience's common stock not owned by Alpine
pursuant to the merger on July 21, 1995 of a wholly-owned subsidiary of Alpine
into Adience. Alpine will pay the former Adience stockholders $1.6 million in
cash.
(6) In connection with Alpine's acquisition of DNE in February 1992, Alpine
issued a subordinated note to the seller (the "DNE Acquisition Note"). The DNE
Acquisition Note had a balance of $2.5 million at April 30, 1995 and will be
repaid as part of the Refinancing. If the DNE Acquisition Note is paid prior to
August 14, 1995, it may be repaid for $2.2 million.
(7) DNE will terminate its revolving credit facility (the "DNE Credit
Facility") and repay all amounts outstanding thereunder, which were $0.6 million
at April 30, 1995.
(8) On July 21, 1995, Alpine redeemed in full its 13.5% Senior Secured Notes
due January 5, 1996 (the "Alpine 13.5% Senior Notes"). The Alpine 13.5% Senior
Notes were issued in January 1995 in the aggregate principal amount of $21.0
million and, at April 30, 1995, had an accreted value of $20.8 million.
4
<PAGE>
(9) On July 21, 1995, Alpine redeemed in full its 13.5% Senior Subordinated
Debentures due October 1, 1996 (the "Alpine 13.5% Debentures"). The Alpine 13.5%
Debentures were issued in 1986 and were in the aggregate principal amount of
$1.6 million.
(10) Alpine will repay other current indebtedness of $0.2 million.
(11) Alpine loaned $3.3 million to PolyVision to enable PolyVision to repay
all amounts due under its revolving credit facility and under its outstanding
equipment loan.
COPPER WIRE AND CABLE BUSINESS
COPPER TELEPHONE WIRE AND CABLE INDUSTRY
The telephone network in the United States is comprised of three major
distribution components: the distribution or local loop portion, the trunking
portion and the long distance portion. The local loop part of the telephone
network is comprised of (i) the connection between a home or business and the
nearest telephone pole or other outside location and (ii) the connection between
the telephone pole or outside location and the nearest telephone company switch,
either at the telephone company's central office or at a remote location. The
trunking portion of the network connects telephone central offices and remote
switch locations to each other and provides some intercity connections, while
the long distance portion of the telephone network also connects cities.
Historically, all three major components of the telephone network in the
United States were comprised of copper wire and cable products. The commercial
development of optical fiber and other new technologies for the distribution of
voice and data communications (including microwave, satellite and cellular
transmission technologies) have had an impact on the market for copper telephone
wire and cable. Optical fiber is currently the transmission medium of choice of
the telephone companies for trunking applications and in the long distance
network. To a lesser degree, optical fiber has been deployed in high-density
feeder applications between telephone central offices or remote locations and
major distribution points, which has further reduced the total market for copper
telephone wire and cable. Copper telephone cable products are used primarily by
the telephone companies in the distribution or local loop part of the telephone
network, connecting the telephone pole or other location outside a home or
business to the nearest telephone company switch. Copper telephone wire products
are then used to connect an individual home or business to the nearest telephone
pole or other outside location.
The copper telephone wire and cable industry manufactures a variety of cable
products, which are used in direct burial or aerial applications, predominantly
in the local loop. The industry also manufactures several types of copper
telephone wire products, including: (i) outside service wire, which is also
referred to as telephone distribution wire, used in direct burial or aerial
applications mainly to connect a home or business to the nearest telephone pole
or other outside location and (ii) inside or premise wire used within a building
to connect various telephone devices to the telephone network.
The basic unit of virtually all copper telephone wires and cables is the
"twisted pair," a pair of insulated wires twisted around each other. Both wires
in the pair are used to complete the telephone connection. Twisted pairs are
bundled together to form telephone wires and cables. In calculating bcf, the
length of each wire in a twisted pair is counted.
Based on the most recently available data published by the U.S. Department
of Commerce, Alpine estimates that domestic production of copper telephone cable
and outside service wire was $1.1 billion in 1993. A substantial majority of the
copper telephone cable and outside service wire sold in the United States is
purchased by the RBOCs and other domestic telephone companies. Prior to the
break-up of AT&T in 1984, it was the sole supplier of copper telephone wire and
cable products to its operating companies. However, after the break-up, the RBOC
market became open to all suppliers. An estimated 5% to 10% of industry sales
are in the export markets. Small amounts of these products are sold to the
military, other government agencies, construction companies and in the homeowner
market. Greater proportions of premises wire are sold to contractors and in the
homeowner market. It is estimated that the seven RBOCs (Ameritech Corporation,
Bell Atlantic Corporation, BellSouth Corporation, NYNEX Corporation, Pacific
Telesis Group, SBC Communications, Inc. (formerly Southwestern Bell) and U.S.
West, Inc.) purchase
5
<PAGE>
approximately 60% of the copper telephone cable and outside service wire
purchased by U.S. telephone companies, while three major independent telephone
holding companies (Alltel Corporation, GTE Corporation and Sprint Corporation)
purchase an additional 25%, and over 1,200 small local telephone operating
companies purchase the remainder.
Demand for copper telephone wire and cable is dependent on several factors,
including the rate at which new lines are installed in homes and businesses
("access lines"); the level of spending for highways, bridges and other parts of
the infrastructure, which often necessitates installation of new telephone
cables; and the level of general maintenance spending by telephone companies.
The installation of new access lines is in turn dependent on the level of new
construction and, increasingly in recent years, on demand for second telephone
lines and lines dedicated to facsimile machines and computer modems.
Alpine believes that overcapacity, which has existed in the industry in
recent years, has been reduced as a result of the 1994 closure of the Atlanta
manufacturing facility of AT&T and, more recently, as a result of increased
demand for copper telephone wire and cable products. Alpine attributes this
increased demand in large part to higher levels of spending on maintenance by
telephone companies to offset their reduced maintenance levels in the early
1990s and demand for new telephone lines associated with new construction and
second telephone lines and dedicated lines.
Copper telephone wire and cable currently provide virtually all local loop
service in the United States, and Alpine believes that these products will
continue to satisfy the telephone and data transmission needs of the substantial
majority of homes and businesses in the United States. Copper telephone wire and
cable products are simpler and less expensive to install and maintain than
optical fiber products. In addition, copper conducts electricity, while optical
fiber is nonconductive and requires a separate power source. As a result, copper
wire connects directly to existing telephone devices (such as telephones,
facsimile machines and computer modems), while optical fiber requires a device
to convert the optical signals transmitted over the fiber to the electrical
signals required by a consumer's telephone devices.
Alpine believes that recent advances in data compression technologies, which
are increasing the throughput capability of the installed base of copper
telephone wire and cable, will minimize the need for the majority of the RBOCs
to make a significant investment in optical fiber in the local loop in the near
future. However, some telephone companies are exploring the provision of video
entertainment and other new services in addition to basic telephone services. As
a result, the telephone companies have been evaluating (and in isolated cases
installing on a test basis) alternative technologies for providing such
services, including coaxial and optical fiber cable applications. These and
other technologies have had, and will continue to have, an impact on the market
for copper telephone wire and cable. A relatively small decline in the level of
purchases of copper wire and cable by the RBOCs and other telephone companies
could have a disproportionately adverse effect on the copper wire and cable
industry, including Alpine.
ALPINE'S COPPER WIRE AND CABLE PRODUCTS
Alpine's copper telephone cable products range in size from small six-pair
cables to cables as large as 4,200 pairs and are further differentiated by
design variations depending on where the cable is to be installed. Cable
products used for direct underground burial are designed to be water resistant
and are filled with compounds to prevent moisture from getting into the cable
structure. The individual copper wires in these cables utilize either a solid
polyethylene or polypropylene insulation or cellular polyethylene covered with a
solid polyethylene skin. Cable products used for underground duct or aerial
applications, where water penetration is not a major concern, are designed with
solid polyethylene insulation and no filling compound. The copper telephone
cable products normally have metallic shields for electrical and mechanical
protection and electromagnetic shielding of the copper wires, as well as an
outer polyethylene jacket. Copper telephone cable represented approximately 75%
of Alpine's pro forma wire and cable net sales for fiscal 1995.
Alpine's outside service wire products range in size from a single twisted
pair to a six-pair product. Similar to copper cable products, outside service
wire products are designed for both direct burial and aerial applications and
are also manufactured in a variety of designs, including a number of different
metallic shield configurations and several different jacketing materials.
Outside service wire represented approximately 23% of Alpine's pro forma wire
and cable net sales for fiscal 1995.
6
<PAGE>
Alpine's copper telephone wire for interior use, or premises wire, generally
ranges in size from a single twisted pair to a four-pair product. Premises wire
is used within buildings to connect telephone devices (telephones, facsimile
machines and computer modems) to the telephone network and, in commercial
buildings, to establish local area networks. All of Alpine's premises wire has
been listed by Underwriters' Laboratories, which is required by most local
building codes. Construction of premises wire differs from outside wire and
cable. For instance, premises wire must be flame retardant, but does not need to
be water resistant. Premises wire represented approximately 2% of Alpine's pro
forma wire and cable net sales for fiscal 1995.
NEW PRODUCTS
An important element of Alpine's strategy in its wire and cable business is
to expand into performance-enhanced, higher growth and higher margin
copper-based wire products for sales to existing and new customers and Alpine
has introduced a number of products. Alpine seeks to provide a full range of
products to its major customers in order to retain and increase its market
share.
UNSHIELDED TWISTED PAIR COPPER WIRE PRODUCTS. In July 1994, Alpine
commenced deliveries of its line of unshielded twisted-pair copper wire products
for high-speed data transmission (high-performance UTP). In recent years, there
has been a significant increase in demand for private data networks, and
particularly for networks that can operate at higher data rates than could
previously be achieved by traditional twisted-pair copper wire technology. Until
recently, the demand for high-speed data networks could only be met by
deployment of optical fiber, which along with a number of advantages, has
significant shortcomings, including the need for electronic components and more
difficult and costly installation and maintenance. UTP was first introduced in
the early 1990s as an alternative to optical fiber in data networking
applications. UTP combines the advantages of copper wire (less costly, easier
maintenance and installation and the ability to transmit both data and power)
along with data transmission rates of 100 megabits per second ("mbps") and
higher, rates that could previously be achieved only with fiber optic
technology. While fiber optic technology can now attain transmission rates well
in excess of 100 mbps, Alpine does not believe that there is a need for
transmission rates of this magnitude in most private data networks (other than
trunking applications). Therefore, Alpine believes that UTP's performance
capabilities are sufficient to address a substantial portion of the market for
private data networks requiring high-speed transmission rates.
There are a large number of manufacturers of UTP and competition for this
product is based on quality, price and product availability.
ADP NMS PRODUCTS. Aerial Drop Products ("ADP") are outside service wires
used to connect a home or business to an adjacent telephone pole. Typically,
such products have consisted of two copper clad steel conductors. ADP NMS
("Non-Metallic Support") wires are used for the same product application, with
fiberglass yarn instead of the steel conductor and twisted-pair copper wires
instead of the copper cladding. ADP NMS products were first shipped by Alpine to
its customers in August 1994. The use of multiple twisted-pair copper wires in
this application provides better transmission characteristics and permits the
use of one ADP NMS wire for the connection of multiple telephone lines to one
home or business, rather than the multiple ADP wires which were previously
required for this purpose. There are a number of competing suppliers of ADP NMS.
HYBRID PRODUCTS. Hybrid products combine the use of twisted-pair copper
wires with coaxial cable and were introduced by Alpine to its customers in April
1995. These hybrid products are available as either outside service wires or
telephone cables and offer coaxial cable's benefits of greater bandwidth and
higher data transmission rates for video together with copper wire's benefits of
low cost and the ability to provide a power source. This product is being
installed by some telephone companies as part of their ongoing installation of
underground telephone cables, even though the companies are not currently using
the new hybrid product for television transmissions.
RISER PRODUCTS. In April 1995, Alpine began supplying "risers," copper
wires used inside high-rise buildings or telephone company central offices to
provide each floor with vertical connections for telephone and data
transmissions. Alpine entered the market for riser products in order to provide
the full-range of copper wire and cable products utilized by its major
customers.
7
<PAGE>
MARKETING AND DISTRIBUTION
During fiscal 1995, on a pro forma basis, 76% of Alpine's telephone wire and
cable net sales were to the RBOCs and major independent telephone companies, 5%
were sold outside the United States and Canada and the remaining 19% were sold
to other telephone companies in the United States and Canada, construction
companies and others. The comparable figures for fiscal 1994 were 73%, 10% and
17%, respectively.
Alpine sells to the RBOCs and other major independent telephone companies on
a direct basis through a sales force of five salespersons. The remainder of
Alpine's products is sold through distributors, original equipment manufacturers
and sales representatives and agents, including sales representatives in South
America. Alpine believes that there will be opportunities for international
expansion of its wire and cable business, as developing countries install and
upgrade existing telephone systems, although a number of countries, including
most European countries, have different technical specifications, tariffs and
other restrictions that limit importation of copper wire and cable products from
North America.
Alpine's sales to telephone companies are generally pursuant to multi-year
supply agreements in which the customer agrees to have Alpine supply certain of
the customer's wire or cable needs as the primary supplier during the term of
the agreement. Prior to awarding a contract, customers forecast their wire and
cable needs and manufacturers such as Alpine bid and quote prices based upon the
forecasted order amount, although customers are not obligated to purchase the
forecasted amount. Alpine currently has long-term agreements with respect to
certain of its wire and cable products with six of the seven RBOCs and with the
three major independent telephone companies. For fiscal 1995, on a pro forma
basis, sales to Sprint Corporation, BellSouth Corporation, GTE Corporation, and
SBC Communications, Inc. (formerly Southwestern Bell) accounted for 21.6%,
15.6%, 14.3% and 10.2% of Alpine's net sales of wire and cable products,
respectively. No other single customer accounted for more than 10% of Alpine's
wire and cable sales. Additionally, as is customary in the industry, most of
Alpine's sales to customers other than large telephone companies are on the
"spot" market on the basis of short-term purchase orders.
MANUFACTURING PROCESS AND QUALITY CONTROL
Copper rod is the base component for most of Alpine's wire and cable
products. The manufacturing processes for these products require that the copper
rod be drawn and insulated. Alpine purchases copper rod of 5/16" diameter from
third-party suppliers. Alpine then "draws" the wire to one of four American wire
gauges (I.E., standard diameters or "AWGs"). Wire drawing is the process of
reducing the conductor diameter by pulling the copper rod through a converging
die until the specified AWG is attained. Since the reduction is limited by the
breaking strength of the conductor, this operation is repeated several times
internally within the machine. As the wire becomes smaller, less pulling force
is required. Therefore, machines operating in specific size ranges are required.
Take-up containers or spools are generally large, allowing one person to operate
several machines. Wire products are then typically insulated with plastic
compounds through an extrusion process. Alpine uses five primary types of
insulating material compounds: high density polyethylene, high density cellular,
flame retardant polyethylene, fluoropolymers and polyvinyl chloride. Extrusion
involves the feeding, melting and pumping of a compound through a die to shape
it in final form as it is applied to insulate the wire. Alpine purchases these
insulating compounds from a variety of suppliers.
Alpine's products also require that the wire be "twisted" so that two
insulated single conductors are combined to create a twisted pair. Alpine's
products are often "cabled" or "stranded" so that multiple twisted pairs of
insulated wires are combined to form larger units of multiple pair cables.
Typically, cabling or stranding is done only on large (E.G., 25 or more) numbers
of pairs. Smaller numbers of pairs (E.G., fewer than 25) are not cabled, but are
sent directly for jacketing.
Once insulated, Alpine's copper and wire cable products are "jacketed" or
covered through the application of filling, flooding and shielding compounds to
the insulated wire. Products to be installed underground are protected by
metallic shielding (E.G., aluminum or steel) for electrical and mechanical
isolation and by plastic compounds of polyvinyl chloride or polyethylene for
protection against water and other sources of corrosion and interference. After
the wire and cable products are fabricated, they are packaged and shipped either
directly to customers or to distributors.
8
<PAGE>
RAW MATERIALS
The principal raw materials used by Alpine in the manufacture of its wire
and cable products are copper, aluminum, bronze, steel and plastics such as
polyethylene and polyvinyl chloride. These raw materials are available from
several sources and Alpine has not experienced any shortages of these raw
materials in the recent past. However, the production of UTP products is
dependent upon teflon, which is currently manufactured by only two producers and
is in short supply. As a result, Alpine has had to limit its production of UTP.
However, one of those producers has indicated that it intends to increase its
production capacity. From time to time, particular plastics have been difficult
to obtain, but in recent years none of these shortages has required Alpine to
limit production. The inability of Alpine to obtain sufficient quantities of raw
materials may adversely affect its operating results.
The cost of copper, the most significant raw material used by Alpine in its
wire and cable business, has been subject to considerable volatility over the
past several years. However, this volatility has not had, nor is it expected to
have, an impact on Alpine's profitability due to customers' contractual
arrangements that provide for the pass-through of changes in copper costs
through price revisions. Nevertheless, sharp increases in the price of copper
can reduce demand if telephone companies decide to defer their purchases of
copper telephone wire and cable products until copper prices decline.
As part of the Alcatel Acquisition, Alpine entered into an agreement with
Alcatel NA under which Alcatel NA's Montreal rod mill facility is supplying the
copper rod requirements of Alpine's Winnipeg plant at prevailing market prices.
This arrangement is subject to renegotiation or termination annually.
COMPETITION
The copper telephone wire and cable business is very competitive. Alpine has
three major domestic competitors in the copper telephone wire and cable
business: AT&T Network Cable Systems, Inc., a subsidiary of AT&T Corporation;
General Cable Corporation, a subsidiary of Wassall, plc; and Essex Group
Incorporated, a subsidiary of BCP/Essex Holding, Inc. The parent of each of
these competitors is a large company having significant financial resources.
Competition in this market is based primarily on price and, to a lesser degree,
on quality and service. Several RBOCs have adopted policies of limiting the
number of their suppliers and requiring that these suppliers provide additional
services. As a result, Alpine and other copper wire and cable producers
increasingly compete on the basis of service, as well as price.
BACKLOG
As of April 30, 1995, Alpine's wire and cable business backlog (on a pro
forma basis) was $46.4 million as compared to $27.0 million as of April 30,
1994. The backlog represents firm orders that are expected to be filled in the
upcoming fiscal year. Since Alpine generally operates on short lead times and
often ships wire and cable products directly from inventory to its customers,
Alpine does not believe that backlog is indicative of future financial
performance.
REFRACTORY PRODUCTS AND SERVICES
GENERAL
Alpine, through Adience, is one of the largest manufacturers and installers
of specialty refractory products in the United States. Refractory products are
consumable materials used as insulation on surfaces exposed to high
temperatures, such as those generated by molten metals. The manufacture,
installation and maintenance of specialty refractory products to the iron and
steel industry represented over 80% of the net sales of this business for fiscal
1995. Alpine is also among the leading manufacturers in the United States of
specialty refractory products for use in the production of glass and aluminum
and is one of the few rebuilders of coke ovens in the United States.
Adience was formed in 1985 and, through 1990, it acquired 12 largely
unrelated businesses. Many of these businesses were unprofitable and were
eventually sold. Construction of unnecessary production capacity and excessive
leverage and working capital levels, among other factors, led Adience to file a
prepackaged plan of reorganization under Chapter 11 of the United States
Bankruptcy Code in February 1993 (the "Reorganization").
9
<PAGE>
The Reorganization adjusted, but did not fundamentally restructure,
Adience's operations or capital structure in a manner sufficient to assure
long-term profitability. In late 1993, Alpine acquired an equity interest in
Adience and in April 1994 the Chairman of the Board of Alpine and another
director of Alpine were elected to the Board of Directors of Adience and a new
management team was put into place. In December 1994, Alpine increased its
ownership to 87.2% of the outstanding common stock of Adience. Alpine and the
new Adience management team have substantially implemented a number of strategic
initiatives to improve the profitability of Alpine's refractory business,
including: (i) cost reduction programs involving the consolidation of
manufacturing and general and administrative operations, discontinuation of
unprofitable product lines and elimination of duplicative overhead; (ii)
improved marketing efforts to penetrate broader end-user and geographic markets;
(iii) new product development and (iv) realignment of the sales force. In
connection with the foregoing, Alpine has: (i) eliminated unprofitable products
from Adience's product line; (ii) increased the prices of a number of Adience's
products; (iii) entered into a contract to sell Adience's former corporate
headquarters and closed a plant in Ohio; and (iv) consolidated production at a
number of Adience's plants.
REFRACTORY PRODUCTS AND SERVICES
Alpine manufactures a wide range of refractory products and specializes in
producing refractory materials that are custom designed for specific industrial
applications and customers. The principal products are monolithic (unformed)
refractory materials, slide gates, bottom pour refractories and bricks and
blocks. Alpine also provides installation and maintenance services for its
customers. Monolithic refractory materials are cement-like materials that are
mixed with water on the customer's premises and applied to surfaces exposed to
high temperatures. Slide gates and bottom pour refractories are pre-formed units
that allow the discharge of molten metal from the bottom of the furnace, rather
than from the top, resulting in reduced iron and steel impurities. Alpine
manufactures a wide range of bricks and blocks, which are used to line
industrial furnaces. Because of the high temperatures involved in the
manufacturing and movement of molten iron and other molten materials, the
equipment employed in such processes must utilize linings made of refractory
products, which deteriorate and must be repaired or replaced frequently. The
largest customer for Alpine's refractory products and services is the iron and
steel industry, followed by the glass, aluminum, cement and co-generation
industries.
Certain of Alpine's refractory products are used to line furnaces, troughs,
runways and other surfaces exposed to molten glass or the molten tin used in the
float glass method of production. All of these products are manufactured
according to customer specifications. In addition, certain of Alpine's
refractory products are distinguished by their resistance to corrosion.
Corrosion resistance is particularly important in the glass industry where,
unlike the steel industry, certain refractory products are designed to last for
up to 10 years.
The manufacturing process for specialty refractory products involves the
mixing and, in some cases, the kiln firing of various raw materials,
particularly fireclays and minerals such as bauxites and aluminas. Alpine
operates eight principal refractory plants located near major industrial centers
in the United States and Canada. Alpine designs its refractory products for
specific applications and customer needs.
Alpine also provides a variety of services, primarily to its iron and steel
customers: it installs refractory products manufactured by it and others; it
provides on-site maintenance of refractory products; and it rebuilds coke ovens
The ability to react quickly to customer requests for products or installation
and maintenance services is particularly important in the refractory industry
because of the extremely high cost of manufacturing downtime in the iron and
steel industry. Consequently, Alpine maintains refractory service facilities
located near its major customers in the United States and Canada. Each facility
has the equipment and skilled staff required for the installation and
maintenance of refractory products. Other personnel required for installation
projects are hired on an as-needed basis from readily available local union
labor pools and are employed by Alpine only for the duration of each job.
One of Alpine's strategic initiatives in the refractories business is to
extend sales of its refractory products and services into the steel making phase
of the integrated iron and steel mills. Currently, Alpine supplies its products
and services primarily to the iron making and handling area of an integrated
iron and steel mill. The steel ladle and continuous casting phases utilize
substantially greater amounts of refractory
10
<PAGE>
products than Alpine's traditional area of focus and therefore represent a
potential area for growth. To strengthen Alpine's leadership position in the
monolithic refractory business, Alpine is also emphasizing the use of shotcrete
technology in the installation of its unformed refractory materials. This
technology permits a lower cost and faster installation of monolithic refractory
materials in applications previously dominated by brick refractories. Alpine is
developing robotic application equipment permitting the installation of
refractories at higher temperatures than currently possible, thereby resulting
in less facility downtime.
MARKETING AND DISTRIBUTION
The iron and steel industry has historically been the major consumer of
Alpine's refractory products and services. For fiscal 1994 and 1995, direct
sales to the iron and steel industry accounted for 57% and 64%, respectively, of
refractory product net sales. Other customers for Alpine's specialty refractory
materials are the glass, aluminum, cement and cogeneration industries. Alpine
also sells its refractory products to other refractory contractors and buys
refractory products produced by other manufacturers in performing its
contracting services.
Within the iron and steel industry, Alpine's principal customers have
traditionally been the largest companies in the industry. USX--US Steel Group,
Inc., Bethlehem Steel Corporation and LTV Steel Company, Inc. together accounted
for approximately 27% and 31% of the net sales of this business segment for
fiscal 1994 and 1995, respectively. USX--US Steel Group, Inc., alone accounted
for 10% and 13% of this business segment's net sales during fiscal 1994 and
1995, respectively. Each of the other companies accounted for less than 10% of
this business segment's net sales during such periods. Marketing of Alpine's
refractory products is conducted by a sales force working out of 15 sales
offices located in eight states.
COMPETITION
In the production of refractory materials, Alpine competes with a number of
companies, including North American Refractories Co., INDRESCO Inc., A.P. Green
Industries, Inc., National Refractories Co. and Premier Refractories &
Chemicals, Inc., some of which are larger than Alpine.
Alpine's primary competitors in the installation of refractory products are
in-house employees of iron and steel companies and also regional refractory
service contractors which, unlike Alpine, do not engage in the production of
such materials. Other major refractory producers typically contract with these
regional companies to install the product, or their customers install the
products themselves. Competition is based primarily on service, price and
product performance. Alpine believes that its ability to produce, install and
maintain its refractory products without dependence upon third parties
strengthens its competitive position.
RAW MATERIALS
In manufacturing its specialty refractory products, Alpine uses more than
100 different raw materials which come from a variety of sources, the majority
of which are obtained within the United States. Some of the more important raw
materials are alumina, bauxite, silicon carbide, calcium aluminate cements and
clays. The number of sources of supply varies with each raw material. Alpine
believes that it is not dependent in its manufacturing processes on any one
source of supply.
BACKLOG
Alpine's refractory business operates on releases from blanket orders and,
therefore, does not have a significant amount of backlog orders, except in the
case of certain refractory products used by the glassmaking industry which had
$3.2 million and $6.5 million in backlog at April 30, 1994 and 1995,
respectively. Generally, customers place orders on the basis of their
short-range needs for which sales are made out of inventory or manufactured on a
just-in-time basis.
DATA COMMUNICATIONS AND OTHER ELECTRONIC PRODUCTS
Alpine designs, manufactures, tests and markets data communication and other
electronic products for the military, government and commercial sectors. Since
1993, Alpine has successfully reduced its dependence on the military market
through the development of products and services for non-military applications,
as well as contract manufacturing services for governmental (non-military) and
commercial customers.
11
<PAGE>
MILITARY PRODUCTS
Products for the military market have traditionally represented most of
Alpine's sales of data communications and other electronic products and systems
and include data and voice multiplexers, communication products, electronic
avionics equipment and electronic printers.
Alpine is the largest supplier to the U.S. military of data and voice
multiplexers used in tactical secure military applications. Multiplexers are
communication devices that can combine several individual information carrying
channels into one line, thereby permitting simultaneous multiple voice and data
communications over a single line. Alpine's military multiplexer product line
includes "TEMPEST" accredited multiplexers, cryptographic equipment and signal
terminating units used for voice and data communications, both in tactical
environments (field applications) and in secure office environments.
Alpine's avionic products include electrical controllers (switches, dimmers,
flashers and relays), aerial refueling amplifiers and various sensors (oil
temperature, liquid level and ice detection) which are used in military
aircraft. Alpine has contracts for the development of new ice detectors for the
F-18 aircraft, a dimmer for the new Comanche helicopter and an aerial refueling
amplifier for the proposed F-22 aircraft.
Alpine's electronic printer product line includes "TEMPEST" certified dot
matrix and drum printers which are used in both technical environments and
secure office environments. As a result of technological advances, demand for
these printers has declined and Alpine is de-emphasizing this business.
Alpine's products for the military market are sold on a direct basis to the
military or through government prime contractors and government agencies. Alpine
competes with a number of companies that provide electronic products and
components to the military, many of which are large companies or divisions of
large companies that have greater financial resources than Alpine. For fiscal
1995, sales to the military accounted for 56.9% of the net sales of this
business segment, of which sales of multiplexers accounted for 49.7%.
CONTRACT MANUFACTURING SERVICES
Alpine provides contract manufacturing and component performance testing
services to governmental (non-military) and commercial customers. Alpine is
currently providing contract manufacturing services to four OEMS. In addition to
traditional contract manufacturing services, Alpine was awarded a multi-year
contract from the National Aeronautics and Space Administration for the assembly
and testing of Hardware Interface Modules which are integrated with other
equipment to support the information processing of critical launch functions for
the space shuttle at the Kennedy Space Center. For fiscal 1995, contract
manufacturing and component testing services accounted for 37.9% of this
business segment.
COMMERCIAL APPLICATIONS
Consistent with its strategy to adapt its products for commercial
applications, Alpine has developed and begun marketing a data and voice
multiplexer product for the non-military market. While there is a large market
for commercial multiplexers, the market is highly competitive and is
characterized by rapid technological change and short product life cycles. There
are a large number of competitors in the commercial multiplexer market, many of
which have financial, manufacturing, development and marketing resources
substantially greater than Alpine. Alpine also provides multi-image equipment
software to the commercial and government (non-military) markets. For fiscal
1995, sales of products for commercial applications accounted for 5.2% of this
business segment.
BACKLOG
At April 30, 1995, Alpine's order backlog believed to be firm for its data
communication and electronic products and systems was $10.9 million, as compared
to approximately $11.1 million at April 30, 1994. Approximately 90% of the
backlog was expected to ship in the next 12 months. Approximately 46% of this
backlog is pursuant to contracts with the U.S. government or with government
prime contractors and, accordingly, is generally subject to renegotiation or
termination at the convenience of the government. With respect to government
contracts, it is Alpine's policy to enter into backlog only those contracts or
portions
12
<PAGE>
thereof which have actually been funded by the respective government agency.
Therefore, certain of Alpine's contracts have not been reflected in the above
backlog, including the remaining portion of an outstanding NASA contract.
OTHER
Alpine currently owns approximately 19.0% of the outstanding PolyVision
common stock and 98% of the preferred stock of PolyVision. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" for a description of certain transactions which may result in the
reduction of Alpine's ownership of PolyVision common stock. PolyVision
manufactures and markets menuboard display systems to the fast food and
convenience store industries, changeable magnetic signage used primarily by
banks, and writing, projection and other visual display surfaces (such as
chalkboards and markerboards) and cabinets and partitions for schools and
offices. PolyVision is also engaged in the research, development, licensing and
initial manufacturing and testing of a proprietary materials technology known as
PolyVision, with potential commercial applications in a wide range of consumer,
industrial, office and other host product applications that utilize or
incorporate flat panel display components and systems.
RESEARCH AND DEVELOPMENT
In response to the changing requirements of the telecommunications industry,
Alpine has focused its recent product development activities on performance
enhanced copper-based wire products that are designed to meet the existing and
future needs of the telephone companies. Several of these projects have been
undertaken in conjunction with Alpine's telephone company customers and include
the development of composite cables that include copper twisted pair wire and
coaxial cable and optical fibers in a single cable construction. Alpine is
currently developing shielded twisted pair products and the retail packaging of
certain of its products for premise (I.E., in-home or in-office) use as well as
extensions of its UTP products, such as patch cords for use in connecting UTP
products within premises and 25-pair UTP cables for certain data transmission
applications. Alpine expects to continue to explore new product development
opportunities as the requirements of the telephone companies evolve.
Constant revisions to industry processes and chemistries require changes in
refractory products to meet customer demand. Alpine maintains research and
development facilities for improving existing refractory products and
installation methods and developing new products for existing and new markets.
In order to compete for contracts, DNE frequently invests its own funds on
research and development in order to determine the financial and practical
feasibility of manufacturing the products. DNE is also currently in the process
of developing a new multiplexer (under a development contract) for secure
communications for a U.S. government agency. Although Alpine currently holds
certain trademark licenses and patents, none is considered to be material to its
businesses.
EMPLOYEES
As of April 30, 1995, Alpine employed 2,380 people, including 1,400 in the
copper wire and cable business, 810 in the refractories business, 174 in the
data communications and electronics business and six at Alpine's executive
offices.
The number of individuals employed in the refractories business does not
reflect members of the building trades, who are hired by Alpine as required.
Approximately 600 persons employed in Alpine's specialty refractory business and
approximately 870 persons employed in Alpine's telecommunications wire and cable
business are represented by unions.
Alpine considers relations with its employees to be satisfactory.
ENVIRONMENTAL MATTERS
Alpine's manufacturing operations are subject to numerous federal, state and
local laws and regulations relating to the storage, handling, emission,
transportation and discharge of hazardous materials and waste products.
Compliance with these laws has not been a material cost to Alpine and has not
had a material effect upon its capital expenditures, earnings or competitive
position. Violation of such laws or regulations, even if inadvertent, could have
an adverse impact on the operations, business or financial results of Alpine.
13
<PAGE>
Operations of Alpine have resulted in releases of hazardous substances at
sites currently or formerly owned or operated by Alpine. Alpine is presently
involved in investigatory and remedial activities at certain sites under the
oversight of state governmental authorities, as described below.
Soil and groundwater at Superior's Brownwood, Texas facility has been found
to be contaminated with volatile organic compounds as a result of operations at
the facility which management believes occurred prior to Superior's acquisition
of the facility. Superior is in the process of obtaining approval for a
remediation plan from the Texas Natural Resource Conservation Commission. Based
upon investigations performed to date, Alpine believes that the cost of this
remediation will not be in excess of $0.5 million. Pursuant to an agreement
between Superior and the former owner of the facility, Alpine has been
reimbursed for approximately 85% of the costs incurred to date in connection
with the investigation and remediation of this facility, and is entitled to
reimbursement of future expenses at percentages ranging from 85% to 25%
(depending on the time at which such expenses are incurred), subject to an
aggregate expense reimbursement of not less than 75%.
In connection with the sale of a facility in Woburn, Massachusetts, low
levels of volatile organic compounds were discovered in shallow groundwater.
Alpine has assumed responsibility for this contamination pursuant to an
indemnity granted to the purchaser of the facility. This facility has been
designated as a non-priority site by the Massachusetts Department of
Environmental Protection ("MDEP") which granted a waiver to Alpine allowing it
to proceed with further investigation and, if necessary, remediation, of the
groundwater contamination without MDEP oversight subject to certain conditions.
In accordance with the waiver, Alpine has until August 1997 to complete these
efforts. Although no assurances can be given, Alpine does not believe that the
cost to fulfill its obligations with respect to the contamination will be
material. Alpine has also assumed responsibility for and indemnified purchasers
against liabilities associated with contamination, if any, existing at other of
its former facilities. In particular, in connection with the sale of its former
East Windsor, Connecticut facility and pursuant to Connecticut property transfer
laws, Alpine was required by the Connecticut Department of Environmental
Protection ("CDEP") to develop a plan to investigate the existence of
contamination, if any, at that facility. Alpine has developed and submitted to
CDEP the required plan and is awaiting CDEP approval of the scope of its
proposed investigation. Based upon information available to date, Alpine does
not believe the costs associated with fulfilling its obligations with respect to
the East Windsor facility will have a material adverse effect on its operations,
business or financial results.
See "Item 3. Legal Proceedings" for a discussion of certain Superfund
litigation.
In February 1992, PolyVision was cited by the Ohio Environmental Protection
Agency (the "Ohio EPA") for violations of Ohio's hazardous waste regulations,
including speculative accumulation of waste (holding waste on-site beyond the
legal time limit) and illegal disposal of hazardous waste on the site of its
Alliance, Ohio facility. In December 1993, PolyVision and Adience signed a
consent order with the Ohio EPA and the Ohio Attorney General which required
PolyVision and Adience to pay to the State of Ohio a civil penalty of $0.2
million and to remediate the site in accordance with specified cleanup goals. In
addition, the consent order requires the payment of stipulated penalties of up
to $1,000 per day for failure to satisfy certain requirements of the consent
order, including milestones in the closure plan. In October 1994, PolyVision and
Adience filed a proposed amendment to the consent order which would allow
PolyVision and Adience to establish risk-based cleanup goals, an approach which
has been approved by the Ohio EPA for other contaminated sites. If the Ohio EPA
approves this proposed amendment, use of this approach is expected to reduce the
extent and cost of remediation required at this site. The Ohio EPA has not yet
responded to this proposed amendment. At April 30, 1995, environmental accruals
amounted to $0.5 million, which represents management's estimate of the amounts
remaining to be incurred in this matter, including the costs of effecting the
closure plan, bonding and insurance costs, penalties and legal and consultants'
fees. Since 1991, Adience and PolyVision have together paid $1.3 million
(excluding the civil penalty) for the environmental cleanup related to the
Alliance facility. If the Ohio EPA does not accept the proposed amendment to the
consent order, the cost of the remediation may exceed the amounts currently
accrued.
14
<PAGE>
Under the acquisition agreement pursuant to which PolyVision acquired the
Alliance facility from Adience, Adience represented and warranted that, except
as otherwise disclosed to PolyVision, no hazardous material had been stored or
disposed of on the property. No disclosure of storage or disposal of hazardous
material on the site was made. Accordingly, Adience is required to indemnify
PolyVision for any losses in excess of $0.3 million. PolyVision has notified
Adience that it is claiming the right to indemnification for all costs in excess
of $0.3 million incurred by PolyVision in this matter, and has received
assurance that Adience will honor such claim.
Certain Adience and PolyVision facilities contain areas which may have been
used for the disposal of waste materials generated by facility operations, some
of which may contain elements or compounds classified as hazardous under
environmental laws or which may otherwise cause environmental contamination. If
it is determined that past disposal practices have resulted in releases of
contaminants to soil or groundwater, remediation of such contamination may be
required. If substantial environmental contamination is found at any or all of
the Adience and PolyVision facilities, this could have a material adverse effect
on the operations, business and financial results of Alpine.
ITEM 2. PROPERTIES
Alpine conducts its operations primarily at the facilities set forth below:
<TABLE>
<CAPTION>
LOCATION SQUARE FOOTAGE LEASED/OWNED
-------------------------------------------------------------------- -------------- ----------------------------
<S> <C> <C>
MANUFACTURING FACILITIES
TELECOMMUNICATIONS WIRE AND CABLE
Brownwood, Texas................................................ 310,000 Leased (expires 2013)
(five five-year renewals)
Winnipeg, Manitoba.............................................. 193,000 Owned
Elizabethtown, Kentucky......................................... 170,700 Owned
Tarboro, North Carolina......................................... 289,000 Owned
REFRACTORIES
Washington, Pennsylvania........................................ 201,881 Owned
Snow Shoe, Pennsylvania......................................... 162,080 Owned
South Webster, Ohio............................................. 131,154 Owned
Crown Point, Indiana............................................ 76,106 Owned
Altoona, Pennsylvania........................................... 47,160 Owned
Smithville, Ontario............................................. 46,900 Owned
Canon City, Colorado............................................ 35,626 Owned
Johnstown, Pennsylvania......................................... 27,000 Owned
DATA COMMUNICATIONS AND ELECTRONICS
Wallingford, Connecticut........................................ 155,000 Owned
CORPORATE EXECUTIVE OFFICES
New York, New York.............................................. 5,375 Leased (expires 2002)
Atlanta, Georgia................................................ 20,000 Leased (expires 1996)
</TABLE>
The facility in Wallingford, Connecticut is subject to a mortgage held by
the Connecticut Development Authority as security for a $5.3 million loan and
the wire and cable plants owned by Alpine are subject to mortgages.
ITEM 3. LEGAL PROCEEDINGS
Together with various parties, Alpine has been named as a defendant in a
lawsuit filed by the State of New York in Federal district court relating to the
release of hazardous chemicals at, and their subsequent migration and threat of
migration from, the Wellsville-Andover Landfill, near Rochester, New York. The
State of New York alleges that Alpine, by virtue of its purchase of some (but
not all) of the assets of an entity that allegedly disposed of hazardous
substances, is liable as a corporate successor under the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA" or "Superfund")
15
<PAGE>
for the costs of remediation. The total remediation costs for the site have been
estimated by the New York Department of Environmental Conservation to
potentially be in excess of $14.0 million. This action is in an early stage and
no determination has yet been made as to either the reasonableness of New York's
claim and its cost estimates or as to Alpine's liability, if any, or its share
of such remediation costs. In addition, together with various parties, Alpine
has been named as a defendant in a lawsuit filed by the owners of property
adjacent to another landfill in the Rochester area seeking recovery for property
damage caused by and cleanup of alleged contamination emanating from that
landfill. The property owners allege that Alpine is liable under CERCLA and New
York law based upon its status as corporate successor to the aforementioned
entity, which also allegedly disposed of hazardous substances at this landfill.
This action is also in an early stage. No determination has yet been made as to
whether contamination is present at plaintiff's property or as to Alpine's share
of any liabilities. Alpine believes that it has defenses to these actions and it
has indemnification rights with respect to liabilities, if any, relating to
these matters from the seller of the assets. However, there can be no assurance
that an adverse outcome in these cases would not have a material adverse effect
on the operations, business and financial results of Alpine.
ASBESTOS LITIGATION. Adience's J.H. France unit, which was merged into
Adience in December 1991, has been named as a party in approximately 8,000
pending lawsuits filed in eight jurisdictions principally by employees and
former employees of certain customers of J.H. France, alleging in certain cases
that a single product, a plastic insulating cement manufactured more than 20
years ago by J.H. France, caused them to suffer from asbestosis related diseases
and in other cases alleging that products manufactured or sold by J.H. France,
caused silica related diseases. Such lawsuits typically involve multiple
defendants and seek monetary damages ranging from $20,000 to approximately $1.0
million each. J.H. France and its insurance carriers have historically settled
these lawsuits, typically for an average amount per case of less than the
minimum amount stated. Punitive damages have also been claimed in some cases.
In addition to the lawsuits against J.H. France, Adience has been named a
party in approximately 250 pending lawsuits filed in the States of Pennsylvania,
Ohio, Michigan and West Virginia, principally by employees and former employees
of certain customers of Adience alleging that products produced by Adience
caused silicosis, not asbestosis, in such persons. The majority of such lawsuits
involve multiple defendants and seek unstated monetary damages ranging from
$20,000 each, which is the minimal jurisdictional requirement for personal
injury cases in a majority of such state courts, to $1.0 million each. Adience
and its insurance carriers have historically settled these lawsuits for an
average amount per case of less than the minimum amount stated. Virtually all
such claims and all costs of defense for these cases are covered by insurance.
The insurance companies which had issued policies covering the J.H. France
cases initially denied coverage for these claims. In June 1993, the Supreme
Court of Pennsylvania held that the insurance policies covering the claims in
these J.H. France cases covered liabilities and defense costs up to the amounts
of the limits of the respective policies, without regard to the period of time
said policies were in effect. As a result of this judicial determination and
based upon Adience's experience in obtaining dismissals or settlements in closed
cases, Adience anticipates, although no assurance can be given, that the
expected costs and liabilities in such pending cases will be adequately covered
by insurance and that the aggregate limits on the insurance policies in effect
exceed the liabilities and defense costs which will be incurred in the 8,000
J.H. France cases and the other 250 cases, for which the scope of coverage has
never been an issue.
Adience was recently named as one of many defendants in a class action
lawsuit brought in the circuit court of Cook County, Illinois, seeking unstated
monetary damages and alleging that products produced by Adience caused certain
of its employees, former employees and such persons' family members to suffer
from asbestos related diseases or an increased risk of developing such diseases.
Because the complaint was served upon Adience in late May 1995, Alpine and its
counsel have not yet had the opportunity to evaluate fully the validity of such
claims or the scope of its potential liabilities and defense costs.
16
<PAGE>
Two former officers of Adience have demanded arbitration in connection with
the termination by them of their employment with Adience. Such former officers
contend that the Adience Acquisition and alleged changes in their duties
entitled them to terminate their employment with Adience and receive settlements
under their employment agreements aggregating $0.9 million for both officers.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report through the solicitation of
proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED SECURITY HOLDER MATTERS
(a) Market Information
Alpine's Common Stock, $.10 par value (the "Alpine Common Stock"), is listed
on the American Stock Exchange (the "AMEX") under the symbol AGI. The following
table sets forth the range of high and low sales prices for Alpine Common Stock
on the AMEX for fiscal 1994 and 1995.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C> <C>
Fiscal 1994 First Quarter................................................. $ 12 1/4 $8 1/2
Second Quarter................................................ 10 7/8 8 1/4
Third Quarter................................................. 9 3/8 6 5/8
Fourth Quarter................................................ 7 1/2 4 11/16
Fiscal 1995 First Quarter................................................. 7 5/8 4 3/8
Second Quarter................................................ 8 3/8 5 1/8
Third Quarter................................................. 6 4 1/8
Fourth Quarter................................................ 5 7/8 4 5/8
</TABLE>
(b) Holders
At July 24, 1995, 17,742,362 shares of Alpine Common Stock were issued and
outstanding, and there were approximately 8,000 record holders thereof.
(c) Dividends
Alpine has no recent history of paying dividends and does not intend to
declare dividends on the Alpine Common Stock in the foreseeable future. Certain
provisions of Alpine's debt instruments and of the Company's outstanding
preferred stock have the effect of currently prohibiting Alpine from paying cash
dividends.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
HISTORICAL FINANCIAL DATA
ALPINE
Set forth below are certain selected historical consolidated financial data
of Alpine. This information should be read in conjunction with the Consolidated
Financial Statements of Alpine and related notes thereto appearing elsewhere
herein and "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations." The selected historical consolidated financial data
for, and as of the end of, each of the fiscal years in the five-year period
ended April 30, 1995 are derived from the audited consolidated financial
statements of Alpine, which have been restated to reflect the results of
operations of APV and Posterloid as discontinued.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30, (1)
-----------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................... $ 2,994 $ 6,786 $ 27,897 $ 68,510 $ 198,135
Cost of sales............................................... 1,807 4,239 15,915 56,250 169,125
--------- --------- --------- --------- ---------
Gross profit.............................................. 1,187 2,547 11,982 12,260 29,010
Selling, general and administrative expenses................ 3,144 4,808 10,482 12,168 20,487
Amortization of goodwill and other intangible charges....... 269 283 395 2,292 1,527
--------- --------- --------- --------- ---------
Operating income (loss)................................... (2,226) (2,544) 1,105 (2,200) 6,996
Interest income............................................. 356 484 209 242 345
Interest expense............................................ (3,026) (3,127) (2,301) (2,363) (8,197)
Other income (expense), net................................. (540) (604) (1,469) (506) 28
--------- --------- --------- --------- ---------
(Loss) from continuing operations before income taxes..... (5,436) (5,791) (2,456) (4,827) (828)
Provision for income taxes.................................. -- -- -- 68 348
--------- --------- --------- --------- ---------
(Loss) from continuing operations......................... (5,436) (5,791) (2,456) (4,895) (1,176)
Income (loss) from discontinued operations (2).............. 2,027 (3,082) (8,377) (25,236) (4,868)
--------- --------- --------- --------- ---------
(Loss) before extraordinary item.......................... (3,409) (8,873) (10,833) (30,131) (6,044)
Extraordinary item -- gain (loss) on early extinguishment of
debt (3)................................................... 1,423 888 (1,262) (47) --
--------- --------- --------- --------- ---------
Net (loss)................................................ $ (1,986) $ (7,985) $ (12,095) $ (30,178) $ (6,044)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
(LOSS) PER SHARE OF COMMON STOCK:
Continuing operations..................................... $ (0.92) $ (0.78) $ (0.32) $ (0.38) $ (0.11)
Discontinued operations................................... 0.33 (0.42) (0.94) (1.78) (0.27)
Extraordinary item -- gain (loss) on early extinguishment
of debt.................................................. 0.24 .12 (0.14) -- --
--------- --------- --------- --------- ---------
$ (0.35) $ (1.08) $ (1.40) $ (2.16) $ (0.38)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital............................................. $ 6,404 $ 9,745 $ 7,256 $ 24,594 $ 7,080
Total assets................................................ 26,326 34,312 27,998 113,796 233,778
Total debt.................................................. 18,781 19,817 13,637 43,745 119,179
Preferred stock............................................. 986 5,177 4,677 6,177 17,250
Total stockholders' equity.................................. 247 5,867 10,602 47,998 44,658
<FN>
--------------------------
(1) Alpine's results of operations have been significantly impacted by
acquisitions in fiscal 1993, 1994 and 1995. On February 22, 1992, Alpine
acquired DNE for a cash purchase price of $7.1 million. On November 9,
1993, Alpine acquired Superior for $60.8 million in cash and common stock.
On December 21, 1994, Alpine acquired Adience for $12.4 million in a
combination of cash, Alpine 8% preferred stock and PolyVision common stock.
See "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations."
(2) In November 1994, Alpine adopted a plan to dispose of its information
display segment consisting of APV and Posterloid. The results of operations
for this segment have been reflected as income (loss) from discontinued
operations for all periods presented. See Note 5 of Alpine's Consolidated
Financial Statements.
(3) The extraordinary gain (loss) recorded during the fiscal years ended April
1991, 1992, 1993 and 1994 is related to the early extinguishment of $3.5
million, $2.4 million, $6.0 million and $0.1 million, principal amount,
respectively, of Alpine's debt, principally Alpine's 13.5% senior
subordinated debentures due October 1, 1996.
</TABLE>
18
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Alpine is a diversified industrial company principally engaged in the
manufacture and sale of copper wire and cable for the telecommunications
industry, specialty refractory products for the iron and steel, glass, aluminum,
cement and co-generation industries and data communications and other electronic
products and systems for military, governmental and commercial applications.
Alpine entered the copper wire and cable business in 1993 with the Superior
Acquisition and significantly enlarged its presence in this business with the
Alcatel Acquisition in May 1995. Alpine entered the specialty refractory
business in 1994 with the Adience Acquisition. Alpine entered the data
communications and electronics industry with its acquisition of DNE in February
1992.
RESULTS OF OPERATIONS
To facilitate a meaningful comparison, this Management's Discussion and
Analysis of Financial Condition and Results of Operations focuses on pro forma
information for the periods covered, which management believes provides
comparability among historical periods. Period-to-period comparisons of Alpine's
historical financial information are less relevant to an understanding of Alpine
as it is presently constituted due to the significance of the Superior
Acquisition on November 11, 1993, the Adience Acquisition on December 21, 1994,
the Alcatel Acquisition on May 11, 1995, the completion on July 21, 1995 of the
Offering of $153.0 million principal amount of Notes, the entering into and
initial drawing under the New Credit Agreement and the Refinancing. See Item 1.
Business -- Recent Developments; the Refinancing.
As used herein the term "fiscal" refers to the 12-month fiscal period ended
on April 30 of the specified year, except in the case of the Alcatel Business in
which case the term refers to the 12-month fiscal period ended on March 31 of
the specified year. Alpine reports separately its results of operations for its
three business segments: telecommunications wire and cable; refractories; and
data communications and electronic products.
Alpine's Pro Forma Condensed Combined Statement of Operations for fiscal
1995 presented below and the comparative data for fiscal 1993 and 1994, which
follows, have been prepared in a substantially consistent manner. Accordingly,
for convenience of presentation, the accompanying tables and period-to-period
comparisons of net sales, gross profit and other income statement items for the
periods presented refer to the pro forma amounts thereof. The pro forma data are
not necessarily indicative of the results that would have been achieved had such
acquisitions actually occurred on May 1, 1992, nor are they necessarily
indicative of Alpine's future results.
19
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
12 MONTHS ENDED APRIL 30, 1995 (ALPINE) AND MARCH 31, 1995 (ALCATEL BUSINESS)
<TABLE>
<CAPTION>
HISTORICAL ALCATEL PRO FORMA PRO FORMA
ALPINE ADIENCE (A) BUSINESS ADJUSTMENTS COMBINED
---------- ----------- ---------- -------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales....................................... $ 198,135 $ 67,259 $ 204,178 $ 469,572
Cost of goods sold.............................. 169,125 59,352 192,999 $ (1,591)(b) 413,228
(2,253)(c)
(1,550)(d)
(2,854)(e)
---------- ----------- ---------- ------- -----------
Gross profit................................ 29,010 7,907 11,179 8,248 56,344
Selling, general and administrative............. 20,487 12,338 10,254 68(b) 31,883
(2,170)(c)
(9,094)(f)
Amortization of goodwill........................ 1,527 693 219(b) 3,041
602(e)
---------- ----------- ---------- ------- -----------
Operating income (loss)..................... 6,996 (5,124) 925 18,623 21,420
Interest income................................. 345 64 409
Interest expense................................ (8,197) (5,154) (1,965) (11,493)(g) (26,809)
Other income (expense), net..................... 28 364 392
---------- ----------- ---------- ------- -----------
Income (loss) from continuing operations
before income taxes........................ (828) (9,850) (1,040) 7,130 (4,588)
Provision for income taxes...................... 348 --(h) 348
---------- ----------- ---------- ------- -----------
Income (loss) from continuing operations.... (1,176) (9,850) (1,040) 7,130 (4,936)
Preferred stock dividends....................... 801 204(i) 264(i) 1,269
---------- ----------- ---------- ------- -----------
Income (loss) attributable to common stock from
continuing operations.......................... $ (1,977) $ (10,054) $ (1,040) $ 6,866 $ (6,205)
---------- ----------- ---------- ------- -----------
---------- ----------- ---------- ------- -----------
Income (loss) per share of common stock from
continuing operations (j).................. $ (0.11) $ (0.34 )
---------- -----------
---------- -----------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
20
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF APRIL 30, 1995 (ALPINE) AND MAY 11, 1995 (ALCATEL BUSINESS)
<TABLE>
<CAPTION>
HISTORICAL
----------------------
ALCATEL PRO FORMA PRO FORMA
ALPINE BUSINESS ADJUSTMENTS COMBINED
---------- ---------- --------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and marketable securities............................ $ 17,041 $ 135,400(k) $ 1,367
(93,000)(k)
(10,255)(k)
(21,919)(k)
(500)(k)
134,300(l)
58,455(m)
(213,119)(n)
(1,596)(o)
(3,300)(p)
(140)(q)
Accounts receivable, net.................................. 41,255 $ 29,177 70,432
Inventories, net.......................................... 35,242 33,160 68,402
Other current assets...................................... 5,347 1,192 6,539
---------- ---------- --------------- -----------
Total current assets.................................... 98,885 63,529 (15,674) 146,740
Property, plant and equipment, net.......................... 52,240 39,598 4,945(k) 96,783
Investment in and advances to PolyVision.................... 11,202 1,332(p) 15,834
3,300(p)
Goodwill and other intangibles, net......................... 65,712 18,055(k) 85,363
1,596(o)
Long term investments and other assets...................... 5,739 6,058(l) 13,227
1,800(m)
(370)(q)
---------- ---------- --------------- -----------
Total assets............................................ $ 233,778 $ 103,127 $ 21,042 $ 357,947
---------- ---------- --------------- -----------
---------- ---------- --------------- -----------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
21
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (CONTINUED)
AS OF APRIL 30, 1995 (ALPINE) AND MAY 11, 1995 (ALCATEL BUSINESS)
<TABLE>
<CAPTION>
HISTORICAL
----------------------
ALCATEL PRO FORMA PRO FORMA
ALPINE BUSINESS ADJUSTMENTS COMBINED
---------- ---------- --------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term borrowings..................................... $ 20,790 $ (20,790)(n)
Revolving line of credit.................................. 12,345 (12,345)(n)
Current portion of long-term debt......................... 2,022 (728)(n) $ 1,294
Accounts payable.......................................... 31,655 $ 14,964 46,619
Accrued expenses.......................................... 24,993 6,908 500(k) 32,401
---------- ---------- --------------- -----------
Total current liabilities............................... 91,805 21,872 (33,363) 80,314
Long-term debt, less current portion........................ 84,022 140,358(l) 218,886
60,255(m)
(21,919) (k)
140,000 (k)(n
(183,830)(n)
Other long-term obligations................................. 7,560 7,560
Adience Acquisition obligation.............................. 5,733 (5,733)(p)
Stockholders' equity:
Preferred stock........................................... 17,250 (3,500)(i) 15,495
(500)(i)
2,245(n)
Common stock.............................................. 1,743 84(i) 1,827
Capital in excess of par value............................ 103,114 81,255 (81,255)(k) 107,030
3,916(i)
Gain on distribution of PolyVision interest............... 1,332(p) 9,310
5,733(p)
2,245(p)
Cumulative translation adjustment......................... 144 144
Accumulated deficit....................................... (76,050) (5,026)(q) (81,076)
---------- ---------- --------------- -----------
46,201 81,255 (74,726) 52,730
Less: Treasury stock........................................ (1,229) (1,229)
Receivable from stockholder............................. (314) (314)
---------- ---------- --------------- -----------
Total stockholders' equity.................................. 44,658 81,255 (74,726) 51,187
---------- ---------- --------------- -----------
Total liabilities and stockholders' equity.............. $ 233,778 $ 103,127 $ 21,042 $ 357,947
---------- ---------- --------------- -----------
---------- ---------- --------------- -----------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
22
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(a) On December 21, 1994, Alpine completed the acquisition of 87.2% of the
outstanding capital stock of Adience. Adience's results of operations have been
consolidated with those of Alpine from that date. This column sets forth
Adience's historical results of operations, excluding PolyVision, for the period
from May 1, 1994 through December 20, 1994.
(b) Reflects the changes to Adience's historical depreciation and
amortization resulting from the allocation of Alpine's purchase price.
<TABLE>
<CAPTION>
MAY 1, 1994 TO DECEMBER
20, 1994
------------------------
HISTORICAL ADJUSTED CHANGE
----------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Cost of goods sold..................................................... $ 3,670 $ 2,079 $ (1,591)
Selling, general and administrative.................................... 180 248 68
Amortization of intangibles............................................ 948 1,167 219
</TABLE>
(c) Reflects the elimination of certain expenses incurred by Adience that
are either directly attributable to the Adience Acquisition or would not have
been incurred if the Adience Acquisition had taken place on May 1, 1994 as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30,
1995
-------------
(IN
THOUSANDS)
<S> <C>
Cost of goods sold:
Inventory writedowns (1)............................................................... $ 2,253
------
------
Selling, general and administrative expense:
Directors' fees, public filing expenses and ESOP administrative fees (2)............... $ 722
Consulting fees (3).................................................................... 283
Executive salaries (4)................................................................. 226
Adience acquisition expenses (5)....................................................... 602
Relocation of Adience corporate headquarters (6)....................................... 337
------
$ 2,170
------
------
<FN>
------------------------
(1) At the time of the Adience Acquisition, Alpine management determined that
certain Adience product lines would be discontinued. Adience recorded a
charge to reduce the carrying value of the related inventory to its
realizable value on a liquidation basis.
(2) Adience's financial statements for the year ended April 30, 1995 included
$0.7 million of expenses related to the reporting and other expenses
incurred by Adience as a public company. Following the Adience Acquisition,
the directors of Adience who were not affiliated with Alpine resigned and
Adience ceased paying directors' fees. Also following the Adience
Acquisition, Adience's obligation to file reports with the Securities and
Exchange Commission terminated and Adience initiated the process of
terminating its ESOP.
(3) Reflects $0.3 million of consulting fees paid to a partnership in which two
Alpine officers had a majority interest. The consulting agreement was
terminated in connection with the Adience Acquisition.
(4) Reflects the elimination of the salaries of Adience executives who are no
longer employed by Adience to the extent that such executives will not be
replaced.
(5) Reflects the elimination of $0.6 million of legal, investment banking and
other third-party expenses incurred by Adience during the period from May
1, 1994 to December 20, 1994 in connection with the Adience Acquisition.
</TABLE>
23
<PAGE>
<TABLE>
<S> <C>
(6) Reflects the elimination of expenses associated with Adience's corporate
headquarters, which will be relocated to the offices of one of the
Adience's divisions in August 1995.
</TABLE>
(d) Represents an aggregate of $1.6 million in costs, consisting of $1.3
million of annual freight savings and $0.3 million of savings resulting from a
reduction in headcount at the Alcatel Business' plants. Alpine believes that the
location of the Alcatel Business' plants and the similarity of the production
capabilities of such plants and Superior's existing plant will allow Superior
management to ship products to customers in a manner designed to reduce freight
costs. Alpine estimates that freight savings at the annual rate can be achieved
within three months after the Alcatel Acquisition.
(e) Reflects the changes to historical depreciation expense and the
incremental amortization of intangibles resulting from the Alcatel Acquisition.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995
------------------------
HISTORICAL ADJUSTED CHANGE
----------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Cost of good sold: depreciation........................................ $ 6,154 $ 3,300 $ (2,854)
Amortization of intangibles............................................ -- 602 602
</TABLE>
See Note (k) below.
(f) Reflects the elimination of selling, general and administrative expense
incurred by the Alcatel Business in the historical period, of which $5.9 million
represented management fees, an allocation of administrative charges previously
paid by the Alcatel Business to its affiliates, as well as employee costs which
will not be incurred subsequent to the Alcatel Acquisition, offset by additional
annual selling, general and administrative expense of $1.2 million which Alpine
estimates will be required following the completion of the combination of the
Alcatel Business with Superior, as set forth below.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995
------------------------
HISTORICAL ADJUSTED CHANGE
----------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Management fees........................................................ $ 4,868 -- $ (4,868)
Administrative fees.................................................... 1,064 -- (1,064)
Other selling general and administrative............................... 4,322 $ 1,160 (3,162)
----------- ----------- ---------
Total.............................................................. $ 10,254 $ 1,160 $ (9,094)
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
(g) The adjustment to interest expense resulting from the Refinancing
described in Note (m) below is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30,
1995
-------------
(IN
THOUSANDS)
<S> <C>
Interest on the Notes (at 12.25% per annum).............................................. $ 18,743
Amortization of original issue discount on the Notes..................................... 939
Interest on New Credit Agreement (assuming an 8.0% interest rate)........................ 4,000
Amortization of deferred financing costs................................................. 1,117
Less, historical interest on indebtedness assumed to be repaid:
With respect to Alpine and Adience..................................................... (11,341)
With respect to the Alcatel Business (for the year ended March 31, 1995)............... (1,965)
-------------
Total................................................................................ $ 11,493
-------------
-------------
</TABLE>
The adjustment to interest expense assumes that, during the fiscal year
ended April 30, 1995, (i) $153.0 million principal amount of Notes were
outstanding and (ii) the average amount outstanding under the New Credit
Agreement was $50.0 million at an interest rate of 8.0% per annum (which
approximates the current rate that would be applied to LIBOR advances
thereunder). Alpine believes that $50.0 million of borrowings
24
<PAGE>
under the New Credit Agreement would have been adequate to satisfy its operating
cash needs during the year, including the payment 90 days after the closing of
the Alcatel Acquisition of the $10.3 million deferred obligation to Alcatel N.A.
Deferred financing costs are amortized over the terms of the related
indebtedness.
(h) There is no tax effect attributable to the Pro Forma Adjustments because
of Alpine's net operating loss carryforwards.
(i) Reflects an additional $0.3 million of preferred stock dividends, which
assumes that the following transactions had taken place on May 1, 1994: (1) the
issuance on January 5, 1995 of $8.0 million of Alpine 8% Preferred Stock in
exchange for 1,000,000 shares of Alpine Common Stock; (2) the exchange of all
$3.5 million of Alpine's outstanding 8.5% Cumulative Convertible Senior
Preferred Stock plus accrued dividends thereon for 737,476 shares of Alpine
Common Stock, which exchange will take place in July 1995; (3) the exchange in
May 1995 of $0.5 million of Alpine's 9% Cumulative Convertible Senior Preferred
Stock plus accrued dividends thereon for 100,000 shares of Alpine Common Stock;
and (4) the issuance of $2.2 million of Alpine 8% Preferred Stock in connection
with the redemption of the Adience Senior Notes.
Further reflects an additional $0.2 million of preferred stock dividends for
the period from May 1, 1994 through December 20, 1994, which assumes the
issuance of $4.1 million of Alpine's 8% Preferred Stock in connection with the
Adience Acquisition as if the Adience Acquisition had taken place on May 1,
1994.
(j) The pro forma loss per share of common stock is based upon 18,025,381
shares outstanding, which is the weighted average number of shares outstanding
during the year ended April 30, 1995, adjusted to give effect to the
transactions discussed in Note (i).
(k) On May 11, 1995, Alpine completed the Alcatel Acquisition, which was
financed with the net proceeds of the sale by Superior of the Alcatel
Acquisition Notes of $135.4 million. Of the net proceeds, $93.0 million was paid
in cash to Alcatel N.A., an estimated $0.5 million was applied to pay
transaction expenses and $22.6 million ($21.9 million recorded at April 30,
1995) was used to retire Superior's debt. The remaining proceeds of $19.3
million were available to Superior for working capital and general corporate
purposes. The following reflects the preliminary allocation of the purchase
price to the net assets of the Alcatel Business based upon the estimated fair
values of such assets:
<TABLE>
<CAPTION>
AMOUNT
-------------
(IN
THOUSANDS)
<S> <C>
Estimated acquisition cost............................................................... $ 103,755
Less, historical book value of net assets at May 11, 1995................................ (81,255)
Write-up of property, plant and equipment................................................ (4,945)
Accrual of Alcatel employee relocation and severance costs............................... 500
-------------
Acquisition goodwill (to be amortized over 30 years)..................................... $ 18,055
-------------
-------------
</TABLE>
The estimated acquisition cost of $103.8 million represents (i) $93.0
million paid in cash to Alcatel N.A., (ii) a deferred amount payable to Alcatel
N.A. in he amount of $10.3 million, which amount is subject to adjustment based
upon the completion of a closing balance sheet audit, and (iii) acquisition
expenses estimated at $0.5 million.
(l) Represents Alpine's receipt of an estimated $134.3 million of net
proceeds, after expense aggregating $6.1 million, from the Offering of $153.0
million principal amount of the Notes at an initial issue price of $140.4
million.
(m) Represents Alpine's receipt of an estimated $58.5 million of net
proceeds from its initial borrowing under the New Credit Agreement (an initial
borrowing of $60.3 million reduced by an estimated $1.8 million of transaction
expenses). Alpine anticipates using cash flow generated after April 30, 1995 to
complete the Refinancing, including amounts necessary to pay the Alcatel
Acquisition deferred obligation in August 1995 (see Note (k)). Alpine estimates
that $50.0 million of borrowings under the New Credit Agreement will be required
to complete the Refinancing.
25
<PAGE>
(n) Reflects the payment (or, in the case of the DNE Acquisition Note and
the DNE Credit Facility, the assumed payment) of an aggregate of $213.1 million
to retire existing debt as part of the Refinancing, as follows.
<TABLE>
<CAPTION>
AT APRIL 30, 1995
-----------------------
CASH
RETIREMENT
BOOK VALUE COST
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Alcatel Acquisition Notes...................................................... $ 140,000 $ 140,000
Adience Senior Notes........................................................... 39,761 35,271
Adience Credit Facility........................................................ 12,345 12,345
DNE Acquisition Note........................................................... 2,469 2,175
DNE Credit Facility............................................................ 627 627
Alpine 13.5% Senior Notes...................................................... 20,790 21,000
Alpine 13.5% Debentures........................................................ 1,551 1,551
Other Alpine indebtedness...................................................... 150 150
---------- -----------
Total...................................................................... $ 217,693 $ 213,119
---------- -----------
---------- -----------
Short-term debt:
Short-term borrowings........................................................ $ 20,790
Revolving line of credit..................................................... 12,345
Current portion of long-term debt............................................ 728
----------
33,863
Long-term debt, less current portion........................................... 183,830
----------
Total...................................................................... $ 217,693
----------
----------
</TABLE>
Pursuant to the Debt Exchange Agreement, the holders of the Adience Senior
Notes retired $44.1 million principal amount of the Adience Senior Notes, having
a book value of $39.8 million at April 30, 1995, for $35.3 million in cash, $2.2
million in value of PolyVision common stock (see Note (p) below), and 44,916
shares of Alpine 8% Preferred Stock having a liquidation preference of $2.2
million.
(o) Reflects the payment of $1.6 million in cash to the holders of the
remaining 12.8% of Adience's common stock in connection with the acquisition of
such shares by Alpine.
(p) Reflects the effects of the PolyVision Transactions. Until the date of
the PolyVision Merger (May 24, 1995), 80.3% of the outstanding PolyVision common
stock was owned by Adience, and the remainder was publicly owned. Alpine owned
87.2% of the outstanding capital stock of Adience and, therefore Alpine's
effective ownership of PolyVision was 87.2% of 80%, or 70.0%. Also, until the
date of the PolyVision Merger, Alpine owned 98% of the outstanding capital stock
of APV and all of the outstanding capital stock of Posterloid. In Alpine's
historical financial statements, APV and Posterloid are reflected as
discontinued operations and PolyVision is reflected as an asset held for
disposal.
Following the PolyVision Merger, Alpine owned 98.0% of PolyVision's
outstanding preferred stock with a liquidation preference of $25.0 million and
94% of the outstanding PolyVision common stock. At April 30, 1995, the
PolyVision common stock had a negative book value of $12.6 million.
As a result of the PolyVision Merger, Alpine's ownership of the outstanding
PolyVision common stock increased from 70.0% to 94%. In accordance with FASB
Technical Bulletin 85-5, this increase in equity ownership was recorded as the
acquisition of a minority interest at its estimated fair value of $2.4 million.
Because the minority interest was acquired by an Alpine subsidiary issuing
stock, and because Alpine planned to distribute to its stockholders most of the
PolyVision common stock owned by it, $1.3 million, representing the excess of
the fair value of the minority interest acquired over the book value of the
interests given up in APV and Posterloid, was added directly to capital surplus.
26
<PAGE>
On June 14, 1995, Alpine distributed to its stockholders 73% of the
outstanding PolyVision common stock. This distribution, when combined with
shares of PolyVision common stock to be used as partial consideration in
connection with the Adience Acquisition and the retirement of the Adience Senior
Notes and prior to any further distribution as discussed below, will result in
the ownership by Alpine of approximately 19% of the outstanding shares of
PolyVision common stock. Accordingly, Alpine will account for its remaining
PolyVision common stock investment at its fair value as a security available for
sale following the PolyVision Spin-Off. Because the shares of PolyVision common
stock distributed had a negative book value, Alpine's stockholders' equity was
not reduced by the PolyVision Spin-Off.
As partial consideration for the Adience common stock it acquired on
December 21, 1994, Alpine agreed to give former Adience common stockholders
PolyVision common stock having an estimated value of $5.7 million. this $5.7
million obligation was reflected as a liability on the consolidated balance
sheet of Alpine as of April 30, 1995. Alpine is obligated to distribute
approximately 170,615 shares of PolyVision common stock to partially settle this
obligation. For purposes of these pro forma financial statements, the gain and
portion of the liability settled through the distribution of 170,615 shares of
PolyVision common stock has been estimated to be $2.0 million. To the extent
that the value of the 170,615 shares of PolyVision common stock delivered is
less than $5.7 million, Alpine is obligated to deliver to the former Adience
stockholders an amount equal to 170,615 shares of PolyVision common stock
multiplied by the difference between $33.60 and the greater of the average
closing price for PolyVision common stock on each of the 20 trading days
preceding August 1, 1995 and $11.25 per share. This amount will be payable at
the option of Alpine, in either Alpine 8% Preferred Stock or PolyVision common
stock, or a combination thereof. A gain credited to discontinued operations will
be recorded based on the actual trading price of the shares of PolyVision common
stock actually distributed.
As partial consideration for acquiring the Adience Senior Notes pursuant to
the Debt Exchange Agreement with certain of the holders, Alpine used
approximately $2.2 million of PolyVision common stock. Alpine is obligated to
distribute 66,792 shares of PolyVision common stock to partially settle this
obligation. To the extent that the value of the 66,792 shares of PolyVision
common stock delivered is less than $2.2 million, Alpine is obligated to deliver
either additional shares of Alpine 8% Preferred Stock or PolyVision common stock
or a combination thereof (calculated in the same manner as outlined above for
the Adience common stockholders). A gain in the same amount will be credited to
discontinued operations.
Pursuant to both the Adience Acquisition and Debt Exchange Agreement and
based upon the closing price of PolyVision common stock on July 14, 1995 of
$3.44 per share, Alpine would be required to deliver either $5.3 million in
Alpine 8% Preferred Stock or 1,542,455 shares of PolyVision common stock
(representing substantially all of Alpine's PolyVision shares), or a combination
thereof. These pro forma financial statements assume that Alpine's obligations
have been satisfied using PolyVision common stock; however, Alpine has not yet
determined how this obligation will be settled.
The PolyVision Spin-Off and the foregoing transactions will be taxable
events for Alpine. In these pro forma financial statements, no provision for
federal income taxes on taxable gains has been made because, if the transactions
had taken place during Alpine's fiscal year ended April 30, 1995, Alpine would
have had sufficient tax loss carryforwards to offset the taxable income. The
actual provision for income taxes provided on these gains will depend on
Alpine's tax position in 1996. There can be no assurance that the tax loss
carryforwards will be sufficient to offset 1996 income, including gains from the
aforementioned transactions.
In connection with the Refinancing, Alpine loaned $3.3 million to PolyVision
to enable PolyVision to repay all amounts due under its revolving credit
facility and under its outstanding equipment loan.
(q) In connection with the repayment of the Alcatel Acquisition Notes,
Superior's bank credit agreement and the Adience Credit Facility and the
redemption of Alpine's 13.5% Senior Notes and 13.5% Debentures, Alpine will
write off the unamortized deferred debt issuance costs associated with these
credit facilities and, as a result, will incur an extraordinary charge in the
first quarter of fiscal 1996. The extraordinary charge is estimated at $5.3
million and consists of $4.6 million of fees and expenses associated with the
Alcatal Acquisition Notes, $0.4 million fees and expenses associated with the
other credit facilities and $0.3 million associated with original issue discount
on the Alpine 13.5% Senior Notes.
27
<PAGE>
COMBINED SUPPLEMENTAL UNAUDITED PRO FORMA OPERATING DATA
<TABLE>
<CAPTION>
FISCAL YEARS ENDED APRIL 30,
----------------------------------------------------
1993 1994 1995
--------------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales
Telecommunications wire and
cable...................... $ 351,523 $ 311,904 $ 340,756
Refractories................ 92,550 98,824 100,909
Data communications and
electronics................ 27,897 21,653 27,907
--------------- --------- ---------
Combined net sales........ $ 471,970 $ 432,381 $ 469,572
--------------- --------- ---------
--------------- --------- ---------
Gross profit
Telecommunications wire and
cable...................... $ 27,595(a) $ 35,760 $ 29,733
Refractories................ 14,147 15,443 18,390
Data communications and
electronics................ 11,997 8,252 8,221
--------------- --------- ---------
Combined gross profit..... $ 53,739 $ 59,455 $ 56,344
--------------- --------- ---------
--------------- --------- ---------
Gross margin
Telecommunications wire and
cable...................... 7.9%(a) 11.5% 8.7%
Refractories................ 15.3 15.6 18.2
Data communications and
electronics................ 42.9 38.1 29.5
Combined gross margin....... 11.4 13.8 12.0
Selling, general and
administrative
Telecommunications wire and
cable...................... $ 5,813 $ 5,249 $ 6,170
Refractories................ --(b) 16,578 15,977
Data communications and
electronics................ 7,558 6,574 6,511
Corporate................... 2,836 3,644 3,225
--------------- --------- ---------
Combined selling, general
and administrative....... $ --(b) $ 32,045 $ 31,883
--------------- --------- ---------
--------------- --------- ---------
Operating income
Telecommunications wire and
cable...................... $ 20,168(a) $ 28,897 $ 21,949
Refractories................ --(b) (2,562) 986
Data communications and
electronics................ 4,069 (75) 1,710
Corporate................... (2,964) (3,750) (3,225)
--------------- --------- ---------
Combined operating
income................... $ --(b) $ 22,510 $ 21,420
--------------- --------- ---------
--------------- --------- ---------
<FN>
------------------------
(a) Includes a $12.0 million restructuring charge incurred during fiscal 1993
for the shutdown of the Alcatel Business' manufacturing facility in
Fordyce, Arkansas and the relocation and consolidation of that operation
into its other U.S. manufacturing facilities.
(b) Adience items for 1993 reflect Adience's results for the 12-month period
ended June 30, 1993. Because Adience emerged from a prepackaged bankruptcy
in June 1993, comparable information prior to such date is not available
for selling, general and administrative expenses, operating income and
EBITDA.
</TABLE>
28
<PAGE>
SUPPLEMENTAL UNAUDITED PRO FORMA OPERATING DATA -- TELECOMMUNICATIONS WIRE AND
CABLE
The contracts under which Alpine's telecommunication wire and cable products
are sold provide for the pass-through of copper costs on specified terms.
Generally, the copper price component passed through in each contract for a
particular quarter is, based on the average COMEX copper price over the
three-month period ending at or before the beginning of that quarter. Each
month, Alpine estimates its product deliveries several months into the future
and enters into price commitments with its suppliers for a portion of its
estimated copper rod requirements for delivery on a forward basis. Alpine uses
these forward purchase commitments to minimize the differences between its raw
material copper costs charged to cost of sales and the pass-through pricing
charged to its customers.
The following table sets forth, for the periods indicated, certain combined
supplemental pro forma operating data for Alpine's telecommunications wire and
cable business.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
----------------------------------
1993(A) 1994(A) 1995(A)
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales
Superior................................................................... $ 122,671 $ 107,011 $ 136,578
Alcatel Business........................................................... 228,852 204,893 204,178
---------- ---------- ----------
Total.................................................................... $ 351,523 $ 311,904 $ 340,756
---------- ---------- ----------
---------- ---------- ----------
Gross profit
Superior................................................................... $ 14,220 $ 9,850 $ 14,150
Alcatel Business........................................................... 21,376 21,333 11,179
Restructuring charge -- Alcatel Business................................... (12,000) -- --
Pro forma adjustments (b).................................................. 3,999 4,577 4,404
---------- ---------- ----------
Total.................................................................... $ 27,595 $ 35,760 $ 29,733
---------- ---------- ----------
---------- ---------- ----------
Gross margin................................................................. 7.9% 11.5% 8.7%
Selling, general and administrative
Superior................................................................... $ 4,928 $ 4,214 $ 5,010
Alcatel Business........................................................... 12,597 13,692 10,254
Pro forma adjustments...................................................... (11,712) (12,657) (9,094)
---------- ---------- ----------
Total.................................................................... $ 5,813 $ 5,249 $ 6,170
---------- ---------- ----------
---------- ---------- ----------
Amortization of intangibles
Superior................................................................... $ 1,012 $ 1,012 $ 1,012
Alcatel Business........................................................... -- -- --
Pro forma adjustments (b).................................................. 602 602 602
---------- ---------- ----------
Total.................................................................... $ 1,614 $ 1,614 $ 1,614
---------- ---------- ----------
---------- ---------- ----------
Operating income
Superior................................................................... $ 8,280 $ 4,624 $ 8,128
Alcatel Business........................................................... 8,779 7,641 925
Restructuring charge -- Alcatel Business................................... (12,000) -- --
Pro forma adjustments (b).................................................. 15,109 16,632 12,896
---------- ---------- ----------
Total.................................................................... $ 20,168 $ 28,897 $ 21,949
---------- ---------- ----------
---------- ---------- ----------
<FN>
------------------------
(a) Represents results of Superior for the periods indicated and results of the
Alcatel Business for the 12 months ended December 31, 1992, and March 31,
1994 and 1995. Alpine prepared the Supplemental Pro Forma Operating Data
for the Alcatel Business on the basis of a fiscal year ended December 31,
1992, because the financial statements of the Alcatel Business historically
had been consolidated with those of Alcatel NA's other businesses and
financial data relating to the Alcatel Business were not available for the
12 months ended March 31, 1993.
(b) Reflects unaudited pro forma adjustments resulting from the Alcatel
Acquisition. These adjustments are described below and, for fiscal 1995, in
the Pro Forma Condensed Combined Financial Statements and the notes
thereto.
</TABLE>
29
<PAGE>
FISCAL 1995 COMPARED TO FISCAL 1994.
Superior's net sales during fiscal 1995 were $136.6 million, representing an
increase of $29.6 million, or 27.6%, as compared to net sales of $107.0 million
for fiscal 1994. Approximately $9.0 million of the increase was attributable to
the pass-through, in the form of increased selling prices, of higher copper
costs during fiscal 1995. The remaining $20.6 million increase in net sales was
due to increased volume in all of Superior's product lines. Net sales of
telephone wire and premise wire products increased to $64.1 million during
fiscal 1995 from $44.8 million (an increase of 41% after taking into account the
pass-through of higher copper costs). The majority of the increase in telephone
wire product sales was the result of additional long-term supply agreements
entered into during both fiscal years and included sales of recently introduced,
performance enhanced telephone wire products. The increase in premise wire
product sales was primarily due to increased sales of UTP products, first
introduced in September 1994.
In addition, sales of Superior's telephone cable products increased to $72.5
million from $62.2 million during fiscal 1994 (an increase of 7% after taking
into account the pass-through of higher copper costs). This increase was
primarily attributable to the impact of an award of a long-term supply agreement
from one of the RBOCs during fiscal 1994 and overall higher levels of demand for
telephone cable products during the latter half of fiscal 1995.
Net sales of the Alcatel Business during fiscal 1995 were $204.2 million,
essentially unchanged from $204.9 million during fiscal 1994. However, during
fiscal 1995, net sales included $18.0 million in additional billings for the
pass-through of higher copper costs and, therefore, adjusted for the impact of
higher copper prices, reflected a decline of 9.4%. This decline in net sales
resulted from a decrease in both sales volume and selling prices. The decrease
in sales volume, estimated at $10.0 million, was principally the result of the
loss of two major RBOC telephone cable supply agreements during the latter half
of fiscal 1994, as well as lower export sales. The Alcatel Business' allocation
under the two supply agreements was reallocated (pursuant to competitive bids)
to other industry participants as part of the RBOC's desire to further
concentrate their supplier relationships. Superior was an existing supplier to
one of these customers and was awarded a portion of the contract volume that the
Alcatel Business lost. The decline in the Alcatel Business' sales volume was
partially offset by spot market sales, sales under two supply agreements entered
into late in fiscal 1994 and in the third quarter of fiscal 1995, and sales to
two competitors for resale under their own name. Recent industry-wide capacity
reductions have resulted in an improvement in market pricing since the latter
half of fiscal 1995. Since the Alcatel Acquisition, Alpine has renegotiated
higher prices on certain of the Alcatel Business' supply agreements.
These new supply agreements entered into by Alcatel quoted lower sales
prices for telephone cable products, which contributed to $8.0 million of the
decrease in net sales during fiscal 1995 attributable to lower pricing (after
giving effect to the pass-through of copper costs). The generally weak spot
market conditions, which existed through the first half of fiscal 1995, also
contributed to this decrease in net sales. Telephone cable spot market pricing
improved significantly in the latter half of fiscal 1995 as a result of
increased industry-wide demand, together with capacity reductions by certain
industry participants.
Superior's gross profit was $14.2 million during fiscal 1995, an increase of
$4.3 million, or 43.7%, over gross profit of $9.9 million during fiscal 1994.
The gross margin increased to 10.4% during fiscal 1995 from 9.2% during fiscal
1994 and, if adjusted to exclude the impact of the pass-through of higher copper
costs, would have been 11.0% during fiscal 1995. The improvement in gross margin
during fiscal 1995 was the result of: (i) the increase in, and the higher
proportion of, telephone and premise wire sales which typically generate higher
percentage margins than telephone cable sales; (ii) the increase in overall
demand for telephone cable products in the latter half of fiscal 1995 and the
reduction in industry-wide capacity resulting in an improvement in pricing on
products not subject to long-term supply agreements (approximately 20%); and
(iii) higher production volumes during such period which resulted in a
reduction, on a percentage basis, of the fixed cost component of cost of goods
sold.
The gross profit of the Alcatel Business declined from $21.3 million during
fiscal 1994 to $11.2 million during fiscal 1995. The gross margin declined from
10.4% to 5.5% for this period and, if adjusted to exclude the impact of the
pass-through of higher copper costs, would have been 7.5% during fiscal 1995.
The
30
<PAGE>
reduction in gross profit and gross margin during fiscal 1995 was the result of
the replacement of the RBOC telephone cable business lost (a portion of which
was awarded to Superior) in the latter half of 1994 with spot market sales and
business under new supply agreements during a period of extremely competitive
market pricing. If recent higher market prices continue, this will result in
near-term improvement in profit margins on the portion of product sales of the
Alcatel Business not subject to long-term supply agreements, and a gradual
improvement in profit margins on product sales subject to long-term supply
agreements as they expire.
Pro forma adjustments reducing cost of goods sold were $4.6 million during
fiscal 1994 and $4.4 million during fiscal 1995. These adjustments reflect: (i)
freight savings based on optimizing product shipments to specific customers
based on shipment from the closest manufacturing facility, (ii) savings
resulting from a reduction in headcount at the Alcatel Business' plants and
(iii) adjustments to the historical depreciation expense of the Alcatel
Business. See Notes (d) and (e) to the Unaudited Pro forma Condensed Combined
Financial Statements in Item 6 Selected Financial Data.
Selling, general and administrative expenses during fiscal 1995 on a
combined basis amounted to $6.2 million, compared to $5.2 million during fiscal
1994. Such pro forma selling, general and administrative expenses include
historical expenses for Superior's operations of $5.0 million during fiscal 1995
and $4.2 million during fiscal 1994. The historical selling, general and
administrative expenses for the Alcatel Business decreased to $10.3 million
during fiscal 1995 from $13.7 million during fiscal 1994 due to lower
allocations of management fees and administrative charges which represent
indirect expense allocations from the parent and other affiliates of the
previous owner of the Alcatel Business, which will not be incurred after the
Alcatel Acquisition. Pro forma adjustments to selling, general and
administrative expenses are included to reflect: (i) the elimination of
historical selling, general and administrative expenses of the Alcatel Business
and (ii) the inclusion of incremental selling, general and administrative
expenses estimated to be required by Superior to absorb the operations of the
Alcatel Business. See Note (c) to the Unaudited Pro Forma Condensed Combined
Statements of Operations.
Operating income during fiscal 1995 on a combined basis was $21.9 million,
or $7.0 million less than operating income of $28.9 million during fiscal 1994.
This decrease was the result of the factors discussed above.
FISCAL 1994 COMPARED TO FISCAL 1993.
During fiscal 1994, Superior's net sales declined by $15.7 million, or
12.8%, from $122.7 million during fiscal 1993. Approximately $5.0 million of the
decline was attributable to the pass-through, in the form of reduced selling
prices, of lower copper costs during fiscal 1994. Despite the overall sales
decline, sales of telephone wire products increased by $10.0 million, or 29%,
during fiscal 1994 to $44.8 million. This increase was caused by the award of a
long-term supply agreement from an RBOC during the early part of fiscal 1994 and
reflected the impact of Superior's strategy to concentrate production, sales,
marketing, and engineering resources towards telephone wire products, a market
that is somewhat less competitive and generates higher product margins than
telephone cable products. During fiscal 1994, sales of telephone cable products
declined by $25.6 million to $62.2 million. The loss of one significant
long-term supply agreement with a major independent telephone company, and
overall sluggish demand during fiscal 1994 for telephone cable sales, led to
this decline.
Net sales for the Alcatel Business during fiscal 1994 declined $24.0
million, or 10.5%, from sales of $228.9 million during fiscal 1993.
Approximately $11.0 million of this decline was attributable to the pass-
through, in the form of reduced selling prices, of lower copper costs during
fiscal 1994. The remainder of the decline in net sales was the result of the
loss of a major long-term supply agreement with an RBOC in the third quarter of
this period, offset in part by the impact of Hurricane Andrew, which resulted in
a significant short-term increase in net sales during the 12-month period ended
December 31, 1992.
During fiscal 1994, Superior's gross profit declined by $4.4 million to $9.9
million. The gross margin declined from 11.6% during fiscal 1993 to 9.2% during
fiscal 1994 (8.8% if adjusted for the impact of pass-through of lower copper
costs). The reduction in the gross margin during fiscal 1994 was the result of
the
31
<PAGE>
extremely competitive market for telephone cable products in the latter part of
fiscal 1993 and the early part of fiscal 1994, as well as lower production
volumes which resulted in higher fixed costs on a per unit of production basis.
Gross profit for the Alcatel Business was $21.3 million during 1994, a
decrease from $21.4 million (before restructuring charges) during the fiscal
12-month period ended December 31, 1992. During the fiscal 12-month period ended
December 31, 1992, a $12.0 million restructuring charge was incurred for the
shutdown of the Alcatel Business' Fordyce, Arkansas manufacturing facility and
the relocation and consolidation of these operations into its other U.S.
manufacturing facilities. Gross margin during fiscal 1994 was 10.4% (11.2%
adjusted for the pass-through of lower copper costs during such period), as
compared to 9.3% (before consideration of the $12.0 million restructuring
charge) for the fiscal 12-month period ended December 31, 1992. The increase in
gross margin during fiscal 1994 was primarily the result of improved
manufacturing and cost efficiencies upon completion of the aforementioned plant
consolidation. Pro forma adjustments reducing cost of goods sold were $4.0
million during fiscal 1993 and $4.6 million during fiscal 1994.
Selling, general and administrative expenses on a combined basis declined
$0.6 million, or 9.7%, to $5.2 million during fiscal 1994. This decline was the
result of staffing and other cost reductions at Superior in conjunction with
reduced level of sales and profit margins during fiscal 1994. As discussed in
the analysis of selling, general and administrative expenses for fiscal 1995,
expenses incurred by the Alcatel Business relate to allocations from affiliated
companies and personnel and other costs, which have been substantially
eliminated as a result of the Alcatel Acquisition.
Operating income during fiscal 1994 increased to $28.9 million from $20.2
million during the 12-month period ended December 30, 1992. Excluding the $12.0
million restructuring charge incurred during the fiscal 12-month period ended
December 31, 1992, operating income during fiscal 1994 would have declined $3.3
million as a result of the factors discussed above.
SUPPLEMENTAL UNAUDITED PRO FORMA OPERATING DATA -- REFRACTORIES
On February 22, 1993, prior to its acquisition by Alpine, Adience filed a
prepackaged plan of reorganization under Chapter 11 of the Bankruptcy Code,
which was consummated on June 30, 1993. Upon emerging from the Reorganization,
Adience adopted fresh start reporting in accordance with AICPA Statement of
Position 90-7.
The Supplemental Pro Forma Operating Data presented below represent time
periods both before and after the Reorganization and should therefore be
considered in the light of the effects of the Reorganization. As a result of the
Reorganization, comparative information prior to such date is not available for
selling, general and administrative expenses, amortization of intangibles and
operating income (loss).
<TABLE>
<CAPTION>
12 MONTH ENDED FISCAL YEAR ENDED
JUNE 30, APRIL 30,
-------------------- ---------------------
1993 1994 1994 1995
--------- --------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales......................................................... $ 92,550 $ 99,985 $ 98,824 $ 100,909
Gross profit...................................................... 14,147 14,980 15,443 18,390
Gross margin...................................................... 15.3% 15.0% 15.6% 18.2%
Selling, general and administrative............................... 16,578 15,977
Amortization of intangibles....................................... 1,427 1,427
Operating income (loss)........................................... (2,562) 986
</TABLE>
FISCAL 1995 COMPARED TO FISCAL 1994.
Adience's net sales of refractory products and services during fiscal 1995
were $100.9 million, representing an increase of $2.1 million, or 2.1%, as
compared to net sales of $98.8 million during fiscal 1994. The increase was due
to increased sales of Alpine's specialty products and services, particularly
monolithic (unformed) refractories utilizing shotcrete technology, bottom pour
refractories and slidegates, as well as an
32
<PAGE>
increase in rebuilding services for coke ovens, partially offset by a decrease
in sales of maintenance services to the integrated iron and steel industry.
Sales of refractory bricks to the iron and steel industry declined due to the
discontinuation of numerous unprofitable product lines. Sales of block to the
flat plate glass industry remained essentially unchanged.
Adience's gross profit for fiscal 1995 was $18.4 million, representing an
increase of $2.9 million, or 19.1%, from gross profit of $15.4 million during
fiscal 1994. The gross margin increased to 18.2% during fiscal 1995, as compared
to 15.6% during fiscal 1994. The improvement in gross margin during fiscal 1995
was the result of the new management's efforts to (1) discontinue unprofitable
product lines, (2) increase product prices, (3) increase productivity through
headcount reductions, (4) consolidate operations and (5) continue to focus on
higher margin products such as monolithic and bottom pour refractories and
slidegates.
Selling, general and administrative expenses during fiscal 1995 were $16.0
million, as compared to $16.6 million during fiscal 1994, a decrease of 3.6% on
a pro forma basis. This decrease resulted from reductions in corporate overhead,
insurance expenses and public company expenses, partially offset by increased
personnel expenses in the sales, research and development and other areas.
12 MONTHS ENDED JUNE 30, 1994 COMPARED TO 12 MONTHS ENDED JUNE 30, 1993
Adience's net sales of refractory products and services during the 12 months
ended June 30, 1994 were $100.0 million, representing an increase of $7.4
million, or 8%, as compared to net sales of $92.6 million for the 12 months
ended June 30, 1993. Iron and steel producers generally operated at 90% of
capacity during the 12 months ended June 30, 1994, thus creating favorable
economic conditions for Adience. Sales and installation of monolithic
refractories and repair services increased $8.8 million during this period while
demand in the flat plate glass industry was depressed and resulted in a sales
decline of $1.5 million. Sales of brick products remained flat during this
period.
In addition, the 12 months ended June 30, 1993 included the Reorganization.
During the Reorganization, Adience operated under strict payment terms with many
of its suppliers, experienced higher costs and, because of a highly competitive
marketplace, was unable to pass on these higher costs to its customers or to
offer extended payment terms. As a result, sales opportunities were lost and
sales declined while customers were concerned with Adience's financial
stability.
Adience's gross profit for the 12-month period ended June 30, 1994 was $15.0
million, representing an increase of $0.8 million, or 5.9%, as compared to gross
profit of $14.1 million for the 12 month period ended June 30, 1993. The gross
margin percentage remained essentially unchanged during both periods.
SUPPLEMENTAL OPERATING DATA -- DATA COMMUNICATIONS AND ELECTRONICS
The following table sets forth for the periods indicated certain financial
data for Alpine's data communications and electronics business.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
-------------------------------
1993 1994 1995
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales........................................................................ $ 27,897 $ 21,653 $ 27,907
Gross profit..................................................................... 11,979 8,252 8,221
Gross margin..................................................................... 42.9% 38.1% 29.5%
Selling, general and administrative.............................................. 7,558 6,574 6,511
Amortization of intangibles...................................................... 267 1,753 --
Operating income (loss).......................................................... 4,069 (75) 1,710
</TABLE>
FISCAL 1995 COMPARED TO FISCAL 1994
During fiscal 1995, net sales increased by $6.3 million, or 28.9%, to $27.9
million. The primary contributor to this increase was the growth in the contract
manufacturing business, net sales of which increased to $10.5 million during
fiscal 1995, from $1.9 million during fiscal 1994. The largest component of
33
<PAGE>
this increase was $7.0 million related to a new contract with the National
Aeronautics and Space Administration for Hardware Interface Modules, which
generated no sales during fiscal 1994. Net sales of products to the U.S.
military decreased from $18.6 million during fiscal 1994 to $15.9 million during
fiscal 1995, a 15.1% decrease. Sales of multiplexers increased $0.8 million
during fiscal 1995 to $7.9 million. Net sales of printers declined by $1.5
million during fiscal 1995 to $1.3 million. Alpine has decided to de-emphasize
this product line because it is reaching the end of its product life. Sales of
multiplexer upgrades and other products declined by $0.7 million during fiscal
1995.
During fiscal 1995, gross profit remained relatively unchanged at $8.2
million. Gross margin declined from 38.1% during fiscal 1994 to 29.5% during
fiscal 1995. A change in product mix from primarily higher margin military
products to a mix of both military products and lower margin contract
manufacturing services resulted in this decline.
Selling, general and administrative expenses declined from $6.6 million
during fiscal 1994 to $6.5 million during fiscal 1995, representing a decrease
of 1.0%. This decrease was the result of reductions in personnel and other
expenses.
Amortization of intangibles of $1.8 million during fiscal 1994 resulted
primarily from a non-recurring charge of $1.5 million related to the write-off
of intangible assets associated with Alpine's multi-image business, which was
not forecast to generate sufficient income to recover the carrying value of such
intangible asset. There was no amortization during fiscal 1995.
Operating income increased to $1.7 million during fiscal 1995 from an
operating loss of $0.1 million during fiscal 1994, as a result of the factors
discussed above.
FISCAL 1994 COMPARED TO FISCAL 1993
DNE's net sales during fiscal 1994 declined by $6.2 million, or 22.4%, from
$27.9 million during fiscal 1993 to $21.7 million during fiscal 1994.
The decline in fiscal 1994 net sales included a reduction of approximately
$6.0 million in the datacommunications business due primarily to the completion
of a large government requirements contract that accounted for $6.0 million in
sales during fiscal 1993. Also contributing to this decrease was the completion
during fiscal 1993 of a major development program for the U.S. Navy, which
contributed $0.8 million in sales.
DNE's printer and audio visual businesses also experienced a decline in net
sales of $2.3 million during fiscal 1994 to $3.8 million. Alpine decided to
de-emphasize these products because they were reaching the end of their
respective product lives.
Somewhat offsetting the reduction in sales during fiscal 1994 was an
increase in contract manufacturing business and sales of military avionic
products which had aggregate net sales of $8.4 million, an increase of $2.3
million.
Gross profit declined from $12.0 million during fiscal 1993 to $8.3 million
during fiscal 1994. The reduction in sales during fiscal 1994 was the primary
reason for the decline in gross profit. However, also contributing to the
reduction in gross profit was a decline in gross margin from 42.9% in fiscal
1993 to 38.1% in fiscal 1994. This reduction was primarily due to the addition
of lower margin contract manufacturing business during fiscal 1994 and lower
margins on its printer product line.
Selling, general and administrative expenses during fiscal 1994 were $6.6
million, as compared to $7.6 million for fiscal 1993, representing a decrease of
13.0%. The decline was primarily attributable to reductions in research and
development and amortization of non-cash compensation expense.
Amortization of intangibles was $0.3 million during fiscal 1993, as compared
to $1.8 million during fiscal 1994. This increase resulted from the
aforementioned non-recurring charge of $1.5 million during fiscal 1994.
Operating income decreased by $4.1 million during fiscal 1994 as a result of
the factors discussed above.
34
<PAGE>
SUPPLEMENTAL OPERATING DATA -- CORPORATE
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
-------------------------------
1993 1994 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Selling, general and administrative...................................... $ 2,836 $ 3,644 $ 3,225
</TABLE>
Selling, general and administrative expenses decreased from $3.6 million in
fiscal 1994 to $3.2 million in fiscal 1995, a decrease of 11.5%, primarily as a
result of a reduction in consulting expenses and expenses associated with stock
option grants and restricted stock awards. Selling, general and administrative
expenses increased $0.8 million, or 28.5%, in fiscal 1994, primarily because of
the consulting, stock option and restricted stock expenses referred to above.
SUPPLEMENTAL COMMENTS ON ACTUAL RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, supplemental data
reflecting Alpine's actual results of operations.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
--------------------------------
1993 1994 1995
--------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales............................................................. $ 27,897 $ 68,510 $ 198,135
Gross profit.......................................................... 11,982 12,260 29,010
Gross margin.......................................................... 43.0% 17.9% 14.6%
Operating income (loss)............................................... 1,105 (2,200) 6,996
Interest expense...................................................... 2,301 2,363 8,197
(Loss) from continuing operations..................................... (2,456) (4,895) (1,176)
</TABLE>
The growth in net sales and gross profit in fiscal 1994 and 1995 reflected
the acquisition of Superior in November 1993 and the Adience Acquisition in
December 1994. The Superior Acquisition added $46.9 million and $4.0 million to
net sales and gross profit, respectively, during fiscal 1994 and $136.6 million
and $14.2 million to net sales and gross profit, respectively, during fiscal
1995, while the Adience Acquisition added $33.6 million and $6.6 million to net
sales and gross profit, respectively, during fiscal 1995.
Gross margin declined in fiscal 1994 and 1995, primarily as the result of
the inclusion of the operations of Superior and Adience, both of which operate
in relatively low gross margin industries, compared to the margins achieved by
DNE. In addition, DNE's margins declined from 42.9% during fiscal 1993 to 38.1%
during fiscal 1994 and to 29.5% during fiscal 1995. The decline in DNE's margins
resulted primarily from the increase in lower margin contract manufacturing
business, which has grown as a percentage of DNE's net sales from zero during
fiscal 1993 to 37.4% during fiscal 1995.
Interest expense increased slightly in fiscal 1994 and substantially in
fiscal 1995. In fiscal 1994, the acquisition of Superior added $1.2 million in
interest expense. This increase was mostly offset by a $1.2 million decrease in
corporate interest expense due to a reduction in long-term debt, primarily
through negotiated exchanges of debt for Alpine Common Stock. The acquisition of
Adience during fiscal 1995 and the inclusion of a full year of Superior
operations resulted in an increase in interest expense of $4.5 million, along
with a $1.2 million increase in corporate interest expense, accounted for
substantially all of this increase.
The loss from continuing operations for fiscal 1995 reflected losses
incurred at Adience of $2.2 million and the write-off of $0.2 million in
expenses incurred in connection with postponed placement of long-term debt.
DISCONTINUED OPERATIONS
As described in Note 5 to the Consolidated Financial Statements, Alpine
completed the merger of its subsidiaries, Alpine Polyvision, Inc. ("APV") and
Posterloid Corporation ("Posterloid") into PolyVision
35
<PAGE>
Corporation ("PolyVision") (formerly Information Display Technology, Inc.) and
on June 14, 1995 distributed 73% of the outstanding PolyVision common stock to
Alpine's stockholders. This distribution, when combined with shares of
PolyVision common stock to be used as partial consideration in connection with
the Adience Acquisition and the retirement of Adience 11% Senior Secured Notes
will reduce Alpine's investment in PolyVision common stock to less than 20%. As
a result of the distribution, the operations of APV and Posterloid have been
reported as discontinued operations in the historical Consolidated Financial
Statements.
For the year ended April 30, 1994 and 1995, losses from discontinued
operations were $25.2 million and $4.9 million, respectively, including a $3.0
million provision recorded in the quarter ended October 31, 1994 to reflect
estimated operating losses to be incurred through the date of the distribution
date of PolyVision common stock to Alpine's stockholders, and a non-cash charge
of $21.7 million recorded during the quarter ended January 31, 1994 related to
purchased R&D research and development charges of APV.
LIQUIDITY AND CAPITAL RESOURCES
The Superior Acquisition in November 1993, the Adience Acquisition in
December 1994 and the Alcatel Acquisition in May 1995, together with related
financing and equity transactions, the PolyVision Transactions and the other
transactions referred to in Alpine's Consolidated Financial Statements, have had
a major impact on Alpine's financial condition. Stockholders' equity has
increased from $10.6 million at April 30, 1993 to $44.7 million at April 30,
1995 and debt has increased from $13.6 million at April 30, 1993 to $247.5
million on a pro forma basis at April 30, 1995 (See Footnote 9 to the
Consolidated Financial Statements). The increase in equity resulted primarily
from the issuance of 4,500,000 shares of Alpine Common Stock in connection with
the Superior Acquisition, the receipt by Alpine of $5.0 million from a private
placement of preferred stock in November 1993 and the issuance of Alpine
preferred stock in connection with the Adience Acquisition. Stockholders' equity
includes $17.2 million of preferred stock, of which $4.0 million is subject to
conversion into Common Stock pursuant to two exchange agreements.
During fiscal 1995, Alpine used $1.0 million in cash flow from operations,
including $3.2, million provided by continuing operations, offset by $4.1
million used for discontinued operations. Cash used for investing activities of
$1.2 million included capital expenditures of $2.6 million, and net cash
provided of $0.8 million as a result of the Adience Acquisition. Cash provided
by financing activities of $15.2 million during the period included $20.7
million in additional borrowings (including short term borrowings and borrowings
under revolving credit facilities), partially offset by $3.5 million in term
loan repayments and $1.7 million for preferred stock dividends and open market
repurchases of Alpine Common Stock.
Alpine's principal subsidiaries have maintained separate bank lines and
other credit facilities to finance their operations.
At April 30, 1995 Superior had a bank and revolving credit facility
amounting to $33.4 million of which $21.9 million was outstanding. On May 11,
1995 Superior's bank credit facility and revolving credit facility were repaid
with the proceeds of the sale of $140.0 million principal amount of Alcatel
Acquisition Notes due in 1997. The net proceeds, after payment of the
aforementioned facilities, amounted to $112.8 million, of which $93.0 million
was used to finance the Alcatel Acquisition costs and the remainder, $19.8
million, was included in Superior's working capital. Superior has historically
generated cash flow exceeding its debt service and capital expenditure
requirements and it is anticipated that this will continue into the foreseeable
future.
DNE has a $3.0 million credit facility of which $0.6 million was outstanding
at April 30, 1995, with an additional $2.4 million of undrawn collateral-based
availability. DNE is also indebted under a $5.3 million mortgage loan (with
annual principal payments of $186,000) and under a $2.5 million subordinated
note, due in eight equal semi-annual installments from August 1995 through
February 1999. DNE has historically generated operating cash flow exceeding its
debt service and capital expenditure requirements and it is anticipated that
this will continue into the foreseeable future.
On July 26, 1995, Alpine completed its acquisition of all of the outstanding
common stock of Adience (see footnote 6 to the Consolidated Financial
Statements). Adience's principal debt structure includes a
36
<PAGE>
$14.0 million revolving credit facility (maturing in September 1995), of which
approximately $12.3 million was outstanding at April 30, 1995, with
approximately $1.0 million of undrawn collateral-based availability, and a $49.1
million face value ($45.4 million recorded amount) of outstanding 11% Senior
Secured Notes ("Senior Notes") which includes semi-annual interest payments and
is due in 2002. An agreement between Alpine and the holders of 90% (face value)
of the Senior Notes has been entered into whereby $44.1 million face value of
the Senior Notes will be exchanged for $35.3 million in cash, $2.3 million in
value of PolyVision Common Stock and 44,916 shares of 8% Cumulative Convertible
Preferred Stock of Alpine with a liquidation preference of $50 per share. If the
exchange does not occur prior to July 1, 1995, the agreement may be terminated
by either Alpine or the Senior Note holders. Adience is currently in the process
of a restructuring which is expected to result in reduced operating costs and
improved profitability. It is anticipated that upon the completion of such
restructuring Adience will generate sufficient cash flow from operations to
service its debt and meet its other ongoing commitments.
Alpine's working capital generally increases during June, July and August,
largely because of higher summertime shipments to the RBOCs and its other
telephone company customers, and is generally at its lowest levels in December,
January and February. For fiscal 1996, Alpine estimates that the difference
between the highest and lowest levels of working capital will be in the range of
$10.0 million to $15.0 million. Alpine has initiated a working capital
management program designed to reduce Alcatel's historical working capital
levels (on a days outstanding basis) to levels comparable to that of Superior.
Alpine's pro forma capital expenditures totaled $8.4 million in fiscal 1995.
Alpine has budgeted approximately $7.5 million for capital expenditures in
fiscal 1996, including (i) approximately $6.0 million for its wire and cable
operations; (ii) approximately $2.6 million for its refractories business and
(iii) approximately $0.9 million for data communications and electronics.
In connection with the PolyVision Merger, Alpine entered into an agreement
with PolyVision on May 24, 1995, pursuant to which Alpine agreed to lend to
PolyVision from time to time prior to May 24, 1997 up to $5.0 million to be used
by PolyVision to fund its working capital needs. Borrowings under the agreement
will be unsecured and will bear interest at a market rate reflecting Alpine's
cost of funds. The principal balance outstanding will be due on May 24, 2005,
subject to mandatory prepayment of principal and interest, in whole or in part,
from the net cash proceeds of any public or private equity or debt financing by
PolyVision at any time before maturity. Alpine's obligation to lend such funds
to PolyVision is subject to a number of conditions, including review by Alpine
of the proposed use of such funds by PolyVision. Until May 24, 1996, Alpine has
additionally agreed to loan to PolyVision for working capital deficiencies an
amount not to exceed $2.5 million.
The terms of Alpine's 8% convertible senior preferred stock, 9% convertible
senior preferred stock and 9% convertible preferred stock provide for the annual
payment by Alpine of an aggregate of $1.3 million in dividends. The Agreement
contain restrictions on the ability of Alpine to pay dividends on its capital
stock.
On July 21, 1995, Alpine successfully completed an offering of $153.0
million face amount of 12.25% Senior Secured Notes and concurrently entered into
a $85.0 million loan and security agreement. The proceeds of the Notes and a
$40.0 million initial draw under the loan and security agreement were used to
refinance substantially all of Alpine's existing long term debt. After giving
effect to such refinancing, Alpine's total debt due within one year is $11.3
million, of which $1.0 million represents the current portion of long-term debt
and $10.3 million represents a deferred payment obligation due Alcatel NA. In
connection with the Alcatel Acquisition this deferred obligation is payable,
without interest, on August 11, 1995.
Alpine will rely on cash flow from operations and borrowing under the New
Credit Agreement to meet its ongoing cash requirements. The New Credit Agreement
provides for borrowings of up to $85.0 million for general working capital needs
if certain conditions are met and is available to Alpine under a revolving
credit facility that does not reduce over its five-year term. Borrowings will be
guaranteed by Alpine's operating subsidiaries and a first priority security
interest will be granted in favor of the lenders in all inventories and accounts
receivable owned by these subsidiaries and certain other assets. Based on
expected levels of
37
<PAGE>
inventory and accounts receivable during fiscal 1996 and the collateral advance
rates, Alpine estimates that it could borrow up to $75 million under the New
Credit Agreement during 1996. The New Credit Agreement contains restrictions on
incurring additional indebtedness or liens and requires Alpine to maintain
certain minimum financial performance levels.
Alpine believes that, its cash flow from operations and amounts available
under the New Credit Agreement will be sufficient to fund its working capital
requirements, planned capital expenditures and debt service requirements for at
least the next 12 months.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Alpine's consolidated financial statements at April 30, 1994 and 1995 and
for each of the three years in the period ended April 30, 1995 and the report of
the independent accounts thereon and financial statement schedules required
under Regulation S-X are submitted herein as a separate section following Item
14 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The information required by this Item is incorporated herein by reference to
Alpine's definitive Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after the end of the
fiscal year covered by this report ("Alpine's Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to
Alpine's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference to
Alpine's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference to
Alpine's Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1), (a)(2) See the separate section of this report following Item 14 for
a list of financial statements and schedules filed herewith.
(a)(3) Exhibits as required by Item 601 of Regulation S-K are listed in Item
14(c) below.
(b) The Company did not file any Reports on Form 8-K during the fourth
quarter of fiscal 1995.
ITEM 14(C) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -------------------------------------------------------------------------------------------------------
<S> <C>
2(a) Asset Purchase Agreement, dated as of March 17, 1995 by and among Alatel NA Cable Systems, Inc.,
Alcatel Canada Wire, Inc. Superior Cable Corporation and Superior Teletec Inc. (incorporated herein by
reference to Exhibit 1 to the Current Report on Form 8-K of Alpine dated May 24, 1995)
2(b) Amendment dated May 11, 1995 to Asset Purchase Agreement by and among Alcatel NA Cable Systems, Inc.,
Alcatel Canada Wire, Inc., Superior Cable Corporation and Superior Teletec Inc. (incorporated herein by
reference to Exhibit 2 to the Current Report on Form 8-K of Alpine dated May 24, 1995)
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -------------------------------------------------------------------------------------------------------
2(c) Agreement and Plan of Merger, dated as of December 21, 1994, as amended, by and among Information
Display Technology, Inc., IDT PolyVision Acquisition Corp., IDT Posterloid Acquisition Corp., The
Alpine Group, Inc., Alpine/PolyVision, Inc. and Posterloid Corporation (incorporated herein by
reference to Exhibit 2 to Amendment No. 1 to Alpine's Statement on Schedule 13D relating to its
beneficial ownership of equity securities of Information Display Technology, Inc. dated December 28,
1994)
<S> <C>
2(d) Amendment to the Agreement and Plan of Merger, dated as of December 21, 1994, by and among Information
Display Technology, Inc., IDT PolyVision Acquisition Corp., IDT Posterloid Acquisition Corp., The
Alpine Group, Inc., Alpine/PolyVision, Inc. and Posterloid Corporation (incorporated herein by
reference to Exhibit 1 to Amendment No. 2 to Alpine's Statement on Schedule 13D relating to its
beneficial ownership of equity securities of Information Display Technology Inc. dated May 5, 1995)
2(e) Amended and Restated Stock Purchase Agreement, dated as of October 11, 1994, by and among The Alpine
Group, Inc. and certain stockholders of Adience, Inc. ("Adience") as listed therein, as amended
(incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated
January 5, 1995)
3(a)* Certificate of Incorporation of Alpine.
3(b) Amendment to the Certificate of Incorporation of Alpine (incorporated herein by reference to Exhibit
3(aa) of Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No.
33-53434) of Alpine, as filed with the Commission on May 12, 1993)
3(c) Certificate of the Powers, Designations, Preferences and Rights of the 9% Cumulative Convertible
Preferred Stock of Alpine (incorporated herein by reference to Exhibit 1 to the Quarterly Report on
Form 10-Q of Alpine for the quarter ended January 31, 1989)
3(d) Certificate of the Powers, Designations, Preferences and Rights of the 9% Cumulative Convertible Senior
Preferred Stock of Alpine (incorporated herein by reference to Exhibit 3(c) to the Annual Report on
Form 10-K of Alpine for the fiscal year ended April 30, 1992 ("1992 10-K"))
3(e) Certificate of the Powers, Designations, Preferences and Rights of the 8.5% Cumulative Convertible
Senior Preferred Stock of Alpine (incorporated herein by reference to Exhibit 3(e) to the Annual Report
on Form 10-K of Alpine for the fiscal year ended April 30, 1994)
3(f)* Certificate of the Powers, Designations, Preferences and Rights of the 8% Cumulative Convertible Senior
Preferred Stock of the Company
3(g)* By-laws of Alpine
4(a) Indenture, dated as of October 1, 1986, between Alpine and Manufacturers Hanover Trust Company
("MHTC"), as trustee, relating to the 13 1/2% Senior Subordinated Debentures due 1996 of the Company
(incorporated herein by reference to Exhibit 4 to Amendment No. 2 to the Registration Statement on Form
S-1 (Registration No. 33-7709) of Alpine, as filed with the Commission on October 3, 1986)
4(b)* First Supplemental Indenture to the above Indenture, dated as of February 3, 1989, between Alpine and
MHTC, as trustee
4(c)* Second Supplemental Indenture to the above Indenture, dated as of October 31, 1989, between Alpine and
MHTC, as trustee
4(d)* Indenture, dated as of October 31, 1989, between Alpine and IBJ Schroder Bank & Trust Company ("IBJ"),
as trustee, relating to the Convertible Secured Senior Subordinated Notes due July 31, 1996, of Alpine
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -------------------------------------------------------------------------------------------------------
4(e) First Supplemental Indenture to the above Indenture, dated as of March 28, 1991, between Alpine and
IBJ, as trustee (incorporated herein by reference to Exhibit 4 to the Current Report on Form 8-K of
Alpine dated April 10, 1991 (the "April 1991 8-K"))
<S> <C>
4(f) Second Supplemental Indenture to the above Indenture, dated as of April 10, 1992, between Alpine and
IBJ, as trustee (incorporated herein by reference to Exhibit 4(f) to the 1992 10-K)
4(g) Indenture, dated as of June 30, 1993, between Adience, Inc. ("Adience") and IBJ, as trustee
(incorporated herein by reference to Registration Statement No. 33-72024 of Adience, Inc.)
10(a) Amended and Restated 1984 Restricted Stock Plan of Alpine (incorporated herein by reference to Exhibit
10.5 to Form S-4 (Registration No. 33-9978) of Alpine, as filed with the Commission on October 5, 1993
(the "S-4 Registration Statement")
10(b) Amended and Restated 1987 Long Term Equity Incentive Plan of Alpine (incorporated herein by reference
to Exhibit 10.4 to the S-4 Registration Statement)
10(c) Stock Purchase Agreement, dated February 14, 1992, by and between Alpine and Dataproducts Corporation,
relating to the purchase of shares of capital stock of DNE (incorporated herein by reference to Exhibit
1 to the Current Report on Form 8-K of Alpine dated March 2, 1992 (the "March 1992 8-K"))
10(d) Loan Agreement, dated as of February 13, 1992, by and among Alpine, DNE and the Connecticut Development
Authority (incorporated herein by reference to Exhibit 3 to the March 1992 8-K)
10(e) Agreement and Plan of Merger by and between Alpine and Superior TeleTec Inc., dated as of June 17, 1993
and amended on September 24, 1993 (incorporated herein by reference to Exhibit 2 to the S-4
Registration Statement)
10(f) Exchange Agreement, dated June 17, 1993 by and among Alpine, PV Partners, Suez Ventures, EUROC, and
Samuel Montagu Finance (incorporated herein by reference to Exhibit 10.1 to the S-4 Registration
Statement)
10(g) Development Agreement between Connecticut Innovations Incorporated and Alpine/ PolyVision, Inc., dated
as of December 9, 1992 (incorporated herein by reference to Exhibit 10(z) to the Annual Report on Form
10-K of Alpine for the fiscal year ended April 30, 1993 (the "1993 10-K"))
10(h) Loan Agreement between Connecticut Development Authority and Alpine/PolyVision, Inc., dated as of
December 9, 1992 (incorporated herein by reference to Exhibit 10(aa) to the 1993 10-K)
10(i) Master Credit Agreement, dated October 19, 1993 and amended on November 10, 1993, by and among Superior
TeleTec Transmission Products Inc., as borrower, Alpine, as guarantor, Bank of Boston Connecticut and
Creditanstalt-Bankverein, as the banks, and Bank of Boston Connecticut, as the agent (incorporated
herein by reference to Exhibit 10(a) to the Current Report on Form 8-K of Alpine dated November 24,
1993)
10(j) Lease Agreement by and between ALP(TX) QRS 11-28, Inc., and Superior TeleTec Transmission Products,
Inc., dated as of December 16, 1993 (incorporated herein by reference to Exhibit (i) to the Quarterly
Report on Form 10-Q of Alpine for the Quarter ended January 31, 1994)
10(k)* Amended and Restated Debt Exchange Agreement, dated as of October 11, 1994, among Alpine and certain
debtholders of Adience as listed therein (as amended through April 14, 1995)
10(l) Note Purchase Agreement by and among Alpine, Superior TeleTec, Inc., Superior Cable Corporation and
Nomura International Trust Company (incorporated herein by reference to Exhibit 3 to Alpine's Current
Report on Form 8-K dated May 24, 1995)
10(m)* Letter Agreement, dated May 24, 1995, by and between Alpine and PolyVision Corporation ("PolyVision")
relating to $5,000,000 credit commitment
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -------------------------------------------------------------------------------------------------------
10(n)* Letter Agreement, dated May 24, 1995, by and between Alpine and PolyVision relating to $2,500,000
credit commitment
<S> <C>
10(o)* First Amendment to Lease Agreement, dated as of May 10, 1995, by and between ALP (TX) QRS 11-28, Inc.
and Superior Teletec Inc.
10(p)* Purchase Agreement, dated as of July 14, 1995, by and among Alpine, Adience, Superior
Telecommunications Inc., Superior Cable Corporation, Merrill Lynch & Co., Nomura Securities
International, Inc. and First Albany Corporation.
10(q)* Employment Agreement, dated as of September 8, 1993, by and between Alpine and Steven S. Elbaum
10(r)* Amendment to Employment Agreement, dated as of September 8, 1993, by and between Alpine and Steven S.
Elbaum
10(s)* Employment Agreement, dated as of September 8, 1993, by and between Alpine and Bragi F. Schut
10(t)* Amendment to Employment Agreement, dated as of September 8, 1993, by and between Alpine and Bragi F.
Schut
10(u)* Employment Agreement, dated as of November 10, 1993, by and between Alpine and David S. Aldridge
10(v)* Employment Agreement, dated as of November 10, 1993, by and between Alpine and James R. Kanely
10(w)* Employment Agreement, dated as of November 10, 1993, by and between Alpine and Justin F. Deedy, Jr.
10(x)* Second Amendment to Lease Agreement, dated as of July 21, 1995, by and between ALP(TX) QRS H-28, Inc.
and Superior Telecommunications Inc.
10(y)* Loan and Security Agreement, dated as of July 21, 1995, by and between Alpine, Shawmut Capital
Corporation, Nationsbank of Georgia, N.A., and Creditanstalt Corporation Finance, Inc.
10(z)* Amendment to Employment Agreement, dated as of November 10, 1993, by and between Alpine and Justin F.
Deedy, Jr.
10(aa)* Amendment to Employment Agreement, dated as of November 10, 1993, by and between Alpine and David S.
Aldridge.
10(bb)* Amendment dated as of June 30, 1995, to Amended and Restated Debt Exchange Agreement dated as of
October 11, 1984, among Alpine and certain debtholders of Adience, as listed therein.
10(cc)* Supplemental Indenture, dated as of July 21, 1995, to Indenture by and between Adience and IBJ dated as
of June 30, 1985
10(dd)* Amendment to the Employment Agreement, dated as of November 10, 1993, by and between Alpine and James
R. Kanely
10(ee)* Indenture, dated as of July 15, 1995, by and among Alpine, Adience, Superior Telecommunications Inc.,
Superior Cable Corporation and Marine Midland Bank ("Marine Midland"), as trustee.
10(ff)* Pledge Agreement, dated as of July 21, 1995, by and between Alpine and Marine Midland.
21* List of Subsidiaries
23(a)* Consent of Arthur Andersen LLP
27* Financial Data Schedule
<FN>
------------------------
* Filed herewith.
</TABLE>
41
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE ALPINE GROUP, INC.
<TABLE>
<S> <C>
Dated: July 29, 1995 By/s/STEVEN S. ELBAUM
Steven S. Elbaum
Chairman of the Board and
Chief Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ STEVEN S. ELBAUM Chairman of the Board and Chief
----------------------------------- Executive Officer July 29, 1995
Steven S. Elbaum (principal executive officer)
/s/ DAVID S. ALDRIDGE Vice President and Treasurer
----------------------------------- (principal financial and July 29, 1995
David S. Aldridge accounting officer)
/s/ KENNETH G. BYERS, JR.
----------------------------------- Director July 29, 1995
Kenneth G. Byers, Jr.
/s/ RANDOLPH HARRISON
----------------------------------- Director July 29, 1995
Randolph Harrison
/s/ JOHN C. JANSING
----------------------------------- Director July 29, 1995
John C. Jansing
/s/ ERNEST C. JANSON, JR.
----------------------------------- Director July 29, 1995
Ernest C. Janson, Jr.
/s/ JAMES R. KANELY
----------------------------------- Director July 29, 1995
James R. Kanely
/s/ GENE E. LEWIS
----------------------------------- Director July 29, 1995
Gene E. Lewis
/s/ BRAGI F. SCHUT
----------------------------------- Director July 29, 1995
Bragi F. Schut
</TABLE>
42
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ALPINE
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS:
Report of independent public accountants............................................. 44
Consolidated balance sheets at April 30, 1994 and 1995............................... 45
Consolidated statements of operations for the years ended
April 30, 1993, 1994 and 1995...................................................... 46
Consolidated statements of stockholders' equity for the three years ended April 30,
1993, 1994 and 1995................................................................. 47
Consolidated statements of cash flows for the years ended April 30, 1993, 1994 and
1995................................................................................ 50
Notes to consolidated financial statements........................................... 52
SCHEDULE
Schedule I -- Condensed Financial Information of Registrant (Parent Company)......... 72
</TABLE>
43
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Alpine Group, Inc.:
We have audited the accompanying consolidated balance sheets of The Alpine
Group, Inc. ("Alpine") (a Delaware corporation) and subsidiaries as of April 30,
1994 and 1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended April 30, 1995. These consolidated financial statements and the financial
statement schedule referred to below are the responsibility of Alpine's
management. Our responsibility is to express an opinion on these consolidated
financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Alpine Group, Inc. and subsidiaries as of April 30, 1994 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended April 30, 1995 in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for the purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
Arthur Andersen LLP
New York, New York
June 16, 1995
44
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
APRIL 30,
----------------------
1994 1995
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Current Assets:
Cash and cash equivalents............................................................... $ 2,507 $ 15,546
Marketable securities................................................................... 1,972 1,495
Accounts receivable (less allowance for doubtful accounts of
$68,000 in 1994 and $956,000 in 1995).................................................. 17,792 41,255
Inventories............................................................................. 22,502 35,242
Other current assets.................................................................... 1,204 5,347
---------- ----------
Total current assets.................................................................. 45,977 98,885
Property, plant and equipment, net........................................................ 31,674 52,240
Long-term investments and other assets.................................................... 6,047 16,941
Goodwill and other intangibles, net....................................................... 30,098 65,712
---------- ----------
Total assets........................................................................ $ 113,796 $ 233,778
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings................................................................... $ -- $ 33,135
Current portion of long-term debt....................................................... 2,217 2,022
Accounts payable........................................................................ 13,750 31,655
Accrued expenses........................................................................ 5,416 24,993
---------- ----------
Total current liabilities............................................................. 21,383 91,805
---------- ----------
Long-term debt, less current portion...................................................... 41,528 84,022
---------- ----------
Other long-term liabilities............................................................... 2,887 7,560
---------- ----------
Adience acquisition obligation............................................................ -- 5,733
---------- ----------
Commitments and contingencies
Stockholders' equity:
8% Cumulative convertible preferred stock at liquidation value.......................... -- 11,823
9% Cumulative convertible preferred stock at liquidation value.......................... 2,677 1,927
8.5% Cumulative convertible preferred stock at liquidation value........................ 3,500 3,500
Common stock, $.10 par value; authorized 25,000,000 shares, issued: 1994, 18,073,512
shares; 1995, 17,429,141 shares........................................................ 1,808 1,743
Capital in excess of par value.......................................................... 109,593 103,114
Cumulative translation adjustment....................................................... -- 144
Accumulated deficit..................................................................... (69,205) (76,050)
---------- ----------
48,373 46,201
Less: shares of common stock in treasury, at cost:
1994, 14,511 shares; 1995, 233,290 shares........................................... (61) (1,229)
Receivable from stockholder........................................................... (314) (314)
---------- ----------
Total stockholders' equity............................................................ 47,998 44,658
---------- ----------
Total liabilities and stockholders' equity.......................................... $ 113,796 $ 233,778
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
45
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------------
1993 1994 1995
---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Net sales..................................................................... $ 27,897 $ 68,510 $ 198,135
Cost of goods sold............................................................ 15,915 56,250 169,125
---------- ---------- ----------
Gross profit................................................................ 11,982 12,260 29,010
Selling, general and administrative........................................... 10,482 12,168 20,487
Amortization of goodwill and other intangible charges......................... 395 2,292 1,527
---------- ---------- ----------
Operating income (loss)..................................................... 1,105 (2,200) 6,996
Interest income............................................................... 209 242 345
Interest expense.............................................................. (2,301) (2,363) (8,197)
Other income (expense), net................................................... (1,469) (506) 28
---------- ---------- ----------
(Loss) from continuing operations before income taxes....................... (2,456) (4,827) (828)
Provision for income taxes.................................................... -- 68 348
---------- ---------- ----------
(Loss) from continuing operations........................................... (2,456) (4,895) (1,176)
(Loss) from discontinued operations........................................... (8,377) (25,236) (4,868)
---------- ---------- ----------
(Loss) before extraordinary item............................................ (10,833) (30,131) (6,044)
Extraordinary item -- (loss) on early extinguishment of debt.................. (1,262) (47) --
---------- ---------- ----------
Net (loss).................................................................. (12,095) (30,178) (6,044)
Preferred stock dividends..................................................... 454 414 801
---------- ---------- ----------
(Loss) applicable to common stock............................................. $ (12,549) $ (30,592) $ (6,845)
---------- ---------- ----------
---------- ---------- ----------
(Loss) per share of common stock:
Continuing operations....................................................... $ (0.32) $ (0.38) $ (0.11)
Discontinued operations..................................................... (0.94) (1.78) (0.27)
Extraordinary item -- (loss) on early extinguishment of debt................ (0.14) -- --
---------- ---------- ----------
Net (loss) per share of common stock...................................... $ (1.40) $ (2.16) $ (0.38)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
46
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
9% CUMULATIVE
CAPITAL CONVERTIBLE
COMMON STOCK IN PREFERRED STOCK
------------------- EXCESS -------------------- ACCUMULATED
SHARES AMOUNT OF PAR SHARES AMOUNT DEFICIT
---------- ------ -------- -------- -------- -------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1992......................... 8,496,712 $ 850 $26,722 5,177 $ 5,177 $ (26,064)
Compensation expense related to stock options..... 1,393
Dividends on preferred stock...................... (454)
Shares issued for directors' fees................. 10
Receivable from stockholder.......................
Issuance of stock in subsidiary................... 1,776
Shares issued in connection with the
Reorganization of European Display Technologies
Joint Venture.................................... 178,572 17 1,234
Shares issued in connection with the early
extinguishment of debt........................... 787,212 79 7,162
Shares issued pursuant to employment agreements... (54)
Issuance of 9% cumulative convertible preferred
stock............................................ 2,500 2,500
Acquisition of American Menu Display, Inc......... 34,801 4 331
Exercise of stock options......................... 55,000 5 141
Conversion of convertible notes................... 525,872 53 2,002
Conversion of convertible preferred stock......... 357,753 36 2,964 (3,000) (3,000)
Shares issued in connection with the early
extinguishment of debt........................... 280
Net (loss) for the year ended April 30, 1993...... (12,095)
---------- ------ -------- -------- -------- -------------
Balance at April 30, 1993......................... 10,435,922 $1,044 $43,961 4,677 $ 4,677 $ (38,613)
---------- ------ -------- -------- -------- -------------
<CAPTION>
TREASURY STOCK RECEIVABLE
-------------------- FROM
SHARES AMOUNT STOCKHOLDERS TOTAL
-------- -------- -------------- ---------
<S> <C> <C> <C> <C>
Balance at April 30, 1992......................... (96,514) $ (409) $(409) $ 5,867
Compensation expense related to stock options..... 1,393
Dividends on preferred stock...................... (454)
Shares issued for directors' fees................. 7,787 32 42
Receivable from stockholder....................... 95 95
Issuance of stock in subsidiary................... 1,776
Shares issued in connection with the
Reorganization of European Display Technologies
Joint Venture.................................... 1,251
Shares issued in connection with the early
extinguishment of debt........................... 7,241
Shares issued pursuant to employment agreements... 12,500 54
Issuance of 9% cumulative convertible preferred
stock............................................ 2,500
Acquisition of American Menu Display, Inc......... 335
Exercise of stock options......................... 146
Conversion of convertible notes................... 2,055
Conversion of convertible preferred stock.........
Shares issued in connection with the early
extinguishment of debt........................... 40,000 170 450
Net (loss) for the year ended April 30, 1993...... (12,095)
-------- -------- ----- ---------
Balance at April 30, 1993......................... (36,227) $ (153) $(314) $ 10,602
-------- -------- ----- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
47
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- (CONTINUED)
FOR THE THREE YEARS ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
9% CUMULATIVE 8.5% CUMULATIVE
CONVERTIBLE CONVERTIBLE
COMMON STOCK CAPITAL PREFERRED STOCK PREFERRED STOCK
-------------------- IN EXCESS -------------------- -------------------- ACCUMULATED
SHARES AMOUNT OF PAR SHARES AMOUNT SHARES AMOUNT DEFICIT
-------- -------- ----------- -------- -------- -------- -------- -------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1993..... 10,435,922 $ 1,044 $43,961 4,677 $ 4,677 -- -- $(38,613)
Compensation expense related
to stock options............. 72
Compensation expense related
to restricted stock grants... 347
Dividends on preferred
stock........................ (414)
Issuance of stock in
subsidiary................... 27
Shares issued pursuant to
employment agreements........ 4,974 48
Exercise of stock options..... 298,905 30 966
Exercise of warrant........... 50,000 5 145
Conversion of convertible
notes........................ 82,403 8 308
Issuance of 8.5% cumulative
convertible preferred
stock........................ (300) 5,000 5,000
Conversion of convertible
preferred stock.............. 553,884 55 3,445 (2,000) (2,000) (1,500) (1,500)
Shares issued in connection
with the early extinguishment
of debt...................... 15,715 2 179
Shares issued for directors'
fees......................... (10)
Acquisition of Alpine
PolyVision, Inc. minority
interest..................... 2,164,099 217 19,260
Acquisition of Superior
Telecommunications, Inc...... 4,467,610 447 41,145
Net (loss) for the year ended
April 30, 1994............... (30,178)
-------- -------- ----------- -------- -------- -------- -------- -------------
Balance at April 30, 1994..... 18,073,512 $ 1,808 $109,593 2,677 $ 2,677 3,500 $ 3,500 $(69,205)
-------- -------- ----------- -------- -------- -------- -------- -------------
<CAPTION>
TREASURY STOCK RECEIVABLE
-------------------- FROM
SHARES AMOUNT STOCKHOLDER TOTAL
-------- -------- ------------- ---------
<S> <C> <C> <C> <C>
Balance at April 30, 1993..... (36,227) $ (153) $ (314) $ 10,602
Compensation expense related
to stock options............. 72
Compensation expense related
to restricted stock grants... 347
Dividends on preferred
stock........................ (414)
Issuance of stock in
subsidiary................... 27
Shares issued pursuant to
employment agreements........ 48
Exercise of stock options..... 996
Exercise of warrant........... 150
Conversion of convertible
notes........................ 316
Issuance of 8.5% cumulative
convertible preferred
stock........................ 4,700
Conversion of convertible
preferred stock..............
Shares issued in connection
with the early extinguishment
of debt...................... 181
Shares issued for directors'
fees......................... 21,716 92 82
Acquisition of Alpine
PolyVision, Inc. minority
interest..................... 19,477
Acquisition of Superior
Telecommunications, Inc...... 41,592
Net (loss) for the year ended
April 30, 1994............... (30,178)
-------- -------- ----- ---------
Balance at April 30, 1994..... (14,511) $ (61) $ (314) $ 47,998
-------- -------- ----- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
48
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY -- (CONTINUED)
FOR THE THREE YEARS ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
9% CUMULATIVE 8% CUMULATIVE 8.5% CUMULATIVE
CONVERTIBLE CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED PREFERRED STOCK
COMMON STOCK CAPITAL STOCK
--------------------- IN EXCESS ----------------- -------------------- -----------------
SHARES AMOUNT OF PAR SHARES AMOUNT SHARES AMOUNT SHARES
----------- -------- --------- ------- ------- --------- -------- ------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1994..... 18,073,512 $ 1,808 $109,593 2,677 $2,677 -- -- 3,500
Compensation expense related
to stock options and
grants....................... 114,579 11 377
Dividends on preferred
stock........................
Foreign currency
translation..................
Conversion of convertible
preferred stock.............. 140,000 14 736 (750) (750)
Conversion of convertible
notes........................ 7,165 1 40
Exercise of stock options..... 93,885 9 247
Shares issued for directors'
fees......................... 21
Purchase of treasury stock....
Exchange of common stock for
preferred stock.............. (1,000,000) (100) (7,900) 160,000 8,000
Acquisition of Adience,
Inc.......................... 82,267 4,113
Repurchase of preferred
stock........................ (5,787) (290)
Net (loss) for the year ended
April 30, 1995...............
----------- -------- --------- ------- ------- --------- -------- -------
Balance at April 30, 1995..... 17,429,141 $ 1,743 $103,114 1,927 $1,927 236,480 $ 11,823 3,500
----------- -------- --------- ------- ------- --------- -------- -------
----------- -------- --------- ------- ------- --------- -------- -------
<CAPTION>
FOREIGN TREASURY STOCK RECEIVABLE
ACCUMULATED CURRENCY -------------------- FROM
AMOUNT DEFICIT TRANSLATION SHARES AMOUNT STOCKHOLDER TOTAL
-------- ------------- ------------- --------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1994..... $ 3,500 $ (69,205) -- (14,511) $(61) $ (314 ) $ 47,998
Compensation expense related
to stock options and
grants....................... 388
Dividends on preferred
stock........................ (801) (801)
Foreign currency
translation.................. 144 144
Conversion of convertible
preferred stock..............
Conversion of convertible
notes........................ 41
Exercise of stock options..... 256
Shares issued for directors'
fees......................... 10,221 43 64
Purchase of treasury stock.... (229,000) (1,211) (1,211)
Exchange of common stock for
preferred stock..............
Acquisition of Adience,
Inc.......................... 4,113
Repurchase of preferred
stock........................ (290)
Net (loss) for the year ended
April 30, 1995............... (6,044) (6,044)
-------- ------------- ------------- --------- -------- ------ --------
Balance at April 30, 1995..... $3,500 $ (76,050) $ 144 (233,290) $(1,229) $ (314) $ 44,658
-------- ------------- ------------- --------- -------- ------ --------
-------- ------------- ------------- --------- -------- ------ --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
49
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------------
1993 1994 1995
--------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
(Loss) from continuing operations............................................. $ (2,456) $ (4,895) $ (1,176)
Adjustments to reconcile (loss) to net cash provided by (used for) operations:
Depreciation and amortization............................................... 960 4,425 6,169
Amortization of deferred financing and accretion of debt discount........... 313 232 885
Inducement charges for debt conversions..................................... 419 23 --
Compensation expense related to stock options and grants.................... 870 497 388
Other, net.................................................................. 1,233 628 30
Change in assets and liabilities, net of effects from companies acquired:
Accounts receivable......................................................... 646 (3,409) (8,001)
Inventories................................................................. (181) 2,157 (3,164)
Other current assets........................................................ (55) 31 (659)
Other assets................................................................ (59) (95) (2,126)
Accounts payable and accrued expenses....................................... 668 (219) 11,123
Other long-term liabilities................................................. (10) 224 (288)
--------- ---------- ---------
Cash provided by (used for) continuing operations............................. 2,348 (401) 3,181
--------- ---------- ---------
(Loss) from discontinued operations........................................... (8,377) (25,236) (4,868)
Depreciation and amortization................................................. 728 1,032 746
Loss recognized on purchase of R&D and other related charges.................. 2,847 21,312 --
Increase (decrease) in net assets............................................. 943 (74) (11)
--------- ---------- ---------
Cash (used for) discontinued operations....................................... (3,859) (2,966) (4,133)
--------- ---------- ---------
Cash (used for) operating activities.......................................... (1,511) (3,367) (952)
--------- ---------- ---------
Cash flows from investing activities:
(Purchases) sales of long-term investments, net............................... (3,034) -- 566
Capital expenditures for continuing operations................................ (422) (1,565) (2,275)
Capital expenditures for discontinued operations.............................. (1,946) (397) (360)
Acquisitions, net of cash acquired............................................ (273) (19,197) 802
(Investment in) proceeds from sale of marketable securities................... 51 (1,268) 477
Restricted cash............................................................... 1,750 -- --
Other......................................................................... -- -- (442)
--------- ---------- ---------
Cash (used for) investing activities.......................................... (3,874) (22,427) (1,232)
--------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
50
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------------
1993 1994 1995
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from financing activities:
Short-term borrowings (repayments).......................................... (3,816) (118) 20,685
Borrowings under revolving credit facilities, net........................... -- 7,271 (1,530)
Term loan and lease finance borrowings of continuing operations............. -- 17,034 636
Term loan borrowings of discontinued operations............................. 1,611 690 --
Term loan repayments of continuing operations............................... (613) (3,771) (3,408)
Term loan repayments of discontinued operations............................. (8) (54) (70)
Proceeds from exercise of stock options..................................... 146 1,072 256
Minority investments in subsidiaries........................................ 112 27 --
Issuance of preferred stock, net............................................ 2,500 4,278 --
Dividends on preferred stock................................................ (454) (414) (505)
Purchase of treasury shares................................................. -- -- (1,211)
Other....................................................................... -- -- 370
---------- ---------- ----------
Cash provided by (used for) financing activities.............................. (522) 26,015 15,223
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents.......................... (5,907) 221 13,039
Cash and cash equivalents at beginning of year................................ 8,193 2,286 2,507
---------- ---------- ----------
Cash and cash equivalents at end of year...................................... $ 2,286 $ 2,507 $ 15,546
---------- ---------- ----------
---------- ---------- ----------
Supplemental Disclosures:
Interest paid............................................................... $ 1,782 $ 1,579 $ 5,615
---------- ---------- ----------
---------- ---------- ----------
Noncash investing and financing activities:
Exchange and conversion of preferred stock.................................. $ 3,000 $ 3,500 $ 140
---------- ---------- ----------
---------- ---------- ----------
Shares issued in connection with the acquisition of a minority
interest in Alpine PolyVision, Inc......................................... $ 19,477
----------
----------
Shares issued in connection with the purchase of the R&D partnership
interest in European Display Technologies, ("EDT")......................... $ 1,251
----------
----------
Shares of Alpine PolyVision, Inc. issued in connection with the purchase of
the R&D partnership interest in EDT........................................ $ 1,664
----------
----------
Preferred stock issued in exchange for common stock......................... $ 8,000
----------
----------
Acquisition of businesses:
Assets, net of cash acquired.............................................. $ 93,018 $ 107,837
Common stock issued....................................................... (41,592)
Preferred stock issued.................................................... (4,113)
Contingent consideration.................................................. (5,733)
Liabilities assumed....................................................... (32,229) (98,793)
---------- ----------
Net cash paid (received).................................................. $ 19,197 $ (802)
---------- ----------
---------- ----------
Conversion of notes and exchange of debentures:
Conversions and retirements of debt....................................... $ 7,340 $ 625 $ 38
---------- ---------- ----------
---------- ---------- ----------
Fair value of common stock issued......................................... $ 8,876 $ 674 $ 41
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
51
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
The Alpine Group, Inc. and all its subsidiaries (collectively, "Alpine," unless
the context otherwise requires). All significant intercompany accounts and
transactions have been eliminated.
CONTRACT REVENUE RECOGNITION
Revenues related to long-term contracts are recognized by the percentage of
completion method measured on the basis of costs incurred to estimated total
costs which approximates contract performance to date. The estimated sales value
of completed performance under certain government fixed-priced engineering
contracts in process is recognized pursuant to achievement of certain
contractual milestones which approximates the percentage of completion, cost to
cost method. Provisions for losses on uncompleted contracts are made if it is
determined that a contract will ultimately result in a loss.
CASH AND CASH EQUIVALENTS
Alpine considers all highly liquid investments purchased with a maturity at
acquisition of 90 days or less to be cash equivalents.
INVENTORIES
Inventories, other than inventoried costs relating to long-term contracts,
are stated at the lower of cost or market, using the first-in, first-out (FIFO)
or average cost method. Inventoried costs relating to long-term contracts and
programs are stated at actual production cost, including factory overhead,
initial tooling and other related nonrecurring costs, reduced by the cost of
revenue recognized and units delivered or milestones completed. The costs
attributed to units delivered under long-term contracts and programs are based
on the average cost per unit of production. Included in the accompanying
consolidated balance sheet are inventories relating to contracts and programs
having production cycles longer than one year.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are provided over
the estimated useful lives of the assets using the straight-line method. The
estimated lives are as follows:
<TABLE>
<S> <C>
Building and improvements............................. 5-32 years
Machinery and equipment............................... 2-12 years
</TABLE>
Maintenance and repairs are charged to expense as incurred. Long term
improvements are capitalized as additions to property, plant and equipment. Upon
retirement, or other disposal, the asset cost and related accumulated
depreciation are removed from the accounts and the net amount, less any
proceeds, is charged or credited to income.
GOODWILL AND OTHER INTANGIBLES
The excess of the purchase price over the net identifiable assets of
businesses acquired by Alpine is amortized ratably over periods not exceeding 30
years. Accumulated amortization of goodwill and other intangibles at April 30,
1994 and 1995 was $557,000 and $2,338,000 respectively. Alpine periodically
reviews goodwill and other intangibles to assess recoverability following the
provisions of Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." The adoption of this statement had no effect on Alpine's consolidated
financial position or results of operations as of or for the year ended April
30, 1995. During fiscal 1994, Alpine expensed $1,511,000 of unamortized
intangible assets relating to a product line which was not forecasted to
generate sufficient income to recover the carrying value of such intangible
asset. The intangible assets' original estimated life was ten years of which six
years had expired.
52
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED FINANCING COSTS
The costs incurred in connection with certain of Alpine's debt financings
are included in the consolidated balance sheet in long-term investments and
other assets and are being amortized through the relevant maturity dates of
Alpine's outstanding debt.
FOREIGN CURRENCY TRANSLATION
The financial position and results of operations of Alpine's foreign
subsidiaries are measured using local currency as the functional currency.
Assets and liabilities of operations denominated in foreign currencies are
translated into U.S. dollars at exchange rates in effect at year-end, while
revenues and expenses are translated at average exchange rates prevailing during
the year. The resulting translation gains and losses are charged directly to
cumulative translation adjustment, a component of stockholders' equity, and are
not included in net income until realized through sale or liquidation of the
investment. Foreign exchange gains and losses incurred on foreign currency
transactions are included in net income.
CONCENTRATIONS OF CREDIT RISK
Alpine, through Superior Telecommunications Inc. ("Superior"), formerly
Superior TeleTec Inc., is principally engaged in the telecommunications wire and
cable business and, through Adience, Inc. ("Adience"), in the refractory
products business, primarily for the iron and steel, glass and aluminum
industries.
During fiscal 1994 and 1995, sales to the seven regional Bell operating
companies and two major independent telephone companies represented 74% and 78%,
respectively, of Superior's net sales. At April 30, 1994 and 1995, accounts
receivable from these customers were $11,131,000 and $13,993,000, respectively.
At April 30, 1995, Adience accounts receivable from customers in the iron
and steel industry were $10,739,000.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1993 and 1994 consolidated
financial statements to conform with the 1995 presentation.
2. MARKETABLE SECURITIES
In 1994, Alpine adopted the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," which requires certain investments to be recorded at fair value or
amortized cost, as appropriate. In accordance with this statement, Alpine has
classified its investments in marketable securities as trading securities which
are reported at fair value. The adoption of this statement did not have a
material impact on Alpine's consolidated financial position or results of
operations for the year ended April 30, 1994. Prior to fiscal 1994, Alpine's
investments in marketable securities were carried at the lower of cost or
market.
3. INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Raw materials.............................................. $ 5,947 $ 11,969
Work in process............................................ 5,580 8,716
Finished goods............................................. 10,975 14,557
--------- ---------
$ 22,502 $ 35,242
--------- ---------
--------- ---------
</TABLE>
53
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net, consists of the following:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Land....................................................... $ 1,123 $ 2,547
Building and improvements.................................. 9,206 16,853
Machinery and equipment.................................... 23,893 39,774
--------- ---------
34,222 59,174
Less: accumulated depreciation........................... 2,548 6,934
--------- ---------
$ 31,674 $ 52,240
--------- ---------
--------- ---------
</TABLE>
Depreciation expense related to property, plant and equipment for the years
ended April 30, 1993, 1994 and 1995 was $565,000, $2,133,000 and $4,642,000,
respectively.
5. DISCONTINUED OPERATIONS
In November 1994, Alpine management adopted a plan to dispose of its
information display segment consisting of its interest in Alpine PolyVision,
Inc. ("APV") and Posterloid Corporation ("Posterloid"). In May 1995, APV and
Posterloid were merged (the "PolyVision Merger") into PolyVision Corporation
("PolyVision") (formerly Information Display Technology, Inc.), a subsidiary of
Adience (see Note 6).
Until the date of the PolyVision Merger, 80.3% of the outstanding PolyVision
common stock was owned by Adience, and the remainder was publicly owned. Alpine
owned 87.2% of the outstanding capital stock of Adience; therefore Alpine's
effective ownership of PolyVision was 87.2% of 80%, or 70.0%. Also, until the
date of the PolyVision Merger, Alpine owned 98% of the outstanding capital stock
of APV and all of the outstanding capital stock of Posterloid.
Following the PolyVision Merger, Alpine owned 98% of PolyVision's
outstanding preferred stock with a liquidation preference of $25,000,000 and 94%
of the outstanding PolyVision common stock. At April 30, 1995, the PolyVision
common stock had a negative book value of $12,641,000.
As a result of the PolyVision Merger, Alpine's ownership of the outstanding
PolyVision common stock increased from 70.0% to 94%. In accordance with FASB
Technical Bulletin 85-5, this increase in equity ownership will be recorded in
fiscal 1996 as the acquisition of a minority interest at its estimated fair
value of $2,418,000. Because the minority interest was acquired by an Alpine
subsidiary issuing stock, and because Alpine subsequently distributed to its
stockholders most of the PolyVision common stock owned by it, the excess,
estimated to be $1,332,000, of the fair value of the minority interest acquired
over the book value of the interests given up in APV and Posterloid, will be
added directly to capital surplus.
On June 14, 1995, Alpine distributed to its stockholders 73% of the
outstanding PolyVision common stock (the "PolyVision Spin-Off"). This
distribution, when combined with shares of PolyVision common stock to be used as
partial consideration in connection with the Adience Acquisition and the
retirement of the Adience 11% Senior Secured Notes due 2002 (the "Adience Senior
Notes") (see Notes 6 and 9), will result in the ownership by Alpine of less than
20% of the outstanding shares of PolyVision common stock. Accordingly, Alpine
will account for its remaining PolyVision common stock investment at its fair
value as a security available for sale following the PolyVision Spin-Off.
Because the shares of PolyVision common stock to be distributed have a negative
book value, Alpine's stockholders' equity will not be reduced by the PolyVision
Spin-Off. The aforementioned transaction is a taxable transaction and actual
taxes payable, if any, will depend on Alpine's 1996 tax position.
54
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. DISCONTINUED OPERATIONS (CONTINUED)
The combined historical results of APV and Posterloid for the years ended
April 30, 1993, 1994 and 1995 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------------
STATEMENT OF OPERATIONS 1993 1994 1995
--------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales.............................................................. $ 4,211 $ 5,108 $ 4,918
Operating (loss)....................................................... (8,318) (25,416) (4,696)
Net (loss)............................................................. (8,377) (25,236) (4,868)
</TABLE>
At October 31, 1994, Alpine recorded a $3,000,000 pretax provision to
reflect management's estimate of operating losses through the disposition date,
largely in connection with research and development expenditures at APV. The
fiscal 1995 net loss includes a benefit for income taxes of $122,000.
The net assets of APV and Posterloid as of April 30, 1994 and 1995, have
been included in the consolidated balance sheets in long-term investments and
other assets (see Note 7).
6. ACQUISITIONS
ADIENCE
On December 21, 1994, Alpine acquired from certain stockholders of Adience
82.3% of its outstanding common stock (the "Adience Acquisition"). At April 30,
1995, Alpine, which had previously purchased 4.9% of Adience's common stock,
owned 87.2% of Adience's outstanding common stock.
Consideration paid in the Adience Acquisition consisted of 82,267 shares of
a new series of Alpine's 8% cumulative convertible senior preferred stock ("8%
Preferred Stock") with a liquidation preference of $50 per share (see Note 17)
and 170,615 shares of post-merger PolyVision common stock. The PolyVision stock
delivered by Alpine to the Adience stockholders is subject to a consideration
reset. The consideration reset requires Alpine to deliver to the selling
stockholders an amount equal to the 170,615 shares of PolyVision common stock
multiplied by the difference, if any, between $33.60 and the greater of the
average closing price for PolyVision common stock on each of the 20 trading days
preceding August 1, 1995 and $11.25 per share. The consideration reset will be
payable, at the option of Alpine, in either 8% Preferred Stock or PolyVision
common stock, or a combination thereof. Accordingly, the estimated deferred
consideration has been reflected in the accompanying consolidated balance sheet
as a noncurrent liability, "Adience Acquisition obligation," of approximately
$5,733,000 (170,615 shares multiplied by $33.60 per share) at April 30, 1995.
A summary of the consideration paid and estimated to be paid for the Adience
Acquisition is as follows:
<TABLE>
<CAPTION>
AMOUNT
(IN
THOUSANDS)
<S> <C>
Common stock purchased for cash................................................ $ 1,058
82,267 shares of 8% Preferred Stock............................................ 4,113
Adience Acquisition obligation................................................. 5,733
Expenses associated with the acquisition....................................... 1,500
-------------
$ 12,404
-------------
-------------
</TABLE>
The Adience Acquisition has been accounted for using the purchase method
and, accordingly, Adience's results of operations have been included in Alpine's
consolidated results on a prospective basis from the date of the acquisition.
The estimated purchase price for the Adience Acquisition (including expenses)
has been allocated to the fair market value of Adience's assets and liabilities
as of the Adience
55
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. ACQUISITIONS (CONTINUED)
Acquisition date based on preliminary assumptions and is subject to revision.
The excess of the estimated purchase price over the estimated fair market value
of identifiable net assets acquired resulted in goodwill of approximately
$36,975,000, which is being amortized on a straight line basis over 30 years.
Prior to the Adience Acquisition, Adience experienced losses from continuing
operations (before reorganization items) both pre- and post-emergence under
Chapter 11. Management has formulated and is implementing a strategic plan with
the following objectives: streamline manufacturing operations, eliminate
duplicative costs, discontinue unprofitable product lines, improve marketing
efforts, develop and introduce new products and generate sufficient cash from
operations, financing or other sources to meet its ongoing obligations over a
sustained period. In addition, in conjunction with the acquisition of Adience by
Alpine, Alpine has committed to provide Adience up to $3,000,000 through
December 31, 1995, to achieve its strategic plan. There can be no assurance
however, that such activities will achieve the intended improvement in results
of operations or financial position.
SUPERIOR
On November 9, 1993, Alpine's stockholders approved an Agreement and Plan of
Merger pursuant to which Superior merged into a subsidiary of Alpine. Alpine
paid approximately $19,200,000 in cash (including approximately $2,200,000 in
merger-related expenses), issued 4,467,610 shares of its common stock (subject
to adjustments for redemption of fractional shares) and assumed existing
Superior stock options as consideration for the merger.
The merger was accounted for using the purchase method and, accordingly,
Superior's results of operations have been included in Alpine's consolidated
results on a prospective basis from the date of the merger. The total purchase
price for acquiring Superior (including merger related expenses) amounted to
approximately $60,800,000 and has been allocated to the fair market value of
Superior's assets and liabilities as of the merger date resulting in goodwill of
approximately $29,300,000. Goodwill is being amortized on a straight line basis
over 30 years.
Unaudited condensed pro forma results of operations which give effect to the
acquisition of Adience and Superior as if both transactions had occurred on May
1, 1993 are presented below. The pro forma results of operations for the year
ended April 30, 1994 include the results of Adience for the 12-month period
ended June 30, 1994. Such period reflects the pro forma results of operations
post-emergence from Adience's prepackaged bankruptcy plan consummated on June
30, 1993. The pro forma amounts reflect acquisition related purchase accounting
adjustments, including adjustments to depreciation and amortization expense. The
pro forma financial information does not purport to be indicative of either the
results of operations that would have occurred had the acquisitions taken place
at the beginning of the periods presented or of future
56
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. ACQUISITIONS (CONTINUED)
results of operations. The allocation of the purchase price for Adience
reflected in the consolidated financial statements and in the pro forma
information is based on preliminary appraisals and estimations. Accordingly, the
final recording of the purchase can be expected to differ from that reflected
herein.
<TABLE>
<CAPTION>
PRO FORMA
(UNAUDITED)
----------------------
1994 1995
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Net sales.................................................................... $ 228,930 $ 265,394
(Loss) from continuing operations before income taxes........................ (15,120) (4,951)
(Loss) from continuing operations before extraordinary item.................. (14,509) (5,299)
(Loss) from discontinued operations.......................................... (25,236) (4,868)
Net (loss)................................................................... (39,792) (10,167)
(Loss) per share of common stock:
Continuing operations...................................................... (1.08) (0.35)
Discontinued operations.................................................... (1.78) (0.27)
Extraordinary item -- (loss) on early extinguishment of debt............... -- --
Net (loss)................................................................. (2.86) (0.62)
</TABLE>
SUBSEQUENT EVENT -- ALCATEL ACQUISITION
On May 11, 1995, Alpine completed the acquisition (the "Alcatel
Acquisition") of the U.S. and Canadian copper wire and cable business (the
"Alcatel Business") of Alcatel NA Cable Systems, Inc. and Alcatel Canada Wire,
Inc. (collectively, "Alcatel NA"), which was financed with the proceeds of the
sale by Superior of $140,000,000 aggregate principal amount of notes (the
"Alcatel Acquisition Notes") (see Note 9(a)). The following reflects the
preliminary allocation of the purchase price of the net assets of the Alcatel
Business based upon the estimated fair values of such assets:
<TABLE>
<CAPTION>
AMOUNT
-------------
(IN
THOUSANDS)
<S> <C>
Estimated acquisition cost..................................................... $ 103,755
Less, historical book value of net assets at May 11, 1995...................... (81,255)
Write-up of property, plant and equipment...................................... (4,945)
Accrual of Alcatel employee relocation and severance costs..................... 500
-------------
Acquisition goodwill (to be amortized over 30 years)........................... $ 18,055
-------------
-------------
</TABLE>
The estimated acquisition cost of $103,755,000 represents (i) $93,000,000
paid in cash to Alcatel NA, (ii) a deferred amount payable to Alcatel NA on
August 11, 1995 in the amount of $10,255,000, which amount is subject to
adjustment based upon the completion of a closing balance sheet audit, and (iii)
acquisition expenses estimated at $500,000.
57
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. LONG-TERM INVESTMENTS AND OTHER ASSETS
Long-term investments and other assets consist of the following:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Investment in PolyVision (a).......................................... $ 3,600 $ 11,202
Investment in real estate (b)......................................... 1,033 908
Other assets.......................................................... 1,414 4,831
--------- ---------
$ 6,047 $ 16,941
--------- ---------
--------- ---------
<FN>
------------------------
(a) Reflects the investment in PolyVision, including the net assets of APV and
Posterloid (see Note 5).
After the PolyVision Merger, Alpine's investment in PolyVision consisted of
$25,000,000 face amount of PolyVision 8% preferred stock and PolyVision
common stock. Following the PolyVision Spin-Off on June 14, 1995, Alpine
owned 1,706,836 (20.6%) shares of PolyVision issued and outstanding common
stock. PolyVision's common stock closed at $3.75 on June 16, 1995. Alpine
expects to further reduce its holding by using 170,615 shares of PolyVision
common stock as partial consideration for the Adience Acquisition
obligation (see Note 6), and by using 66,802 shares of PolyVision common
stock as partial consideration for the retirement of Adience Senior Notes
(see Note 9(e)). Alpine may use additional shares of PolyVision common
stock in connection with one or both of the aforementioned transactions.
In connection with the PolyVision Merger, Alpine entered into an agreement
with PolyVision pursuant to which Alpine agreed to lend to PolyVision from
time to time prior to May 24, 1997, up to $5,000,000 to be used by
PolyVision to fund its working capital needs. Borrowings under the
agreement will be unsecured and will bear interest at a market rate
reflecting Alpine's cost of funds (approximately 11.8% at April 30, 1995).
The principal balance outstanding will be due on May 24, 2005, subject to
mandatory prepayment of principal and interest, in whole or in part, from
the net cash proceeds of any public or private equity or debt financing by
PolyVision at any time before maturity. Alpine's obligation to lend such
funds to PolyVision is subject to a number of conditions, including review
by Alpine of the proposed use of such funds by PolyVision. Until May 24,
1996, Alpine has additionally agreed to fund PolyVision's working capital
deficiencies in an amount not to exceed $2,500,000.
(b) During fiscal 1993, Alpine was obliged to purchase for $2,320,000 a
manufacturing facility operated by a former subsidiary of Alpine. During
fiscal 1993 and 1994, Alpine recorded a charge of $820,000 and $200,000,
respectively, to adjust the property to its estimated net realizable value.
During fiscal 1994, Alpine sold the property subject to a nine-year
leaseback and an option to repurchase (see Note 9(i)). The sale/leaseback
was accounted for as a financing transaction with the property continuing
to be recorded as an asset at its depreciated value.
</TABLE>
8. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Accrued wages, salaries and employee benefits......................... $ 2,891 $ 5,172
Accrued insurance..................................................... 142 5,673
Other accrued expenses................................................ 2,383 14,148
--------- ---------
$ 5,416 $ 24,993
--------- ---------
--------- ---------
</TABLE>
58
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. DEBT
Debt consists of the following:
<TABLE>
<CAPTION>
1995
AS ADJUSTED
FOR THE
ALCATEL
1994 1995 ACQUISITION (A)
--------- --------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Variable Rate Senior Secured Guaranteed Extendible Revolving Notes, Series A
(a)........................................................................ $ -- $ -- $ 85,000
11% Senior Secured Guaranteed Extendible Notes, Series B (a)................ -- -- 55,000
Alcatel Acquisition obligation (a).......................................... -- -- 10,255
13.5% Senior Secured Notes (face value $21,000,000) (b)..................... -- 20,790 20,790
13.5% Senior Subordinated Debentures (c).................................... 1,551 1,551 1,551
10% Convertible Senior Subordinated Notes ($1,141,000 and $1,104,000 face
value at April 30, 1994 and 1995, respectively) (d)........................ 759 860 860
Adience 11% Senior Secured Notes due in 2002 (face value $49,079,000) (e)... -- 44,386 44,386
Revolving credit loans (f).................................................. 18,567 29,505 12,972
Term loan (f)............................................................... 7,700 5,386 --
Mortgage loan (g)........................................................... 5,474 5,297 5,297
Subordinated note (h)....................................................... 2,954 2,469 2,469
Lease finance obligations (i)............................................... 6,063 5,967 5,967
Other....................................................................... 677 2,968 2,968
--------- --------- --------------
Total debt................................................................ 43,745 119,179 247,515
Less: Short-term borrowings and current portion........................... 2,217 35,157 45,412
--------- --------- --------------
Long-term debt....................................................... $ 41,528 $ 84,022 $ 202,103
--------- --------- --------------
--------- --------- --------------
</TABLE>
The fair value of Alpine's debt is estimated based on the quoted market
prices for the same or similar issues or on the current rates offered to Alpine
for debt of the same remaining maturities. At April 30, 1995, the fair value of
Alpine's debt, as adjusted for the Alcatel Acquisition, is estimated to be
$252,222,000.
The aggregate maturities of long-term debt for the five years subsequent to
April 30, 1995, as adjusted for the Alcatel Acquisition, are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------------------------------------------- AMOUNT
-------------
(IN
THOUSANDS)
<S> <C>
1996................................................................. $ 45,412
1997................................................................. 4,752
1998................................................................. 141,420
1999................................................................. 1,137
2000................................................................. 503
</TABLE>
(a) In connection with the Alcatel Acquisition (see Note 6), Superior
sold $140,000,000 aggregate principal amount of Alcatel Acquisition Notes.
Two series of these Alcatel Acquisition Notes were issued: $85,000,000 of
Variable Rate Senior Secured Guaranteed Extendible Revolving Notes, Series
A, due 1997 (the "Series A Senior Notes") and $55,000,000 aggregate
principal amount of 11% Senior Secured Guaranteed Extendible Notes, Series
B, due 1997 (the "Series B Senior Notes"). The Series A and B Senior Notes
are guaranteed by Alpine and certain of its subsidiaries. The Alcatel
Acquisition Notes will mature on the second anniversary of their issuance,
except that the maturity date may be
59
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. DEBT (CONTINUED)
extended up to two times for a period of six months per extension at the
option of Superior. The Series A Senior Notes bear interest equal to the
prime rate plus 1.5% per annum prior to any extension. The Series B Senior
Notes bear interest at the rate of 11% per annum during the first six months
following their issuance, increasing by 0.5% for each succeeding six-month
period. During any extension period, the interest rate on the Series A
Senior Notes will be the prime rate plus 3% and the interest rate on the
Series B Senior Notes will be 14%. The Alcatel Acquisition Notes are secured
by substantially all of the assets of Superior and the Alcatel Business. The
proceeds of $140,000,000, net of an estimated $4,600,000 in transaction
expenses, was used as follows, (1) $93,000,000 was paid in cash to Alcatel
NA, (2) an estimated $500,000 was paid in Alcatel Acquisition-related
transaction expenses, and (3) $22,572,000 ($21,919,000 outstanding at April
30, 1995) was used to retire Superior debt. The remaining proceeds of
$19,328,000 were available to Superior for working capital and general
corporate purposes. The Alcatel Acquisition obligation represents the
estimated final acquisition payment and is subject to adjustment based upon
the completion of a closing balance sheet audit (see Note 6).
(b) On January 6, 1995, Alpine issued $21,000,000 face amount of 13.5%
Senior Secured Notes due January 5, 1996 (the "Alpine 13.5% Senior Notes") .
The Alpine 13.5% Senior Notes are secured by the pledge of shares of
PolyVision preferred stock owned by the Company. The Alpine 13.5% Senior
Notes were issued at a discount of 1.5%, which will be accreted as a charge
to interest expense through maturity.
(c) The 13.5% Senior Subordinated Debentures due October 1, 1996 (the
"Alpine 13.5% Debentures") pay interest semi-annually on April 1 and October
1 of each year. Alpine may redeem the Debentures at a stipulated redemption
price which includes applicable prepayment premiums. During fiscal 1994,
Alpine exchanged $135,000 of the Alpine 13.5% Debentures plus related
accrued interest for 15,715 shares of Alpine common stock. During fiscal
1993, Alpine exchanged $6,010,000 of the Alpine 13.5% Debentures plus
related accrued interest for 787,212 shares of Alpine common stock. These
transactions resulted in an extraordinary loss of $1,262,000 and $47,000 in
fiscal 1993 and 1994, respectively.
(d) The Convertible Senior Subordinated Notes due July 31, 1996 pay
interest semi-annually on January 31 and July 31 of each year and are
convertible into Alpine common stock through July 31, 1996 at a conversion
price of $6.23 per share. The original issue discount is added to the
recorded amount through maturity utilizing the effective interest method.
During fiscal 1995, holders of $29,500 recorded amount ($37,750 face amount)
exchanged such notes for 7,165 shares of Alpine common stock. During fiscal
1994, holders of $498,000 recorded amount ($833,750 face amount) exchanged
such notes for 133,886 shares of Alpine common stock. During fiscal 1993,
holders of $1,330,000 recorded amount of Notes ($3,002,500 face amount)
exchanged such notes for 525,872 shares of Alpine common stock. Certain of
the conversions occurred at prices below the stated conversion price
resulting in a charge to other expense of $419,000 and $23,000 in fiscal
1993 and 1994, respectively.
(e) The Adience 11% Senior Notes are redeemable at the option of Adience
after December 15, 1997 and pay interest semi-annually on June 15 and
December 15. The Adience Senior Notes are secured by a second lien (to the
Adience credit facility -- see (f) below) on the assets of Adience,
including the stock of PolyVision currently owned by Adience.
In connection with the Adience Acquisition in December 1994 (see Note
6), Alpine entered into a debt exchange agreement with the holders of 89.8%
of the Adience Senior Notes whereby Alpine has an agreement to retire
$44,089,000 aggregate principal amount ($39,761,000 recorded amount) of the
Adience Senior Notes for $35,271,000 in cash, $2,245,000 in value of
PolyVision common stock (or,
60
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. DEBT (CONTINUED)
at Alpine's option, 8% Preferred Stock) and 44,916 shares of 8% Preferred
Stock having a liquidation preference of $2,245,000, which is convertible
into approximately 289,780 shares of Alpine common stock.
(f) As more fully described below, the revolving credit loans represent
borrowings by Superior, DNE Systems, Inc. ("DNE"), formerly DNE
Technologies, Inc., and Adience under credit facilities obtained by each
entity.
The Superior credit facility includes: (i) a $28,000,000 revolving
credit facility (subject to collateral availability) bearing interest at
LIBOR plus 2.75% or prime plus 1%, and (ii) a term loan with an outstanding
balance of $5,386,000 at April 30, 1995. Both the revolving credit facility
and the term loan were repaid by Superior from the proceeds of the Alcatel
Acquisition Notes (see (a) above).
The Adience credit facility may not exceed $14,000,000 or available
collateral (85% of eligible accounts receivable and 30%-50% of eligible
inventory). The loan is collateralized by Adience's accounts receivable,
inventory, fixed assets, intangible assets and common stock of PolyVision
owned by Adience. In addition, PolyVision has guaranteed the Adience line of
credit and has pledged as collateral its own accounts receivable, inventory
and equipment. Interest on the outstanding balance is based on 2.5% over the
prime rate. Letters of credit issued under the facility totalled $179,000 at
April 30, 1995, which reduced the availability under the financing
arrangement in a like amount. The facility terminates on September 30, 1995.
DNE has a bank credit agreement which provides for a revolving
facility of up to $3,500,000. Borrowings bear interest at prime plus 1.5%
and are collateralized by the accounts receivable and inventory of DNE. The
facility expires in June 1996.
(g) The mortgage loan was made to DNE by the Connecticut Development
Authority ("CDA"). The loan is guaranteed by Alpine and collateralized by
DNE's real estate, machinery and equipment. The loan is payable March 2002
and is subject to a 20-year amortization schedule. The interest rate is
7.25% through February 28, 1999 and the higher of 7.25% or the yield on U.S.
Treasury securities with the same maturity thereafter.
(h) The subordinated note is payable to the previous owner of DNE and
bears interest at prime plus 1.5% (not less than 7% or more than 11% per
annum). Through February 1994, 100% of the interest was accrued and added to
the principal. From February 1994 to February 1995, 60% of the interest was
accrued and added to principal. Thereafter, interest is payable
semi-annually commencing in August 1995. Principal and deferred interest are
required to be paid in eight equal semi-annual installments commencing
August 1995.
(i) The lease finance obligations result from the sale/leaseback of two
properties during fiscal 1994 which, because of Alpine's continuing
involvement in the form of repurchase options, have been recorded under the
finance method. The lease finance obligations at April 30, 1995 consist of:
(a) $5,000,000 related to the sale/leaseback of Superior's manufacturing
facility and (b) $967,000 related to the sale/leaseback of a manufacturing
facility owned by DNE and sublet to a third party manufacturer.
The Superior sale/leaseback transaction included a sales price of
$5,000,000 and net cash proceeds (after fees and expenses) of $4,500,000.
The term of the leaseback is twenty years, with five additional option terms
(at Superior's election) of five years each. Superior has a one time option
to repurchase the property during the eleventh year of the lease term at the
greater of the property's Fair Market Value (as defined in the lease) or
$5,000,000 plus related ancillary costs. Annual lease payments are
approximately $520,000, and are subject to adjustments based on changes in
short-term interest
61
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. DEBT (CONTINUED)
rates (monthly) and increases in the consumer price index (on a triannual
basis). Until the repurchase option expires or is exercised, all lease
payments will be reflected as interest expense. The related asset, which is
being depreciated over its estimated useful life, has a net carrying value
of $7,174,000 as of April 30, 1995 and is classified as property, plant and
equipment in the consolidated balance sheet.
The DNE sale/leaseback transaction included a sales price of
$1,300,000 and a lease term of nine years. Alpine has an option to
repurchase the property during the fourth and fifth years of the lease term
for $1,300,000 plus ancillary costs; however, the lessor may elect to
terminate the lease in lieu of accepting such repurchase offer. Annual lease
payments are $169,000 and are subject to annual adjustments based on
increases in the consumer price index. As of April 30, 1995, remaining total
lease payments amounted to $1,253,000, of which $968,000 will be applied
against principal and $285,000 will be recorded as interest expense. The
related asset, which is being depreciated over the term of the lease and has
a net carrying value of $908,000 as of April 30, 1995, is classified in
long-term investments and other assets in the consolidated balance sheet.
This property is being sublet under a lease agreement which provides for
annual lease payments of $225,000 and expires in 1996.
Alpine's indentures and credit agreements contain covenants which, among
other matters, restrict or limit the ability of Alpine and its subsidiaries to
pay dividends and incur indebtedness. Additionally, existing loan covenants,
including those relating to the Alcatel Acquisition Notes, contain certain
provisions which limit the amount of funds available for transfer to Alpine from
its subsidiaries without the consent of certain lenders. At April 30, 1995,
approximately $14.7 million was available for dividend payments under the most
restrictive of these covenants. Alpine and its subsidiaries must also maintain
certain ratios regarding working capital, interest coverage, debt service,
leverage and net worth, among other restrictions.
10. (LOSS) PER SHARE
(Loss) per share is derived by dividing the net (loss) plus preferred stock
dividends ($454,000, $414,000 and $801,000 in fiscal 1993, 1994 and 1995,
respectively) by the weighted average number of shares of common stock
outstanding during the year. The inclusion of common stock equivalents in the
calculation of earnings per share would be anti-dilutive in each of the fiscal
years presented. For the years ended April 30, 1993, 1994 and 1995 the number of
shares used in computing (loss) per share was 8,944,270, 14,156,143 and
17,857,905, respectively.
11. STOCK OPTIONS AND RESTRICTED STOCK PLAN
Under Alpine's 1987 Long-Term Equity Incentive Plan (the "Plan") 2,000,000
shares of common stock are reserved for issuance. There were 1,054,000 and
1,065,000 shares of common stock available under the Plan for granting of
options at April 30, 1994 and 1995, respectively. Participation in the Plan is
limited generally to key employees and directors of Alpine. The Plan provides
for grants of incentive and non-incentive stock options. In addition to options,
the Plan permits the grant of stock appreciation rights (SARs) and phantom stock
units (Units). Under the Plan, options are not exercisable in the first year nor
after ten years from the date of grant and no option may be granted after
December 31, 1996. Where the exercise price of stock options granted under the
Plan is less than the market value of Alpine common stock at the date of grant,
non-cash compensation expense is recorded based on the difference between the
exercise price and market value. This non-cash charge is amortized over the
vesting period of the options and is included in selling, general and
administrative expense.
During fiscal 1994, Alpine exchanged options to purchase 482 shares of
common stock of a subsidiary for options to purchase 150,000 shares of Alpine
common stock at an exercise price of $3.00 per share.
During fiscal 1994, in conjunction with the merger of Superior (see Note 6),
Alpine assumed Superior's obligations with respect to options issued and
outstanding prior to the merger, resulting in the conversion of Superior options
into options to purchase 268,853 shares of Alpine common stock.
62
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. STOCK OPTIONS AND RESTRICTED STOCK PLAN (CONTINUED)
During fiscal 1993, Alpine issued 35,500 options to a director of Alpine
pursuant to an agreement whereby the director provided consulting services to a
subsidiary, as well as 126,000 options to key employees and 70,000 options in
connection with certain acquisitions. The option grants resulted in a non-cash
compensation charge of $348,000 in fiscal 1993.
Alpine's 1977 Non-Qualified Stock Option Plan expired according to its terms
on December 31, 1986. Outstanding options granted thereunder expire ten years
from the date of grant.
The following table summarizes stock option activity for fiscal 1994 and
1995:
<TABLE>
<CAPTION>
SHARES PRICE RANGE
----------- --------------
<S> <C> <C>
Outstanding at April 30, 1993............................................. 1,545,333 $ 1.00-$ 9.88
Exercised............................................................... (311,405) $ 1.00-$ 8.82
Granted................................................................. 516,500 $ 3.00-$12.00
Superior options assumed................................................ 268,853 $ 2.88-$ 8.63
Cancelled............................................................... (98,000) $ 7.50-$10.75
-----------
Outstanding at April 30, 1994............................................. 1,921,281 $ 2.50-$12.00
Exercised............................................................... (193,885) $ 1.75-$ 6.77
Cancelled............................................................... (11,500) $ 6.60-$10.75
-----------
Outstanding at April 30, 1995............................................. 1,715,896 $ 2.50-$12.00
-----------
-----------
</TABLE>
At April 30, 1995, 1,373,081 options were exercisable which expire between
February 1997 and April 2004. The average exercise price for all outstanding
options at April 30, 1995 was $5.77 per share.
Alpine also has a Restricted Stock Plan under which a maximum of 350,000
shares of Alpine common stock have been reserved for issuance. At April 30,
1995, there are no shares available for issuance. During fiscal 1995, non-cash
compensation expense of $388,000 was recorded representing the market value of
Alpine common stock amortized over the applicable vesting period related to the
grants.
12. POSTRETIREMENT HEALTH CARE BENEFITS
Superior provides postretirement employee health care benefits for certain
employees. The policy provides each employee and spouse, upon reaching normal or
early retirement and upon achieving certain minimum service requirements, a
fixed monthly benefit for the purchase of Superior-sponsored health care
insurance. The amount of the fixed monthly benefit will not be increased in the
future, notwithstanding medical-based inflation cost increases.
The accumulated postretirement health care benefit obligation which is
included in long-term liabilities in the accompanying balance sheet, consisted
of the following at April 30, 1994 and 1995:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Retirees............................................................................. $ 708 $ 733
Fully eligible active plan participants.............................................. 171 164
Other active plan participants....................................................... 504 596
--------- ---------
$ 1,383 $ 1,493
--------- ---------
--------- ---------
</TABLE>
63
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. POSTRETIREMENT HEALTH CARE BENEFITS (CONTINUED)
Net periodic postretirement benefit cost includes the following components
for 1994 and 1995:
<TABLE>
<CAPTION>
1994 1995
----- ---------
(IN THOUSANDS)
<S> <C> <C>
Service cost for benefits earned..................................................... $ 24 $ 45
Interest cost on accumulated postretirement benefit obligation....................... 37 118
--- ---------
$ 61 $ 163
--- ---------
--- ---------
</TABLE>
An increase in the health care cost trend assumptions would not change the
annual exposure or obligation amounts as the employer cost is effectively
capped.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 6.5% and 8% for fiscal 1994 and 1995,
respectively.
13. EMPLOYEE BENEFIT PLANS
Alpine maintains three 401(k) payroll matching programs, one each for the
employees of Superior and Adience and one for the employees of DNE and Alpine.
The 401(k) plans match between 15% and 50% of employee contributions up to 6%-8%
of annual salary. Alpine's contributions during fiscal 1993, 1994, and 1995 were
$181,000, $240,000 and $516,000, respectively.
14. INCOME TAXES
The provision for taxes on income from continuing operations is comprised of
the following:
<TABLE>
<CAPTION>
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Federal
Deferred...................................................................... $ -- $ -- $ 122
State
Current....................................................................... -- 20 316
Deferred...................................................................... -- 48 (148)
Foreign......................................................................... -- -- 58
------ ------ ------
$ -- $ 68 $ 348
------ ------ ------
------ ------ ------
</TABLE>
64
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. INCOME TAXES (CONTINUED)
A reconciliation of Alpine's loss from continuing operations before income
taxes for financial statement purposes to its Federal taxable loss from
continuing operations for the years ended April 30, 1993, 1994 and 1995 is as
follows:
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Loss from continuing operations before income taxes for financial
statement purposes..................................................... $ (2,456) $ (4,827) $ (828)
--------- --------- ---------
Differences between loss from continuing operations before income taxes
for financial statement purposes and taxable loss:
Permanent differences:
Amortization of goodwill and other intangible charges............... 395 2,292 1,527
Net income of foreign subsidiary.................................... -- -- (114)
Other, net.......................................................... 283 (310) 141
Net changes in temporary differences:
Stock options and stock grants...................................... 725 421 320
Real estate valuation and related provisions........................ 748 (1,682) (530)
Sale/leaseback...................................................... -- (1,914) (10)
Amortization of intangibles......................................... -- 765 (83)
Depreciation........................................................ (111) 450 1,097
Inventory reserves.................................................. 152 33 (2,604)
Other items, net.................................................... (57) (228) (227)
--------- --------- ---------
Net differences......................................................... 2,135 (173) (483)
--------- --------- ---------
Taxable loss from continuing operations................................. $ (321) $ (5,000) $ (1,311)
--------- --------- ---------
--------- --------- ---------
</TABLE>
At April 30, 1995, Alpine had unused net operating loss carryforwards of
approximately $20,120,000 that can be used to offset future taxable income.
These loss carryforwards do not include the Adience pre-acquisition loss
carryforwards discussed below. Alpine has unused capital loss carryforwards of
approximately $3,530,000 that may be used to offset future capital gains through
April 30, 1996. The net operating loss carryforwards expire in various amounts
from fiscal year 1997 to 2010 as follows
<TABLE>
<CAPTION>
OPERATING LOSS
--------------
(IN THOUSANDS)
<S> <C>
1997...................................................... $ 2,781
1998...................................................... 354
2003...................................................... 871
2004...................................................... 3,177
2005...................................................... 465
2006...................................................... 4
2007...................................................... 3,038
2008...................................................... --
2009...................................................... 5,379
2010...................................................... 4,051
-------
$ 20,120
-------
-------
</TABLE>
Alpine has entered into certain transactions that have resulted in ownership
changes under Section 382 of the Internal Revenue Code of 1986 and, thus, on the
imposition of annual limitations on the amount of
65
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. INCOME TAXES (CONTINUED)
future taxable income which may be offset by Alpine's prechange net operating
loss carryforward. The unused portion of the annual limitations for any year may
be carried forward to increase the annual limitation in succeeding years.
As further discussed in Note 6, Alpine acquired Adience on December 21,
1994. Accordingly, as of that date, Adience was included in Alpine's
consolidated Federal tax return. At December 21, 1994, Adience had net operating
loss carryforwards aggregating approximately $19,650,000. Such carryforwards are
available to offset Alpine's future consolidated taxable income subject to the
imposition of an annual limitation on the amount of taxable income of Alpine
which may be offset by net operating loss carryforwards of Adience that were
generated prior to December 20, 1994.
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," requires the recognition of deferred tax assets and liabilities for both
the expected future tax impact of temporary differences arising from assets and
liabilities whose tax basis are different from financial statement amounts, and
for the expected future tax benefit to be derived from tax loss carryforwards.
The statement also requires that a valuation allowance be established if it is
more likely than not that all or a portion of deferred tax assets will not be
realized. Realization of the future tax benefits is dependent on Alpine's
ability to generate taxable income within the carryforward period and the
periods in which net temporary differences reverse. No assurance can be given
that sufficient taxable income will be generated for utilization of the net
operating loss carryforwards and reversal of temporary differences.
Items that result in deferred tax assets (liabilities) and the related
valuation allowance at April 30, 1994 and 1995 are as follows:
<TABLE>
<CAPTION>
1994 1995
--------- ----------
(IN THOUSANDS)
<S> <C> <C>
Inventory reserves................................................................ $ 1,282 $ 1,198
Sale/leaseback.................................................................... 1,716 1,923
Accruals not currently deductible for tax......................................... 1,690 6,103
Compensation expense related to unexercised stock options and stock grants........ 1,072 1,218
Tax net operating loss carryforwards.............................................. 6,164 17,195
Tax capital loss carryforwards.................................................... 3,604 1,200
Alternative minimum tax credit carryforwards...................................... -- 419
Foreign tax credit carryforwards.................................................. -- 275
Depreciation...................................................................... (8,803) (13,376)
Other............................................................................. 199 780
--------- ----------
6,924 16,935
Less: Valuation allowance......................................................... (7,562) (17,536)
--------- ----------
$ (638) $ (601)
--------- ----------
--------- ----------
</TABLE>
The deferred tax liability of $638,000 and $601,000 at April 30, 1994 and
1995, respectively, relates to the state tax impact of certain temporary
differences and is included in other long-term liabilities in the accompanying
consolidated balance sheet.
Alpine's tax returns for years subsequent to 1980 have not been reviewed by
the Internal Revenue Service (the "IRS"). Availability of the net operating loss
and capital loss carryforwards might be challenged by the IRS upon examination
of such returns which could affect the availability of such carryforwards
66
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. INCOME TAXES (CONTINUED)
incurred-prior or subsequent to the change in ownership or both. Alpine
believes, however, that the IRS challenges that would limit the utilization of
net operating loss carryforwards will not have a material adverse effect on
Alpine's financial position.
15. COMMITMENTS AND CONTINGENCIES
Total rent expense under cancelable and non-cancelable operating leases was
$354,000, $483,000 and $1,356,000 for the years ended April 30, 1993, 1994 and
1995, respectively.
At April 30, 1995, future minimum lease payments under non-cancelable
operating leases are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------------------------------------------------------- REAL AND
PERSONAL
PROPERTY
----------------
(IN THOUSANDS)
<S> <C>
1996........................................................................ $ 500
1997........................................................................ 248
1998........................................................................ 154
1999........................................................................ 136
2000........................................................................ 136
Thereafter.................................................................. 215
--------
$ 1,389
--------
--------
</TABLE>
Together with various parties, Alpine has been named as a defendant in a
lawsuit filed by the State of New York in Federal district court relating to the
release of hazardous chemicals at a landfill near Rochester, New York. The State
of New York alleges that Alpine, by virtue of its purchase of some (but not all)
of the assets of an entity that allegedly disposed of hazardous substances, is
liable as a corporate successor under the federal Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA" or "Superfund") for the costs
of remediation.The total remediation costs for the site have been estimated by
the New York Department of Environmental Conservation to potentially be in
excess of $14,000,000. Alpine has filed a motion for summary judgment dismissing
the case against Alpine. This action is in an early stage, and no determination
has yet been made as to either the reasonableness of New York's claim and its
cost estimates or as to Alpine's liability, if any, or its share of such
remediation costs. Although there can be no assurance that an adverse outcome in
this case would not have a material adverse effect on Alpine's consolidated
financial position or results of operations, management believes that it has
strong defenses to this action and it has indemnification rights with respect to
liabilities, if any, relating to this matter from the seller of the assets.
In February 1992, PolyVision was cited by the Ohio Environmental Protection
Agency (the "Ohio EPA") for violations of Ohio's hazardous waste regulations,
including speculative accumulation of waste (holding waste on-site beyond the
legal time limit) and illegal disposal of hazardous waste on the site of its
Alliance, Ohio manufacturing facility. In December 1993, PolyVision and Adience
signed a consent order with the Ohio EPA and the Ohio Attorney General which
required PolyVision and Adience to pay to the State of Ohio a civil penalty and
to remediate the site in accordance with specified cleanup goals. In addition,
the consent order requires the payment of stipulated penalties of up to $1,000
per day for failure to satisfy certain requirements of the consent order,
including milestones in the closure plan. In October 1994, PolyVision and
Adience filed a proposed amendment to the consent order which would allow
PolyVision and Adience to establish risk-based cleanup goals, an approach which
has been approved by the Ohio EPA for other contaminated sites. If the Ohio EPA
approves this proposed amendment, use of this approach is expected to reduce the
extent and cost of remediation required at this site. The Ohio EPA has not yet
responded to this proposed amendment. At April 30, 1995, environmental accruals
amounted to $498,000, which represents management's estimate of the amounts
remaining to be incurred in this matter, including
67
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. COMMITMENTS AND CONTINGENCIES (CONTINUED)
the costs of effecting the closure plan, bonding and insurance costs, penalties
and legal and consultants' fees. If the Ohio EPA does not accept the proposed
amendment to the consent order, the cost of the remediation may exceed the
amounts currently accrued.
Under the acquisition agreement pursuant to which PolyVision acquired the
Alliance facility from Adience, Adience represented and warranted that, except
as otherwise disclosed to PolyVision, no hazardous material had been stored or
disposed of on the property. No disclosure of storage or disposal of hazardous
material on the site was made. Accordingly, Adience is required to indemnify
PolyVision for any losses in excess of $250,000, PolyVision has notified Adience
that it is claiming the right to indemnification for all costs in excess of
$250,000 incurred by PolyVision in this matter and has received assurance that
Adience will honor such claim.
Adience was recently named as one of many defendants in a class action
lawsuit brought in the circuit court of Cook County, Illinois, seeking unstated
monetary damages and alleging that products produced by Adience caused certain
of its employees, former employees, and such persons' family members to suffer
from asbestos-related diseases or an increased risk of developing such diseases.
Because the complaint was served upon Adience in late May 1995, Alpine and its
counsel have not yet had the opportunity to evaluate fully the validity of such
claims or the scope of its potential liabilities and defense costs.
Alpine is subject to other legal proceedings and claims which have primarily
arisen in the ordinary course of business and have not been finally adjudicated.
In the opinion of management, based on its examination of such matters and
discussions with counsel, the ultimate resolution of all pending or threatened
litigation, claims and assessments will not have a material adverse effect upon
Alpine's consolidated financial position or results of operations.
16. RELATED PARTY TRANSACTIONS
In March 1994, Steib & Company, ("Steib"), a New York investment partnership
in which two Alpine officers have a majority interest, purchased 5.8% of Adience
common stock at a price 20% higher than paid by Alpine for its purchase of 4.9%
of Adience common stock in December 1993. In January 1995, following completion
of Alpine's purchase of a further 82.3% of Adience common stock, including the
common stock owned by Steib, Alpine reimbursed Steib for costs incurred by Steib
in connection with its investment in Adience common stock. In connection with
these transactions, Steib agreed to terminate a three-year advisory agreement
with Adience and voluntarily surrender options to purchase 7.2% of Adience at
$1.25 per share.
Prior to fiscal 1994, certain of the executive officers and directors of
Alpine held direct and indirect ownership interests in APV. As a result of an
exchange transaction, the equity ownership in APV was converted into Alpine
common stock or options to acquire common stock. Pursuant to the exchange
transaction, an investment company in which Alpine's Chairman and Chief
Executive Officer was the managing general partner, received 907,504 shares of
Alpine common stock, and two officers of Alpine received an aggregate 687,554
shares of Alpine common stock and 50,000 options to purchase Alpine common stock
for $3.00 per share, all in exchange for their respective APV ownership
interest.
During fiscal 1988, Alpine loaned certain officers $463,000 relating to the
exercise of stock options of which $163,000 has been repaid. The unpaid balance,
which is deducted from stockholders' equity and is repayable in Alpine common
stock, bears interest at prime plus 0.5% and is payable in July 1995.
17. PREFERRED STOCK
Alpine has authorized 500,000 shares of preferred stock with a par value of
$1.00 per share. The preferred stock may be issued at the discretion of the
Board of Directors in one or more series with differing terms, limitations and
rights.
68
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. PREFERRED STOCK (CONTINUED)
At April 30, 1995 Alpine has outstanding 236,480 shares of 8% Preferred
Stock, 3,500 shares of 8.5% Cumulative Convertible Senior Preferred Stock ("8.5%
Preferred Stock"), 1,750 shares of 9% Cumulative Convertible Senior Preferred
Stock ("9% Senior Preferred Stock") and 177 shares of 9% Cumulative Convertible
Preferred Stock ("9% Preferred Stock"). The 8% Preferred Stock has a liquidation
value of $50 per share while each of the other series has a liquidation value of
$1,000 per share. During fiscal 1995, 750 shares of 9% Preferred Stock plus
accrued dividends were converted through negotiated conversions for 140,000
shares of Alpine common stock. During fiscal 1994, 1,500 shares of the 8.5%
Preferred Stock and 2,000 shares of the 9% Senior Preferred Stock plus accrued
dividends were converted through negotiated conversions into 553,884 shares of
Alpine common stock. During fiscal 1993, 3,000 shares of 9% Senior Preferred
Stock plus accrued dividends were converted through negotiated conversions into
357,753 shares of Alpine common stock.
The 8.5% Preferred Stock is senior in ranking to Alpine's common stock, 9%
Senior Preferred Stock and 9% Preferred Stock. During fiscal 1995, Alpine
entered into an agreement whereby the outstanding 8.5% Preferred Stock plus
accrued dividends shall be converted into 737,476 shares of Alpine common stock
on July 31, 1995 at a conversion price of $5.25 per share of common stock.
The 9% Senior Preferred Stock is senior in ranking to holders of Alpine's
common stock, 8% Preferred Stock and the 9% Preferred Stock. Each share is
convertible at any time into shares of Alpine common stock at a conversion price
of $10 per share, subject to customary adjustments. Alpine may redeem the stock,
in whole or in part, at a price equal to the liquidation value (i) during the
period commencing three years from and ending on the seventh year after the date
of issuance, if for any 30 trading days within a period of 45 consecutive
trading days ending five (5) days prior to the date of the notice of such
redemption, the market price of Alpine's common stock equals or exceeds one
hundred forty percent (140%) of the conversion price, or (ii) subsequent to the
seventh year after issuance of the preferred stock.
On December 21, 1994, Alpine issued 82,267 shares of the 8% Preferred Stock
in connection with the acquisition of Adience. On January 6, 1995, Alpine issued
a further 160,000 shares of 8% Preferred Stock in exchange for 1,000,000 shares
of Alpine's common stock. The 8% Preferred Stock ranks senior to the 9%
Preferred Stock but junior to the issued and outstanding 8.5% Preferred Stock
and 9% Senior Preferred Stock. Each share is convertible at any time into shares
of Alpine common stock at a conversion price of $7.75 (subject to customary
adjustment) and may be redeemed by Alpine at $50 per share plus accrued
dividends, if any, at any time after the third anniversary of the date of
issuance. Alpine reached an agreement with the holders of the 160,000 shares of
8% Preferred Stock issued in the January 6, 1995 exchange that after February
27, 1995, each such holder may exchange the 8% Preferred Stock for shares of
Alpine common stock at an amount equal to the liquidation preference divided by
115% of the average trading price of Alpine common stock for the twenty days
prior to February 28, 1996, provided that such exchange price will not be less
than $3.25 per share nor greater than $8.25 per share.
The 8.5% Preferred Stock carries 99 votes per share, the 9% senior Preferred
Stock carries 100 votes per share and the 8% Preferred Stock are entitled to
vote that number of shares into which the shares are initially convertible. Each
of the 8.5% Preferred Stock, the 8% Preferred Stock and the 9% Senior Preferred
Stock vote as a single class with Alpine's common stock on all matters submitted
to stockholders. In addition, holders of the 8.5% Preferred Stock and the 9%
Senior Preferred Stock are entitled to vote as a separate class in the event of
any proposal to (i) amend any of the principal terms of the 8.5% Preferred Stock
or the 9% Senior Preferred Stock; (ii) authorize, create, issue or sell any
class of stock senior to or on a parity with the 8.5% Preferred Stock or the 9%
Senior Preferred Stock as to dividends or liquidation preference; or (iii) merge
into or consolidate with, or sell all or substantially all of the assets of
Alpine to another entity. The holders of not less than 66 2/3% of the 8.5%
Preferred Stock, 8% Preferred Stock and the 9% Senior Preferred Stock must
approve any transaction subject to the class voting rights.
69
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. PREFERRED STOCK (CONTINUED)
The 9% Preferred Stock is convertible into 83 1/3 shares of common stock,
subject to customary adjustments. Alpine may redeem the stock at any time, in
whole or in part at a price equal to the liquidation value per share.
18. SEGMENT INFORMATION
Alpine conducts business in three segments: telecommunications wire and
cable products (through Superior, acquired in November 1993, and the Alcatel
Business, acquired in May 1995); refractories (through Adience, acquired in
December 1994); and data communications and electronics (through DNE, acquired
in February, 1992).
The following provides information about each business segment:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
---------------------------------
1993 1994 1995
--------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales (a):
Telecommunications wire and cable............................................ $ -- $ 46,857 $ 136,578
Refractories................................................................. -- -- 33,650
Data communications and electronics.......................................... 27,897 21,653 27,907
--------- ---------- ----------
$ 27,897 $ 68,510 $ 198,135
--------- ---------- ----------
--------- ---------- ----------
Operating income (loss):
Telecommunications wire and cable............................................ $ -- $ 1,625 $ 8,128
Refractories................................................................. -- -- 383
Data communications and electronics.......................................... 4,069 (75) 1,710
Corporate.................................................................... (2,964) (3,750) (3,225)
--------- ---------- ----------
$ 1,105 $ (2,200) $ 6,996
--------- ---------- ----------
--------- ---------- ----------
Identifiable assets at year end:
Telecommunications wire and cable............................................ $ -- $ 89,687 $ 98,785
Refractories................................................................. -- -- 104,300
Data communications and electronics.......................................... 18,500 15,340 16,820
Corporate (b)................................................................ 9,498 8,769 13,873
--------- ---------- ----------
$ 27,998 $ 113,796 $ 233,778
--------- ---------- ----------
--------- ---------- ----------
Depreciation and amortization expense:
Telecommunications wire and cable............................................ $ -- $ 1,562 $ 3,570
Refractories................................................................. -- -- 1,670
Data communications and electronics.......................................... 778 2,697 872
Corporate.................................................................... 182 166 57
--------- ---------- ----------
$ 960 $ 4,425 $ 6,169
--------- ---------- ----------
--------- ---------- ----------
Capital expenditures:
Telecommunications wire and cable............................................ $ -- $ 420 $ 1,388
Refractories................................................................. -- -- 426
Data communications and electronics.......................................... 422 1,140 394
Corporate.................................................................... -- 5 67
--------- ---------- ----------
$ 422 $ 1,565 $ 2,275
--------- ---------- ----------
--------- ---------- ----------
<FN>
------------------------
(a) (i) Two customers accounted for 26% and 14% of net sales in fiscal 1994
and 30% and 16% of sales in fiscal 1995 in the telecommunications wire and
cable segment.
(ii) Three customers accounted for 31% of net sales in the refractories
segment, of which one accounted for 13%.
</TABLE>
70
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. SEGMENT INFORMATION (CONTINUED)
<TABLE>
<S> <C>
(iii) The data communications and electronics segment has historically
been dependent on government funding of programs in which it participates.
Significant changes in the levels of funding for such programs could have a
materially adverse effect on the segment. Sales to agencies of the U.S.
government were 92.9%, 86.4% and 82.3% of net sales of this segment for
fiscal 1993, 1994 and 1995, respectively.
(b) Includes investment in PolyVision and net assets of APV and Posterloid.
</TABLE>
19. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FISCAL 1994 QUARTER ENDED
------------------------------------------------------------------
JULY 31 OCTOBER 31 JANUARY 31 APRIL 30 YEAR
---------- ------------ -------------- ---------- --------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE)
<S> <C> <C> <C> <C> <C>
Net sales............................................. $ 6,308 $ 6,170 $ 22,016 $ 34,016 $ 68,510
Gross profit.......................................... 2,689 2,080 2,923 4,568 12,260
Operating income (loss)............................... 225 (501) (2,857)(b) 933 (2,200)
(Loss) from continuing operations..................... (96) (751) (3,855) (193) (4,895)
(Loss) from discontinued operations................... (81) (839) (23,370)(c) (946) (25,236)
Extraordinary item--(loss) on early extinguishment of
debt................................................. (47) -- -- -- (47)
---------- ------------ -------------- ---------- --------
Net (loss).......................................... $ (224) $ (1,590) $ (27,225) $ (1,139) $(30,178)
---------- ------------ -------------- ---------- --------
---------- ------------ -------------- ---------- --------
Loss per share of common stock:
Continuing operations............................... $ (0.02) $ (0.08) $ (0.23) $ (0.02) $ (0.38)
Discontinued operations............................. (0.01) (0.08) (1.38) (0.05) (1.78)
Extraordinary item -- (loss) on early extinguishment
of debt............................................ -- -- -- -- --
---------- ------------ -------------- ---------- --------
Net (loss).......................................... $ (0.03) $ (0.16) $ (1.61) $ (0.07) $ (2.16)
---------- ------------ -------------- ---------- --------
---------- ------------ -------------- ---------- --------
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1995 QUARTER ENDED
----------------------------------------------------------------
JULY 31 OCTOBER 31 JANUARY 31 APRIL 30 YEAR
---------- ------------ ------------ ---------- --------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE)
<S> <C> <C> <C> <C> <C>
Net sales............................................. $ 39,330 $ 40,552 $ 45,900 $ 72,353 $198,135
Gross profit.......................................... 5,685 5,278 6,355 11,692 29,010
Operating income...................................... 1,888 1,411 840 2,857 6,996
(Loss) from continuing operations..................... 838 249 (1,954) (309) (1,176)
(Loss) from discontinued operations................... (826) (4,042)(a) -- -- (4,868)
---------- ------------ ------------ ---------- --------
Net income (loss)................................... $ 12 $ (3,793) $ (1,954) $ (309) $ (6,044)
---------- ------------ ------------ ---------- --------
---------- ------------ ------------ ---------- --------
Income (loss) per share of common stock:
Continuing operations............................... $ 0.04 $ 0.01 $ (0.12) $ (0.04) $ (0.11)
Discontinued operations............................. (0.05) (0.22) -- -- (0.27)
---------- ------------ ------------ ---------- --------
Net (loss).......................................... $ (0.01) $ (0.21) $ (0.12) $ (0.04) $ (0.38)
---------- ------------ ------------ ---------- --------
---------- ------------ ------------ ---------- --------
<FN>
------------------------
(a) Includes a $3,000,000 pretax provision for estimated losses through the
disposition date.
(b) Includes a non-recurring charge of $1,511,000 representing unamortized
intangible costs relating to a product line which was not forecast to
generate sufficient income to recover the carrying value of such intangible
asset.
(c) Includes a non-cash charge of $21,687,000 related to the acquisition of
substantially all of APV's minority equity ownership interest.
</TABLE>
71
<PAGE>
SCHEDULE I
THE ALPINE GROUP, INC.
(PARENT COMPANY)
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
APRIL 30,
----------------------
1994 1995
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................................... $ 1,830 $ 13,299
Marketable securities................................................................... 1,972 1,495
Other current assets.................................................................... 93 212
---------- ----------
Total current assets.................................................................. 3,895 15,006
Advances to subsidiaries................................................................ 2,602 7,503
Investment in consolidated subsidiaries................................................. 44,592 52,053
Property, plant and equipment, net...................................................... 72 114
Long-term investments and other assets.................................................. 1,234 2,738
---------- ----------
TOTAL ASSETS.......................................................................... $ 52,395 $ 77,414
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings................................................................... $ -- $ 20,790
Current portion of long-term debt....................................................... 150 150
Accounts payable........................................................................ 269 744
Accrued expenses........................................................................ 1,545 2,805
---------- ----------
Total current liabilities............................................................. 1,964 24,489
---------- ----------
Long-term debt, less current portion...................................................... 2,433 2,534
---------- ----------
Adience acquisition obligation............................................................ -- 5,733
Stockholders' equity:
8% Cumulative Convertible Preferred Stock at liquidation value.......................... -- 11,823
9% Cumulative Convertible Preferred Stock at liquidation value.......................... 2,677 1,927
8.5% Cumulative Convertible Preferred Stock at liquidation value........................ 3,500 3,500
Common stock, $.10 par value; authorized 25,000,000 shares; issued: 1994, 18,073,512
shares; 1995, 17,429,141 shares........................................................ 1,808 1,743
Cumulative translation adjustment....................................................... -- 144
Capital in excess of par value.......................................................... 109,593 103,114
Accumulated deficit..................................................................... (69,205) (76,050)
---------- ----------
48,373 46,201
Less shares in treasury, at cost:
1994, 14,511 shares; 1995, 233,290 shares............................................... (61) (1,229)
Receivable from stockholder............................................................. (314) (314)
---------- ----------
Total stockholders' equity............................................................ 47,998 44,658
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY.................................................. $ 52,395 $ 77,414
---------- ----------
---------- ----------
</TABLE>
72
<PAGE>
SCHEDULE I
(CONTINUED)
THE ALPINE GROUP, INC.
(PARENT COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------------
1993 1994 1995
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Interest income............................................................. $ 174 $ 105 $ 345
Corporate charges........................................................... 1,440 360 111
---------- ---------- ----------
1,614 465 456
---------- ---------- ----------
Expenses:
General and administrative.................................................. 2,964 3,750 2,992
Interest expense............................................................ 1,666 484 1,661
Other expense............................................................... 1,539 445 531
---------- ---------- ----------
6,169 4,679 5,184
---------- ---------- ----------
(4,555) (4,214) (4,728)
Equity in net (loss) of subsidiaries before extraordinary item................ (6,278) (25,917) (1,316)
---------- ---------- ----------
(Loss) before extraordinary item.............................................. (10,833) (30,131) (6,044)
Extraordinary item:
(Loss) gain on early extinguishment of debt................................. (1,262) (47) --
---------- ---------- ----------
Net (loss).................................................................. $ (12,095) $ (30,178) $ (6,044)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
73
<PAGE>
SCHEDULE I
(CONTINUED)
THE ALPINE GROUP, INC.
(PARENT COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
---------------------------------
1993 1994 1995
--------- ---------- ----------
<S> <C> <C> <C>
(IN THOUSANDS)
Cash provided by (used for) operating activities:............................... $ (221) $ (2,566) $ (3,386)
Cash flows from investing activities:
Repayments of long-term investments........................................... (2,023) -- --
Capital expenditures.......................................................... -- (5) (67)
Acquisitions, net of cash acquired............................................ -- (17,000) (2,424)
Investment in/sale of subsidiaries............................................ -- 773 --
Proceeds from (investment in) marketable securities........................... 51 (1,268) 477
Dividends received from subsidiaries.......................................... -- 17,610 2,000
Restricted cash............................................................... 1,750 -- --
Proceeds from sale of property................................................ -- -- 300
--------- ---------- ----------
Cash (used for) provided by investing activities................................ (222) 110 286
--------- ---------- ----------
Cash flows from financing activities:
Short-term borrowings (repayments)............................................ (3,816) (118) 20,685
Long-term borrowings.......................................................... 433 123 --
Repayments of long-term borrowings............................................ (457) -- --
Dividends on preferred stock.................................................. (454) (414) (505)
Proceeds from stock options exercised......................................... 146 1,072 256
Changes in intercompany accounts.............................................. (5,359) (1,809) (4,656)
Issuance of preferred stock (net)............................................. 2,500 4,700 --
Purchase of treasury shares................................................... -- -- (1,211)
--------- ---------- ----------
Cash provided by (used for) financing activities................................ (7,007) 3,554 14,569
--------- ---------- ----------
Net increase (decrease) in cash and cash equivalents............................ (7,450) 1,098 11,469
Cash and cash equivalents at beginning of year.................................. 8,182 732 1,830
--------- ---------- ----------
Cash and cash equivalents at end of year........................................ $ 732 $ 1,830 $ 13,299
--------- ---------- ----------
--------- ---------- ----------
Supplemental cash flow disclosures:
Interest paid................................................................. $ 1,345 $ 376 $ 1,287
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
74
<PAGE>
SCHEDULE I
(CONTINUED)
THE ALPINE GROUP, INC.
(PARENT COMPANY)
APPENDIX A
<TABLE>
<CAPTION>
APRIL 30,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Long-Term Debt:
Long-term debt consists of:
13 1/2% Senior Subordinated Notes due October 1, 1996 (a).................................... $ 1,551 $ 1,551
10% Convertible Senior Subordinated Notes due July 31, 1996 ($1,141,000 and $1,104,000 face
amount at April 30, 1994 and 1995, respectively) (a)........................................ 759 860
Other........................................................................................ 273 273
--------- ---------
2,583 2,684
Less, current portion.......................................................................... 150 150
--------- ---------
$ 2,433 $ 2,534
--------- ---------
--------- ---------
<FN>
------------------------
(a) See Note 10 to Consolidated Financial Statements
</TABLE>
Minimum current maturities of long-term debt outstanding as of April 30,
1995, are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
-------------------------------------------------- ---------
<S> <C>
1995.............................................. 150
1996.............................................. 2,692
1997.............................................. --
1998.............................................. --
</TABLE>
75
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
--------- ------------------------------------------------------------------------------------- ---------
<C> <S> <C>
2(a) Asset Purchase Agreement, dated as of March 17, 1995 by and among Alatel NA Cable
Systems, Inc., Alcatel Canada Wire, Inc. Superior Cable Corporation and Superior
Teletec Inc. (incorporated herein by reference to Exhibit 1 to the Current Report
on Form 8-K of Alpine dated May 24, 1995)
2(b) Amendment dated May 11, 1995 to Asset Purchase Agreement by and among Alcatel NA
Cable Systems, Inc., Alcatel Canada Wire, Inc., Superior Cable Corporation and
Superior Teletec Inc. (incorporated herein by reference to Exhibit 2 to the
Current Report of Alpine on Form 8-K dated May 24, 1995)
2(c) Agreement and Plan of Merger, dated as of December 21, 1994, as amended, by and
among Information Display Technology, Inc., IDT PolyVision Acquisition Corp., IDT
Posterloid Acquisition Corp., The Alpine Group, Inc., Alpine/PolyVision, Inc. and
Posterloid Corporation (incorporated herein by reference to Exhibit 2 to Amendment
No. 1 to Alpine's Statement on Schedule 13D relating to its beneficial ownership of
equity securities of Information Display Technology, Inc. dated December 28, 1994)
2(d) Amendment to the Agreement and Plan of Merger, dated as of December 21, 1994, by and
among Information Display Technology, Inc., IDT PolyVision Acquisition Corp., IDT
Posterloid Acquisition Corp., The Alpine Group, Inc., Alpine/PolyVision, Inc. and
Posterloid Corporation (incorporated herein by reference to Exhibit 1 to Amendment
No. 2 to Alpine's Statement on Schedule 13D relating to its beneficial ownership of
equity securities of Information Display Technology Inc. dated May 5, 1995)
2(e) Amended and Restated Stock Purchase Agreement, dated as of October 11, 1994, by and
among The Alpine Group, Inc. and certain stockholders of Adience, Inc. ("Adience")
as listed therein, as amended (incorporated herein by reference to Exhibit 2.1 to the
Current Report on Form 8-K of Alpine dated January 5, 1995)
3(a)* Certificate of Incorporation of Alpine
3(b) Amendment to the Certificate of Incorporation of Alpine (incorporated herein by
reference to Exhibit 3(aa) of Post-Effective Amendment No. 1 to the Registration
Statement on Form S-3 (Registration No. 33-53434) of Alpine, as filed with the
Commission on May 12, 1993)
3(c) Certificate of the Powers, Designations, Preferences and Rights of the 9% Cumulative
Convertible Preferred Stock of Alpine (incorporated herein by reference to Exhibit 1
to the Quarterly Report on Form 10-Q of Alpine for the quarter ended January 31, 1989)
3(d) Certificate of the Powers, Designations, Preferences and Rights of the 9% Cumulative
Convertible Senior Preferred Stock of Alpine (incorporated herein by reference to
Exhibit 3(c) to the Annual Report on Form 10-K of Alpine for the fiscal year ended
April 30, 1992 ("1992 10-K"))
3(e) Certificate of the Powers, Designations, Preferences and Rights of the 8.5% Cumulative
Convertible Senior Preferred Stock of Alpine (incorporated herein by reference to
Exhibit 3(e) to the Annual Report on Form 10-K of Alpine for the fiscal year ended
April 30, 1994)
3(f)* Certificate of the Powers, Designations, Preferences and Rights of the 8% Cumulative
Convertible Senior Preferred Stock of the Company
3(g)* By-laws of Alpine
4(a) Indenture, dated as of October 1, 1986, between Alpine and Manufacturers Hanover Trust
Company ("MHTC"), as trustee, relating to the 13 1/2% Senior Subordinated Debentures
due 1996 of the Company (incorporated herein by reference to Exhibit 4 to Amendment
No. 2 to the Registration Statement on Form S-1 (Registration No. 33-7709) of
Alpine, as filed with the Commission on October 3, 1986)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
--------- ------------------------------------------------------------------------------------- ---------
<C> <S> <C>
4(b)* First Supplemental Indenture to the above Indenture, dated as of February 3, 1989,
between Alpine and MHTC, as trustee
4(c)* Second Supplemental Indenture to the above Indenture, dated as of October 31, 1989,
between Alpine and MHTC, as trustee
4(d)* Indenture, dated as of October 31, 1989, between Alpine and IBJ Schroder Bank & Trust
Company ("IBJ"), as trustee, relating to the Convertible Secured Senior Subordinated
Notes due July 31, 1996, of Alpine
4(e) First Supplemental Indenture to the above Indenture, dated as of March 28, 1991,
between Alpine and IBJ, as trustee (incorporated herein by reference to Exhibit 4 to
the Current Report on Form 8-K of Alpine dated April 10, 1991 (the "April 1991 8-K"))
4(f) Second Supplemental Indenture to the above Indenture, dated as of April 10, 1992,
between Alpine and IBJ, as trustee (incorporated herein by reference to Exhibit 4(f)
to the 1992 10-K)
4(g) Indenture, dated as of June 30, 1993, between Adience, Inc. and IBJ Schroeder Bank &
Trust Company (incorporated herein by reference to Registration Statement No. 33-72024
of Adience, Inc.)
10(a) Amended and Restated 1984 Restricted Stock Plan of Alpine (incorporated herein by
reference to Exhibit 10.5 to Form S-4 (Registration No. 33-9978) of Alpine, as filed
with the Commission on October 5, 1993 (the "S-4 Registration Statement")
10(b) Amended and Restated 1987 Long Term Equity Incentive Plan of Alpine (incorporated
herein by reference to Exhibit 10.4 to the S-4 Registration Statement)
10(c) Stock Purchase Agreement, dated February 14, 1992, by and between Alpine and
Dataproducts Corporation, relating to the purchase of shares of capital stock of DNE
(incorporated herein by reference to Exhibit 1 to the Current Report on Form 8-K of
Alpine dated March 2, 1992 (the "March 1992 8-K"))
10(d) Loan Agreement, dated as of February 13, 1992, by and among Alpine, DNE and the
Connecticut Development Authority (incorporated herein by reference to Exhibit 3
to the March 1992 8-K)
10(e) Agreement and Plan of Merger by and between Alpine and Superior TeleTec Inc., dated
as of June 17, 1993 and amended on September 24, 1993 (incorporated herein by
reference to Exhibit 2 to the S-4 Registration Statement)
10(f) Exchange Agreement, dated June 17, 1993 by and among Alpine, PV Partners, Suez
Ventures, EUROC, and Samuel Montagu Finance (incorporated herein by reference to
Exhibit 10.1 to the S-4 Registration Statement)
10(g) Development Agreement between Connecticut Innovations Incorporated and
Alpine/PolyVision, Inc., dated as of December 9, 1992 (incorporated herein by
reference to Exhibit 10(z) to the Annual Report on Form 10-K of Alpine for the fiscal
year ended April 30, 1993 (the "1993 10-K"))
10(h) Loan Agreement between Connecticut Development Authority and Alpine/PolyVision, Inc.,
dated as of December 9, 1992 (incorporated herein by reference to Exhibit 10(aa) to the
1993 10-K)
10(i) Master Credit Agreement, dated October 19, 1993 and amended on November 10, 1993, by
and among Superior TeleTec Transmission Products Inc., as borrower, Alpine, as
guarantor, Bank of Boston Connecticut and Creditanstalt-Bankverein, as the banks,
and Bank of Boston Connecticut, as the agent (incorporated herein by reference to
Exhibit 10(a) to the Current Report on Form 8-K of Alpine dated November 24, 1993)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
--------- ------------------------------------------------------------------------------------- ---------
<C> <S> <C>
10(j) Lease Agreement by and between ALP(TX) QRS 11-28, Inc., and Superior TeleTec
Transmission Products, Inc., dated as of December 16, 1993 (incorporated herein
by reference to Exhibit (i) to the Quarterly Report on Form 10-Q of Alpine for
the Quarter ended January 31, 1994)
10(k)* Amended and Restated Debt Exchange Agreement, dated as of October 11, 1994, among
Alpine and certain debtholders of Adience as listed therein (as amended
through April 14, 1995)
10(l) Note Purchase Agreement by and among Alpine, Superior TeleTec, Inc., Superior Cable
Corporation and Nomura International Trust Company (incorporated herein by reference
to Exhibit 3 to Alpine's Current Report on Form 8-K dated May 24, 1995)
10(m)* Letter Agreement, dated May 24, 1995, by and between Alpine and PolyVision
Corporation ("PolyVision") relating to $5,000,000 credit commitment
10(n)* Letter Agreement, dated May 24, 1995, by and between Alpine and PolyVision
relating to $2,500,000 credit commitment
10(o)* First Amendment to Lease Agreement, dated as of May 10, 1995, by and between
ALP (TX) QRS 11-28, Inc. and Superior Teletec Inc.
10(p)* Amendment to Alpine's 1984 Restricted Stock Plan.
10(q)* Employment Agreement, dated as of September 8, 1993, by and between Alpine and
Steven S. Elbaum
10(r)* Amendment to Employment Agreement, dated as of September 8, 1993, by and between
Alpine and Steven S. Elbaum
10(s)* Employment Agreement, dated as of September 8, 1993, by and between Alpine and
Bragi F. Schut
10(t)* Amendment to Employment Agreement, dated as of September 8, 1993, by and between
Alpine and Bragi F. Schut
10(u)* Employment Agreement, dated as of November 10, 1993, by and between Alpine and
David S. Aldridge
10(v)* Employment Agreement, dated as of November 10, 1993, by and between Alpine and
James R. Kanely
10(w)* Employment Agreement, dated as of November 10, 1993, by and between Alpine and
Justin F. Deedy, Jr.
10(x)* Second Amendment to Lease Agreement, dated as of July 21, 1995, by and between
ALP(TX) QRS H-28, Inc. and Superior Telecommunications Inc.
10(y)* Loan and Security Agreement, dated as of July 21, 1995, by and between Alpine,
Shawmut Capital Corporation, Nationsbank of Georgia, N.A., and Creditanstalt
Corporation Finance, Inc.
10(z)* Amendment to Employment Agreement, dated as of November 10, 1993, by and between
Alpine and Justin F. Deedy, Jr.
10(aa)* Amendment to Employment Agreement, dated as of November 10, 1993, by and between
Alpine and David S. Aldridge
10(bb)* Amendment, dated as of June 30, 1995, to Amended and Restated Debt Exchange Agreement,
dated as of October 11, 1984, among Alpine and certain debtholders of Adience
as listed herein
10(cc)* Supplemental Indenture, dated as of July 21, 1995, to Indenture by and between
Adience and IBJ dated as of June 30, 1993
10(dd)* Amendment to the Employment Agreement, dated as of November 10, 1993, by and
between Alpine and James R. Kanely.
10(ee)* Indenture, dated as of July 15, 1995, by and among Alpine, Adience, Superior
Telecommunications Inc., Superior Cable Corporation and Marine Midland Bank ("Marine
Midland"), as trustee.
10(ff)* Pledge Agreement, dated as of July 21, 1995, by and between Alpine and Marine Midland.
21* List of Subsidiaries
23(a)* Consent of Arthur Andersen LLP.
27* Financial Data Schedule
<FN>
------------------------
* Filed herewith.
</TABLE>
<PAGE>
EXHIBIT 3(a)
CERTIFICATE OF INCORPORATION
OF
ALPINE GROUP, INC.
The undersigned, for the purpose of organizing a corporation pursuant
to the provisions of the General Corporation Law of the State of Delaware, does
make and file this Certificate of Incorporation and does hereby certify as
follows:
FIRST: NAME. The name of the corporation is The Alpine Group, Inc.
(hereinafter referred to as the "Corporation").
SECOND: REGISTERED OFFICE. The registered office of the Corporation
is to be located in the City of Wilmington, County of New Castle, in the State
of Delaware. The name of its registered agent is The Corporation Trust Company,
whose address is Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801.
THIRD: PURPOSES. The purpose of the Corporation is to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: CAPITAL STOCK. The aggregate number of shares which the
Corporation shall have authority to issue shall be ten million (10,000,000)
shares of the par value of ten cents ($.10) each, all of which shall be Common
Stock, and five hundred
<PAGE>
thousand (500,000) shares of Preferred Stock of the par value of one dollar
($1.00) each.
1. PREFERRED STOCK. Shares of Preferred Stock may be issued from
time to time in series and the Board of Directors of the Corporation is hereby
authorized, subject to the limitations provided by law, to establish and
designate series of the Preferred Stock, to fix the number of shares
constituting each series and to fix by resolution or resolutions the
designations and the relative rights, preferences and limitations of the shares
of each series and the variations and the relative rights, preferences and
limitations as between series and to increase and to decrease the number of
shares constituting each series.
2. COMMON STOCK. Subject to any preferential dividend rights
applicable to shares of the Preferred Stock, the holders of shares of the Common
Stock shall be entitled to receive such dividends as may be declared by the
Board of Directors.
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, after distribution in full of the
preferential amounts to be distributed to the holders of shares of the Preferred
Stock, the holders of shares of the Common Stock shall be entitled to receive
all of the remaining assets of the Corporation available for distribution to its
stockholders, ratably in proportion to the number of shares of the Common Stock
held by them.
2
<PAGE>
The holders of shares of the Common Stock shall be entitled to
vote on all matters at all meetings of the stockholders of the Corporation and
shall be entitled to one vote for each share of the Common Stock entitled to
vote at such meeting.
FIFTH: BOARD OF DIRECTORS.
1. GENERAL. All power of the Corporation shall be exercised by or
under the direction of the Board of Directors except as otherwise provided
herein, required by law or by the By-Laws. For the management of the business
and for the conduct of the affairs of the Corporation and of its Directors and
of its shareholders, it is further provided:
2. ELECTION OF DIRECTORS. Election of Directors need not be by
written ballot unless the By-laws of the Corporation shall so provide.
3. NUMBER, ELECTION AND TERMS OF DIRECTORS. The number of Directors
of the Corporation shall be fixed from time to time by or pursuant to the By-
laws. The Directors shall be classified with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, as shall be provided in the manner specified in the By-laws, one class
to hold office initially for a term expiring at the next annual meeting of
shareholders, to be held in 1987, another class to hold office initially for a
term expiring at the annual meeting of shareholders, to be held in 1988, and
another
3
<PAGE>
class to hold office initially for a term expiring at the annual meeting of
shareholders to be held in 1989, with the members of each class to hold office
until their successors are elected and qualified. At each annual meeting of the
stockholders of the Corporation, the successors to the class of Directors whose
terms expire at that meeting shall be elected to hold office for a term expiring
at the annual meeting of shareholders held in the third year following the year
of their election.
4. SHAREHOLDER NOMINATION OF DIRECTOR CANDIDATES. Advance notice
of nominations for the election of Directors, other than by the Board of
Directors or a committee thereof, shall be given in the manner provided in the
By-laws.
5. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created
directorships resulting from any increase in the number of Directors and any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled solely by the
affirmative vote of a majority of the remaining Directors then in of office,
even though less than a quorum of the Board of Directors. Any Director elected
in accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of Directors in which the new directorship was
created or the vacancy occurred and until such Director's successor shall have
been elected and qualified. No decrease in the number of Directors constituting
the Board of Directors shall shorten the term of any incumbent Director.
4
<PAGE>
6. REMOVAL OF DIRECTORS. Any Director may be removed from office
with cause, by affirmative vote of the holders of a majority, or without cause
by the affirmative vote of the holders of at least 80% of the combined voting
power, of the then outstanding shares of stock entitled to vote generally in the
election of Directors, voting together as a single class at an annual or special
meeting of shareholders of the Corporation called for such purpose. Any
Director may be removed from office with cause by the affirmative vote of the
Board of Directors.
7. BY-LAW AMENDMENTS. The Board of Directors shall have power to
make, alter, amend and repeal the By-laws (except so far as the By-laws adopted
by the shareholders shall otherwise provide). Any By-laws made by the Directors
under the powers conferred hereby may be altered, amended or repealed by the
Directors or by the shareholders. Notwithstanding the foregoing and anything
contained in this Certificate of Incorporation to the contrary, those provisions
of the By-laws relating to the number, election and terms of the Directors,
newly created Directorships and vacancies or removal of Directors shall not be
altered, amended or repealed and no provision inconsistent therewith shall be
adopted without the affirmative vote of the holders of at least 80% of the
combined voting power of the then outstanding shares of stock entitled to vote
generally in the election of Directors, voting together as a single class.
8. AMENDMENT, REPEAL, ETC. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary,
5
<PAGE>
the affirmative vote of the holders of at least 80% of the combined voting power
of the then outstanding shares of stock entitled to vote generally in the
election of Directors, voting together as a single class, shall be required to
alter, amend or adopt any provision inconsistent with, or repeal, this Article
or any provision hereof.
SIXTH: LIMITATION OF DIRECTORS' LIABILITY. As authorized by
Section 102(b)(7) of subsection (b) of Section 102, Title 8, of the Delaware
Code (the "Code"), as the same may be interpreted or amended from time to time,
no director shall be personally liable to the Corporation or its shareholders
for monetary damages for breach of fiduciary duty as a director, provided,
however, that the foregoing shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the Corporation
or its shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Code, or (iv) for any transaction from which the director
derived an improper personal benefit. This Article SIXTH shall not apply to any
act or omission occurring prior to the date this Article SIXTH becomes
effective.
6
<PAGE>
SEVENTH: INCORPORATOR. The name and mailing address of the
incorporator is:
Name Mailing Address
---- ---------------
Jeffrey B. Cobb c/o Spengler Carlson Gubar
Brodsky & Frischling
280 Park Avenue
New York, New York 10017
EIGHTH: COMPROMISE. Whenever a compromise or arrangement is
proposed between this Corporation and its creditors or any class of them and/or
between this Corporation and its shareholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or shareholder thereof or on
the application of any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of Title 8 of the Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 279 of Title 8 of the Code order a
meeting of the creditors or class of directors, and/or of the shareholders or
class of shareholders of this Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
shareholders or class of shareholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
7
<PAGE>
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the shareholders or class of
shareholders, of this Corporation, as the case may be, and also on this
Corporation.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, hereby declare and certify that the facts herein stated are
true, and accordingly have hereunto set my hand this 8th day of January, 1987.
------------------------------
Jeffrey B. Cobb, Incorporator
8
<PAGE>
EXHIBIT 3(f)
CERTIFICATE
OF
THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS
OF THE
8% CUMULATIVE CONVERTIBLE SENIOR
PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
OF
THE ALPINE GROUP, INC.
The Alpine Group, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "CORPORATION"), pursuant to Section 151 of
the General Corporation Law of the State of Delaware, certifies that the
Executive Committee of the Board of Directors of the Corporation at a meeting
thereof duly called and held on December 21, 1994, at which meeting a quorum was
present and acting throughout, duly adopted the following resolutions:
WHEREAS, the Board of Directors of the Corporation is authorized,
within the limitations and restrictions stated in the Certificate of
Incorporation of the Corporation (the "CERTIFICATE OF INCORPORATION"), to fix by
resolution or resolutions the designation of each series of preferred stock,
$1.00 par value per share (the "PREFERRED STOCK"), the number of shares
constituting such series and the relative rights, preferences and limitations
thereof, including, without limiting the generality of the foregoing, such
provisions as may be desired concerning voting, redemption, dividends,
dissolution or the distribution of assets, conversion or exchange, and such
other subjects or matters as may be fixed by resolution or resolutions of the
Board of Directors under the General Corporation Law of the State of Delaware;
WHEREAS, it is the desire of the Board of Directors of the Corporation
to authorize a series of preferred stock to be designated the "8% CUMULATIVE
CONVERTIBLE SENIOR PREFERRED STOCK" and to fix the terms of the 8% Cumulative
Convertible Senior Preferred Stock and the number of shares constituting such
series for purposes of the private offering and sale thereof to a limited group
of qualified purchasers in connection with the sale of certain shares of common
stock of Adience, Inc. by the group
<PAGE>
of qualified purchasers to the Corporation pursuant to a stock purchase
agreement (the "STOCK PURCHASE AGREEMENT") among such purchasers and the
Corporation dated as of October 11, 1994, and the exchange of certain senior
notes of Adience, Inc. by the group of qualified purchasers with the Corporation
pursuant to a debt exchange agreement (the "DEBT EXCHANGE AGREEMENT") among such
purchasers and the Corporation dated as of October 11, 1994, and certain other
issuances to the same persons in accordance with the terms of those agreements
(the closing date as defined by the Stock Purchase Agreement shall hereinafter
be referred to as the "CLOSING DATE"); and
WHEREAS, the Board of Directors has authorized the Executive Committee
of the Board to fix the designation and determine the rights, preferences and
limitation of the 8% Cumulative Convertible Senior Preferred Stock.
NOW THEREFORE, BE IT RESOLVED that pursuant to the authority vested in
the Board of Directors by the Certificate of Incorporation there is created a
series of preferred stock consisting of Three Hundred Fifty Thousand (350,000)
shares of 8% Cumulative Convertible Senior Preferred Stock, par value $1.00 per
share.
1. DESIGNATION AND NUMBER OF SHARES. The designation of such series
of Preferred Stock, par value $1.00 per share, authorized by this resolution
shall be 8% Cumulative Convertible Senior Preferred Stock (the "SENIOR PREFERRED
STOCK"). The number of shares of the Senior Preferred Stock shall be Three
Hundred Fifty Thousand (350,000) and no more.
2. RANK. The Senior Preferred Stock shall, with respect to dividend
rights and rights upon liquidation, winding up and dissolution, rank senior to:
(a) the issued and outstanding shares of the Corporation's 9% Cumulative
Convertible Preferred Stock, $1.00 par value per share (the "JUNIOR PREFERRED
STOCK"); (b) any other series of Preferred Stock established by the Board of
Directors after the date hereof, the terms of which specifically shall provide
that such shares rank junior to the Senior Preferred Stock; (c) all other
classes and series of preferred stock established by the Board of Directors,
unless the holders of the Senior Preferred Stock shall agree pursuant to Section
7(b) hereof that such shares shall rank PARI PASSU with or senior to the shares
of Senior Preferred Stock; and (d) all other equity securities of the
Corporation, including the Common Stock, par value $.10 per share (the "ALPINE
COMMON STOCK"), of the Corporation (all of the securities of the Corporation
which rank junior to the Senior Preferred Stock are at times collectively
referred to herein as the "JUNIOR SECURITIES"); and shall rank junior to (i) the
issued and outstanding shares of the Corporation's 8-1/2% Cumulative Convertible
Senior Preferred Stock (the "8-1/2% PREFERRED STOCK") and (ii) the issued and
outstanding shares of the Corporation's 9% Cumulative Convertible
2
<PAGE>
Senior Preferred Stock, $1.00 par value per share (the "9% PREFERRED STOCK").
3. DIVIDENDS. (a) The holders of the shares of the Senior
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds at the time legally available for the payment
of dividends, cumulative cash dividends at the annual rate of four dollars
($4.00) per share, and no more. Such dividends shall be payable in equal
quarterly payments on January 31, April 30, July 31 and October 31 of each year
(or such prorated amount as may be applicable with respect to the first such
payment), commencing January 31, 1995 (each of such dates being a "DIVIDEND
PAYMENT DATE"). Such dividends shall be paid to the holders of record at the
close of business on the date specified by the Board of Directors of the
Corporation at the time such dividend is declared; PROVIDED, HOWEVER, that such
date shall not be more than sixty (60) days nor less than ten (10) days prior to
the respective Dividend Payment Date. Each such quarterly dividend shall be
fully cumulative and shall accrue (whether or not declared), without interest,
from the first day of the quarter (or, with respect to the first such dividend,
from the date of issuance of such shares) in which such dividend may be payable
through the Dividend Payment Date with respect to such quarter as herein
provided. If the Dividend Payment Date is not a business day, the Dividend
Payment Date shall be the next succeeding business day. Accumulated unpaid
dividends for any past dividend periods may be declared by the Board of
Directors and paid on any date, whether or not a regular Dividend Payment Date,
fixed by the Board of Directors, to holders of record on the books of the
Corporation on such record date as may be fixed by the Board of Directors with
respect to such payment.
(b) Notwithstanding anything contained herein to the contrary, no
cash dividends on shares of the Senior Preferred Stock shall be declared by the
Board of Directors or paid or set apart for payment by the Corporation at such
time as the terms and provisions of any agreement of the Corporation, including
any agreement relating to its indebtedness, prohibits such declaration, payment
or setting apart for payment or provides that such declaration, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, unless the Corporation has obtained the consent of the requisite
holders of such indebtedness to the payment or setting apart for payment of such
dividends; PROVIDED, HOWEVER, that nothing herein contained shall in any way or
under any circumstances be construed or deemed to require the Board of Directors
to declare, or the Corporation to pay or set apart for payment, any dividends on
shares of the Senior Preferred Stock at any time, whether permitted by any of
such agreements or not.
(c) If at any time the Corporation shall have failed to pay all
dividends which have accrued on any outstanding shares
3
<PAGE>
of any series of Preferred Stock having cumulative dividend rights ranking PARI
PASSU with or senior to the shares of the Senior Preferred Stock at the times
such dividends are payable, no cash dividend shall be declared by the Board of
Directors, or paid or set apart for payment by the Corporation, on shares of the
Senior Preferred Stock unless prior to or concurrently with such declaration,
payment or setting apart for payment, (i) all accrued and unpaid dividends on
all outstanding shares of any other series of Preferred Stock having cumulative
dividend rights ranking senior to the Senior Preferred Stock shall have been or
shall be declared, paid or set apart for payment without interest and (ii) all
accrued and unpaid dividends on all outstanding shares of any other series of
Preferred Stock having cumulative dividend rights ranking PARI PASSU with the
Senior Preferred Stock shall have been or shall be declared, paid or set apart
for payment, without interest, PRO RATA with all accrued and unpaid dividends on
all outstanding shares of the Senior Preferred Stock so that the amounts of any
cash dividends declared, paid or set apart for payment on shares of the Senior
Preferred Stock and shares of such other series of Preferred Stock having
cumulative dividend rights ranking PARI PASSU with the Senior Preferred Stock
shall in all cases bear to each other the same ratio that, at the time of such
declaration, payment or setting apart for payment, all accrued but unpaid cash
dividends on shares of the Senior Preferred Stock and shares of such other
series of the Preferred Stock having cumulative dividend rights ranking PARI
PASSU with the Senior Preferred Stock bear to each other.
(d) (i) Holders of shares of the Senior Preferred Stock shall be
entitled to receive the dividends provided for in paragraph 3(a) hereof on a PRO
RATA basis with shares of any other series of Preferred Stock having cumulative
dividend rights ranking PARI PASSU with the Senior Preferred Stock so that the
amounts of any cash dividends declared, paid or set apart for payment on shares
of the Senior Preferred Stock and shares of such other series of Preferred Stock
having cumulative dividend rights ranking PARI PASSU with the Senior Preferred
Stock shall in all cases bear to each other the same ratio that, at the time of
such declaration, payment or setting apart for payment, all accrued but unpaid
cash dividends on shares of the Senior Preferred Stock and shares of such other
series of the Preferred Stock having cumulative dividend rights ranking PARI
PASSU with the Senior Preferred Stock bear to each other, and in preference to
and in priority over any dividends upon any of the Junior Securities.
(ii) So long as any shares of the Senior Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment any
dividend on any of the Junior Securities or make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or any
warrants, rights, calls or options exercisable
4
<PAGE>
for any of the Junior Securities, or make any distribution in respect thereof,
either directly or indirectly and whether in cash, obligations or shares of the
Corporation or other property (other than distributions or dividends in stock to
the holders of such stock), and shall not permit any corporation or other entity
directly or indirectly controlled by the Corporation to purchase or redeem any
of the Junior Securities or any warrants, rights, calls or options exercisable
for any of the Junior Securities, unless prior to or concurrently with such
declaration, payment or setting apart for payment, purchase or distribution, as
the case may be, all accrued and unpaid cash dividends on shares of the Senior
Preferred Stock not paid on the dates provided for in paragraph 3(c) hereof
(including if not paid pursuant to paragraph 3(b) or paragraph 3(c) hereof)
shall have been, or concurrently therewith shall be, paid.
(iii) Subject to the foregoing provisions of this paragraph 3(d),
the Board of Directors may declare and the Corporation may pay or set apart for
payment, dividends and other distributions on any of the Junior Securities, and
may purchase or otherwise redeem any of the Junior Securities or any warrants,
rights, or options exercisable for any of the Junior Securities, and the holders
of the shares of the Senior Preferred Stock shall not be entitled to share
therein.
(e) If there is an arrearage of three or more dividend payments on
shares of Senior Preferred Stock at any time, whether or not consecutive, the
holders of fifty-one percent (51%) of the outstanding shares of Senior Preferred
Stock shall have the right to appoint one director to the Corporation's Board of
Directors until such arrearage is eliminated.
4. LIQUIDATION PREFERENCE. (a) In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Corporation, whether voluntary or involuntary, the holders of shares of the
Senior Preferred Stock then outstanding shall be entitled to be paid out of the
assets of the Corporation available for distribution to its stockholders, for
each share held, an amount in cash equal to fifty dollars ($50.00), plus an
amount in cash equal to all accrued but unpaid dividends thereon (without
interest) to the date fixed for liquidation (the "LIQUIDATION VALUE"), before
any payment shall be made or any assets distributed to the holders of the Junior
Securities. If the assets of the Corporation are not sufficient to pay in full
the Liquidation Value payable to the holders of outstanding shares of Senior
Preferred Stock or any other series of Preferred Stock having liquidation rights
ranking PARI PASSU with the shares of Senior Preferred Stock, then the holders
of all such shares shall share ratably in such distribution of assets in
accordance with the respective amounts which would be payable on such
distribution if the amounts to which the holders of outstanding shares of Senior
Preferred Stock
5
<PAGE>
and of such other series of Preferred Stock are entitled were paid in full.
(b) For the purposes of this Section 4, neither the voluntary sale,
conveyance, exchange, or transfer (for cash, shares of stock, securities, or
other consideration) of all or substantially all the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed to be a liquidation, dissolution, or winding
up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange,
or transfer shall be in connection with a dissolution or winding up of the
business of the Corporation.
5. OPTIONAL REDEMPTION. (a) To the extent the Corporation shall
have funds legally available for such payment, commencing three years from the
Closing Date, the Corporation may redeem, at its option, shares of the Senior
Preferred Stock, in whole or in part, at a redemption price per share equal to
the Liquidation Value thereof on the date fixed for redemption.
(b) Shares of Senior Preferred Stock which have been issued and
reacquired in any manner, including shares purchased or redeemed, shall (upon
compliance with any applicable provisions of the laws of the State of Delaware)
have the status of authorized and unissued shares of Preferred Stock
undesignated as to series and may be redesignated and reissued as part of any
series of Preferred Stock.
(c) No sinking fund payments shall be required to be made by the
Corporation in connection with the redemption of the Senior Preferred Stock
pursuant to this Section 5.
6. PROCEDURE FOR REDEMPTION. (a) In the event that fewer than all
of the then outstanding shares of the Senior Preferred Stock are to be redeemed,
the shares of Senior Preferred Stock to be redeemed shall be determined by lot,
or PRO RATA as may be determined by the Board of Directors, or by any other
method selected by the Board of Directors which is not inconsistent with
applicable law.
(b) In the event the Corporation shall redeem shares of the Senior
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than sixty (60) days prior to the redemption
date, to each holder of record of the shares to be redeemed at such holder's
address as the same appears on the stock register of the Corporation. Each such
notice shall state: (i) the redemption date; (ii) the number of shares of the
Senior Preferred Stock to be redeemed and, if less than all the shares held by
such holder are to be redeemed from such holder, the number of shares to be
redeemed from such holder; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for
6
<PAGE>
payment of the redemption price; and (v) that dividends on the shares to be
redeemed will cease to accrue on such redemption date.
(c) Notice having been mailed as provided in Section 6(b), from and
after the redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price of the shares called for
redemption) dividends on the shares of Senior Preferred Stock so called for
redemption shall cease to accrue, and such shares shall no longer be deemed to
be outstanding and shall have the status of authorized but unissued shares of
Preferred Stock, unclassified as to series, and all rights of the holders
thereof as stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in accordance
with said notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the Corporation
shall so require and the notice shall so state), such shares shall be redeemed
by the Corporation at the redemption price aforesaid. In the event that fewer
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
7. VOTING RIGHTS (a) The holders of shares of the Senior Preferred
Stock shall be entitled to that number of votes per share equal to the number of
shares of Alpine Common Stock into which the shares of Senior Preferred Stock
are initially convertible pursuant to Section 8(a). Except as otherwise
provided below or by law, the holders of shares of Senior Preferred Stock and
the holders of Alpine Common Stock shall vote together as one class on all
matters submitted to a vote of the Corporation's stockholders.
(b) The holders of Senior Preferred Stock shall have the right to
vote as a separate class on the following matters: (i) the amendment of any of
the principal terms of the Senior Preferred Stock; (ii) the authorization,
creation, issuance or sale of any class of capital stock ranking senior to or on
parity with the Senior Preferred Stock as to dividends or liquidation
preference; or (iii) the merger of the Corporation into or consolidation with
another entity or the sale of all or substantially all of the assets of the
Corporation to another entity. The affirmative vote of the holders of not less
than sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of
Senior Preferred Stock shall be necessary to authorize any transaction
referenced in subsections (b) (i) through (iii) above.
8. CONVERSION RIGHTS, ADJUSTMENTS. (a) The shares of Senior
Preferred Stock shall be convertible at the option of the respective holders of
record thereof, in whole or in part, at any time and from time to time, as
hereinafter provided, into
7
<PAGE>
that number of fully paid and nonassessable shares of Alpine Common Stock (as
such shares may be constituted on the Conversion Date, as hereinafter defined)
as shall be obtained by dividing $50.00 by the Conversion Price (as hereinafter
defined) and multiplying the resulting quotient by the number of shares of
Senior Preferred Stock to be converted. As used herein, the "CONVERSION PRICE"
shall be $7.75, or, in case an adjustment of such Conversion Price has taken
place pursuant to the provisions of Section 8(c) below, then the Conversion
Price as last adjusted and in effect on the Conversion Date. No adjustment in
the Conversion Price shall be made on account of any unpaid dividends, whether
or not accrued, on the Senior Preferred Stock and any holder thereof
surrendering any shares thereof for conversion shall be deemed to have waived
any and all rights to such dividends.
(b) Before any holder of shares of Senior Preferred Stock shall be
entitled to convert the same into Alpine Common Stock, he or she shall deliver
the certificate or certificates therefor, duly endorsed, at the office of the
Corporation or the Corporation's transfer agent, if any, and shall give written
notice to the Corporation that he or she elects to convert all or part of the
shares represented by the certificate or certificates and shall state in writing
therein the name or names in which he or she wishes the certificate or
certificates for Alpine Common Stock to be issued. Conversion shall be deemed
to have been made effective on the date when such delivery is made, and such
date is referred to herein as the "CONVERSION DATE". The corporation will, as
soon as practicable thereafter, issue and deliver to such holder of shares of
Senior Preferred Stock, or to his or her nominee or nominees, certificates for
the number of full shares of Alpine Common Stock to which he or she shall be
entitled as aforesaid, together with cash in lieu of any fraction of a share as
hereinafter provided. If surrendered certificates for Senior Preferred Stock
are converted only in part, the Corporation will issue and deliver to the holder
a new certificate or certificates representing the aggregate of the unconverted
shares of Senior Preferred Stock.
(c) The Conversion Price shall be subject to adjustment as follows:
(i) ADJUSTMENT UPON ISSUANCES OF ALPINE COMMON STOCK BELOW THE CONVERSION
PRICE. In case the Corporation shall issue any shares of Alpine Common Stock
other than Excluded Stock (as hereinafter defined) for a consideration per share
less than the then existing Conversion Price applicable immediately prior to
such issuance, the Conversion Price in effect immediately prior to each such
issuance shall be reduced to a price determined by dividing (a) the sum of (i)
the number of shares of Alpine Common Stock outstanding immediately prior to
such issue, multiplied by the Conversion Price in effect immediately prior to
such issue, plus (ii) the consideration, if any, received by the Corporation
8
<PAGE>
upon such issue, by (b) the number of shares of Alpine Common Stock outstanding
immediately after such issue. For the purposes of this clause (i), the
following provisions shall also be applicable:
(1) CONVERTIBLE SECURITIES, OPTIONS AND RIGHTS. If the
Corporation shall issue any stock, warrant, security, obligation,
option or other right which directly or indirectly may be converted,
exchanged, or satisfied in shares of Alpine Common Stock other than
Excluded Stock, the maximum total number of shares of Alpine Common
Stock issuable upon such conversion, exchange or other exercise of
such securities or rights shall thereupon be deemed to have been
issued and to be outstanding, and the consideration received by the
Corporation therefor shall be deemed to include the sum of the
consideration received for the issue of such securities or rights and
the minimum additional consideration payable upon such conversion,
exchange or other exercise of such securities or rights. No further
adjustment shall be made for the actual issuance of Alpine Common
Stock upon such conversion, exchange or other exercise of any such
securities or rights. If the provisions of any such securities or
rights with respect to purchase price or shares purchasable shall
change or expire, any adjustment previously made hereunder therefor
shall be readjusted to such as would have been obtained on the basis
of the securities or rights as modified by such change or expiration.
(2) STOCK DIVIDENDS AND SPLITS. In case the Corporation shall
declare a dividend or other distribution payable in Alpine Common
Stock or shall subdivide Alpine Common Stock into a greater number of
shares of Alpine Common Stock, such issue of Alpine Common Stock shall
be deemed to have been made without consideration.
(3) CONSIDERATION. In case the Corporation shall issue shares
of Alpine Common Stock for a consideration wholly or partly other than
cash, the amount of the consideration other than cash received by
the Corporation shall be deemed to be the fair value of such
consideration as determined by the Board of Directors of the
Corporation by any method such Board deems appropriate; PROVIDED,
HOWEVER, that in the event that any such shares of Alpine Common Stock
are to be issued to any person or entity in which any director or
directors of the Corporation has an interest, such determination shall
be made solely by those members of the Board of Directors who have no
such interest.
9
<PAGE>
(4) RECORD DATES. In case the Corporation shall take a record
of the holders of Alpine Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in Alpine
Common Stock, or (ii) to subscribe for or purchase Alpine Common
Stock, then such record date shall be deemed to be the date of the
issue or sale of the shares of Alpine Common Stock deemed to have been
issued upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(5) TREASURY STOCK. The number of shares of Alpine Common
Stock outstanding at any given time shall include shares owned or held
by or for the account of the Corporation, and the disposition of any
such shares so owned or held shall not be considered an issue of
Alpine Common Stock.
(6) EXCLUDED STOCK. The term "EXCLUDED STOCK" shall mean shares
of Alpine Common Stock issued or issuable by the Corporation upon (i)
conversions of the Senior Preferred Stock, the 9% Preferred Stock, the
8-1/2% Preferred Stock, the Junior Preferred Stock or the
Company's Convertible Senior Subordinated Notes due 1996 or exchanges
of the Company's 13% Senior Subordinated Debentures due 1996; or (ii)
exercises, at a price less than the Conversion Price, of any and all
stock options or warrants, or issuance or vesting of stock bonus or
award grants, outstanding on the date hereof or issued in the future,
in an aggregate amount of up to ten percent (10%) of the then issued
and outstanding shares of Alpine Common Stock, of which not more than
two-and-one-half percent (2 1/2%) shall relate to exercises by or
issuances to persons who are not directors or employees of the
Corporation.
This Section 8(c)(i) does not apply to rights or warrants referred
to in Section 8(c)(iii).
(ii) ADJUSTMENTS FOR CHANGES IN CAPITAL STOCK. If the Corporation:
(1) pays a dividend in shares of Alpine Common Stock to holders
of Alpine Common Stock;
(2) subdivides outstanding shares of Alpine Common Stock into a
greater number of shares;
(3) combines outstanding shares of Alpine Common Stock into a
smaller number of shares; or
10
<PAGE>
(4) issues by reclassification of shares of Alpine Common Stock
any shares of its capital stock;
then the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of Senior Preferred Stock thereafter converted may
receive the number of shares of capital stock of the Corporation which such
holder could have owned immediately following such action if such holder had
converted the Senior Preferred Stock immediately prior to such action.
For a dividend or distribution, the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision, combination
or reclassification.
If, after an adjustment, a holder of Senior Preferred Stock upon
conversion thereof may receive shares of two or more classes of capital stock of
the Corporation, the Board of Directors of the Corporation shall determine the
allocation of the adjusted Conversion Price between or among the classes of
capital stock. After such allocation, the Conversion Price of the classes of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Alpine Common Stock contained in this Section 8(c).
(iii) ADJUSTMENT FOR RIGHTS ISSUE. If the Corporation issues any
rights or warrants to all or substantially all holders of shares of Alpine
Common Stock entitling them after the record date mentioned below to purchase
shares of Alpine Common Stock (or securities convertible into shares of Alpine
Common Stock) at a price per share (or having a Conversion Price per share) less
than the Market Price (as defined below) per share on that record date, the
Conversion Price shall be adjusted in accordance with the formula:
O + N x P
-------
C' = C x M
--------------
O + N
where:
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
0 = the number of shares of Alpine Common Stock outstanding on the record date.
N = the number of additional shares of Alpine Common Stock offered.
P = the offering price per share of the additional shares.
11
<PAGE>
M = the Market Price (as hereinafter defined) per share of Alpine Common Stock
on the record date.
The foregoing adjustment shall be made successively whenever any such
rights or warrants are issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the rights
or warrants. If all of the shares of Alpine Common Stock or securities
convertible into shares of Alpine Common Stock subject to such rights or
warrants have not been issued when such rights or warrants expire, then the
Conversion Price shall promptly be readjusted to the Conversion Price which
would then be in effect had the adjustment upon the issuance of such rights or
warrants been made on the basis of the actual number of shares of Alpine Common
Stock (or securities convertible into shares of Alpine Common Stock) issued upon
the exercise of such rights or warrants.
The term "MARKET PRICE" with respect to a share of Alpine Common Stock
shall mean, for each trading day, the reported closing sale price, or, if there
were no sales on such day, the average of the reported closing bid and asked
prices regular way, in either case on the AMEX or, if the Alpine Common Stock is
not listed or admitted to trading on the AMEX, on the principal national
securities exchange on which the Alpine Common Stock is listed or admitted to
trading (based on the aggregate dollar value of all securities listed or
admitted to trading) or, if not listed or admitted to trading on any national
securities exchange, in the NASDAQ National Market System or, if the Alpine
Common Stock is not listed or admitted to trading on any national securities
exchange or quoted on the NASDAQ National Market System, the average of the
closing bid and asked prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm selected from time to time by the
Corporation for the purpose, or, if such prices are not available, the fair
market value set by, or in a manner established by, the Board of Directors of
the Corporation in good faith.
(iv) ADJUSTMENT FOR OTHER DISTRIBUTIONS. If the Corporation (A)
distributes to all or substantially all holders of shares of Alpine Common Stock
any assets or general evidences of indebtedness or any rights or warrants to
purchase assets or general evidences of indebtedness of the Corporation, or (B)
pays a dividend on shares of Alpine Common Stock in shares of capital stock
other than Alpine Common Stock or makes a distribution on Alpine Common Stock in
shares of capital stock other than Alpine Common Stock, then the Conversion
Price shall be adjusted in accordance with the formula:
(O x M) - F
-------------
C' = C x O x M
where:
12
<PAGE>
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
0 = the number of shares of Alpine Common Stock outstanding on the record date.
M = the Market Price per share of Alpine Common Stock on the record date.
F = the fair market value on the record date of the assets, general evidences
of indebtedness distributed, or capital stock, as determined by the Board
of Directors.
The foregoing adjustment shall be made successively whenever any such
distribution is made, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This Section does not apply to cash dividends or cash distributions.
Also, this Section does not apply to rights or warrants referred to in Section
8(c)(iii).
(v) Voluntary Adjustment. The Corporation at any time may decrease the
Conversion Price, temporarily or otherwise, by any amount, but in no event shall
such Conversion Price result in the issuance of Alpine Common Stock at a price
less than the par value of the Alpine Common Stock at the time such decrease is
made. Any such decreased Conversion Price shall be available for at least
twenty (20) days from the date on which notice of such decrease is filed by the
Corporation with the transfer agent for the Alpine Common Stock, and such
decrease shall be irrevocable during such period. The Company shall notify
holders of Senior Preferred Stock at least fifteen (15) days prior to the date
on which the reduced Conversion Price takes effect.
(vi) WHEN ADJUSTMENTS MAY BE DEFERRED, ETC. No adjustment in the
Conversion Price need be made under this Section 8(c) unless cumulative
adjustments equal at least fifty cents ($.50). Any adjustments which are not
made shall be carried forward and taken into account in any subsequent
adjustment. No adjustment of the Conversion Price will be made for cash
distributions or cash dividends paid out of current or undistributed net income
or retained earnings.
All calculations under this Section 8(c) shall be made to the nearest
cent or to the nearest 1/1000th of a share, as the case may be.
(vii) NOTICE OF ADJUSTMENT. Whenever the Conversion Price is
adjusted, the Corporation shall calculate the adjustment to be made and shall
promptly mail to holders of Senior Preferred Stock a notice of the adjustment
and file with the transfer agent of
13
<PAGE>
the Corporation a certificate from an officer of the Corporation briefly stating
the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence that the adjustment is correct, absent
manifest error.
(viii) NOTICE OF CERTAIN TRANSACTIONS. If:
(1) the Corporation takes any action which would require an
adjustment in the Conversion Price;
(2) the Corporation proposes to consolidate with or merge with
or into, or transfer all or substantially all of its assets to, another
corporation; or
(3) there is a proposed dissolution or liquidation of the
Corporation, a holder of shares of Senior Preferred Stock may desire to convert
them into shares of Alpine Common Stock prior to the record date for, or the
effective date of, the transaction so that he may receive the rights, warrants,
securities or assets which a holder of shares of Alpine Common Stock on that
date may receive. Therefore, the Corporation shall mail to holders and the
transfer agent a notice stating any such proposed record or effective date, as
the case may be, by first-class mail at least fifteen (15) days before such
date. Failure to mail the notice or any defect in it shall not affect the
validity of any transaction referred to in clause (1), (2) or (3) of this
Section.
(ix) In case the Corporation shall consolidate or merge into or with
another corporation, or in case the Corporation shall sell or convey to any
other person or persons all or substantially all the assets of the Corporation,
each holder of Senior Preferred Stock then outstanding shall have the right
thereafter to convert each share of Senior Preferred Stock held by him into the
kind and amount of shares of stock, other securities, cash and property
receivable upon such consolidation, merger, sale or conveyance by a holder of
the number of shares of Alpine Common Stock into which such shares might have
been converted immediately prior to such consolidation, merger, sale or
conveyance, and shall have no other conversion rights. In any such event,
effective provision shall be made, in the certificate or articles of
incorporation of the resulting or surviving corporation or otherwise or in any
contracts of sale and conveyance so that, so far as appropriate and as nearly as
reasonably may be, the provisions set forth herein for the protection of the
conversion rights of the shares of the Senior Preferred Stock shall thereafter
be made applicable.
(d) No fractional shares or scrip representing fractional shares of
Alpine Common Stock shall be issued upon conversion of the Senior Preferred
Stock. If more than one certificate representing shares of the Senior Preferred
Stock shall be surrendered for conversion at one time by the same
14
<PAGE>
holder; the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Senior Preferred
Stock so surrendered. Instead of any fractional share of Alpine Common Stock
that would otherwise be issuable upon conversion of any shares of Senior
Preferred Stock, the Corporation will pay a cash adjustment in respect of such
fractional interest in an amount equal to the same fraction of the Market Price
per share of Alpine Common Stock at the close of business on the business day
prior to the day of conversion.
(e) The Corporation shall reserve out of its authorized but unissued
shares of Alpine Common Stock or its shares of Alpine Common Stock held in
treasury sufficient shares of Alpine Common Stock to permit the conversion of
the Senior Preferred Stock at all times. All shares of Alpine Common Stock
which may be issued upon conversion of the Senior Preferred Stock shall be
validly issued, fully paid and non-assessable.
(f) The issuance of certificates for shares of Alpine Common Stock
upon the conversion of shares of Senior Preferred Stock shall be made without
charge to the holders of shares of Senior Preferred Stock converting such shares
of Senior Preferred Stock for any issue or stamp tax in respect of the issuance
of such certificates, and such certificates shall be issued in the respective
names of, or in such names as may be directed by, the holders of shares of
Senior Preferred Stock converted.
(g) Shares of Alpine Common Stock held in the treasury of the
Corporation may in its discretion be delivered upon any conversion of shares of
the Senior Preferred Stock.
15
<PAGE>
(h) All certificates for the shares of Senior Preferred Stock and any
shares of Alpine Common Stock issued upon conversion thereof shall bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFICATION
UNDER THE BLUE SKY LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR
OTHERWISE DISPOSED OF, BENEFICIALLY OR ON THE RECORDS OF THE
CORPORATION, UNLESS THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
AND QUALIFIED UNDER APPLICABLE BLUE SKY LAWS OR AN EXEMPTION
FROM SUCH REGISTRATION AND QUALIFICATION IS AVAILABLE."
The certificates evidencing such shares shall also bear any legends required
pursuant to any state, local or foreign law governing such securities.
16
<PAGE>
IN WITNESS WHEREOF, The Alpine Group, Inc. has caused this certificate
to be signed by Steven S. Elbaum, its Chairman and Chief Executive Officer, and
Bragi F. Schut, its Secretary, this 21st day of December, 1994.
THE ALPINE GROUP, INC.
By:/s/ Steven S. Elbaum
---------------------------
Steven S. Elbaum, Chairman
and Chief Executive Officer
By:/s/ Bragi F. Schut
---------------------------
Bragi F. Schut, Secretary
17
<PAGE>
EXHIBIT 3(g)
BY-LAWS OF
THE ALPINE GROUP, INC.
(a Delaware corporation)
ARTICLE I
Meetings of Shareholders
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders of
THE ALPINE GROUP, INC. (hereinafter referred to as the "Corporation") for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on such date and at such time as
may be fixed by the Board of Directors (hereinafter referred to as the "Board")
or if no date and time are so fixed on the second Tuesday in October of each
year, if not a legal holiday, and if a legal holiday, then on the next
succeeding day not a legal holiday, at the office of the Corporation or at such
other place and at such hour as shall be designated by the Board, or, if no such
time be fixed, then at 10:00 o'clock in the forenoon.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders,
unless otherwise prescribed by statute, may be called at any time by the Board.
SECTION 3. NOTICE OF MEETINGS. Notice of the place, date and hour of
holding each annual and special meeting of the shareholders and the purpose or
purposes thereof shall be given personally or by mail in a postage prepaid
envelope, not less than ten or more than sixty days before the date of such
meeting, to each shareholder entitled to vote at such meeting, and, if mailed,
it shall be directed to such shareholder at his address as it appears on the
record of shareholders, unless he shall have filed with the Secretary of the
Corporation a written request that notices to him be mailed to some other
address. Any such notice for any meeting other than the annual meeting shall
indicate that it is being issued at the direction of the Board. Notice of any
meeting of shareholders shall not be required to be given to any shareholder who
shall attend such meeting in person or by proxy and shall not, prior to the
conclusion of such meeting, protest the lack of notice thereof, or who shall,
either before or after the meeting, submit a signed waiver of notice, in person
or by proxy. Unless the Board shall fix a new record date for an adjourned
meeting, notice of such adjourned meeting need not be given if the time and
place to which the meeting shall be adjourned were announced at the meeting at
which the adjournment is taken.
SECTION 4. QUORUM. At all meetings of the shareholders the holders of
the majority of the shares of Common Stock of the Corporation, issued and
outstanding and entitled to vote, shall be present in person or by proxy to
constitute a quorum for the transaction of business. In the absence of a
quorum, the holders of a majority of the shares of Common Stock present in
person or by proxy and entitled to vote may adjourn the meeting from time to
time. At any such adjourned meeting at which a quorum may be present any
business may be transacted which might have been transacted at the meeting as
originally called.
SECTION 5. ORGANIZATION. At each meeting of the shareholders, the
Chairman or in his absence the President of the Corporation, shall act as
chairman of the meeting or, if no one of the foregoing officers is present, a
chairman shall be chosen at the meeting by the shareholders. The Secretary, or
in his absence or inability to act, the person whom the chairman of the meeting
shall appoint secretary of the meeting, shall act as secretary of the meeting
and keep the minutes thereof.
SECTION 6. ORDER OF BUSINESS. The order of business at all meetings of
the shareholders shall be as determined by the chairman of the meeting.
C-1
<PAGE>
SECTION 7. VOTING. Except as otherwise provided by statute or the
Certificate of Incorporation, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
shareholders to one vote for every share of such stock standing in his name on
the record of shareholders of the Corporation:
(a) on the date fixed pursuant to the provisions of Section 5 of
Article V of these By-laws as the record date for the determination of the
shareholders who shall be entitled to notice of and to vote at such meeting; or
(b) if such record date shall not have been so fixed, then at the
close of business on the day next preceding the day on which notice thereof
shall be given.
Each shareholder entitled to vote at any meeting of shareholders may authorize
another person or persons to act for him by a proxy signed by such shareholder
or his attorney-in-fact. Any such proxy shall be delivered to the secretary of
such meeting at or prior to the time designated in the order of business for so
delivering such proxies. Unless required by statute, or determined by the
chairman of the meeting to be advisable, the vote on any question need not be by
ballot. On a vote by ballot, each ballot shall be signed by the shareholder
voting, or by his proxy, if there be such proxy, and shall state the number of
shares voted.
SECTION 8. LIST OF SHAREHOLDERS. A list of shareholders as of the
record date, certified by the Secretary of the Corporation or by the transfer
agent for the Corporation, shall be produced at any meeting of the shareholders
upon the request of any shareholder made at or prior to such meeting.
SECTION 9. INSPECTORS. The Board may, in advance of any meeting of
shareholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting shall appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the chairman
of the meeting or any shareholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, request or matter determined by them
and shall execute a certificate of any fact found by them. No director or
candidate for the office of director shall act as an inspector of an election of
directors. Inspectors need not be shareholders.
SECTION 10. CONSENT OF SHAREHOLDERS IN LIEU OF MEETING. Any action
required or permitted to be taken at any annual or special meeting of
shareholders of the Corporation (other than removal of any director) may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those shareholders, if any, who have not consented in writing.
C-2
<PAGE>
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board. The Board may exercise all
such authority and powers of the Corporation and do all such lawful acts and
things as are not by statute or the Certificate of Incorporation directed or
required to be exercised or done by the shareholders.
SECTION 2. NUMBER, INCREASE OR DECREASE THERETO AND TERM OF OFFICE.
The Board of Directors shall consist of at least three (3), but no more than
eleven (11) Directors, as determined by a majority vote of the entire Board of
Directors, which number may be increased and decreased as provided in Section 2
of this Article; provided, however, that, (i) if there is no stock outstanding
the number of directors may be less than three but not less than one, and (ii)
if there is stock outstanding and so long as there are less than three
shareholders, the number of directors may be less than three but not less than
the number of shareholders. Each director shall hold office until the annual
meeting of shareholders of the Corporation next succeeding his election or until
his successor is duly elected and qualifies. Directors need not be
shareholders.
Nominations for the election of Directors may be made by the Board of
Directors or a committee appointed by the Board of Directors or by any
shareholder entitled to vote in the election of Directors generally. However,
any shareholder entitled to vote in the election of Directors generally may
nominate one or more persons for election as Directors at a meeting only if
written notice of such shareholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid to the Secretary of the Corporation not later than (i)
with respect to an election to be held at an annual meeting of shareholders,
ninety days prior to the anniversary date of the immediately preceding annual
meeting, and (ii) with respect to an election to be held at a special meeting of
shareholders for the election of Directors, the close of business on the tenth
day following the date on which notice of such meeting is first given to
shareholders. Each such notice shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and the person or persons to be
nominated; (b) a representation that the shareholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the shareholder; (d) such other information regarding each nominee
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission; and (e) the consent of each nominee to serve as a Director of the
Corporation if so elected. The presiding officer of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
The Board of Directors, by the vote of a majority of the entire Board, may
increase the number of Directors to a number not exceeding eleven, and may elect
Directors to fill the vacancies created by any such increase in the number of
Directors until the next annual meeting or until their successors are duly
elected and qualified. The Board of Directors, by the vote of a majority of the
entire Board, may decrease the number of Directors to a number not less than
three, but any such decrease shall not affect the term of office of any
Director. Vacancies occurring by reason of any such increase or decrease shall
be filled in accordance with Section 13 of this Article II.
C-3
<PAGE>
SECTION 3. PLACE OF MEETING. Meetings of the Board shall be held at
the principal office of the Corporation in the State of Delaware or at such
other place, within or without such State, as the Board may from time to time
determine or as shall be specified in the notice of any such meeting.
SECTION 4. ANNUAL MEETING. The Board shall meet for the purpose of
organization, the election of officers and the transaction of other business, as
soon as practicable after each annual meeting of the shareholders, on the same
day and at the same place where such annual meeting shall be held. Notice of
such meeting need not be given. Such meeting may be held at any other time or
place (within or without the State of Delaware) which shall be specified in a
notice thereof given as hereinafter provided in Section 7 of this Article II.
SECTION 5. REGULAR MEETING. Regular meetings of the Board shall be
held at such time as the Board may fix. If any day fixed for a regular meeting
shall be a legal holiday at the place where the meeting is to be held, then the
meeting which would otherwise be held on that day shall be held at the same hour
on the next succeeding business day. Notice of regular meetings of the Board
need not be given except as otherwise required by statute or these By-laws.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board may be
called by the President or by a majority of the entire Board.
SECTION 7. NOTICE OF MEETINGS. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required) shall be
given by the Secretary as hereinafter provided in this Section 7, in which
notice shall be stated the time and place of the meeting. Except as otherwise
required by these By-laws, such notice need not state the purposes of such
meeting. Notice of each such meeting shall be mailed, postage prepaid, to each
director, addressed to him at his residence or usual place of business, by
first-class mail, at least two days before the day on which such meeting is to
be held, or shall be sent addressed to him at such place by telegraph, telex,
cable or wireless, or be delivered to him personally or by telephone, at least
24 hours before the time at which such meeting is to be held. A written waiver
of notice, signed by the director entitled to notice, whether before or after
the time stated therein shall be deemed equivalent to notice. Notice of any
such meeting need not be given to any director who shall, either before or after
the meeting, submit a signed waiver of notice or who shall attend such meeting
without protesting, prior to or at its commencement, the lack of notice to him.
SECTION 8. QUORUM AND MANNER OF ACTING. Except as hereinafter
provided, a majority of the entire Board shall be present in person or by means
of a conference telephone or similar communications equipment which allows all
persons participating in the meeting to hear each other at the same time at any
meeting of the Board in order to constitute a quorum for the transaction of
business at such meeting; and, except as otherwise required by statute or the
Certificate of Incorporation, the act of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the Board. In the
absence of a quorum at any meeting of the Board, a majority of the directors
present thereat may adjourn such meeting to another time and place. Notice of
the time and place of any such adjourned meeting shall be given to the directors
who were not present at the time of the adjournment and, unless such time and
place were announced at the meeting at which the adjournment was taken, to the
other directors. At any adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called. The directors shall act only as a Board and the individual
directors shall have no power as such.
C-4
<PAGE>
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the Board at a meeting may be taken without a meeting if all
members of the Board consent in writing to the adoption of the resolutions
authorizing such action. The resolutions and written consents thereto shall be
filed with the minutes of the Board.
SECTION 10. TELEPHONIC PARTICIPATION. One or more members of the Board
may participate in a meeting by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at the meeting.
SECTION 11. ORGANIZATION. At each meeting of the Board, the Chairman
or, in his absence, another director chosen by a majority of the directors
present shall act as chairman of the meeting and preside thereat. The Secretary
(or, in his absence, any person -- who shall be an Assistant Secretary, if any
of them shall be present at such meeting -- appointed by the chairman) shall act
as secretary of the meeting and keep the minutes thereof.
SECTION 12. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Board or the
Chairman or the Secretary. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective shall not be
specified therein, immediately upon its receipt, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 13. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, although less than a quorum, or
by a sole remaining director. If there are no directors in office, then a
special meeting of shareholders for the election of directors may be called and
held in the manner provided by statute. When one or more directors shall resign
from the Board, effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office until the next election of directors and until their successors shall be
elected and qualified.
SECTION 14. REMOVAL OF DIRECTORS. Any director may be removed from
office with cause, by affirmative vote of the holders of a majority, or without
cause by the affirmative vote of the holders of at least 80%, of the combined
voting power of the then outstanding shares of stock entitled to vote generally
in the election of directors, voting together as a single class at an annual or
special meeting of shareholders of the Corporation called for such purpose. Any
director may be removed from office with cause by the affirmative vote of the
Board of Directors.
SECTION 15. COMPENSATION. The Board shall have authority to fix the
compensation, including fees and reimbursement of expenses, of directors for
services to the Corporation in any capacity.
ARTICLE III
EXECUTIVE AND OTHER COMMITTEES
SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Board may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the directors of the
Corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at
C-5
<PAGE>
any meeting of the committee. Any such committee, to the extent provided in the
resolution shall have and may exercise the powers of the Board in the management
of the business and affairs of the Corporation, and may authorize the seal of
the Corporation to be affixed to all papers which may require it; provided,
however, that in the absence or disqualification of any member of such committee
or committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member. Each committee shall keep
written minutes of its proceedings and shall report such minutes to the Board
when required. All such proceedings shall be subject to revision or alteration
by the Board; provided, however, that third parties shall not be prejudiced by
such revision or alteration.
SECTION 2. GENERAL. A majority of any committee may determine its
action and fix the time and place of its meetings, unless the Board shall
otherwise provide. Notice of such meeting shall be given to each member of the
committee in the manner provided for in Article II, Section 7. The Board shall
have the power at any time to fill vacancies in, to change the membership of, or
to dissolve any such committee. Nothing herein shall be deemed to prevent the
Board from appointing one or more committees consisting in whole or in part of
persons who are not directors of the Corporation; provided, however, that no
such committee shall have or may exercise any authority of the Board.
SECTION 3. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by any committee at a meeting may be taken without a meeting if all
of the members of the committee consent in writing to the adoption of the
resolutions authorizing such action. The resolutions and written consents
thereto shall be filed with the minutes of the committee.
SECTION 4. TELEPHONE PARTICIPATION. One or more members of a committee
may participate in a meeting by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at the meeting.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation
may include the Chairman of the Board of Directors, the President, an Executive
Vice President, one or more Vice Presidents, the Treasurer, and the Secretary.
Any two or more offices may be held by the same person; except the offices of
President and Secretary; provided that when all of the issued and outstanding
stock of the Corporation is held by one person, such person may hold all or any
combination of offices. Such officers shall be elected from time to time by the
Board, each to hold office until the meeting of the Board following the next
annual meeting of the shareholders, or until his successor shall have been duly
elected and shall have qualified or until his death, or until he shall have
resigned, or have been removed, as hereinafter provided in these By-laws. The
Board may from time to time elect, or delegate to the Chairman the power to
appoint, such other officers (including one or more Assistant Treasurers and one
or more Assistant Secretaries) and such agents, as may be necessary or desirable
for the business of the Corporation. Such other officers and agents shall have
such duties and shall hold their offices for such terms as may be prescribed by
the Board or by the appointing authority.
SECTION 2. RESIGNATIONS. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board, the
C-6
<PAGE>
Chairman or the Secretary. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective shall not be
specified therein, immediately upon its receipt; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 3. REMOVAL. Any officer or agent of the Corporation may be
removed, either with or without cause, at any time, by the Board at any meeting
of the Board or, except in the case of an officer or agent elected or appointed
by the Board, by the Chairman.
SECTION 4. VACANCIES. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled for the unexpired
portion of the term of the office which shall be vacant, in the manner
prescribed in these By-laws for the regular election or appointment to such
office.
SECTION 5. THE CHAIRMAN. The Chairman shall be the chief executive
officer of the Corporation and shall have general and active management of the
business and affairs of the Corporation and general and active supervision and
direction over the other officers, agents and employees and shall see that their
duties are properly performed, subject, however, to the control of the Board.
The Chairman shall perform all duties incident to the office of Chairman and
such other duties as from time to time may be assigned to the Chairman by the
Board or these By-laws.
SECTION 6. THE PRESIDENT. The President shall perform such duties as
from time to time may be assigned to the President by the Board or these By-laws
SECTION 7. VICE PRESIDENTS. Each Vice President, including any
Executive Vice President, shall perform all such duties as from time to time may
be assigned to such Vice President by the Board.
SECTION 8. THE TREASURER. The Treasurer shall
(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation;
(c) deposit all monies and other valuables to the credit of the
Corporation in such depositaries as may be designated by the Board;
(d) receive, and give receipts for, monies due and payable to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the Board, taking proper
vouchers therefor; and
(f) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to the
Treasurer by the Board or the President.
SECTION 9. THE SECRETARY. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, the committees of the Board
and the shareholders;
C-7
<PAGE>
(b) see that all notices are duly given in accordance with the
provisions of these By-laws and as required by law;
(c) be the custodian of the records and the seal of the Corporation
and affix and attest the seal to all stock certificates of the Corporation
(unless the seal of the Corporation on such certificates shall be a facsimile,
as hereinafter provided) and affix and attest the seal to all other documents to
be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to the
Secretary by the Board or the President.
SECTION 10. OFFICERS' BONDS OR OTHER SECURITY. If required by the
Board, any officer of the Corporation shall give a bond or other security for
the faithful performance of his duties, in such amount and with such surety or
sureties as the Board may require.
SECTION 11. COMPENSATION. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time to time
by the Board; provided, however, that the Board may delegate to the Chairman the
power to fix the compensation of officers and agents appointed by him. An
officer of the Corporation shall not be prevented from receiving compensation by
reason of the fact that the officer is also a director of the Corporation, but
any such officer who shall also be a director (except in the event that there is
only one director of the Corporation) shall not have any vote in the
determination of the amount of compensation paid to such director.
ARTICLE V
SHARES, ETC.
SECTION 1. STOCK CERTIFICATES. Each owner of stock of the Corporation
shall be entitled to have a certificate, in such form as shall be approved by
the Board, certifying the number of shares of stock of the Corporation owned by
him. The certificates representing shares of stock shall be signed in the name
of the Corporation by the President or a Vice President and by the Secretary,
Treasurer or an Assistant Secretary and sealed with the seal of the Corporation
(which seal may be a facsimile, engraved or printed). In case any officer who
shall have signed such certificates shall have ceased to be such officer before
such certificates shall be issued, they may nevertheless be issued by the
Corporation with the same effect as if such officer were still in office at the
date of their issue.
SECTION 2. BOOKS OF ACCOUNT AND RECORD OF SHAREHOLDERS. There shall be
kept correct and complete books and records of account of all the business and
transactions of the Corporation. The stock record books and the blank stock
certificate books shall be kept by the Secretary or by any other officer or
agent designated by the Board of Directors.
SECTION 3. TRANSFERS OF SHARES. Transfers of shares of stock of the
Corporation shall be made on the share records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with a transfer agent or transfer clerk, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by a duly executed
stock transfer power and the payment of all taxes thereon. The person in whose
name shares of stock shall stand on the record of shareholders
C-8
<PAGE>
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation. Whenever any transfers of shares shall be made for collateral
security and not absolutely and written notice thereof shall be given to the
Secretary or to such transfer agent or transfer clerk, such fact shall be stated
in the entry of the transfer.
SECTION 4. REGULATIONS. The Board may make such additional rules and
regulations, not inconsistent with these By-laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
SECTION 5. FIXING OF RECORD DATE. The Board may fix, in advance, a
date not more than sixty nor less than ten days before the date then fixed for
the holding of any meeting of the shareholders or before the last day on which
the consent or dissent of the shareholders may be effectively expressed for any
purpose without a meeting, as the time as of which the shareholders entitled to
notice of and to vote at such meeting or whose consent or dissent is required or
may be expressed for any purpose, as the case may be, shall be determined, and
all persons who were shareholders of record of voting stock at such time, and no
others, shall be entitled to notice of and to vote at such meeting or to express
their consent or dissent, as the case may be. The Board may fix, in advance, a
date not more than sixty nor less than ten days preceding the date fixed for the
payment of any dividend or the making of any distribution or allotment of rights
to subscribe for securities of the Corporation, or for the delivery of evidence
of rights or evidences of interest arising out of any change, conversion or
exchange of capital stock or other securities, as the record date for the
determination of the shareholders entitled to receive any such dividend,
distribution, allotment, rights or interests, and in such case only the
shareholders of record at the time so fixed shall be entitled to receive such
dividend, distribution, allotment, rights or interests.
SECTION 6. LOST, DESTROYED OR MUTILATED CERTIFICATE. The holder of any
certificate representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof shall
allege to have been lost or destroyed or which shall have been mutilated, and
the Board may, in its discretion, require such owner or his legal representative
to give to the corporation a bond in such sum, limited or unlimited, and in such
form and with such surety or sureties as the Board in its absolute discretion
shall determine, to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate, or the issuance of such new certificate. Anything herein to the
contrary notwithstanding, the Board, in its absolute discretion, may refuse to
issue any such new certificate, except pursuant to legal proceedings under the
laws of the State of Delaware.
ARTICLE VI
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. EXECUTION OF CONTRACTS. Except as otherwise required by
statute, the Certificate of Incorporation or these By-laws, any contract or
other instrument may be executed and delivered in the name and on behalf of the
Corporation by such officer or officers (including any assistant officer) of the
Corporation as the Board may from time to time direct. Such authority may be
general or confined to specific instances as the Board may determine.
C-9
<PAGE>
Unless authorized by the Board or expressly permitted by these By-laws, no
officer or agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it pecuniarily liable for any purpose or to any amount.
SECTION 2. LOANS. Unless the Board shall otherwise determine, the
Chairman, the President or any Vice President may effect loans and advances at
any time for the Corporation from any bank, trust company or other institution,
or from any firm, corporation or individual, and for such loans and advances may
make, execute and deliver promissory notes, bonds or other certificates or
evidences of indebtedness of the Corporation, but no officer or officers shall
mortgage, pledge, hypothecate or transfer any securities or other property of
the Corporation other than in connection with the purchase of chattels for use
in the Corporation's operations, except when authorized by the Board.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts, bills of exchange
or other orders for the payment of money out of the funds of the Corporation,
and all notes or other evidence of indebtedness of the Corporation, shall be
signed in the name and on behalf of the Corporation by such persons and in such
manner as shall from time to time be authorized by the Board.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may from time
to time designate or as may be designated by any officer or officers of the
Corporation to whom such power of designation may from time to time be delegated
by the Board. For the purpose of deposit and for the purpose of collection for
the account of the Corporation, checks, drafts and other orders for the payment
of money which are payable to the order of the Corporation may be endorsed,
assigned and delivered by any officer or agent of the Corporation.
SECTION 5. GENERAL AND SPECIAL BANK ACCOUNTS. The Board may from time
to time authorize the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may
designate or as may be designated by any officer or officers of the Corporation
to whom such power of designation may from time to time be delegated by the
Board. The Board may make such special rules and regulations with respect to
such bank accounts, not inconsistent with the provisions of these By-laws, as it
may deem expedient.
ARTICLE VII
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware, and
the registered agent of the Corporation shall be The Corporation Trust Company,
whose address is Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801.
SECTION 2. OTHER OFFICES. The Corporation may also have such offices,
both within or without the State of Delaware, as the Board of Directors may from
time to time determine or the business of the Corporation may require.
C-10
<PAGE>
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall be the year beginning May 1 of
each year and ending April 30 of the following year, unless and until otherwise
determined by the Board of Directors.
ARTICLE IX
SEAL
The seal of the Corporation shall be circular in form, shall bear the name
of the Corporation and shall include the words and numbers "Corporate Seal,
Delaware" and the year of incorporation.
ARTICLE X
INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by law, indemnify
any person who after July 30, 1986 becomes a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (including without
limitation an action by or in the right of the Corporation) by reason of the
fact that he is or was a director or officer of the Corporation, or, in either
such capacity, is or was serving at the request of the Corporation as a director
or officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding. The
aforesaid indemnity shall continue as to a person who has ceased to be director
or officer and shall inure to the benefit of the heirs, executors and
administrators of such person. The Corporation may provide indemnification to
any person, by agreement or otherwise, on such terms and conditions as the Board
of Directors may approve. Any agreement for indemnification of any director or
officer, employee or other person may provide indemnification rights which are
broader or otherwise different from those set forth herein. The indemnification
provided by this Article shall not be deemed exclusive of any other rights to
which any officer, director, employee or agent of the Corporation seeking
indemnification may be entitled under Delaware law or any By-laws, agreement,
vote of shareholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office.
The Board of Directors of the Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
For purposes of this Article, (1) references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors and officers, so that any person who is or
was a director or officer, of such constituent corporation, or is or was
C-11
<PAGE>
serving at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate existence had
continued; (2) references to "other enterprises" shall include employee benefit
plans; (3) references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and (4) references to "serving
at the request of the Corporation" shall include any service as a director or
officer of the Corporation which imposes duties on, or involves services by,
such director or officer with respect to an employee benefit plan, its
participants, or beneficiaries.
This Article is intended to grant an enforceable right to indemnification
in accordance with its terms to the persons described herein. In the event any
provision hereof is determined to be unenforceable, such provision shall be
considered severed from this Article which, in all other respects, shall remain
in force and effect.
ARTICLE XI
AMENDMENT
The By-laws may be amended, repealed or altered by vote of the holders of a
majority of the shares of stock at the time entitled to vote in the election of
directors, except as otherwise provided in the Certificate of Incorporation.
The By-laws may also be amended, repealed or altered by the Board of Directors,
but any By-law adopted by the Board of Directors may be amended, repealed or
altered by the shareholders entitled to vote thereon as herein provided.
C-12
<PAGE>
EXHIBIT 4(b)
THE ALPINE GROUP, INC.
and
MANUFACTURERS HANOVER TRUST COMPANY,
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of February 3, 1987
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of February 3, 1987 (the
"Supplement"), between The Alpine Group, Inc., a Delaware corporation (the
"Successor"), and Manufacturers Hanover Trust Company, as Trustee (the
"Trustee"), under the Indenture, dated as of October 1, 1986 (the "Indenture"),
between The Alpine Group, Inc., a New Jersey corporation (the "Company"), and
the Trustee.
RECITALS OF THE SUCCESSOR
The Company and the Trustee have heretofore entered into the Indenture
to provide for the issuance of the Company's 13 1/2% Senior Subordinated
Debentures due 1996 (the "Debentures").
Pursuant to an Agreement and Plan of Merger, dated as of January 14,
1987, between the Company and the Successor, the Company was merged into the
Successor on February 3, 1987.
All things necessary to make the Debentures issued under the Indenture
as hereby supplemented the valid obligations of the Successor and to make the
Indenture as hereby supplemented a valid agreement of the Successor, in
accordance with their and its terms, have been done.
NOW, THEREFORE, THIS SUPPLEMENT WITNESSETH:
In order to comply with the requirements of the Indenture, the
Successor covenants and agrees with the Trustee for the equal and proportionate
benefit of the Holders of the Securities as follows:
ARTICLE ONE
ASSUMPTION BY THE SUCCESSOR
Section 101. The Successor hereby represents and warrants to the
Trustee and to the Holders of the Debentures as follows:
(a) The Successor is a corporation organized and existing under
the laws of the State of Delaware.
(b) On February 3, 1987 the Company was merged into the
Successor, said merger being hereinafter referred to as the "Merger".
(c) Immediately after giving effect to the Merger no Event of
Default and no event which, after notice
<PAGE>
or lapse of time, or both, would become an Event of Default has happened
and is continuing.
Section 102. The Successor hereby expressly assumes the due and
punctual payment of the principal of and premium, if any, and interest on the
Debentures in accordance with the terms of the Debentures and the Indenture and
the performance of every covenant of the Indenture on the part of the Company to
be performed or observed.
Section 103. The Successor shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under the Indenture with
the same effect as if the Successor had been named as the Company therein.
Section 104. Debentures authenticated and delivered on and after July
15, 1987 shall bear the following notation which may be stamped, typewritten or
overprinted thereon:
"On February 3, 1987 The Alpine Group, Inc. (a New Jersey
corporation) was merged into The Alpine Group, Inc. (a Delaware
corporation), which has assumed the due and punctual payment of the
principal of and premium, if any, and interest on the Debentures and
the performance of every covenant of the Indenture on the part of The
Alpine Group, Inc. to be performed or observed.
If the Successor shall so determine, new Debentures so modified as to
conform to the Indenture as hereby supplemented, in form satisfactory to the
Trustee, may at any time hereafter be prepared and executed by the Successor and
authenticated and delivered by the Trustee in exchange for Debentures then
Outstanding, and thereafter the notation herein provided shall no longer be
required. Anything herein or in the Indenture to the contrary notwithstanding,
the failure to affix the notation herein provided to any Debenture or to
exchange any Debenture for a new Debenture modified as.herein provided shall not
affect any of the rights of the Holder of such Debenture.
Section 105. Except as modified herein, the Indenture shall remain in
full force and effect.
ARTICLE TWO
MISCELLANEOUS
Section 201. Except as otherwise expressly provided or unless the
context otherwise requires, all terms used herein which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
-2-
<PAGE>
Section 202. This Supplement shall be effective as of the close of
business on the date that is the date of the effectiveness of the Merger.
Section 203. The recitals contained herein shall be taken as the
statements of the Successor, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Supplement.
Section 204. This Supplement shall be governed by and construed in
accordance with the laws which govern the Indenture and its construction.
Section 205. This Supplement may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed and their respective seals to be affixed hereunto and duly
attested all as of the day and year first above written.
THE ALPINE GROUP, INC.
[Corporate Seal]
By
---------------------------
Steven S. Elbaum
Chairman
Attest:
----------------------
MANUFACTURERS HANOVER TRUST
COMPANY, as Trustee,
[Corporate Seal]
By
---------------------------
Assistant Vice President
Attest:
----------------------
Assistant Secretary
-3-
<PAGE>
EXHIBIT 4(c)
THE ALPINE GROUP, INC.
and
MANUFACTURERS HANOVER TRUST COMPANY,
as Trustee
SECOND SUPPLEMENTAL INDENTURE
Dated as of October 31, 1989
to
INDENTURE
Dated as of October 1, 1986
Relating to
13-1/2% Senior Subordinated Debentures due 1996
<PAGE>
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of October 31, 1989 (the
"Supplement"), between The Alpine Group, Inc., a Delaware corporation (the
"Company"), and Manufacturers Hanover Trust Company, as Trustee (the "Trustee"),
under the Indenture, dated as of October 1, 1986, between the Company and the
Trustee (as amended from time to time, the "Indenture").
RECITALS
The Company and the Trustee have heretofore entered into the Indenture
to provide for the issuance of the Company's 13-1/2% Senior Subordinated
Debentures due 1996 (the "Debentures").
The Company and the Trustee have heretofore entered into a First
Supplemental Indenture dated as of February 3, 1987, providing for the Company,
as successor to The Alpine Group, Inc., a New Jersey corporation, to assume
payment and performance of the Debentures.
The Company and the holders of a majority of the Outstanding
Debentures have consented and agreed to the amendment of certain provisions of
the Indenture as provided herein, which amendment will have the effect of
deleting in their entirety from the Indenture certain covenants affecting the
Company. The Company and the Trustee will enter into this Second Supplemental
Indenture to effect such amendments.
NOW, THEREFORE, THIS SUPPLEMENT WITNESSETH:
In order to amend certain provisions of the Indenture, the Company
covenants and agrees with the Trustee for the equal and proportionate benefit of
the Holders of the Debentures as follows:
ARTICLE ONE
CERTAIN AMENDMENTS TO THE INDENTURE
Section 101. Section 101 (Definitions) of the Indenture is hereby
amended as follows:
(i) The definition therein of "Senior Indebtedness" is hereby
amended by inserting before the word "and" at the end of clause (a) thereof
the following:
<PAGE>
it being acknowledged and agreed that all Indebtedness
evidenced by the Convertible Secured Senior Subordinated Notes due July 31,
1996 of the Company shall constitute Senior Indebtedness,"
(ii) The definition therein of "Consolidated Tangible Assets" is
hereby amended by deleting the last paragraph thereof.
Section 102. Section 801 (Company May Consolidate, etc. Only on
Certain Terms) of the Indenture is hereby amended by deleting subsections (2)
and (3) thereof and by renumbering subsections (4) and (5) thereof as
subsections (2) and (3), respectively.
Section 103. Section 901 (Supplemental Indenture Without Consent of
Holders) of the Indenture is hereby amended by deleting from paragraph (4)
thereof the reference to Section 1005.
Section 104. Section 1005 (Limitation on Liens) of the Indenture is
hereby deleted in its entirety.
Section 105. Section 1006 (Limitation on Restricted Payments) of the
Indenture is hereby deleted in its entirety.
Section 106. Section 1007 (Restrictions as to Payment of Dividends and
Repayment of Loans and Advances by Subsidiaries) of the Indenture is hereby
deleted in its entirety.
Section 107. Section 1008 (Limitation on Equity Investments) of the
Indenture is hereby deleted in its entirety.
Section 108. Section 1009 (Limitation on Indebtedness of Subsidiaries
of the Company) of the Indenture is hereby deleted in its entirety.
Section 109. Section 1011 (Limitation on Acquisition Indebtedness) of
the Indenture is hereby deleted in its entirety.
Section 110. section 1012 (Limitation on Transactions among
Affiliates) of the Indenture is hereby deleted in its entirety.
-2-
<PAGE>
ARTICLE TWO
MISCELLANEOUS
Section 201. Except as otherwise expressly provided herein or unless
the context otherwise requires, all terms used herein which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
Section 202. Debentures authenticated and delivered on and after the
date hereof shall bear the following notation which may be stamped, typewritten
or overprinted thereon:
"The Indenture referred to herein has been supplemented and modified
pursuant to a Second Supplemental Indenture, dated as of October 31, 1989,
a copy of which is available for inspection at the principal offices of the
Company, the terms of which delete in their entirety from the Indenture
certain covenants affecting the Company."
If the Company shall so determine, new Debentures so modified as to
conform to the Indenture as hereby supplemented, in form satisfactory to the
Trustee, may at any time hereafter be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Debentures then
Outstanding, and thereafter the notation herein provided shall no longer be
required. Anything herein or in the Indenture to the contrary notwithstanding,
the failure to affix the notation herein provided to any Debenture or to
exchange any Debenture for a new Debenture modified as herein provided shall not
affect any of the rights of the Holder of such Debenture.
Section 203. This Supplement shall be effective as of the date hereof.
Section 204. The provisions of this Supplement are to be deemed
separate and severable. Any invalidity or unenforceability of any provision
hereof shall not affect the validity or enforceability of the remaining
provisions hereof.
Section 205. Except as amended by this Supplement, the Indenture shall
remain in full force and effect and the parties hereby confirm all the terms and
provisions of the Indenture.
Section 206. This Supplement shall be governed by and construed in
accordance with the laws which govern the Indenture and its construction.
-3-
<PAGE>
Section 207. This Supplement may be executed in any number of
counterparts,, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF,.the parties hereto have caused this Supplement to
be duly executed and their respective seals to be affixed hereunto and duly
attested all as of the day and year first above written.
THE ALPINE GROUP, INC.
[Corporate Seal] BY
---------------------------
Steven S. Elbaum, Chairman
Attest:
-------------------------
Bragi F. Schut, Secretary
MANUFACTURERS HANOVER TRUST
COMPANY, as Trustee
[Corporate Seal] BY
--------------------------
Assistant Vice President
Attest:
-------------------------
Assistant Secretary
-4-
<PAGE>
EXHIBIT 4(d)
THE ALPINE GROUP, INC.
and
IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
INDENTURE
Dated as of October 31, 1989
$32,739,000
Convertible Secured Senior Subordinated Notes
due July 31, 1996
<PAGE>
CROSS-REFERENCE TABLE
TIA Section Indenture Section
----------- -----------------
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.*
(a)(4) N.A.
(b) 7.08, 7.10, 13.02
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.05
(b) 13.03
(c) 13.03
313(a) 7.06
(b)(1) 7.06
(b)(2) 7.06
(c) 7.06, 13.02
(d) 7.06
314(a) 4.02, 13.02
(b) 11.02
(c)(1) 13.04
(c)(2) 13.04
(c)(3) N.A.
(d) 11.02, 11.06
(e) 13.05
(f) N.A.
315(a) 7.01(b)
(b) 7.05, 13.02
(c) 7.01(a)
(d) 7.01(d)
(e) 6.11
316(a)(last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
317(a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318(a) 13.01
N.A. means not applicable.
(i)
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Definitions. . . . . . . . . . . . . . . . . . . . . . . 9
1.03 Incorporation by Reference of Trust Indenture Act. . . . . . . 9
1.04 Rules of Construction. . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
THE SECURITIES
2.01 Form and Dating. . . . . . . . . . . . . . . . . . . . . . . . 10
2.02 Execution and Authentication . . . . . . . . . . . . . . . . . 10
2.03 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . 11
2.04 Paying Agent to Hold Money in Trust. . . . . . . . . . . . . . 11
2.05 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . 12
2.06 Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . 12
2.07 Replacement Securities . . . . . . . . . . . . . . . . . . . . 12
2.08 Outstanding Securities . . . . . . . . . . . . . . . . . . . . 13
2.09 Treasury Securities. . . . . . . . . . . . . . . . . . . . . . 13
2.10 Temporary Securities . . . . . . . . . . . . . . . . . . . . . 14
2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
REDEMPTION
3.01 Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . 14
3.02 Selection of Securities to be Redeemed . . . . . . . . . . . . 15
3.03 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 15
3.04 Effect of Notice of Redemption . . . . . . . . . . . . . . . . 16
3.05 Deposit of Redemption Price. . . . . . . . . . . . . . . . . . 16
3.06 Securities Redeemed in Part. . . . . . . . . . . . . . . . . . 16
ARTICLE IV
COVENANTS
4.01 Payment of Securities. . . . . . . . . . . . . . . . . . . . . 17
4.02 SEC Reports; Reports to Securityholders. . . . . . . . . . . . 17
4.03 Compliance Certificate . . . . . . . . . . . . . . . . . . . . 18
(i)
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
----
4.04 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . 18
4.05 Waiver of Stay, Extension or Usury Laws. . . . . . . . . . . . 18
4.06 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . 19
4.07 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.08 Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . 19
4.09 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.10 Limitation on Issuance of Certain Exchange Indebtedness. . . . 20
4.11 Limitation on Payment Restrictions Affecting Subsidiaries. . . 20
4.12 Limitation on Purchase of Old Securities . . . . . . . . . . . 21
4.13 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 21
4.14 Limitation on Future Subordinated Indebtedness . . . . . . . . 22
4.15 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . 22
4.16 Restrictions on Transactions with Affiliates . . . . . . . . . 23
4.17 Maintenance of Consolidated Stockholders' Equity . . . . . . . 23
4.18 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . 26
4.19 Limitation on Certain Investments. . . . . . . . . . . . . . . 26
ARTICLE V
SUCCESSORS
5.01 When Company May Merge, etc. . . . . . . . . . . . . . . . . . 26
5.02 Successor Corporation Substituted. . . . . . . . . . . . . . . 28
ARTICLE VI
DEFAULTS AND REMEDIES
6.01 Events of Default. . . . . . . . . . . . . . . . . . . . . . . 28
6.02 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.03 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 31
6.04 Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . 31
6.05 Control by Majority. . . . . . . . . . . . . . . . . . . . . . 31
6.06 Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . 31
6.07 Rights of Holders to Receive Payment . . . . . . . . . . . . . 32
6.08 Collection suit by Trustee . . . . . . . . . . . . . . . . . . 32
6.09 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . 32
6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.11 Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . 33
(ii)
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE VII
TRUSTEE
7.01 Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . 34
7.02 Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . 35
7.03 Individual Rights of Trustees. . . . . . . . . . . . . . . . . 36
7.04 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . 36
7.05 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . 36
7.06 Reports by Trustee to Holders. . . . . . . . . . . . . . . . . 36
7.07 Compensation and Indemnity . . . . . . . . . . . . . . . . . . 36
7.08 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . 37
7.09 Successor Trustee by Merger, etc.. . . . . . . . . . . . . . . 39
7.10 Eligibility: Disqualification. . . . . . . . . . . . . . . . . 39
7.11 Preferential Collection of Claims Against Company. . . . . . . 39
ARTICLE VIII
DISCHARGE OF INDENTURE
8.01 Termination of Company's Obligations . . . . . . . . . . . . . 39
8.02 Application of Trust Money . . . . . . . . . . . . . . . . . . 40
8.03 Repayment to Company . . . . . . . . . . . . . . . . . . . . . 41
8.04 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IX
AMENDMENTS AND WAIVERS
9,01 Without Consent of Holders . . . . . . . . . . . . . . . . . . 41
9.02 With Consent of Holders. . . . . . . . . . . . . . . . . . . . 42
9.03 Compliance with Trust Indenture Act. . . . . . . . . . . . . . 43
9.04 Revocation and Effect of Consents. . . . . . . . . . . . . . . 43
9.05 Notation on or Exchange of Securities. . . . . . . . . . . . . 43
9.06 Trustee Protected. . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X
SUBORDINATION
10.01 Securities Subordinated to Senior Indebtedness;
Exception for Pledged Collateral. . . . . . . . . . . . . . . 44
10.02 Priority and Payment Over of Proceeds in Certain Events. . . . 44
(iii)
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
10.03 Payment May Be Paid Except in Limited Circumstances. . . . . . 46
10.04 Rights of Holders of Senior Indebtedness Not to Be Impaired. . 47
10.05 Authorization to Trustee to Take Action to Effectuate
Subordination . . . . . . . . . . . . . . . . . . . . . . . . 47
10.06 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.07 Obligations of Company unconditional . . . . . . . . . . . . . 48
10.08 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice . . . . . . . . . . . . . . . . . . . . . . 49
10.09 Right of Trustee to Hold Senior Indebtedness . . . . . . . . . 49
10.10 Modification of Terms of senior Indebtedness . . . . . . . . . 49
10.11 Trustee's Undertaking to Holders of Senior Indebtedness. . . . 49
10.12 Article X Not to Prevent Events of Default . . . . . . . . . . 50
10.13 Officers' Certificate. . . . . . . . . . . . . . . . . . . . . 50
10.14 Paying Agents Other Than the Trustee . . . . . . . . . . . . . 50
10.15 Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XI
SECURITY
11.01 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . 50
11.02 Recording, Etc.. . . . . . . . . . . . . . . . . . . . . . . . 51
11.03 Suits to Protect the Collateral. . . . . . . . . . . . . . . . 53
11.04 Authorization of Receipt of Funds by Trustee under the
Security Documents. . . . . . . . . . . . . . . . . . . . . . 53
11.05 Certain Sales, Exchanges, Etc.; Purchase Offer . . . . . . . . 53
11.06 Pledge of Non-Cash Proceeds and Release of Pledged Shares
and Excess Net Proceeds . . . . . . . . . . . . . . . . . . . 56
11.07 Termination of Security Interest . . . . . . . . . . . . . . . 58
ARTICLE XII
CONVERSION
12.01 Conversion Privilege . . . . . . . . . . . . . . . . . . . . . 58
12.02 Conversion Procedure . . . . . . . . . . . . . . . . . . . . . 58
12.03 Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . 59
(iv)
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
12.04 Taxes on conversion. . . . . . . . . . . . . . . . . . . . . . 59
12.05 Company to Provide Stock . . . . . . . . . . . . . . . . . . . 60
12.06 Adjustment for Change in Capital Stock . . . . . . . . . . . . 60
12.07 Adjustment for Rights Issue. . . . . . . . . . . . . . . . . . 61
12.08 Adjustment for Other Distributions . . . . . . . . . . . . . . 62
12.09 Mandatory Adjustment . . . . . . . . . . . . . . . . . . . . . 62
12.10 Voluntary Adjustment . . . . . . . . . . . . . . . . . . . . . 63
12.11 When Adjustment May Be Deferred. . . . . . . . . . . . . . . . 63
12.12 When Adjustment is Not Required. . . . . . . . . . . . . . . . 63
12.13 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . 64
12.14 Notice of Certain Transactions . . . . . . . . . . . . . . . . 64
12.15 Consolidation, Merger or Sale of the Company . . . . . . . . . 64
12.16 Company Determination Final. . . . . . . . . . . . . . . . . . 65
12.17 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . 65
12.18 No Conversion Under Certain Circumstances. . . . . . . . . . . 65
ARTICLE XIII
MISCELLANEOUS
13.01 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . 65
13.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.03 Communications by Holders with other Holders . . . . . . . . . 67
13.04 Certificate and Opinion as to Conditions Precedent . . . . . . 67
13.05 Statements Required in Certificate or opinion. . . . . . . . . 67
13.06 Rules by Trustee and Agents. . . . . . . . . . . . . . . . . . 68
13.07 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . 68
13.08 No Recourse Against Others . . . . . . . . . . . . . . . . . . 68
13.09 Duplicate Originals. . . . . . . . . . . . . . . . . . . . . . 68
13.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 68
13.11 No Adverse Interpretation of Other Agreements. . . . . . . . . 68
13.12 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . 68
13.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 69
EXHIBITS
EXHIBIT A [Form of Note]
(v)
<PAGE>
INDENTURE, dated as of October 31, 1989, by and between THE ALPINE
GROUP, INC., a Delaware corporation (the "Company"), and IBJ SCHRODER BANK &
TRUST COMPANY, a New York banking corporation (the "Trustee").
Each Party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Company's Convertible
Secured Senior Subordinated Notes due July 31, 1996 (the "Securities").
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions.
"Affiliate" means, when used with reference to any Person, any Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, that Person. For the purposes of this definition, "control"
when used with respect to any specified Person means the power to direct or
cause the direction of the management or policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative of the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"APV" means Alpine PolyVision, Inc., a Delaware corporation and a
Subsidiary of the Company, and any successor thereto by reason of merger,
consolidation or sale of all or substantially all of the assets of APV.
"ATP" means ATP Acquisition, Inc., a Delaware corporation.
"ATP Note Agreement" means the Note Agreement, dated September 22,
1988, between ATP and the Company.
"ATP Notes" means the 14.25% term promissory notes of ATP, in the
original principal amount of $10,950,000, issued to the Company by ATP pursuant
to the ATP Note Agreement, and any and all other promissory notes issued by ATP
to the Company in payment of interest due under such promissory notes, as
modified, extended or replaced from time to time, which notes total
approximately $12,350,000 in aggregate principal amount at the date of this
Indenture.
<PAGE>
"Board of Directors" means the Board of Directors of the Company or
any authorized committee of that Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or the Assistant Secretary of the company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation or any
and all equivalent ownership interests in a Person other than a corporation.
"Capitalized Lease Obligation" means an obligation under a lease that
is required to be capitalized for financial reporting purposes in accordance
with generally accepted accounting principles and the amount of such obligation
shall be the capitalized amount of such obligation determined in accordance with
such principles.
"Closing Market Price" per share of Common Stock on any date means the
last reported sale price on such date of a share of Common Stock on the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading or on the National Association of Securities
Dealers National Market System (the "NMS"), or, if the Common Stock is not then
listed on an exchange or on the NMS, the closing sale price (or the quoted
closing bid price if there were no sales), on such date as reported by the
National Association of Securities Dealers Automated Quotation System. In the
absence of one or more such quotations, the Board of Directors shall determine
the Closing Market Price on the basis of such quotations as it considers
appropriate.
"Company" means the party named as such above until a successor
replaces it and thereafter means the successor.
"Consolidated Net Income" for any period means the aggregate of the
net income (or loss) of the Company and its Subsidiaries for such period, on a
consolidated basis, determined in accordance with generally accepted accounting
principles, provided that (i) the net income of any Person in which the Company
or any Subsidiary of the Company has a joint interest with a third party (which
interest does not cause the net income of such Person to be consolidated into
the net income of the Company in accordance with generally accepted accounting
principles) shall be included only to the extent of
-2-
<PAGE>
the amount of dividends or distributions paid to the Company or its Subsidiaries
by such Person in such period, (ii) the net income of any Subsidiary that is
subject to any restriction or limitation on the payment of dividends or the
payment of other distributions (including loans or advances) to the Company
shall be excluded to the extent of such restriction or limitation and (iii) (A)
the net income (or loss) of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition, (B) any net
gain (but not loss) on the sale or other disposition of assets by the Company or
its Subsidiaries other than in the ordinary course of business and (C) any net
gain (but not loss) from the issuance, sale or disposition of any Capital Stock
of the Company or its Subsidiaries shall be excluded.
"Consolidated Stockholders' Equity" means, as of any date and with
respect to any Person, the consolidated stockholders' equity which would appear
on the consolidated balance sheet of such Person and its consolidated
subsidiaries as of such date.
"Continuing Director" means any director of the Company who (i) was a
director of the Company at October 1, 1989; or (ii) was appointed, or nominated
for election, by the Board of Directors of the Company, a majority of which then
consisted of Continuing Directors.
"Conversion Agent" means the office or agency where Securities may be
presented for conversion and any additional Conversion Agents.
"Default" means any event which is, or after notice, passage of time,
or both, would be, an Event of Default.
"Disqualified Capital Stock" means any Capital Stock of the Company
that, by its terms or by the terms of any security into which it is on any
determination date convertible or exchangeable, is, or upon the happening of an
event would be, required to be repurchased, including at the option of the
holder thereof, in whole or in part, or has, or upon the happening of an event
would have, a redemption or similar payment due, on or prior to the scheduled
maturity date of the securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange offer" means the offer by the Company to exchange the old
Securities for the Securities.
-3-
<PAGE>
"Fixed Charge Coverage Ratio" means the ratio of (i) Consolidated Net
Income plus, to the extent deducted in computing such Consolidated Net Income,
(a) depreciation, amortization of goodwill and other intangibles, and other non-
cash charges, (b) provision for taxes based on income or profits, plus (c)
consolidated interest expense (including amortization of original issue discount
and non-cash interest payments and the interest component of capital leases),
to (ii) consolidated interest expense (including amortization of original issue
discount and non-cash interest payments and the interest component of capital
leases).
"General Plasma" means General Plasma, Inc., a Connecticut corporation
and a Subsidiary of the Company, and any successor thereto by reason of merger,
consolidation or sale of all or substantially all of the assets of General
Plasma.
"Holder" or "Securityholder" means a Person in whose name a security
is registered.
"Indebtedness" means, with respect to any Person, at a particular
date, (i) any indebtedness for borrowed money or any guarantee thereof,
including all Capitalized Lease Obligations, liabilities secured by any purchase
money mortgage and all obligations and other liabilities under any sale-
leaseback transaction, (ii) all other liabilities evidenced by a note, bond,
debenture or other similar security or issued under an indenture or other
similar document, (iii) the face amount of all then outstanding letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (iv) all obligations and other liabilities (in addition
to those set forth above) secured by any lien on any property owned by such
Person, to the extent attributable to such Person's interest in such property,
even though such Person has not assumed or become liable for the payment
thereof, (v) all other liabilities of such Person in respect of the deferred
purchase price of property or services (whether or not contingent and with or
without recourse in whole or in part to the assets of such Person), (vi) any
liability of others described in clauses (i) through (v) above which a Person
has guaranteed or for which it otherwise has legal liability, and (vii) any
deferral, renewal, extension or refunding of, or amendment, modification or
supplement to, any liability of the type referred to in clauses (i) through (vi)
above; but excluding trade and other accounts payable in the ordinary course of
business in accordance with customary trade terms and guarantees thereof.
"Indenture" means this Indenture as amended or supplemented from time
to time.
-4-
<PAGE>
"Lien" means, as to any Person, any mortgage, lien, assignment,
pledge, adverse claim, charge, preferential priority or other security interest
or agreement or other encumbrance or preferential arrangement of whatever nature
in respect of or on, or any interest or title of any vendor, lessor, lender or
other secured party to or of such Person under any conditional sale or other
title retention agreement or Capitalized Lease Obligation, purchase money
mortgage or sale-leaseback transaction with respect to, any property or asset
(including without limitation income and rights thereto) of such Person
(including without limitation capital stock of any Subsidiary of such Person),
or the signing or filing of a financing statement which names such Person as
debtor, or the filing of any financing statement or the signing of any security
agreement agreeing to file, or authorizing any other party as the secured party
thereunder to file, any financing statement; but excluding, however, in the case
of the ATP Notes, the right of first offer of ATP set forth in the ATP Note
Agreement.
"Net Proceeds" means (i) in the case of any sale of Capital Stock by
the Company, the aggregate net proceeds received by the Company, after payment
of expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof on the date of receipt, as determined in good faith by the Board of
Directors, whose determination shall be evidenced by a Board Resolution), (ii)
in the case of any exchange, exercise, conversion or surrender of outstanding
securities of the company or its Subsidiaries for or into shares of Capital
Stock of the Company, the net carrying value of such outstanding securities as
adjusted on the books of such Person on the date of such exchange, exercise,
conversion or surrender plus any additional amount required to be paid by the
holder to the Company upon such exchange, exercise conversion or surrender, and
less any and all payments made to the holder(s), and all expenses incurred by
the Company in connection therewith and (iii) with respect to the sale, exchange
or other disposition of any of the Pledged Shares or the ATP Notes, or the sale
or exchange of substantially all the assets of, or merger or consolidation of,
General Plasma to or with any other Person, any and all cash proceeds received
by the Company with respect to such transaction, less all direct and indirect
costs and expenses of such transaction.
"Non-Cash Proceeds" means, with respect to the sale, exchange or other
disposition of any of the Pledged Shares, or the sale or exchange of
substantially all the assets of, or merger or consolidation of General Plasma to
or with any other Person, any and all proceeds, other than cash, received by the
Company with respect to such transaction.
-5-
<PAGE>
"Old Indenture" means the Indenture dated as of October 1, 1986
between the Company and Manufacturers Hanover Trust Company with respect to the
Old Securities, as supplemented or amended.
"Old Securities" means the Company's 13-1/2% Senior Subordinated
Debentures due 1996 issued pursuant to the Old Indenture.
"Officer" means the Chairman of the Board of Directors, the Vice
Chairman of the Board of Directors, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Secretary or the Controller of the
Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant
Controller of the Company or of any other obligor upon the Securities, as the
case may be.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company, any other obligor upon the Securities or the Trustee.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pledge Agreement" means the Pledge Agreement, dated the date hereof,
between the Company and the Trustee, as pledgee for the benefit of the Holders,
covering the Pledged Shares.
"Pledged Collateral" means (i) the Pledged Shares, (ii) any others
collateral hereafter made subject to the lien of this Indenture, and (iii) any
and all proceeds from any of the foregoing.
"Pledged Shares" means all shares of Capital Stock of General Plasma
owned by the Company, representing 100% of the equity interest of General
Plasma, and any shares of Capital Stock received in exchange for, or upon any
dividend or other distribution with respect to, such shares, or by reason of any
merger or consolidation of General Plasma.
"Preferred Stock" means Capital Stock of a Person which is entitled to
a preference with respect to payment of dividends and/or payments or other
distributions upon liquidation of such Person, as compared to the common stock,
or similar equity interest, of such Person.
-6-
<PAGE>
The "principal" of a debt security (including the securities) means
the principal of the security plus the premium, if any, on the security.
"Purchase Money Indebtedness" means, with respect to any Person, any
Indebtedness incurred for, directly or indirectly, the purchase or other
acquisition of any asset, business or property by such Person, whether such
Indebtedness is secured, unsecured or with or without recourse in whole or in
part to the assets of such Person.
"Qualified Capital Stock" means any Capital Stock of the Company that
is not Disqualified Capital Stock.
"Reference Period" means the period beginning on November 1, 1989 and
ending on the last day of the fiscal quarter of the Company immediately
preceding any date of determination for which financial statements are then
available.
"Refinancing Indebtedness" means, with respect to any Person,
Indebtedness of such Person outstanding at or immediately following the date of
this Indenture or any deferral, renewal, extension or refunding of such
Indebtedness, provided, that any such deferral, renewal, extension or refunding
(i) does not increase the total principal amount of Indebtedness of such Person
outstanding at the time the same is incurred by more than the accrued and unpaid
interest on the Indebtedness being so refinanced (for purposes of such
calculation the maximum amount then available under any loan commitment or
similar facility shall be deemed Indebtedness then outstanding) and (ii) ranks
pari passu with or subordinate to the Indebtedness being refinanced.
"Representative" means the indenture trustee or other trustee, agent
or representative for an issue of Senior Indebtedness.
"Restricted Indebtedness" means (i) any Indebtedness of the Company
that (a) is Senior Indebtedness, (b) ranks pari passu with the Securities in
right of payment of principal and interest or otherwise, (c) by its terms is
required to be redeemed, in whole or in part, matures or has a sinking fund
payment due on or prior to the maturity date of the Securities or (d) is secured
by the assets of the Company or of any Subsidiary of the Company or (ii) any
Indebtedness or Preferred Stock of any Subsidiary of the Company.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above and issued under
this Indenture.
-7-
<PAGE>
"Security Documents" means the Pledge Agreement and such other
instruments as are necessary to create, perfect or preserve the lien of the
Indenture in and to any Pledged Collateral.
"Senior Indebtedness" means the principal of, interest on and other
amounts due on or in connection with, all Indebtedness of the Company
outstanding at any time other than (i) the Securities, (ii) Indebtedness of the
Company to any Subsidiary of the Company for money borrowed or advanced from any
such Subsidiary and (iii) Indebtedness which by its terms is not superior in
right of payment to the Securities.
"Subordinated Securities" means securities of the Company which are
either (i) Qualified Capital Stock or (ii) debt securities which (a) are not
senior or pari passu in right of payment to the Securities; (b) do not mature
prior to, or are not mandatorily redeemable by the Company or putable to the
Company or do not have sinking fund obligations which commence on or prior to,
July 31, 1996; (c) are not secured; (d) are not guaranteed by a Subsidiary; (e)
do not permit the payment of interest or dividends in cash with respect to any
period during which interest on the Securities has not been paid; and (f), are
not convertible, putable or exchangeable at the option of the Company or the
holder into any of the foregoing or into Indebtedness or Preferred Stock of a
Subsidiary.
"Subsidiary" of a Person means (i) a corporation at least a majority
of whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such Person or (ii)
any other Person (other than a corporation) in which such Person, directly or
indirectly, at the date of determination thereof has at least a majority
ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date shown above.
"Trustee" means the party named as such above until a successor
replaces it and thereafter means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters in connection with this Indenture.
"U.S. Government Obligations" means direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged.
-8-
<PAGE>
Section 1.02 Other Definitions.
Term Defined in Section
---- ------------------
"Accelerated Payment". . . . . . . . . . . . . . . 4.17
"Accelerated Payment Date" . . . . . . . . . . . . 4.17
"Acceleration Date". . . . . . . . . . . . . . . . 4.17
"Allowed Transaction". . . . . . . . . . . . . . . 11.05
"Allowed Transaction Payment". . . . . . . . . . . 11.05
"Bankruptcy Law" . . . . . . . . . . . . . . . . . 6.01
"Custodian". . . . . . . . . . . . . . . . . . . . 6.01
"Event of Default" . . . . . . . . . . . . . . . . 6.01
"Excess Net Proceeds". . . . . . . . . . . . . . . 11.05
"Legal Holiday". . . . . . . . . . . . . . . . . . 13.07
"NMS". . . . . . . . . . . . . . . . . . . . . . . 12.05
"Minimum Consolidated Stockholders' Equity". . . . 4.17
"Offer". . . . . . . . . . . . . . . . . . . . . . 4.17
"Paying Agent" . . . . . . . . . . . . . . . . . . 2.03
"Plan of Liquidation". . . . . . . . . . . . . . . 5.01
"Registrar". . . . . . . . . . . . . . . . . . . . 2.03
"Restricted Payment" . . . . . . . . . . . . . . . 4.13
"Substitute Collateral". . . . . . . . . . . . . . 11.07
Section 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company and any other
obligor upon the securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings assigned to them.
-9-
<PAGE>
Section 1.04 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in effect as of the date any determination hereunder is
required;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE II
THE SECURITIES
Section 2.01 Form and Dating. The Securities shall be substantially in
the form of Exhibit A, which is part of this Indenture and may be printed,
lithographed or engraved in any manner. The Securities may have notations, marks
of identification, legends or endorsements required by law, stock exchange rule
or usage or which may, consistently herewith, be determined to be necessary by
the officers executing the Security as evidenced by their execution thereof.
Each Security shall be dated the date of its authentication.
Section 2.02 Execution and Authentication. Two officers shall sign the
Securities for the Company by manual or facsimile signature. The Company's seal
shall be reproduced on the Securities.
If an officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall be valid
nevertheless.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature of a Trust Officer shall be conclusive
evidence that the Security has been authenticated under this Indenture. The
Security shall be dated the date of authentication.
The Trustee shall authenticate and deliver securities executed by the
Company for original issue up to the aggregate
-10-
<PAGE>
principal amount of not more than $32,739,000 upon a written order of the
Company signed by two Officers, certifying the same are to be issued to holders
of Old Securities participating in the Exchange Offer, and not otherwise. The
aggregate principal amount of Securities outstanding at any time may not exceed
that amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate of the Company.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and integral multiples thereof;
provided, however, that the original issuance of the Securities and replacement
of such Securities pursuant to Section 2.07 may be in such other denominations
as shall be necessary to issue the requisite principal amounts thereof to each
holder of Old Securities participating in the Exchange Offer.
Section 2.03 Registrar and Paying Agent. The Company shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar"), and an office or agency where Securities
may be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents and
shall give the Trustee prompt notice of any change of co-registrars, paying
agents and their addresses. The term "Paying Agent" includes any additional
paying agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall
act as such.
The Company initially appoints the Trustee as Registrar and Paying
Agent.
Section 2.04 Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the
-11-
<PAGE>
Trustee to agree in writing that, subject to Article X, the Paying Agent will
hold in trust for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal of or interest on the
Securities, and will notify the Trustee of any default by the Company or any
other obligor upon the Securities in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company) shall have no further liability for the
money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate
and hold as a separate trust fund all money held by it as Paying Agent.
Section 2.05 Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company or any other obligor upon the Securities shall furnish to
the Trustee on or before each interest payment date and at such other times as
the Trustee may request in writing a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.
Section 2.06 Transfer and Exchange. When Securities are presented to
the Registrar with a request to register transfer or to exchange them for an
equal principal amount of Securities of other denominations, the Registrar shall
register the transfer or make the exchange if its requirements for such
transaction are met. To permit registrations of transfers and exchanges, at the
Registrar's request, the company shall execute and the Trustee shall
authenticate and deliver Securities of a like principal amount in the name of
the designated transferee or transferees and in the authorized denominations.
Any transfer or exchange shall be without charge, except that the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto, other than exchanges pursuant to
Sections 2.10, 3.06 or 9.05. The Registrar is not required to transfer or
exchange any Security (i) during a period beginning at the opening of business
15 days before any selection of Securities to be redeemed and ending at the
close of business on the day of the mailing of a notice of redemption and (ii)
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
Section 2.07 Replacement Securities. If the Holder of a Security
claims that the Security has been mutilated, lost, destroyed or wrongfully
taken, the Company shall issue
-12-
<PAGE>
and the Trustee shall authenticate and deliver a replacement Security of a like
principal amount if the requirements of the Trustee and the company are met. If
required by the Trustee or the Company, such Holder must provide an indemnity
bond, sufficient in the judgment of both the Company and the Trustee, to protect
the. Company, the Trustee, any Agent or any authenticating agent from any loss
which any of them may suffer if a Security is replaced. Notwithstanding the
foregoing, the unsecured indemnity agreement of any insurance company or any
agent thereof shall constitute satisfactory indemnity for the purposes of this
Section. The Company and the Trustee may charge for their expenses in replacing
a security mutilated, lost, destroyed or wrongfully taken.
Every replacement Security is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
Section 2.08 outstanding Securities. The securities outstanding at any
time are all Securities authenticated by the Trustee except for those cancelled
by it, those delivered to it for cancellation, and those described in this
Section as not outstanding.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to
Section 2.07.
If Securities are considered paid under Section 4.01, they cease to be
outstanding and interest on them ceases to accrue.
Subject to Section 2.09, a Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
Section 2.09 Treasury Securities. In determining whether the Holders
of the required principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company, any other obligor upon the
Securities or an Affiliate of the Company or such obligor shall be disregarded
(including for purposes of determining the outstanding principal amount of
Securities), except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded.
-13-
<PAGE>
Section 2.10 Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
and deliver temporary Securities. Temporary securities shall be substantially in
the form of definitive Securities but may have variations that the Company, with
the Trustee's reasonable approval, considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in a like principal
amount in exchange for temporary Securities. Until such exchange, such temporary
Securities shall be entitled to the same rights, benefits and privileges as the
definitive Securities.
Section 2.11 Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment or cancellation and
shall dispose of cancelled Securities in accordance with procedures normally
employed and required for such purposes. The company may not issue new
Securities to replace Securities that it has paid, purchased (on the open market
or otherwise) or otherwise acquired or delivered to the Trustee for
cancellation.
Section 2.12 Defaulted Interest. If the Company defaults in a payment
of interest on the securities, such interest shall cease to be payable to
Securityholders on the regular record date therefor, but shall be payable on a
subsequent special payment date to the Persons who are Securityholders on a
subsequent special record date. The Company shall fix such record date and
payment date in a manner satisfactory to the Trustee. At least 10 days before
the record date, the Company shall mail to Securityholders a notice that states
the record date, payment date and amount of interest to be paid. Notwithstanding
the foregoing, the Company may pay defaulted interest in any other lawful manner
satisfactory to the Trustee and not inconsistent with the requirements of any
securities exchange on which the Securities may be listed.
ARTICLE III
REDEMPTION
Section 3.01 Notices to Trustee. If the Company wants to redeem
Securities pursuant to paragraph 5 of the
-14-
<PAGE>
Securities, it shall notify the Trustee of the redemption date and the principal
amount of Securities to be redeemed.
The Company shall give each notice provided for in this Section in an
Officers' Certificate delivered at least 45 days before the redemption date
(unless a shorter period shall be satisfactory to the Trustee).
Section 3.02 Selection of Securities to be Redeemed. If less than all
of the Securities are to be redeemed, the Trustee shall select the Securities to
be redeemed by lot or such other method as the Trustee may deem fair and
appropriate so long as such method is not proscribed by any securities exchange
on which the Securities are then listed. The Trustee shall make the selection
prior to the redemption date from Securities outstanding and not previously
called for redemption and shall notify the Company of the Securities selected
for such redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them it selects shall be in amounts of $1,000 or integral
multiples of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption.
Section 3.03 Notice of Redemption. At least 30 days but not more than
60 days before a redemption date, the Company shall mail or cause to be mailed a
notice of redemption to each Holder whose Securities are to be redeemed. Notices
of redemption shall be deemed duly mailed if mailed to the addresses set forth
on the register of the Securities.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price plus accrued
interest, if any;
(5) that, unless the Company defaults in making the redemption
payment on the redemption date, interest on Securities called for
redemption ceases to accrue on and after the redemption date (subject
to paragraph 5 of the Securities);
-15-
<PAGE>
(6) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, and upon surrender of such Security, a new Security
or Securities in aggregate principal amount equal to the unredeemed
portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion of principal
amount thereof) to be redeemed, as well as the aggregate principal
amount of Securities to be redeemed and the aggregate principal amount
of Securities estimated to be outstanding after such partial
redemption; and
(8) a CUSIP or other identifying number.
No representation will be made by the Trustee as to the accuracy or
correctness of such CUSIP or other identifying number.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Failure to give
notice or a defect in such notice shall not impair the validity of the
redemption.
Section 3.04 Effect of Notice of Redemption. Once notice of redemption
is mailed, Securities called for redemption become due and payable on the
redemption date at the redemption price plus accrued interest, if any. If the
redemption payment is not paid on the redemption date, interest on the
Securities shall continue to accrue until payment.
Notwithstanding anything herein to the contrary, if the redemption
date of a Security is subsequent to a record date with respect to any interest
payment date and on or prior to such interest payment date, then such accrued
interest will be paid to the Person in whose name such security is registered at
the close of business on such record date and no other interest will be payable
thereon.
Section 3.05 Deposit of Redemption Price. The Company shall deposit
with the Paying Agent at least one business day prior to the redemption date
(or, if the Company is its own Paying Agent, the Company shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date.
Section 3.06 Securities Redeemed in Part. After the redemption date,
upon surrender of a Security that is redeemed
-16-
<PAGE>
in part, the Company shall execute for, and upon written order, the Trustee
shall authenticate and deliver at the Company's expense and without a service
charge to, the Holder a new Security equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE IV
COVENANTS
From and after the date of this Indenture, and so long as any of the
Securities are outstanding:
Section 4.01 Payment of Securities. The Company shall pay the
principal of and interest on the Securities on the dates and in the manner
provided herein and in the Securities. The Company shall pay interest on the
principal amount of the Securities at an initial rate of 5-1/2% per annum
accruing commencing October 15, 1989 through and including July 31, 1991, and
thereafter at the rate of 10% per annum. Principal and interest shall be
considered paid on the date that the Paying Agent (other than the Company or an
Affiliate of the Company) holds money sufficient to pay all principal and
interest then due.
Section 4.02 SEC Reports; Reports to Securityholders.
(a) The Company shall file with the Trustee within 15 days after it
files them with the SEC copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
Company also shall comply with the other provisions of TIA Section 314(a). If
the Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, it shall file with the Trustee, within 15 days after it would have
been required to file with the SEC, financial statements, including any notes
thereto (and with respect to annual reports, an auditors' report by a nationally
recognized firm of independent certified public accountants), and a
"Management's Discussion and Analysis of Financial Condition and Results of
operations," both comparable to that which the Company would have been required
to include in such annual reports, information, documents or other reports if it
were subject to the requirements of Section 13 or 15(d) of the Exchange Act.
-17-
<PAGE>
(b) The Company shall cause its annual reports to stockholders and any
quarterly or other financial reports furnished by it to stockholders to be
mailed to the Holders (no later than the date such materials are mailed to the
Company's stockholders) at their addresses appearing in the register of
Securities maintained by the Registrar. If the Company is not required to
furnish annual or quarterly reports to its stockholders pursuant to the Exchange
Act, it shall cause its financial statements referred to in Section 4.02(a)
above, including any notes thereto (and with respect to annual reports, an
auditors' report by a nationally recognized firm of independent certified public
accountants), and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," to be so mailed to the Holders within 120 days after
the end of each of the Company's fiscal years and within 60 days after the end
of each of its first three fiscal quarters. The Company will cause to be
disclosed in the most recent financial statements included in any such mailing
the amount available for payments pursuant to Section 4.13 as of the date of
such financial statements.
Section 4.03 Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating whether or not the signers know of any Default
that occurred during the fiscal year. If they do, the certificate shall describe
the Default, its status and the action, if any, the Company then proposes to
take. The Officers' Certificate need not comply with Section 13.05. The first
certificate to be delivered by the Company pursuant to this Section shall be for
the fiscal year ending April 30, 1990.
Section 4.04 Notice of Default. The Company will deliver to the
Trustee an Officers' Certificate promptly upon becoming aware of any Default or
Event of Default, or any event of default or event which, with notice or lapse
of time, or both, could result in a default under Section 6.01(4), which
Officers' Certificate will specify such Default, Event of Default or such other
event.
Section 4.05 Waiver of Stay, Extension or usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture and (to the
-18-
<PAGE>
extent that it may lawfully do so) the company hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 4.06 Corporate Existence. Subject to Article V, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate or other existence of
its subsidiaries in accordance with the respective organizational documents of
each such Subsidiary and the rights (charter and statutory) and franchises of
the Company and each such Subsidiary; provided, however, that the Company shall
not be required to preserve, with respect to itself, any right or franchise, and
with respect to such subsidiaries any such existence, right or franchise, if the
Board of Directors, or the board of directors of the Subsidiary concerned, shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or any such Subsidiary and that the loss thereof is
not disadvantageous in any material respect to the Holders.
Section 4.07 Properties. Subject to Article V, the Company shall cause
all properties used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Board of Directors or of the board of directors of the
Subsidiary concerned, or of an officer (or other agent employed by the Company
or any of its Subsidiaries) of the Company or such Subsidiary having managerial
responsibility for any such property, desirable in the conduct of the business
of the Company or such Subsidiary and not disadvantageous in any material
respect to the Holders.
Section 4.08 Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges (including
withholding taxes and any penalties, interest and additions to taxes)
-19-
<PAGE>
levied or imposed upon the Company or its Subsidiaries or upon the income,
profits or property of the Company or any such Subsidiary, and (ii) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
lien upon the property of the Company or any such Subsidiary; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which disputed amounts adequate reserves have been made.
Section 4.09 Insurance. The Company shall provide, or cause to be
provided, for itself and its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties, including, but
not limited to, products liability insurance and public liability insurance,
with reputable insurers or with the government of the United States of America
or an agency or instrumentality thereof, in such amounts with such deductibles
and by such methods as shall be customary for corporations similarly situated in
the industry.
Section 4.10 Limitation on Issuance of Certain Exchange Indebtedness.
The Company shall not, nor shall it permit any of its Subsidiaries to, issue,
sell, create or cause to be outstanding any Restricted Indebtedness, if any such
Restricted Indebtedness is exchanged for, or the proceeds of the issuance and
sale of such Restricted Indebtedness are used, directly or indirectly, in whole
or in part, to acquire, purchase, redeem, refinance or retire for value, any or
all of the Old Securities outstanding following issuance of the Securities or
any Indebtedness (other than the Securities) issued in exchange for any of such
Old Securities.
Section 4.11 Limitation on Payment Restrictions Affecting
Subsidiaries. The Company shall not, nor shall it permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist any
restriction which by its terms limits the ability of such Subsidiary to (i) pay
dividends or make any other distributions on such Subsidiary's Capital Stock or
pay any Indebtedness owed to the Company or any other Subsidiary of the Company,
(ii) make and pay loans or advances to the Company or any other Subsidiary of
the Company, (iii) pay management fees to the Company or (iv). transfer any of
its property or assets to the Company or any Subsidiary of the Company, unless
such restriction (A) existed prior to the date of this Indenture or (B) is no
more restrictive than those contained in the most restrictive
-20-
<PAGE>
agreement of such Subsidiary existing prior to the date of this Indenture; and
except for (a) such encumbrances existing under or by reason of applicable law;
(b) customary provisions restricting subletting or assignment. of any lease
governing a leasehold interest of the Company or any Subsidiary of the Company;
(c) any encumbrances or restrictions arising under any instrument governing
Indebtedness of a Person acquired by the Company or any Subsidiary of the
Company at the time of such acquisition, which encumbrance or restriction is not
applicable to any Person or the properties or assets of any Person, other than
the Person or the property or assets of the Person so acquired or any entity
formed for the purpose of acquiring such Person or properties, or any
Refinancing Indebtedness thereof; (d) any restrictions with respect to a
Subsidiary of the Company imposed pursuant to an agreement which has been
entered into for the sale or other disposition of all or substantially all of
the capital stock or assets of such Subsidiary pending the closing of such sale
or disposition; (e) agreements entered into in the ordinary course of the
Company or any Subsidiary's business restricting assignment of such agreements;
and (f) purchase money obligations for property acquired in the ordinary course
of business.
Section 4.12 Limitation on Purchase of Old Securities. The Company
shall not, nor shall it permit any of its Subsidiaries to, directly or
indirectly, purchase, redeem or otherwise acquire or retire for value any Old
Securities, except pursuant to existing obligations under the old Indenture;
provided, however, that the foregoing restriction shall not apply to the
purchase, redemption, acquisition or retirement of any Old Securities (i) on or
within three months prior to any mandatory redemption obligation due date, in an
amount equal to or less than the principal amount of old securities required to
be and in fact credited to such mandatory redemption obligation, but only after
the Company has satisfied, to the extent possible, its mandatory redemption
obligations by delivery of Old Securities acquired by the Company in the
Exchange Offer; or (ii) in exchange for, or with the proceeds of the issuance
and sale of, Subordinated Securities.
Section 4.13 Restricted Payments. The Company shall not and shall
cause its Subsidiaries not to, directly or indirectly, (i) declare or pay any
dividends or make any distributions (other than dividends or distributions
payable solely in shares of Qualified Capital Stock) on or in respect of any
shares of Capital Stock of the Company or, except for payments to the Company or
any of its Subsidiaries, any Subsidiary of the company, or (ii) purchase, redeem
or otherwise acquire or retire for value (other than solely with
-21-
<PAGE>
shares of Qualified Capital Stock) any of the Capital Stock of the Company or
warrants, rights (other than rights evidenced by Indebtedness of the Company or
of its Subsidiaries) or options to acquire Capital Stock of the Company if, at
the time of any action referred to in clauses (i) or (ii) (individually and
collectively, a "Restricted Payment"), or after giving effect to such Restricted
Payment, (x) a Default or an Event of Default shall have occurred and be
continuing, or (y) the aggregate amount expended for all such purposes,
including such Restricted Payment (the amount expended for such purposes, if
other than cash, to be the fair market value of such property as determined in
good faith by the Board of Directors, whose determination shall be evidenced by
a Board Resolution), subsequent to the date of this Indenture shall exceed
$500,000; provided, however, that the foregoing restrictions shall not apply to
the payment of any dividend within 60 days after the date of its declaration if
the dividend would have been permitted on the date of declaration; and provided,
further, that the foregoing restrictions shall not apply to (and the amount of
the following shall not be deemed expended for purposes of the foregoing
calculation) (i) the purchase, redemption, acquisition or retirement of any
shares of Capital Stock of the Company solely out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of shares of
Qualified Capital Stock; (ii) any merger permitted by Article V; (iii) any
payment with respect to stock appreciation rights issued pursuant to any
employee benefit or stock ownership plan of the Company or any Subsidiary; or
(iv) the issuance or redemption of any rights issued to holders of the Company's
Capital Stock pursuant to any shareholder rights or similar plan.
Section 4.14 Limitation on Future Subordinated Indebtedness. The
Company shall not issue, incur, create, assume or guarantee any Indebtedness
which is both subordinated in right of payment to any Senior Indebtedness and
which is senior in right of payment to the Securities; provided, however, the
foregoing restriction shall not apply to distinctions between Indebtedness which
exist only by reason of (i) any lien or liens arising or created in respect of
any Indebtedness or (ii) any intercreditor agreement between different creditors
or classes of creditors.
Section 4.15 Limitation on Indebtedness. The Company shall not, nor
shall it permit any of its Subsidiaries to, directly or indirectly, create,
incur, issue, assume or in any manner become liable with respect to or become
responsible for the payment of, contingently or otherwise, any Indebtedness,
unless immediately thereafter and after giving effect thereto the Company's
Fixed Charge Coverage Ratio for its four full
-22-
<PAGE>
fiscal quarters (for which financial statements are then available) next
preceding the date such additional Indebtedness is incurred would have been at
least 1.75 to 1.0, determined on a pro forma basis (including a pro forma
application of the net proceeds of such Indebtedness) as if the additional
Indebtedness had been incurred at the beginning of such four fiscal quarter
period; provided, however, that the foregoing restriction shall not apply to (i)
any Refinancing Indebtedness, (ii) Purchase Money Indebtedness, including
Capitalized Lease Obligations, (iii) any Indebtedness of the Company to any
Subsidiary of the Company or of any Subsidiary of the Company to the Company or
any other Subsidiary of the Company, and (iv) additional Indebtedness of not
more than $4,000,000 in aggregate principal amount at any one time outstanding.
Section 4.16 Restrictions on Transactions with Affiliates. The Company
shall not, and shall not permit any Subsidiary of the Company to, directly or
indirectly, enter into, renew, extend or otherwise 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 Company on terms that are less favorable to the Company or that Subsidiary,
as the case may be, than those which might be obtained at the time in a
comparable arm's-length transaction with Persons who are not such an Affiliate
(as determined by the Board of Directors, whose determination shall be
conclusive); provided, however, that the foregoing restriction shall not apply
to any transaction between or among any of the Company or any of its
Subsidiaries.
Section 4.17 Maintenance of Consolidated Stockholders' Equity. If the
Company's Consolidated Stockholders' Equity at the end of each of any two
consecutive fiscal quarters (the last day of such second fiscal quarter being
referred to as the "Acceleration Date") is a deficit of ($10,000,000) or more
(the "Minimum Consolidated Stockholders' Equity"), then the Company shall make
an offer to all Holders (an "Offer") to acquire on or before the last day of the
next following fiscal quarter (the "Accelerated Payment Date") 10% of the
aggregate principal amount of the Securities originally issued under this
Indenture (or, if the principal amount of the Securities then outstanding is
less than 10% of the aggregate principal amount originally issued, such lesser
amount of the Securities as may be outstanding at the time) (an "Accelerated
Payment") at a purchase price of 100% of principal amount, plus accrued interest
to the Accelerated Payment Date. The Company may credit against any Accelerated
Payment the principal amount of Securities acquired by the Company subsequent to
the first
-23-
<PAGE>
Acceleration Date and prior to the granting of the notice provided for in the
next paragraph of this Indenture and surrendered for cancellation through
purchase, optional redemption or exchange. The Company, however, may not credit
a specific Security against more than one Accelerated Payment. In no event shall
the failure to meet the Minimum Consolidated Stockholders' Equity at the end of
any fiscal quarter be counted toward the making of more than one Offer.
Within 50 days after the end of any fiscal quarter of the Company, at
the end of which the Consolidated Stockholders' Equity of the Company is less
than the Minimum Consolidated Stockholders' Equity, the Company shall so notify
the Trustee.
Such notice to the Trustee from the Company shall state whether the
Company elects to credit its obligation to repurchase securities as provided
above and set forth the amount of the credit and the basis provided above for
such credit (including identification of any previously cancelled Securities not
theretofore made the basis for the credit to an Accelerated Payment), and shall
be delivered together with any Securities required to be delivered to the
Trustee for cancellation as provided above that are to be made the basis for
such credit to an Accelerated Payment.
Notice of an Offer shall be mailed by the Company to all Holders not
less than 30 days nor more than 60 days before the Accelerated Payment Date at
their last registered address. The Offer shall remain open from the time of
mailing until five days before the Accelerated Payment Date. The notice shall be
accompanied by a copy of the information regarding the Company required to be
contained in a Quarterly Report on Form 10-Q (x) for the Company's first fiscal
quarter if the Acceleration Date is the end of the Company's second fiscal
quarter, (y) for the Company's second fiscal quarter if the Acceleration Date is
the end of the Company's third fiscal quarter or (z) for the Company's third
fiscal quarter if the Acceleration Date is the end of the Company's last fiscal
quarter. If the Acceleration Date is the end of the Company's first fiscal
quarter, a copy of the information required to be contained in an Annual Report
to Shareholders pursuant to Rule 14a-3 under the Exchange Act for the fiscal
year ending immediately prior to such Acceleration Date and in a Quarterly
Report on Form 10-Q for such first fiscal quarter shall accompany the notice.
The notice shall contain all instructions and materials necessary to enable such
Holders to tender Securities pursuant to the Offer. The notice, which shall
govern the terms of the Offer, shall state:
(1) that the Offer is being made pursuant to Section 4.17 of this
Indenture;
-24-
<PAGE>
(2) the Accelerated Payment, the purchase price (including the
amount of accrued interest) and the Accelerated Payment Date;
(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that, unless the Company defaults in the making of the
Accelerated Payment, any Security accepted for payment pursuant to the
offer shall cease to accrue interest after the Accelerated Payment
Date;
(5) that Holders electing to have a Security purchased pursuant
to an Offer will be required to surrender the Security to the Paying
Agent at the address specified in the notice at least five days before
the Accelerated Payment Date and must complete any form letter of
transmittal proposed by the Company and acceptable to the Trustee;
(6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than three days prior to the
Accelerated Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
the Security the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have the Security
purchased;
(7) that if Securities in a principal amount (plus accrued
interest) in excess of the Accelerated Payment are tendered pursuant
to the Offer, the Company shall purchase securities on a pro rata
basis (with such adjustments as may be deemed appropriate by the
Company so that only securities in denominations of $1,000 or integral
multiples of $1,000 shall be acquired); and
(8) that Holders whose Securities were purchased only in part
will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities.
Before an Accelerated Payment Date, the Company shall (i) accept for
payment Securities or portions thereof tendered pursuant to the Offer (on a pro
rata basis if required pursuant to paragraph (7) above) , (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Securities or
portions thereof so accepted and (iii) deliver to the Trustee
-25-
<PAGE>
securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Securities so accepted
payment in an amount equal to the purchase price, and the Company shall execute
and the Trustee shall promptly authenticate and mail or deliver to such Holders
a Security equal in principal amount to any unpurchased portion of the
Securities surrendered. Any Securities not so accepted shall be promptly mailed
or delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the offer on the Accelerated Payment Date. For purposes
of this Section, the Trustee shall act as the Paying Agent.
Notwithstanding anything herein to the contrary, if the Accelerated
Payment Date is subsequent to a record date with respect to any interest payment
date and on or prior to such interest payment date, then any accrued interest
will be paid to the Person in whose name a Security is registered at the close
of business on such record date and no other interest will be payable thereon.
Section 4.18 Limitation on Liens. The Company shall not create or
permit to exist any Lien with respect to any of the Pledged Collateral (other
than the lien of the Indenture) or the ATP Notes.
Section 4.19 Limitation on Certain Investments. Neither the Company
nor any Subsidiary shall make any further investment in or loan or advance to
APV, except for loans bearing interest at not less than the prevailing market
rate (as such rate is determined in good faith by the Board of Directors).
ARTICLE V
SUCCESSORS
Section 5.01 When Company May Merge, etc. The Company may not (i)
consolidate with or merge with or into any other Person or transfer (by lease,
assignment, sale or otherwise) all or substantially all of its properties and
assets, in a single transaction or through a series of related transactions, as
an entirety or substantially as an entirety to another Person or group of
affiliated Persons or (ii) adopt a Plan of Liquidation, unless:
(1) either the Company shall be the continuing Person or the
Person (if other than the Company) (or,
-26-
<PAGE>
in the case of a Plan of Liquidation, one Person to which assets are
transferred) formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company as an
entirety or substantially as an entirety or pursuant to a Plan of
Liquidation are transferred shall be a corporation organized and
existing under the laws of the United States of America or any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental to this Indenture, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations
of the Company under the securities and this Indenture;
(2) either the Company if it is the continuing Person or the
Person (or, in the case of a Plan of Liquidation, one Person to which
assets are transferred) formed by such consolidation or surviving such
merger or to which the properties and assets of the Company as an
entirety or substantially as an entirety or pursuant to a Plan of
Liquidation are transferred shall have either (A) Consolidated
Stockholders' Equity after giving effect to such transaction
(including the assumption by the successor of the Securities but
excluding any write-ups of assets resulting from such transaction)
equal to or greater than the Consolidated Stockholders' Equity of the
Company immediately preceding such transaction or (B) after giving
effect to such transaction (including the assumption by the successor
of the Securities but excluding any write-ups of assets resulting from
such transaction), a Fixed Charge Coverage Ratio for its four full
fiscal quarters (for which financial statements are then available)
next preceding the date of such transaction of at least 1.75 to 1.0,
determined on a pro forma basis as if the transaction had occurred at
the beginning of such four fiscal quarter period;
(3) immediately before and immediately after giving effect to
such transaction, no Event of Default and no Default shall have
occurred and be continuing; and
(4) the Company has delivered to the Trustee an Officers'
Certificate (attaching the arithmetic computations to demonstrate
compliance with clause (2)) and an Opinion of Counsel, each stating
that such consolidation, merger, transfer or lease and such
supplemental indenture comply with the foregoing and
-27-
<PAGE>
that all conditions precedent herein provided relating to such
transaction have been complied with.
Notwithstanding the foregoing, any Subsidiary of the Company may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company or any Subsidiary or Subsidiaries of the Company.
"Plan of Liquidation" means a plan (including by operation of law)
that provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously) (i) the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company otherwise than as an entirety or substantially as an entirety and
(ii) the distribution of all or substantially all of the proceeds of such sale,
lease, conveyance or other disposition and all or substantially all of the
remaining assets of the Company to holders of Capital Stock of the Company.
Section 5.02 Successor Corporation Substituted. Upon any consolidation
or merger, or any transfer of assets of the Company in accordance with Section
5.01, the successor corporation formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company therein. When a successor corporation assumes all of the
obligations of the Company under this Indenture and under the securities the
predecessor shall be released from such obligations.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01 Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any
Security when the same becomes due and payable and the Default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any
Security When the same becomes due and payable at maturity, upon
redemption or otherwise;
-28-
<PAGE>
(3) the company fails to comply with any of its other agreements
in the Securities or this Indenture and the Default continues for the
period and after the notice specified below;
(4) there shall be a default under any evidence of Indebtedness
of the Company or any Subsidiary of the Company, whether any such
Indebtedness now exists or shall hereafter be created, if (A) either
(i) such default results from the failure to pay principal of or
interest on any such Indebtedness or (ii) as a result of such default
the maturity of such Indebtedness has been accelerated prior to its
expressed maturity and (B) the aggregate principal amount of such
Indebtedness equals $1,000,000 or more or, together with the principal
amount of any other Indebtedness of the Company or any Subsidiary in
default for failure to pay principal or interest at maturity or the
maturity of which has been accelerated, aggregates $1,000,000 or more
and (C) without such Indebtedness having been discharged or such
acceleration having been rescinded or annulled;
(5) the Company or any Subsidiary of the Company, pursuant to or
within the meaning of any Bankruptcy Law (A) becomes insolvent, (B)
fails generally to pay its debts as.they become due, (C) admits in
writing its inability to pay its debts generally as they become due,
(D) commences a voluntary case or proceeding, (E) consents to, or
acquiesces in, the institution of a bankruptcy or an insolvency
proceeding against it or the entry of a judgment, decree or order for
relief against it in an involuntary case or proceeding, (F) applies
for, consents to or acquiesces in the appointment of or taking
possession by a Custodian of the Company or any Subsidiary of the
Company or of any part of its property, (G) makes a general assignment
for the benefit of its creditors, or (H) takes any corporate action in
furtherance of or to facilitate, conditionally or otherwise, any of
the foregoing;
(6) a court of competent jurisdiction enters a judgment, decree
or order under any Bankruptcy Law which (A) is for relief against the
Company or any Subsidiary of the company in an involuntary case, (B)
appoints a Custodian of the Company or any Subsidiary of the Company
or for any part of its property or (C) orders the winding-up or
liquidation of its affairs, and such judgment, decree or order shall
remain
-29-
<PAGE>
unstayed and in effect for a period of 30 consecutive days; or any
bankruptcy or insolvency petition or application is filed, or any
bankruptcy case or insolvency proceeding is commenced, against the
Company or any Subsidiary of the Company and such petition,
application, case or proceeding is not dismissed within 60 days; or
(7) a final judgment or final judgments for the payment of money
are entered by a court of competent jurisdiction against the Company
or any Subsidiary of the Company and either (A) an enforcement
proceeding shall have been commenced by any creditor upon such
judgment or (B) such judgment remains undischarged and unbonded for a
period (during which execution shall not be effectively stayed) of 60
days, Provided that the aggregate of all such judgments exceeds
$1,000,000.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar Federal or
State law for the relief, supervision, conservation, reorganization or
liquidation of debtors or for the benefit of creditors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under clause (3) (other than any Defaults under Sections
4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18 and 4.19, which Defaults
shall be Events of Default without the notice or passage of time specified in
this paragraph) is not an Event of Default until the Trustee or the Holders of
at least 25% in principal amount of the outstanding Securities notify the
Company of the Default and the Company does not cure the Default within 30 days
after receipt of the notice. The notice must specify the Default, demand that it
be remedied and state that the notice is a "Notice of Default." Such notice
shall be given to the Trustee and the Trustee in turn shall give such notice to
the Company if requested by the Holders of at least 25% in principal amount of
the Securities then outstanding.
Section 6.02 Acceleration. If an Event of Default (other than an Event
of Default specified in Section 6.01(5) or (6)) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the outstanding Securities by notice to the Company and the Trustee,
may declare the unpaid principal of and accrued interest on all the Securities
to be immediately due and payable. Upon such declaration the principal and
accrued interest of such Securities shall be immediately due and payable. If an
Event of Default specified in section 6.01(5)
-30-
<PAGE>
or (6) occurs, all unpaid principal of and accrued interest on the Securities
then outstanding shall automatically become due and payable without any
declaration or other act on the part of the Trustee or any Securityholder. Upon
payment of such principal amount and interest, all of the Company's obligations
under the Securities and this Indenture, other than obligations under Section
7.07, shall terminate. The Holders of a majority in principal amount of the
outstanding Securities by notice to the Trustee may rescind and annul an
acceleration and its consequences if the rescission and annulment would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except non-payment of principal or interest that has become
due solely because of the acceleration. Such rescission and annulment shall not
apply to any subsequent acceleration.
Section 6.03 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee, in its own name and as trustee of an express trust, may
pursue any available remedy to collect the payment of principal of or interest
on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law, and every right and remedy of the
Trustee or the Securityholders can be exercised from time to time or as often as
may be deemed expedient.
Section 6.04 Waiver of Past Defaults. Subject to Sections 6.02, 6.07
and 9.02, the Holders of a majority in principal amount of the outstanding
Securities by notice to the Trustee may waive an existing Default and its
consequences except a Default in the payment of the principal of or interest on
any Security. When a Default or Event of Default is waived, it is cured and
ceases. No waiver shall extend to other or subsequent Defaults.
Section 6.05 Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture, is unduly
prejudicial to the rights of other Securityholders, or would involve the Trustee
in personal liability.
-31-
<PAGE>
Section 6.06 Limitation on Suits. A Securityholder may pursue a remedy
with respect to this Indenture or the securities only if:
(1) the Holder gives to the Trustee notice of a continuing Event
of Default;
(2) the Holders of at least 25% in principal amount of the
outstanding securities make a request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the outstanding Securities do not give the Trustee
a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.07 Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder of a Security to
receive payment of principal of and interest on the Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
Section 6.08 Collection Suit by. Trustee. If an Event of Default
specified in Section 6.01(l) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor upon the Securities for the whole amount of
principal and interest remaining unpaid, together with interest on overdue
principal and, to the extent that payment of such interest is lawful, interest
on overdue installments of interest, in each case at the rate per annum borne by
the Securities and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and any other
amounts due the Trustee under Section 7.07.
-32-
<PAGE>
Section 6.09 Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any other amounts due under Section 7.07)
and the Securityholders allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Securities), its creditors or its
property and shall be entitled and empowered to collect and receive any monies
or other property payable or deliverable on any such claims and to distribute
it, and any Custodian in any such judicial proceedings is hereby authorized by
each Securityholder to make such payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
Section 6.10 Priorities. If the Trustee collects any money pursuant to
this Article, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to holders of Senior Indebtedness to the extent required by
Article X;
Third: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without
preference or priority of any kind, according to the amounts
due and payable on the Securities for principal and
interest, respectively; and
Fourth: to the Company.
Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any such payment to Securityholders.
-33-
<PAGE>
Section 6.11 Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or Omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities then outstanding.
ARTICLE VII
TRUSTEE
Section 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action" its own negligent failure to act or its own wilful misconduct,
except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section.
-34-
<PAGE>
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any right
or power (whether at the request of the holders of a majority in principal
amount of the outstanding Securities or otherwise) unless it receives indemnity
satisfactory to it against any loss, liability or expense. The Trustee shall not
be required to risk its own funds or otherwise incur any financial liability in
the performance by it of its duties and obligations hereunder if the Trustee
reasonably believes that the repayment of such funds is not reasonably assured
to it by the security afforded to it by the terms of this Indenture.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree with the Company. Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law.
Section 7.02 Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person, and shall be
protected in acting or refraining from acting based upon such reliance. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel, require an Officers' Certificate, require an Opinion of Counsel or
require or pursue any combination of such actions. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Certificate or opinion.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
-35-
<PAGE>
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers.
Section 7.03 Individual Rights of Trustees. The Trustee in its
individual or any other capacity may become the owner or pledgee of securities
and may otherwise deal with the Company or an Affiliate of the Company with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee is subject to Sections 7.10 and 7.11.
Section 7.04 Trustee's Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not
be accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement in the Securities other than its
authentication.
Section 7.05 Notice of Defaults. If a Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to Securityholders a
notice of the Default within 90 days after it occurs. Except in the case of a
Default in payment on any Security, the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
Section 7.06 Reports by Trustee to Holders. Within 60 days after each
May 15 beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to Securityholders a brief report dated as of such reporting
date that complies with TIA Section 313(a). The Trustee also shall comply with
TIA Sections 313(b)(1) and (2) and 313(c). Any such reports shall be deemed duly
mailed if mailed postage prepaid to the address of the Securityholders listed in
the register of securities.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the Securities are listed on
any stock exchange.
Section 7.07 Compensation and Indemnity. The Company shall pay to the
Trustee reasonable compensation for its services upon execution of this
Indenture and on each anniversary hereof so long as Securities are outstanding.
The Trustees' compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company
-36-
<PAGE>
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses, disbursements and advances incurred by it. Such expenses shall include
the reasonable compensation and out-of-pocket expenses of the Trustee's agents
and counsel.
The Company shall indemnify the Trustee and hold it harmless against
any loss, liability, obligation, damages, taxes, claims, actions, suits, costs,
expenses and disbursements, including, without limitation, legal fees and
expenses of any kind or nature whatsoever which may be imposed on, incurred by
or asserted at any time against the Trustee (whether' indemnified against by any
other party) in any way relating to or arising out of this Indenture, the
administration of the trust created hereby or the action or inaction of the
Trustee hereunder. Without limiting the foregoing, the Company shall pay and
shall indemnify the Trustee against any tax, fee or other charge (and any
interest, fines or penalties imposed with respect thereto) imposed or asserted
or assessed against deposited U.S. Government Obligations or the principal and
interest received thereon. The Trustee shall notify the company promptly of any
claim for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee--may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal of-and
interest on particular Securities. Such lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations pursuant to this Section shall survive the
satisfaction and discharge of this Indenture.
Section 7.08 Replacement of Trustee. A resignation or removal of the
Trustee and the appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as provided in this
Section.
-37-
<PAGE>
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities may remove the Trustee by so
notifying the Trustee and the Company. The Company may remove the Trustee if:
(1) the Trustees fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company and any other obligor upon the
Securities shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company and such obligor.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the Securities may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A success or Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
The resignation and removal of the Trustee shall be effective without
further act, deed or conveyance to the successor Trustee and the successor
Trustee shall have all rights, duties and powers of the retiring Trustee.
-38-
<PAGE>
Section 7.09 Successor Trustee by Merger, etc. if the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 7.10 Eligibility: Disqualification. This Indenture shall
always have a Trustee who satisfies the requirements of TIA Section 310(a)(1).
The Trustee shall always have a combined capital and surplus of at least
$50,000,000. The Trustee is subject to TIA Section 310(b) , including the
optional provision permitted by the second sentence of TIA Section 310(b)(9)
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
Section 7.11 Preferential Collection of Claims Against Company. The
Trustee is subject to TIA Section 311(a), excluding any creditor relationship
listed in TIA Section 311(b). A Trustee who has resigned or been removed is
subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.01 Termination of Company's Obligations. The Company may
terminate all of its obligations under the Securities and this Indenture if all
Securities previously authenticated and delivered (other than destroyed, lost or
stolen Securities which have been replaced or paid) have been delivered to the
Trustee for cancellation and the Company has paid sums payable by it hereunder
or if:
(1) the Securities mature within one year or all of them are to
be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption;
(2) if then permitted by Article X, the Company irrevocably
deposits in trust with the Trustee money or U.S. Government
obligations, maturing as to principal and interest, in such amounts
(and at such times as are sufficient in the opinion of a nationally
recognized firm of independent certified public accountants expressed
in a written certification
-39-
<PAGE>
thereof delivered to the Trustee) without consideration of any
reinvestment of such interest, to pay principal of and interest on the
Securities to maturity or redemption, as the case may be, and to pay
all other sums (including any fees) payable by it hereunder pursuant
to irrevocable instructions to make such payments;
(3) such deposit is not prohibited by and does not cause a
default under any agreement of the Company; and
(4) the Company delivers to the Trustee an Opinion of Counsel to
the effect that the Trustee (as a result of such deposit) and the
trust relating to such deposit do not constitute or are qualified as
related investment companies under the Investment Company Act of 1940.
and in any case the Company has delivered to the Trustee an Officers'
Certificate and an opinion of Counsel each stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this Indenture
have been complied with. However, the Company's obligations in Section 2.03,
2.04, 2.05, 2.06, 2.07, 4.01, 4.05, 4.06, 7.07, 7.08, 8.03 and 8.04 shall
survive until the Securities are no longer outstanding. Thereafter the Company's
obligations in Sections 7.07 and 8.03 shall survive.
After a deposit and satisfaction of the conditions set forth in
Sections 8.01(l) to 8.01(4), the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under this Indenture except
for those surviving obligations specified above.
In order to have money available on a payment date to pay principal of
or interest on the Securities, the U.S. Governmental Obligations shall be
payable as to principal or interest on or before such payment date in such
amounts as will provide the necessary money. U.S. Government Obligations shall
not be callable at the issuer's option.
Section 8.02 Application of Trust Money. In connection with the
satisfaction and discharge of this Indenture, all moneys held by the Paying
Agent shall be paid over to the Trustee at the direction of the Company. The
Trustee shall hold in trust money or U.S. Government Obligations deposited with
it pursuant to Section 8.01. It shall apply the deposited money and the money
from U.S. Government Obligations through the Paying Agent and in
-40-
<PAGE>
accordance with this Indenture to the payment of principal of and interest on
the Securities. Money and securities so held in trust are not subject to Article
Ten.
Section 8.03 Repayment to Company. The Trustee and the Paying Agent
shall promptly pay to the Company upon request any excess money or securities
held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years; provided that the Company shall have first caused
notice of such payment to be mailed to each Securityholder entitled thereto no
less than 30 days prior to such repayment. Upon such payment by the Trustee or
Paying Agent, the Trustee or Paying Agent shall have no further liability with
respect thereto. After payment to the Company, Securityholders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person.
Section 8.04 Reinstatement. If the Trustee or the Paying Agent is
unable to apply any money in accordance with Section 8.02 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.01 until
such time as the Trustee or the Paying Agent is permitted to apply all such
money in accordance with Section 8.02; provided, that, if the Company has made
any payment of interest on or principal of any Security because of the
reinstatement of its obligations, the company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held by
the Trustee or the Paying Agent.
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01 Without Consent of Holders. The Company and the Trustee
may amend this Indenture or the Securities without the consent of any
Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article V;
-41-
<PAGE>
(3) to provide for uncertificated Securities in addition to
certificated Securities;
(4) to make any change that does not adversely affect the rights
of any Securityholder; or
(5) to comply with the TIA.
Section 9.02 With Consent of Holders. The Company and the Trustee may
amend any provision of either this Indenture or the Securities, including
Section 4.17 and Article X, with the written consent of the Holders of at least
a majority in principal amount of the Securities then outstanding without notice
to any Securityholder. The Holders of a majority in principal amount of the
outstanding Securities may waive compliance by the Company with any such
provisions without notice to any Securityholder. However, without the consent of
each Securityholder affected, an amendment or waiver under this Section may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment or waiver;
(2) reduce the rate of or change the time for payment of interest
on any Security;
(3) reduce the principal of or change the fixed maturity of any
Security or alter the redemption provisions with respect thereto;
(4) make any Security payable in money other than that stated in
the Security; or
(5) make any change in Sections 6.04 or 6.07 or the third
sentence of this Section.
Any amendment shall be effective upon certification to the Trustee by
the Company or an agent of the Company that such amendment has been authorized
by the Company and that the consent of the majority of an aggregate principal
amount of the securities has been obtained, unless such consents specify that
they shall become effective at a later date, in which case such amendment shall
become effective in accordance with the terms of such consent.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing the amendment.
Any failure of the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any supplemental
indenture.
-42-
<PAGE>
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or waiver, but
it shall be sufficient if such consent approves the substance thereof.
Section 9.03 Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities or waiver of the provisions hereof or thereof
shall be set forth in a supplemental indenture that complies with the TIA as
then in effect.
Section 9.04 Revocation and Effect of Consents. Until an amendment or
waiver becomes effective, a consent to it by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of a Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment. If
a record date is fixed, then notwithstanding the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
After an amendment or waiver becomes effective, it shall bind every
Securityholder, unless it makes a change described in any of clauses (1) through
(5) of Section 9.02. In that case, the amendment or waiver shall bind each
Holder of a Security who has consented to it.
Section 9.05 Notation on or Exchange of Securities. The Trustee may
place an appropriate notation about an amendment or waiver on any Security
thereafter authenticated. The Company in exchange for all Securities may issue
and the Trustee shall authenticate and deliver new securities that reflect the
amendment or waiver. Failure to make any such notation on the Securities shall
not affect the validity of any amendment or waiver.
Section 9.06 Trustee Protected. The Trustee need not sign any
supplemental indenture that adversely affects its
-43-
<PAGE>
rights, duties, liabilities or immunities. The Trustee shall obtain an officers'
Certificate and opinion of counsel stating that the supplemental indenture has
been duly authorized.
ARTICLE X
SUBORDINATION
Section 10.01 Securities Subordinated to Senior Indebtedness;
Exception for Pledged Collateral.
(a) The Company covenants and agrees, and each Securityholder by his
acceptance thereof likewise covenants and agrees, that all payments of the
principal of and interest on the Securities by the Company shall be subordinated
in accordance with the provisions of this Article X to the prior payment in
full, in cash or cash equivalents, of all amounts payable on the Senior
Indebtedness of the Company.
(b) It is the intention of the Company and the Trustee that the
security interest and lien granted pursuant to Article XI in favor of the
Holders in and to the Pledged collateral (and the proceeds therefrom) shall be
senior and prior in right to any and all claims thereto of all other creditors
of the Company, including holders of Senior Indebtedness. Therefore,
notwithstanding anything to the contrary herein, the provisions of this Article
X and in the Securities regarding subordination to Senior Indebtedness shall be
inapplicable to the Pledged Collateral, proceeds thereof and any and all
payments or distributions therefrom.
Section 10.02 Priority and Payment Over of Proceeds in Certain Events.
(a) Subordination on Dissolution, Liquidation or Reorganization of the
Company. Upon any payment or distribution of assets or securities of the
Company, as the case may be, whether in cash, property or securities, upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness of the Company shall
first be paid in full in cash, or payment provided for in cash or cash
equivalents, before the Securityholders or the Trustee on behalf of the
Securityholders shall be entitled to receive any payment or distribution of any
assets or securities. Before any payment may be made by the Company of the
principal of or interest on the Securities upon any such dissolution or winding
up or liquidation or reorganization, any payment or
-44-
<PAGE>
distribution of assets or securities of the Company, whether in cash, property
or securities, to which the Securityholders or the Trustee on their behalf would
be entitled, except for the provisions of this Article X, shall be made by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other person making such payment or distribution, directly to the holders of the
Senior Indebtedness of the Company or their Representatives to the extent
necessary to pay all such Senior Indebtedness in full after giving effect to any
concurrent payment or distribution to holders of such Senior Indebtedness. The
Company shall give notice to the Trustee of its dissolution, liquidation or
reorganization.
(b) Subordination on Default in Senior Indebtedness. The Company shall
not pay any amount of principal.of or interest on the Securities, whether at
maturity, upon redemption or acceleration or otherwise, and shall not purchase
any Securities for cash or for property other than the Capital Stock of the
Company, if, at the time of such payment or purchase, there exists (i) a default
in the payment when due of any amount of principal of or interest on any Senior
Indebtedness, whether at maturity, upon redemption or acceleration or otherwise,
or (ii) any other default with respect to any Senior Indebtedness as a result of
which such Senior Indebtedness has been declared to be due and payable, or
required to be prepaid, prior to the stated maturity thereof. The Company shall
resume payments on the Securities and may purchase Securities when any such
default is cured or waived.
(c) Rights and Obligations of Securityholders. In the event that (i)
notwithstanding the provisions of Section 10.02(a) hereof any payment or
distribution of assets of the Company, whether in cash, property or securities,
shall be received by the Trustee or the Securityholders on account of principal
of or interest on the Securities before all Senior Indebtedness is paid in full,
or (ii) notwithstanding the provisions of Section 10.02(b) hereof the Company
shall make any payment to the Trustee on account of the principal of or interest
on the Securities after the occurrence of a payment default on, or the
acceleration of, any Senior Indebtedness, then and in such event such payment or
distribution shall be received and held in trust for the holders of Senior
Indebtedness and shall be paid over or delivered to the holders of the Senior
Indebtedness remaining unpaid to the extent necessary to pay in full in cash or
cash equivalents the principal of and interest on such Senior Indebtedness in
accordance with its terms after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
-45-
<PAGE>
Nothing contained in this Article X shall limit the right of the
Trustee or the Securityholders to take action to accelerate the maturity of the
Securities pursuant to Section 6.02 hereof; Provided, however, that all Senior
Indebtedness of the Company then or thereafter due or declared to be due shall
first be paid in full before the Securityholders or the Trustee are entitled to
receive any payment from the Company of principal of or interest on the
Securities.
Upon any payment or distribution of assets or securities referred to
in Section 10.02(a) hereof, the Trustee and the Securityholders shall be
entitled to rely upon any order or decree of a court of competent jurisdiction
in which such dissolution, winding up, liquidation or reorganization proceedings
are pending, and upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making any such payment or
distribution, delivered to the Trustee for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article X.
If the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as to Senior Indebtedness to
participate in any payment or distribution referred to herein, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the extent
to which such Person is entitled to payment or distribution and to the rights of
such Person. If such evidence is not furnished, the Trustee may defer payment or
distribution to such Person pending judicial determination of the right of such
Person to receive payment or distribution.
Section 10.03 Payment May Be Paid Except in Limited Circumstances.
Nothing contained in this Article X or elsewhere in this Indenture shall prevent
(i) the Company, except under the conditions described in Section 10.02 hereof,
from making payments at any time for the purpose of making payments of principal
of and interest on the Securities, or from depositing with the Trustee or any
Paying Agent any moneys for such payments, or (ii) the receipt (whether or not
in trust) and application by the Trustee or any Paying Agent of any moneys
deposited with it for the purpose of making such payments of principal of and
interest on the Securities, in each case in clause (i) and (ii) above to the
Securityholders entitled thereto unless at least three Business Days prior to
the date upon which such payment would otherwise (except for
-46-
<PAGE>
the prohibitions contained in Section 10.02) become due and payable, the Trustee
shall have received the written notice provided for in Section 10.08, and the
Trustee shall not be affected by any notice to the contrary which may be
received by it on or after such date.
Section 10.04 Rights of Holders of Senior Indebtedness Not to Be
Impaired. No right of any present or future holder of any Senior Indebtedness of
the Company to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act by any such holder,
or by any noncompliance by the Company, with the terms and provisions and
covenants herein regardless of any knowledge thereof any such holder may have or
otherwise be charged with.
The provisions of this Article X are intended to be for the benefit
of, and shall be enforceable directly by, the holders of the Senior Indebtedness
of the Company.
Section 10.05 Authorization to Trustee to Take Action to Effectuate
Subordination. Without purporting to limit the authority of the Trustee as may
be appropriate in other circumstances, each Securityholder by his acceptance
thereof irrevocably authorizes and expressly directs the Trustee on his behalf
of take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article X and appoints the Trustee his attorney-
in-fact for such purpose, including, in the event of any dissolution, winding-up
or liquidation or reorganization of the Company (whether in bankruptcy,
insolvency or receivership proceedings or otherwise), the timely filing of a
claim for the unpaid balance of his Securities in the form required in such
proceedings and the causing of such claim to be approved. If the Trustee does
not file a proper claim or proof of debt in the form required in such
proceedings prior to 30 days before the expiration of the time to file such
claims or proofs, then any of the holders of Senior Indebtedness have the right
to demand, sue for, collect, receive and receipt for the payments and
distributions in respect of the Securities which are required to be paid or
delivered to the holders of Senior Indebtedness as provided in this Article X,
and to file and prove all claims therefor and to take all such other action in
the name of the Securityholders or otherwise, as any such holder of senior
Indebtedness or such holder's Representative may determine to be necessary or
appropriate for the enforcement of the provisions of this Article X.
Section 10.06 Subrogation. Upon the payment in full of all amounts
payable under or in respect of the Senior
-47-
<PAGE>
Indebtedness of the Company, the Securityholders shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company made on such Senior Indebtedness until
the Securities shall be paid in full; and for the purposes of such subrogation,
no payments or distributions to holders of such Senior Indebtedness of any cash,
property or securities to which Securityholders would be entitled except for the
provisions of this Article X and no payment over pursuant to the provisions of
this Article X to holders of such Senior Indebtedness by the Securityholders,
shall, as between the Company, its creditors other than holders of such Senior
Indebtedness and the Securityholders, be deemed to be a payment by the Company
to or on account of such Senior Indebtedness, it being understood that the
provisions of this Article X are solely for the purpose of defining the relative
rights of the holders of such Senior Indebtedness, on the one hand, and the
Securityholders, on the other hand.
If any payment or distribution to which the Securityholders would
otherwise have been entitled but for the provisions of this Article X shall have
been applied, pursuant to the provisions of this Article X, to the payment of
all amounts payable under the Senior Indebtedness of the Company, then and in
such case, the Securityholders shall be entitled to receive from the holders of
such Senior Indebtedness at the time outstanding any payments or distributions
received by such holders of Senior Indebtedness in excess of the amount
sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness of the Company in full.
Section 10.07 Obligations of Company Unconditional. Nothing contained
in this Article X or elsewhere in this Indenture or in any security is intended
to or shall 'impair, as between the Company and the Securityholders, the
obligations of the Company, which are absolute and unconditional, to pay to the
Securityholders the principal of and interest on the Securities as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Securityholders and creditors of
the Company other than the holders of Senior Indebtedness or prevent the Trustee
or any Securityholder from exercising all remedies otherwise permitted by
applicable law upon the occurrence of an Event of Default under this Indenture,
subject to the rights, if any, under this Article X of the holders of such
Senior Indebtedness in respect of cash, property or securities of the company
received upon the exercise of any such remedy.
-48-
<PAGE>
Section 10.08 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice. The Trustee shall not at any time be charged with the
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee, unless and until three Business Days after the
Trustee shall have received written notice thereof from the Company or one or
more holders of Senior Indebtedness of the Company or from any trustee or agent
therefor; and, prior to such time the Trustee shall be entitled to assume
conclusively that no such facts exist. Nothing contained in this Section shall
limit the right of the holders of Senior Indebtedness of the Company to recover
payments as contemplated by Section 10.02. The Trustee shall be entitled to rely
on the delivery to it of a written notice by a Person representing himself to be
a holder of such Senior Indebtedness (or a Representative on behalf of such
holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or a Representative on behalf of any such holder.
Section 10.09 Right of Trustee to Hold Senior Indebtedness. The
Trustee shall be entitled to all of the rights set forth in this Article X in
respect of any Senior Indebtedness of the Company at any time held by it to the
same extent as any such holder of such Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
Section 10.10 Modification of Terms of Senior Indebtedness. Any
renewal or extension of the time of payment of any Senior Indebtedness or the
exercise by the holders of Senior Indebtedness of any of their rights under any
instrument creating or evidencing Senior Indebtedness including, without
limitation, the waiver of default thereunder, may be made or done without notice
to or assent from the Securityholders or the Trustee.
No compromise, alteration, amendment, modification, extension, renewal
or other change of, or waiver, consent or other action in respect of, any
liability or obligation under or in respect of any Senior Indebtedness or of any
of the terms, covenants, or conditions of any indenture or other instrument
under which any Senior Indebtedness is outstanding, whether or not such release
is in accordance with the provisions of any applicable document, shall in any
way alter or affect any of the provisions of this Article X or of the Securities
relating to the subordination thereof.
Section 10.11 Trustee's Undertaking to Holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee undertakes to
perform or to observe
-49-
<PAGE>
only such of its covenants and obligations as are specifically set forth in this
Article X, and no implied covenants or obligations with respect to the holders
of Senior Indebtedness shall be read into this Indenture against the Trustee.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and the Trustee shall not be liable to any holder of Senior
Indebtedness if it shall mistakenly pay over or deliver to Securityholders, the
Company or any other person monies or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article X or otherwise.
Section 10.12 Article X Not to Prevent Events of Default. The failure
to make a payment on account of principal or interest on the Securities by
reason of any provision in this Article X shall not be construed as preventing
the occurrence of any Event of Default under Section 6.01.
Section 10.13 Officers' Certificate. If there occurs an event referred
to in Section 10.02(a), (b) or (c), the Company shall promptly give to the
Trustee an officers' Certificate (on which the Trustee may conclusively rely)
identifying all holders of Senior Indebtedness and the principal amount of
Senior Indebtedness then outstanding held by each such holder and stating the
reasons why such Officers' Certificate is being delivered to the Trustee.
Section 10.14 Paying Agents Other Than the Trustee. In case at any
time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term "Trustee" as used in this Article
X shall in such case (unless the context shall otherwise require) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article X in
addition to or in place of the Trustee.
Section 10.15 Benefits of Indenture. Nothing in this Indenture or in
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the holders of Senior
Indebtedness and the Securityholders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
ARTICLE XI
SECURITY
Section 11.01 Pledge Agreement. In order to secure the due and
punctual payment of the principal of and interest
-50-
<PAGE>
on the Securities when and as the same shall be due and payable, whether on an
interest payment date, at maturity or otherwise, and interest on the overdue
principal of and interest, if any, on the Securities and performance of all
other obligations of the Company to the Holders or the Trustee under this
Indenture and the Securities, according to the terms hereunder or thereunder,
the Company will pledge and grant a security interest in and to all of its
right, title and interest in and to the Pledged Shares pursuant to the Pledge
Agreement and to the extent therein provided no later than the date of the first
issuance of the Securities hereunder. At the time the Security Documents are
executed, the Company will have full right, power and lawful authority to grant,
bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm, absolutely, the property constituting the Pledged Collateral, in
the manner and form done, or intended to be done, in the Security Documents,
free and clear of all Liens, except the lien created by the Security Documents,
and
(a) will forever warrant and defend the title to the same against
the claims of all Persons whatsoever,
(b) will execute, acknowledge and deliver such further
assignments, transfers, assurances or other instruments as may be
required and
(c) will do or cause to be done all such acts and things as may
be necessary or proper to assure and confirm to the Trustee the
security interest in the Pledged Collateral contemplated hereby and by
the Security Documents, or any part thereof, as from time to time
constituted, so as to render the same available for the security and
benefit of this Indenture and of the Securities secured hereby in
accordance with the terms of the Security Documents, according to the
intent and purposes expressed herein and in the Security Documents.
The Security Documents will create a direct and valid first-priority
lien an the property constituting the Pledged Collateral, as set forth
in the Security Documents.
Section 11.02 Recording, Etc. The Company will cause, at its own
expense, the Security Documents, this Indenture and all amendments or
supplements thereto to be registered, recorded and filed or re-recorded, re-
filed and renewed in such manner and in such place or places, if any, as may be
required by law in order fully to preserve and protect the first priority liens
of the Security Documents in and to the Pledged Collateral and to effectuate and
preserve the security of the Securityholders and all rights of the Trustee. The
Company shall furnish to the Trustee:
-51-
<PAGE>
(1) promptly upon the execution and delivery of this Indenture
and the Security Documents, an opinion of Counsel stating that, in the
opinion of such counsel, this Indenture, the Security Documents and
the assignment of the Pledged Collateral intended to be made by the
Security Documents has been delivered, recorded, registered and filed
to the extent required to create and perfect the lien purported to be
created by the Security Documents and this Indenture, and reciting the
details of such action or referring to prior opinions of Counsel in
which such details are given, and stating that no further delivery,
recording, registering or filing is necessary to maintain the priority
thereof as a direct and valid first priority lien on the Pledged
Collateral (so long as the Pledged Collateral continue to be held by
the pledgee, under the terms and provisions of the Security Documents)
and further stating that all financing statements and mortgages have
been executed and filed that are necessary to fully preserve and
protect the rights of the Securityholders and the Trustee hereunder
and under the Security Documents.
(2) at each time the Company delivers to the Trustee an annual
report in accordance with Section 4.02, an opinion of Counsel, dated
no more than 15 days prior to such delivery, either:
(i) stating that, in the opinion of such counsel, such
action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of this
Indenture, all supplemental indentures, mortgages, financing
statements, continuation statements or other instruments of
further assurance as is necessary to maintain the lien of the
Security Documents and this Indenture and reciting the details of
such action or referring to prior opinions of Counsel in which
such details are given, and stating that all mortgages, financing
statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the rights
of the Securityholders and the Trustee hereunder and under the
Security Documents, or
(ii) stating that, in the opinion of such counsel, no such
action is necessary to maintain such lien and assignment.
-52-
<PAGE>
To the extent applicable, the Company shall cause TIA Section 314(d)
relating to the release of property from the lien of the Security Documents to
be complied with. Any certificate or opinion required by TIA Section 314(d) may
be made by an officer of the Company except in cases in which TIA Section 314(d)
requires that such certificate or opinion be made by an independent Person.
Section 11.03 Suits to Protect the Collateral. Subject to the
provisions of the Pledge Agreement and this Indenture, the Trustee shall have
power to institute and to maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Pledged Collateral by any acts which
may be unlawful or in violation of the Security Documents or this Indenture, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders in the Pledged Collateral
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of or compliance with, such enactment, rule or order would
impair the security hereunder or be prejudicial to the interests of the Holders
or the Trustee).
Section 11.04 Authorization of Receipt of Funds by Trustee under the
Security Documents. The Trustee is authorized to receive any funds for the
benefit of Holders distributed under the Security Documents, and make further
distributions of such funds to the Holders according to the provisions of this
Indenture.
Section 11.05 Certain Sales, Exchanges, Etc.; Purchase Offer.
(a) Notwithstanding anything to the contrary in this Article XI or
elsewhere in the Indenture or the Securities, the Company may, from time to
time, without the approval of the Holders or the Trustee, sell, exchange or
otherwise dispose of (i) the Pledged Shares, (ii) the ATP Notes, or (iii)
substantially all of the assets of, or merge or consolidate, General Plasma, to
or with any other Person (each, an "Allowed Transaction") on the terms and
conditions of this Section 11.05 and of Section 11.06.
(b) If the Company shall engage in an Allowed Transaction in which it
receives Net Proceeds, it shall make an offer (the "Transaction Purchase Offer")
no later than 90 days following such Transaction to all Holders to apply not
less than 75% of such Net Proceeds to purchase an amount of securities at a
price which shall be equal to 100% of the
-53-
<PAGE>
principal amount thereof plus accrued interest (such aggregate purchase price
being the "Allowed Transaction Payment"). The Company shall mail notice of the
Transaction Purchase Offer to all Holders at their last registered address. The
notice, which shall govern the terms of the Transaction Purchase offer, shall
state:
(1) that the offer is being made pursuant to Section 11.05 of
this Indenture;
(2) the Allowed Transaction Payment, the purchase price
(including the amount of accrued interest) and the date of payment of
the Allowed Transaction Payment;
(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that, unless the Company defaults in the making of the
Allowed Transaction Payment, any Security accepted for payment
pursuant to such offer shall cease to accrue interest after the date
of payment of the Allowed Transaction Payment;
(5) that Holders electing to have a Security purchased pursuant
to the Transaction Purchase Offer will be required to surrender the
Security to a specified tender or exchange agent at the address
specified in the notice at least five days before the date of payment
of the Allowed Transaction Payment and must complete any form letter
of transmittal proposed by the Company and acceptable to the Trustee;
(6) that Holders will be entitled to withdraw their election if
the tender or exchange agent receives, not later than three days prior
to the date of payment of the Allowed Transaction Payment, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security the Holder delivered for
purchase and a statement that such Holder is withdrawing his election
to have the Security purchased;
(7) that if Securities in a principal amount (plus accrued
interest) in excess of the Allowed Transaction Payment are tendered
pursuant to the Transaction Purchase Offer, the Company shall purchase
Securities on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that
-54-
<PAGE>
only Securities in denominations of $1,000 or integral multiples of $1,000
shall be acquired); and
(8) that Holders whose Securities were purchased only in part
will be issued new securities equal in principal amount to the
unpurchased portion of the Securities.
Before the date of payment of the Allowed Transaction Payment, the
Company shall (i) accept for payment Securities or portions thereof tendered
pursuant to such offer (on a pro rata basis if required pursuant to paragraph
(7) above), (ii) deposit with the Paying Agent money sufficient (together with
any and all Net Proceeds then held by the Trustee and applicable to the Allowed
Transaction Payment pursuant to paragraph (c) hereof) to pay the purchase price
of all Securities or portions thereof so accepted and (iii) deliver to the
Trustee Securities so accepted together with an Officers' Certificate stating
the Securities or portions thereof accepted for payment by the Company. The
Paying Agent shall promptly mail or deliver to Holders of Securities so accepted
payment in an amount equal to the purchase price, and the Company shall execute
and the Trustee shall promptly authenticate and mail or deliver to such Holders
a Security equal in principal amount to any unpurchased portion of the
Securities surrendered. Any Securities not so accepted shall be promptly mailed
or delivered by the Company to the Holder thereof. The Company will publicly
announce the results of any Transaction Purchase offer on the date of payment of
the Allowed Transaction Payment. For purposes of this Section, the Trustee shall
act as the Paying Agent.
(c) Notwithstanding the foregoing provisions of paragraph (a) of this
Section 11.05, in the event that the Allowed Transaction involves the sale,
exchange or other disposition of any of the Pledged Shares or other Pledged
Collateral, any and all Net Proceeds and Non-Cash Proceeds of such Allowed
Transaction shall be deposited and pledged by the Company with the Trustee
immediately upon receipt thereof as additional Pledged Collateral hereunder, to
be held by the Trustee subject to the provisions of this Article XI and the
Security Documents; provided, however, that in the event that the Company shall
make any Transaction Purchase Offer required by paragraph (b) of this Section
11.05, the Trustee shall, upon receipt of an Officers' Certificate and/or such
other evidence satisfactory to it that the Company has complied with the
provisions of this Section 11.05 in connection with such Transaction
Purchase offer, apply and cause to be delivered to Holders of Securities, for
application against and as part of the Allowed Transaction Payment, as provided
in such
-55-
<PAGE>
paragraph (b), such amount of such Net Proceeds as shall be requested by the
Company. Promptly following the making of the Allowed Transaction Payment in
accordance with the provisions of such paragraph (b), the Company shall be
entitled to obtain the release from the lien of this Indenture of any and all
amounts of Net Proceeds theretofore deposited with the Trustee in connection
with such Allowed Transaction and not applied against the Allowed Transaction
Payment (such amounts being referred to herein as "Excess Net Proceeds") upon
compliance with the provisions of paragraph (b) of Section 11.06 hereof.
Section 11.06 Pledge of Non-Cash Proceeds and Release of Pledged
Shares and Excess Net Proceeds.
(a) Subject to the provisions of the Security Documents, the Company
shall from time to time, promptly upon receipt thereof, cause to become Pledged
Collateral hereunder any and all Non-cash Proceeds received upon an Allowed
Transaction and shall be entitled to obtain the release of all or a portion of
the Pledged Shares from the lien of the Indenture upon the occurrence of an
Allowed Transaction involving the sale, exchange or other disposition of the
Pledged Shares to be so released, upon satisfaction of the following conditions
precedent:
(1) in the case of any proposed release from the lien of the
Indenture of any Pledged Shares, the Company shall deliver to the
trustee a certificate or opinion which shall be made by an independent
appraiser, as required by Section 314(d) of the TIA, as to the fair
value of the Pledged Shares proposed to be so released, dated as of a
date no more than 30 days prior to the date of any release, and such
certificate or opinion shall state that the proposed release of such
Pledged Shares will not impair the security interest hereunder or
under the Security Documents in contravention of the provisions hereof
or thereof;
(2) in the event of an Allowed Transaction involving Non-Cash
Proceeds, the Company shall have delivered a written notice to the
Trustee that the Company intends to substitute any and all Non-Cash
Proceeds for all or a portion of the Pledged Shares;
(3) the Company shall deliver to the Trustee an Opinion of
Counsel, stating the legal effect of any action under this Section
11.06, the steps necessary to consummate the same and to perfect the
Trustee's first priority security interest in any and all
-56-
<PAGE>
Non-Cash Proceeds and that such action will not be in contravention of
the provisions hereof or of the Security Documents;
(4) the Company shall deliver to the Trustee all necessary
documentation in order to substitute as security for the Secured
Obligations (as such term is defined in the Pledge Agreement) any and
all such Non-Cash Proceeds;
(5) the Company shall deliver to the Trustee releases of any
Liens that are to be released in connection with the substitution as
collateral of Non-Cash Proceeds received upon such transaction, if
any, in proper and recordable form so that the Trustee shall have a
fully perfected first priority security interest in such Non-Cash
Proceeds; and
(6) at the time of the substitution or release of the Pledged
Collateral, no Event of Default has occurred or is continuing.
(b) Subject to the provisions of the Security Documents, the Company
shall from time to time be entitled to obtain the release of any and all Excess
Net Proceeds from the lien of the Indenture following an Allowed Transaction and
Allowed Transaction Payment upon satisfaction of the following conditions
precedent:
(1) the Company shall have completed an Allowed Transaction in
compliance with the provisions of paragraph (b) of Section 11.05 and
shall have made the Allowed Transaction Payment in accordance with the
terms thereof, and the Company shall so certify in an Officers'
Certificate delivered to the Trustee;
(2) if such Transaction required the pledging of Non-Cash
Proceeds as Pledged Collateral under paragraph (a) of this Section
11.06, the Company shall have complied with the provisions in
connection therewith and the company shall so certify in an Officers'
Certificate delivered to the Trustee;
(3) if and as required by Section 314(d) of the TIA, the Company
shall deliver to the Trustee a certificate or opinion of an
independent expert, which certificate or opinion shall state that in
the opinion of such expert the proposed release will not impair the
security of this Indenture in contravention of the provisions thereof;
and
-57-
<PAGE>
(4) at the time of the release of Excess Net Proceeds, no Event
of Default has occurred or is continuing.
(c) The Holders, by their acceptance of the Securities, and the
Trustee acknowledge that the release of the Pledged Collateral pursuant to this
Section 11.06 does not impair the security interests hereunder or under the
Security Documents in contravention of the provisions hereof or thereof.
Section 11.07 Termination of Security Interest. Upon the payment in
full of all obligations of the Company under this Indenture and the Securities
or upon the provision for the payment thereof in accordance with Article VIII,
the Trustee shall, at the request of the Company together with an Officers'
Certificate to such effect, take all action necessary to release the lien of
this Indenture in and to all Pledged Collateral and shall re-deliver to the
Company any and all such Collateral then held by the Trustee.
ARTICLE XII
CONVERSION
Section 12.01 Conversion Privilege. A Holder of a Security may convert
it into shares of Common Stock at any time during the period stated in paragraph
8 of the Securities; except that if a Security is called for redemption, a
Holder may convert it at any time before the close of business on the date which
is fifteen business days before the date fixed for redemption.
The initial conversion rate and certain conditions of conversion are
stated in paragraph 8 of the Securities. The conversion price is subject to
adjustment. See Sections 12.06 through 12.12.
A Holder may convert a portion of a Security if the portion is $1,000
or an integral multiple of $1,000. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of it.
Section 12.02 Conversion Procedure. To convert a Security a Holder
must satisfy the requirements in paragraph 8 of the Securities. The date on
which the Holder satisfies all those requirements is the conversion date. As
soon as practicable after the conversion date, the Company shall deliver to the
Holder through the Conversion Agent a certificate for the number of full shares
of Common Stock
-58-
<PAGE>
issuable upon the conversion and a check for any fractional share. The person in
whose name the certificate is registered becomes a stockholder of record on the
conversion date.
No payment or adjustment will be made for original issue discount or
accrued interest on a converted Security (except as provided in paragraph 8 of
the Securities) or for dividends or distributions on shares of Common Stock
issued upon conversion of a Security.
If a holder of a Security surrenders the Security for conversion
during the period from the close of business on the record date next preceding
any interest payment date to the opening of business on such interest payment
date, the Security must be accompanied by payment of an amount equal to the cash
interest payable on such interest payment date on the principal amount of the
Security then being converted.
The conversion rate shall not be adjusted at any time during the term
of a Security for accrued original issue discount.
If a Holder converts more than one Security at the same time, the
number of full shares issuable upon the conversion shall be based on the total
principal amount of the Securities converted.
Upon surrender of a Security that is converted in part, the Company
shall execute and the Trustee shall deliver and authenticate for the Holder a
new Security equal in principal amount of the unconverted portion of the
Security surrendered.
If the last day on which a Security may be converted is a Legal
Holiday in a place where a Conversion Agent is located, the Security may be
surrendered to that Conversion Agent on the next succeeding day that is not a
Legal Holiday.
Section 12.03 Fractional Shares. The Company will not issue a
fractional share of Common Stock upon conversion of a Security. Instead, the
Company will deliver its check based on the Closing Market Price of the Common
Stock on the last trading date prior to the date of conversion of a fractional
share. The Closing Market Price of a fraction of a share is determined as
follows: multiply the Closing Market Price of a full share by the fraction and
round the result to the nearest cent.
Section 12.04 Taxes on Conversion. If a Holder of a Security converts
it, the Company shall pay any documentary
-59-
<PAGE>
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion. The Holder, however, shall pay any such tax which is
due because the shares are issued in a name other than his.
Section 12.05 Company to Provide Stock. The Company shall reserve out
of its authorized but unissued shares of Common Stock or its shares of Common
Stock held in treasury sufficient shares of Common Stock to permit the
conversion of the Securities at all times.
All shares of Common Stock which may be issued upon conversion of the
Securities shall be validly issued, fully paid and nonassessable.
In order that the Company may issue shares of Common Stock upon
conversion of the Securities, the Company will endeavor to comply with all
applicable Federal and State securities laws and will endeavor to list such
shares on each national securities exchange on which the Common Stock is listed
or have such shares of Common Stock approved for quotation through the National
Association of Securities Dealers National Market System ("NMS").
Section 12.06 Adjustment for Change in Capital Stock. If the Company:
(1) pays a dividend in shares of its Common Stock to holders of
Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) pays a dividend on its Common Stock in shares of its capital
stock other than Common Stock or makes a distribution on its Common
Stock in shares of its capital stock other than Common Stock; or
(5) issues by reclassification of its shares of Common Stock any
shares of its capital stock;
then the conversion privilege and the conversion price in effect immediately
prior to such action shall be adjusted so that the Holder of any Security
thereafter converted may receive the number of shares of capital stock of the
Company which such Holder would have owned immediately following such action if
such Holder had converted the Security immediately prior to such action.
-60-
<PAGE>
For a dividend or distribution, the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision, combination
or reclassification.
If after an adjustment a Holder of a Security upon conversion of it
may receive shares of two or more classes of capital stock of the Company, the
Board of Directors shall determine the allocation of the adjusted conversion
price between or among the classes of capital stock. After such allocation, the
conversion price of the classes of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Indenture.
Section 12.07 Adjustment for Rights Issue. If the Company issues any
rights or warrants to all or substantially all holders of shares of its Common
Stock entitling them after the record date mentioned below to purchase shares of
Common Stock (or securities convertible into shares of Common Stock) at a price
per share (or having a conversion price per share) less than the Closing Market
Price per share on that record date, the conversion price shall be adjusted in
accordance with the formula:
N x P
-----
C' = C x O + M
-----
O + N
where:
C' = the adjusted conversion price
C = the then current conversion price
O = the number of shares of Common Stock outstanding on the record
date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the Closing Market Price per share of Common Stock on the record
date.
The adjustment shall be made successively whenever any such rights or
warrants are issued, and shall become effective immediately after the record
date for the determination of
-61-
<PAGE>
stockholders entitled to receive the rights or warrants. if all of the shares of
Common Stock or securities convertible into shares of Common Stock subject to
such rights or warrants have not been issued when such rights or warrants
expire, then the conversion rate shall promptly be readjusted to the conversion
rate which would then be in effect had the adjustment upon the issuance of such
rights or warrants been made on the basis of the actual number of shares of
Common Stock (or securities convertible into shares of Common Stock) issued upon
the exercise of such rights or warrants.
Section 12.08 Adjustment for other Distributions. If the Company
distributes to all or substantially all holders of shares of its Common Stock
any assets or general evidences of indebtedness or any rights or warrants to
purchase assets or general evidences of indebtedness of the Company, then the
conversion price shall be adjusted in accordance with the formula:
C' = C x (O x M) - F
-----------
(O x M)
where:
C' = the adjusted conversion price.
C = the then current conversion price.
O = the number of shares of Common Stock outstanding on the record
date mentioned below.
M = the Closing Market Price per share of Common Stock on the record
date mentioned below.
F = the fair market value on the record date as determined by the
Board of Directors of the assets or general evidences of
indebtedness distributed.
The adjustment shall be made successively whenever any such
distribution is made, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This Section does not apply to cash dividends or cash distributions to
which Section 4.13 applies. Also, this Section does not apply to rights or
warrants referred to in Section 12.07.
Section 12.09 Mandatory Adjustment. Notwithstanding any other
provisions of this Article XII, in the event that at July 31, 1991, the
conversion price shall be greater than 150%
-62-
<PAGE>
of the average Closing Market Price of the Common Stock for the thirty (30)
consecutive trading days ending on or immediately prior to such date, then,
effective as of the following August 1, the conversion price shall be reduced to
150% of such average Closing Market Price; provided, however, that in no event
shall the conversion price be reduced hereby to less than $3.00 per share.
Section 12.10 Voluntary Adjustment. The Company at any time may
decrease the conversion price, temporarily or otherwise, by any amount but in no
event shall such conversion price result in the issuance of Common Stock at a
price less than the par value of the Common Stock at the time such decrease is
made. Any such decreased conversion price shall be available for at least 20
days from the date on which notice of such decrease is filed with the Trustee
pursuant to Section 12.13 hereof, and such decrease shall be irrevocable during
such period. The Company shall notify Securityholders at least 15 days prior to
the date on which the reduced conversion price takes effect.
Section 12.11 When Adjustment May Be Deferred. No adjustment in the
conversion price need be made unless cumulative adjustments equal at least $.25.
Any adjustments which are not made shall be carried forward and taken into
account in any subsequent adjustment. No adjustment of the conversion price will
be made for cash distributions or cash dividends paid out of current or
undistributed net income or retained earnings.
All calculations under this Article XII shall be made to the nearest
cent or to the nearest 1/1000th of a share, as the case may be.
Section 12.12 When Adjustment is Not Required. Except as set forth in
Section 12.07, no adjustment in the conversion price shall be made because the
Company issues, in exchange for cash, property or services, shares of Common
Stock or any securities convertible into or exchangeable for shares of Common
Stock or securities carrying the right to purchase shares of Common Stock or
such convertible or exchangeable securities.
Furthermore, no adjustment in the conversion price need be made under
this Article XII for the sale of shares of Common Stock pursuant to a Company
plan providing for reinvestment of dividends or interest or in the event the par
value of the Common Stock is changed.
-63-
<PAGE>
Section 12.13 Notice of Adjustment. Whenever the conversion price is
adjusted, the Company shall calculate the adjustment to be made and shall
promptly mail Securityholders a notice of the adjustment and file with the
Trustee an officers, Certificate briefly stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence that the adjustment is correct, absent manifest error.
Section 12.14 Notice of Certain Transactions. If:
(1) the Company takes any action which would require an
adjustment in the conversion price;
(2) the Company proposes to consolidate with or merge with or
into, or transfer all or substantially all or its assets to, another
corporation; or
(3) there is a proposed dissolution or liquidation of the
Company,
a Holder of a Security may desire to convert it into shares of Common Stock
prior to the record date for or the effective date of the transaction so that he
may receive the rights, warrants, securities or assets which a holder of shares
of Common Stock on that date may receive. Therefore, the Company shall mail to
Securityholders and the Trustee a notice stating any such proposed record or
effective date, as the case may be, by first-class mail at least 15 days before
such date. Failure to mail the notice or any defect in it shall not affect the
validity of any transaction referred to in clause (1), (2) or (3) of this
Section.
Section 12.15 Consolidation, Merger or Sale of the Company. If the
Company is a party to a transaction described in Section 5.01 or a merger which
reclassifies or changes its outstanding Common Stock, the successor corporation
(or corporation controlling the successor corporation or the Company, as the
case may be) shall enter into a supplemental indenture. The supplemental
indenture shall provide that the Holder of a Security may convert it into the
kind and amount of securities or cash or other assets which he would have owned
immediately after the consolidation, merger or transfer if he had converted the
Security immediately before the effective date of such transaction. The
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this Article
XII. The successor corporation shall mail by first-class mail to each
Securityholder a notice describing the supplemental indenture.
-64-
<PAGE>
If this Section applies, Sections 12.06, 12.07 and 12.08 shall not
apply.
Section 12.16 Company Determination Final. Any determination which the
Board of Directors must make pursuant to Sections 12.03, 12.06 or 12.08 is
conclusive, absent manifest error.
Section 12.17 Trustee's Disclaimer. The Trustee has no duty to
determine when an adjustment under this Article XII should be made, how it
should be made or what it should be. The Trustee has no duty to determine
whether any provisions of a supplemental indenture under Section 12.15 are
correct. The Trustee makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities. The Trustee shall not
be responsible for the Company's failure to comply with this Article XII.
Section 12.18 No Conversion Under Certain Circumstances.
Notwithstanding any other provision of this Article XII or the Securities,
without the prior written consent of a majority of the Continuing Directors, no
Holder may convert Securities into shares of Common Stock if and so long as such
Holder, along with all other persons constituting a group (within the meaning of
Section 13(d)(3) of the Exchange Act) with such Holder, together with any
affiliates and associates thereof, beneficially owns (within the meaning of Rule
13d-3 (or successor provision or provisions) under the Exchange Act, which
includes shares of Common Stock which such Holder has a right to acquire within
sixty (60) days) more than an aggregate of 20% of the shares of Common Stock
(computed as provided in said Rule).
ARTICLE XIII
MISCELLANEOUS
Section 13.01 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
Section 13.02 Notices. Any notice or communication by the Company or
the Trustee to the other is duly given if in writing and delivered in person or
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
-65-
<PAGE>
if to the Company:
The Alpine Group, Inc.
Three University Plaza
Hackensack, New Jersey 07601
Attention: Chairman
if to the Trustee:
IBJ Schroder Bank & Trust
Company
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Fourteenth Floor
The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications. Any notice or
communication to the Company or the Trustee shall be deemed to have been given
or made as of the date so delivered if personally delivered; when answered back,
if telexed; when receipt is acknowledged, if telecopied; and five calendar days
after mailing if sent by registered, certified or first-class mail, postage
prepaid (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee).
Any notice or communication to a Securityholder shall be mailed by
first-class mail, postage prepaid, or other equivalent means to his address
shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it. If the Company mails a notice or communication to Securityholders,
it shall mail a copy to the Trustee and each Agent at the same time.
All notices or communications shall be in writing.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
-66-
<PAGE>
Section 13.03 Communications by Holders with other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 13.04 Certificate and opinion as to Conditions Precedent. Upon
any request or application by the Company or any other obligor upon the
Securities to the Trustee to take any action under this Indenture, the Company
or such obligor, as the case may be, shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel reasonably satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Section 13.05 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that each party making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such party, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
party, such condition or covenant has been complied with;
provided, however, that with respect to matters of law, an Officers' Certificate
may be based upon an opinion of Counsel, unless the signers know, or in the
exercise of reasonable care
-67-
<PAGE>
should know, that such Opinion of Counsel is erroneous, and provided, further,
that with respect to matters of fact an Opinion of Counsel may rely on an
officers' Certificate or certificates of public officials, unless the signer
knows, or in the exercise of reasonable care should know, that any such document
is erroneous.
Section 13.06 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or a meeting of Securityholders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.
Section 13.07 Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions in the State of New York are not
required to be open. If a payment date is a Legal Holiday at a place of payment,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section 13.08 No Recourse Against Others. All liability described in
the Securities of any director, officer, employee or stockholder, as such, of
the Company is waived and released.
Section 13.09 Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
Section 13.10 Governing Law. The internal laws of the State of New
York shall govern this Indenture and the Securities, without regard to the
conflicts of laws rules thereof.
Section 13.11 No Adverse Interpretation of other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 13.12 Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successors.
-68-
<PAGE>
Section 13.13 Severability. In case any provision in this Indenture or
in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SIGNATURES:
Dated: THE ALPINE GROUP, INC.
Attest: By:
---------------------------
Title:
---------------------------
Dated: IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
Attest: By:
---------------------------
Title:
---------------------------
<PAGE>
EXHIBIT 10(k)
AMENDED AND RESTATED
DEBT EXCHANGE AGREEMENT
[CONFORMED AND ANNOTATED COPY AS OF APRIL 14, 1995]
AGREEMENT, dated as of October 11, 1994, between those persons whose
names are listed on Exhibit A hereto, or whose names are added to Exhibit A
after the date hereof, and who have executed a signature page to this Agreement
(the "NOTEHOLDERS") and The Alpine Group, Inc., a Delaware corporation with
offices at 1790 Broadway, New York, New York 10019 ("ALPINE").
R E C I T A L S
Each of the Noteholders owns the respective principal amount of 11%
Senior Secured Notes due 2002 (the "ADIENCE SENIOR NOTES"), of Adience, Inc., a
Delaware corporation ("ADIENCE"), set forth opposite its name on Exhibit A
hereto; and
Each of the Noteholders desires to transfer and assign to Alpine, and
exchange its Adience Senior Notes for the consideration hereinafter described,
and Alpine desires to acquire such Adience Senior Notes and effect such exchange
as further described and subject to the terms and conditions contained in this
Agreement;
THEREFORE, for and in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES OF ADIENCE SENIOR NOTES
1.01 TRANSFER AND EXCHANGE. Subject to and in accordance with the
terms and conditions of this Agreement, on the Closing Date (as hereinafter
defined) each of the Noteholders shall transfer and deliver to Alpine, and
Alpine shall acquire from each of the Noteholders, for the consideration
hereinafter described, the respective aggregate principal amount of Adience
Senior Notes set forth opposite such Noteholder's name on Exhibit A hereto.
1.02 THE CLOSING; EFFECTIVENESS.
(a) The closing of the transfer and exchange of the
<PAGE>
Adience Senior Notes (the "CLOSING") shall take place at the offices of
Proskauer Rose Goetz & Mendelsohn, 1585 Broadway, New York, New York 10036
following satisfaction or, if permissible pursuant to the terms and conditions
of this Agreement, waiver, of the conditions set forth in Article IV and on the
same day on which the Concurrent Transactions (as hereinafter defined) occur
(the time and date of the Closing being herein referred to as the "CLOSING
DATE"); provided, however, that if the Closing shall not have occurred on or
prior to June 30, 1995, Alpine or any Noteholder, as the case may be, may
terminate this Agreement on notice to the Noteholders or Alpine, as the case may
be. As used herein, "BUSINESS DAY" shall mean any day other than Saturday,
Sunday, or any other day when banks in New York City are required or permitted
by law or other governmental actions to be closed.
(b) Notwithstanding anything to the contrary in this Agreement, this
Agreement shall be of no force or effect unless and until persons listed on
Exhibit A or whose names are added to Exhibit A after the date hereof holding
Adience Senior Notes representing an aggregate principal amount of at least
$42,500,000 (unless Noteholders holding a majority of the principal amount of
Adience Senior Notes held by all the Noteholders consent to a lesser amount)
have executed this Agreement as Noteholders, at which time this Agreement shall
be binding on the parties. With respect to the Noteholders identified in
Exhibit E hereto, each party agrees to and acknowledges the limited liability
provisions set forth in such Exhibit.
1.03 DELIVERIES BY THE NOTEHOLDERS.
At the Closing, each of the Noteholders shall deliver to Alpine:
(a) certificates representing the Adience Senior Notes to be exchanged
by such Noteholder hereunder, duly endorsed in blank, in proper form for
transfer and in form satisfactory to counsel for Alpine.
1.04 DELIVERIES BY ALPINE. Alpine shall deliver or cause to be
delivered to each of the Noteholders, against delivery of the Adience Senior
Notes to be exchanged by such Noteholder hereunder, and in payment of all
accrued and unpaid interest on such Adience Senior Notes through the Closing
Date, the following:
(a) at the Closing, the amount of cash set forth opposite the name of
such Noteholder and designated therefor on Exhibit A, plus interest, if any, on
such amount (i) at the rate of five percent per annum from November 15, 1994
through March 31, 1995 and (ii) at the rate of eight percent per annum from
-2-
<PAGE>
April 1, 1995 through the Closing Date;
(b) at the Closing, a certificate registered in the name of such
Noteholder representing the number of shares set forth opposite the name of such
Noteholder on Exhibit A hereto, of 8% cumulative convertible preferred stock,
par value $1.00 per share (the "ALPINE 8% PREFERRED STOCK"), of Alpine, having
the rights, preferences, and limitations set forth in the Certificate of
Designations to be filed with the Delaware Secretary of State, a form of which
is attached as Exhibit C hereto (the "CERTIFICATE OF DESIGNATIONS"); and
(c) if the merger (the "IDT MERGER") of Alpine Polyvision, Inc., a
Delaware corporation and a subsidiary of Alpine ("APV"), and Posterloid
Corporation, a Delaware corporation and a subsidiary of Alpine ("POSTERLOID"),
into wholly-owned subsidiaries of Information Display Technology, Inc., a New
York corporation ("IDT"), substantially on the terms described in the Offering
Memorandum (as hereinafter defined), has occurred, then at the Closing, and if
the IDT Merger has not occurred, then as soon as practicable after the
consummation of the IDT Merger, a certificate registered in the name of such
Noteholder representing the number, set forth on Exhibit A, of shares of common
stock, par value $.001 per share ("IDT COMMON STOCK"), of IDT; provided,
however, that if the IDT Merger is not consummated by June 30, 1995, then on
such date Alpine shall instead deliver to each Noteholder a certificate
registered in the name of such Noteholder representing the same number of shares
of Alpine 8% Preferred Stock as previously delivered to such Noteholder pursuant
to Section 1.04(b).
1.05 NO FRACTIONAL SHARES. Neither certificates nor scrip for
fractional shares of Alpine 8% Preferred Stock or IDT Common Stock will be
issued in connection with the transactions contemplated hereby, but in lieu
thereof each Seller otherwise entitled to a fraction of a share of Alpine 8%
Preferred Stock or IDT Common Stock under Section 1.04 shall be paid in cash an
amount equal to such fraction multiplied by (a) $50.00 (in the case of a
fractional share of Alpine 8% Preferred Stock) or (b) (in the case of a
fractional share of IDT Common Stock) the market price per share of IDT Common
Stock computed on the basis of the last sales price per share of IDT Common
Stock on the date immediately preceding the Closing Date (or if there is no such
sale on such date, the last sales price prior to such date).
1.06 CONSIDERATION RESET. (a) Subject to the terms and conditions of
this Section 1.06, if the average of the closing prices for IDT Common Stock on
each of the 20 trading days immediately preceding November 1, 1995 (the "Average
Market Value") is less than $2.24 per share, adjusted as appropriate for stock
splits, dividends payable in cash or property, and similar
-3-
<PAGE>
events or transactions with respect to IDT Common Stock between the date hereof
and November 1, 1995 (such amount, so as adjusted, is hereinafter referred to as
the "Target Value"), then Alpine will deliver to each Noteholder an amount of
consideration (the "Reset Consideration") equal to the number of shares of IDT
Common Stock acquired by such Noteholder pursuant to this Agreement and still
held by such Noteholder as of November 1, 1995, multiplied by the difference
between the Target Value and the greater of the Average Market Value and $0.75.
(b) Alpine shall deliver the Reset Consideration in Alpine 8%
Preferred Stock (valued at its liquidation preference) or IDT Common Stock
(valued at the Average Market Value), or a combination thereof, as Alpine may
determine in its sole discretion. Alpine shall deliver the Reset Consideration
no later than November 19, 1995, without interest.
(c) The provisions of this Section 1.06 shall be terminated and shall
be of no force or effect if the closing price of IDT Common Stock is greater
than or equal to the Target Value for at least 10 consecutive trading days
between the thirtieth day after the date the IDT Merger is consummated and
October 1, 1995, provided that during such period there is in effect a
registration statement under the Securities Act of 1933 (the "SECURITIES ACT")
permitting the sale of IDT Common Stock by the Noteholders.
(d) If the provisions of this Section 1.06 have not been terminated as
provided in Section 1.06(c), then between September 30, 1995, and October 1,
1995, (i) no Noteholder that owns any IDT Common Stock acquired pursuant to this
Agreement as of September 30, 1995, shall, with respect to any IDT Common Stock,
sell, sell short, sell a put option or enter into any agreement with respect to
the foregoing, and (ii) Alpine shall not with respect to any IDT Common Stock,
purchase, purchase an option to purchase or enter into any agreement with
respect to the foregoing. In the event of a breach of this provision by a
Noteholder, such Noteholder shall forfeit its right to receive the Reset
Consideration.
1.07 AMENDMENT OF INDENTURE. Simultaneously with the execution of
this Agreement, each of the Noteholders shall execute and deliver to Alpine a
consent, substantially in the form attached hereto as Exhibit D (the "Consent"),
to the amendment of the Indenture, dated as of June 30, 1993 (the "Indenture"),
relating to the Adience Senior Notes, as therein set forth. Alpine shall
deliver such Consents to the trustee (the "Trustee") under the Indenture at or
prior to the Closing.
-4-
<PAGE>
ARTICLE II
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF THE NOTEHOLDERS
Each of the Noteholders, severally and not jointly as to itself,
represents and warrants to, and agrees with, Alpine as follows:
2.01 VALIDITY OF TRANSACTION. Such Noteholder owns the principal
amount of Adience Senior Notes set forth opposite its name on Exhibit A. Such
Noteholder has all requisite power and authority to execute, deliver, and
perform this Agreement and to transfer to Alpine the Adience Senior Notes to be
transferred by such Noteholder pursuant hereto. All necessary corporate
proceedings or other similar actions by such Noteholder have been duly taken to
authorize the execution, delivery, and performance of this Agreement and to
authorize the transfer of the Adience Senior Notes to Alpine by such Noteholder.
This Agreement has been duly authorized, executed, and delivered by such
Noteholder, is the legal, valid, and binding obligation of such Noteholder, and
is enforceable as to such Noteholder in accordance with its terms, except as may
be limited by bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally, and subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law). No consent, authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any Federal, state, local, or
other governmental authority or of any court or other tribunal is required by
such Noteholder for the execution, delivery, or performance of this Agreement by
such Noteholder, except as would not affect the ability of the Noteholder to
perform any of its material obligations under this Agreement. No consent of any
party to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which such Noteholder is a party, or by which any of its
properties or assets is bound, is required for the execution, delivery, or
performance by such Noteholder of this Agreement, except for such consents as
have been obtained at or prior to the date of this Agreement, and except as
would not affect the ability of the Noteholder to perform any of its material
obligations under this Agreement. The execution, delivery, and performance of
this Agreement by such Noteholder will not violate, result in a breach of,
conflict with, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default under, any such
contract, agreement, instrument, lease, license, arrangement, or understanding,
or violate or result in a breach of any term of the Certificate of Incorporation
or by-laws (or other organizational document) of such Noteholder, or violate,
result in a breach of, or conflict with any law, rule, regulation,
-5-
<PAGE>
order, judgment, or decree binding on such Noteholder or to which any of its
operations, business, properties, or assets is subject, except as would not
affect the ability of the Noteholder to perform any of its material obligations
under this Agreement. Upon the transfer of the Adience Senior Notes to Alpine
at the Closing, Alpine will acquire good and valid title to such Adience Senior
Notes free and clear of all claims, liens, security interests, pledges, charges,
encumbrances (other than any created by Alpine).
2.02 FINDER OR BROKER. Neither such Noteholder nor any person acting
on behalf of such Noteholder has negotiated with any finder, broker,
intermediary, or similar person in connection with the transactions contemplated
hereby.
2.03 ACCREDITED INVESTOR. Such Noteholder is an "accredited
investor," as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933 (the "Securities Act"). Such Noteholder has received
all requested documents from Alpine, including without limitation, the
Confidential Offering Memorandum dated the date hereof relating to the Alpine 8%
Preferred Stock and the IDT Common Stock (the "OFFERING MEMORANDUM") and has had
an opportunity to ask questions of and receive answers from the officers of
Alpine with respect to the business, results of operations, financial condition,
and prospects of Alpine and IDT.
2.04 INVESTMENT INTENT. Such Noteholder is acquiring the shares of
Alpine 8% Preferred Stock and IDT Common Stock pursuant hereto for its own
account for investment and not with a view to, or for sale in connection with,
any public distribution thereof in violation of the Securities Act, it being
understood that Noteholder has the right to sell such shares in its sole
discretion. Such Noteholder understands that such shares of Alpine Preferred
Stock and IDT Common Stock, and the shares of common stock, par value $.01 per
share ("ALPINE COMMON STOCK"), into which the Alpine 8% Preferred Stock is
convertible (the "CONVERSION SHARES") have not been registered for sale under
the Securities Act or qualified under applicable state securities laws and that
the Alpine Preferred Stock, and the IDT Common Stock and the Conversion Shares
will be delivered to such Noteholder pursuant to one or more exemptions from the
registration or qualification requirements of such securities laws and that the
representations and warranties contained in this Article II are given with the
intention that Alpine may rely thereon for purposes of claiming such exemptions.
Such Noteholder understands that the Alpine 8% Preferred Stock, the IDT Common
Stock and the Conversion Shares cannot be sold unless registered under the
Securities Act and qualified under state securities laws, unless an exemption
from such registration and qualification is available.
-6-
<PAGE>
2.05 TRANSFER OF SHARES. Such Noteholder will not sell or otherwise
dispose of any Alpine 8% Preferred Stock, IDT Common Stock or Conversion Shares
unless (a) a registration statement with respect thereto has become effective
under the Securities Act and such shares have been qualified under applicable
state securities laws or (b) such registration and qualification are not
required and, if Alpine or IDT (as the case may be) so requests, there is
presented to Alpine or IDT a legal opinion reasonably satisfactory to Alpine or
IDT to such effect. Such Noteholder consents that the transfer agents for the
Alpine 8% Preferred Stock, the IDT Common Stock and the Alpine Common Stock may
be instructed not to transfer any Alpine 8% Preferred Stock, the IDT Common
Stock acquired pursuant hereto, or Conversion Shares unless it receives
satisfactory evidence of compliance with the foregoing provisions, and that
there may be endorsed upon any certificate representing the Alpine 8% Preferred
Stock, the IDT Common Stock acquired pursuant hereto, or the Conversion Shares
(and any certificates issued in substitution therefor) the following legend
calling attention to the foregoing restrictions on transferability and stating
in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFICATION
UNDER THE BLUE SKY LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR
OTHERWISE DISPOSED OF, BENEFICIALLY OR ON THE RECORDS OF THE
CORPORATION, UNLESS THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
AND QUALIFIED UNDER APPLICABLE BLUE SKY LAWS OR AN EXEMPTION
FROM SUCH REGISTRATION AND QUALIFICATION IS AVAILABLE."
Alpine shall, upon the request of any holder of a certificate bearing the
foregoing legend and the surrender of such certificate, issue a new certificate
without such legend if (i) the security evidenced by such certificate has been
effectively registered under the Securities Act and qualified under any
applicable state securities law and sold by the holder thereof in accordance
with such registration and qualification or (ii) such holder shall have
delivered to Alpine a legal opinion reasonably satisfactory to Alpine to the
effect that the restrictions set forth herein are no longer required or
necessary under the Securities Act or any applicable state law.
-7-
<PAGE>
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF ALPINE
Alpine represents and warrants to, and agrees with, the Noteholders as
follows:
3.01 VALIDITY OF TRANSACTION. Subject to filing the Certificate of
Designations with the Delaware Secretary of State and the consent of certain
holders of other preferred stock of Alpine to the creation of the Alpine 8%
Preferred Stock (the "Preferred Consents"), Alpine has all requisite power and
authority to execute, deliver, and perform this Agreement and to issue and sell
to the Noteholders the shares of Alpine 8% Preferred Stock, to issue the
Conversion Shares upon conversion of the Alpine 8% Preferred Stock in accordance
with its terms, and, subject to the consummation of the Adience Merger (as
hereinafter defined), to sell the IDT Common Stock. Subject to filing the
Certificate of Designations with the Delaware Secretary of State, all necessary
corporate proceedings of Alpine have been duly taken to authorize the execution,
delivery, and performance of this Agreement, the issuance and sale to the
Noteholders of the shares of Alpine 8% Preferred Stock, the issuance of the
Conversion Shares upon conversion of the Alpine 8% Preferred Stock in accordance
with its terms, and, subject to the consummation of the Adience Merger, the sale
of IDT Common Stock. This Agreement has been duly authorized, executed, and
delivered by Alpine, is the legal, valid, and binding obligation of Alpine, and
is enforceable as to Alpine in accordance with its terms, except as may be
limited by bankruptcy, insolvency, moratorium, or other similar laws affecting
creditors' rights generally, and subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law). Subject to the filing of the Certificate of Designations with the
Delaware Secretary of State, the consummation of the Adience Merger, and
compliance with and completion of the registration requirements of the
Securities Act as contemplated in Article V, no consent, authorization,
approval, order, license, certificate, or permit of or from, or declaration or
filing with, any Federal, state, local, or other governmental authority or of
any court or other tribunal is required by Alpine for the execution, delivery,
or performance of this Agreement by Alpine, except as would not affect the
ability of the Noteholder to perform any of its material obligations under this
Agreement. Except for the Preferred Consents, no consent of any party to any
contract, agreement, instrument, lease, license, arrangement, or understanding
to which Alpine is a party, or by which any of its properties or assets is
bound, is required for the execution, delivery, or performance by Alpine of
-8-
<PAGE>
this Agreement, except for such consents as have been obtained at or prior to
the date of this Agreement, and, except as would not affect the ability of
Alpine to perform any of its material obligations under this Agreement. The
execution, delivery, and performance of this Agreement by Alpine will not
violate, result in a breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate or call a
default under any such contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any term of
the Certificate of Incorporation or by-laws of Alpine, or violate, result in a
breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on Alpine or to which any of its operations, business,
properties, or assets is subject, except as would not affect the ability of the
Noteholder to perform any of its material obligations under this Agreement. The
shares of Alpine 8% Preferred Stock and the Conversion Shares have been duly
authorized and, upon receipt by Alpine from the Noteholders of the Adience
Senior Notes being transferred pursuant to this Agreement (in the case of the
Alpine 8% Preferred Stock) or upon conversion of the Alpine 8% Preferred Stock
in accordance with its terms (in the case of the Conversion Shares), will be
validly issued, fully paid, and nonassessable, will not have been issued in
violation of any preemptive right of stockholders or rights of first refusal,
and the Noteholders will have good title to the shares of Alpine 8% Preferred
Stock (and, upon conversion thereof in accordance with its terms, the Conversion
Shares), free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders agreements, and voting trusts (other than any created
by such Noteholder).
3.02 FINDER OR BROKER. Neither Alpine nor any person acting on
behalf of Alpine has negotiated with any finder, broker, intermediary, or
similar person in connection with the transactions contemplated herein.
3.03 ACCREDITED INVESTOR. Alpine is an "accredited investor," as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
3.04 INVESTMENT INTENT. Alpine is acquiring the shares of Adience
Senior Notes for its own account for investment and not with a view to, or for
sale in connection with, any public distribution thereof in violation of the
Securities Act. Alpine understands that it must bear the economic risk of its
investment in Adience for an indefinite period of time, and the shares of
Adience Senior Notes being purchased from the Noteholders cannot be sold unless
registered under the Securities Act and qualified under state securities laws,
unless an exemption from such registration and qualification is available.
-9-
<PAGE>
3.05 FULL DISCLOSURE. (a) All documents filed by Alpine pursuant to
the Exchange Act since December 31, 1992 (the "Exchange Act Documents") (i) were
prepared in accordance with the requirements of the Exchange Act and the rules
and regulations thereunder, (ii) did not at the time they were filed contain any
untrue statement of a material fact, and (iii) did not at the time they were
filed omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Offering Memorandum, together with the exhibits thereto, when read in
conjunction with the Exchange Act Documents, as such Offering Memorandum and
other documents may be supplemented to the reasonable satisfaction of the
Noteholders on or before the Closing Date, do not omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as any of such documents
relate to IDT, as to which Alpine makes no representation other than as set
forth in Section 3.05(b). From the date as of which information is given in the
most recent report filed by Alpine under the Exchange Act to the date of this
Agreement, except as contemplated or described in such report or in the Offering
Memorandum, there has not been any material adverse change in, or any adverse
development which materially affects, the business, results of operations, or
financial condition of Alpine and its subsidiaries taken as a whole.
(b) So far as Alpine is aware, all documents filed by IDT pursuant to
the Exchange Act since December 31, 1992 (i) were prepared in accordance with
the requirements of the Exchange Act and the rules and regulations thereunder,
(ii) did not at the time they were filed contain any untrue statement of a
material fact, and (iii) did not at the time they were filed omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. From the date as of
which information is given in the most recent report filed by IDT under the
Exchange Act to the date of this Agreement, except as contemplated or described
in such report or in the Offering Memorandum, Alpine has no actual knowledge
that there has been any material adverse change in, or any adverse development
which materially affects, the business, results of operations, or financial
condition of IDT and its subsidiaries taken as a whole.
3.06 OTHER NOTEHOLDERS. Alpine has not entered into any agreement
with any holders of Adience Senior Notes, other than this Agreement with the
Noteholders, with respect to the acquisition or exchange of Adience Senior Notes
by Alpine.
-10-
<PAGE>
ARTICLE IV
CONDITIONS TO CLOSING
4.01 CONDITIONS PRECEDENT TO THE NOTEHOLDERS' OBLIGATIONS. The
obligation of the Noteholders to consummate the transactions contemplated hereby
is subject to the fulfillment prior to or on the Closing Date of each of the
following conditions, any one or more of which may be waived in writing by
Noteholders holding a majority of the principal amount of Adience Senior Notes
held by all the Noteholders:
(a) REPRESENTATIONS AND WARRANTIES TRUE. All of the
representations and warranties of Alpine contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as if
made on and as of the Closing Date, and the Noteholders shall have received a
certificate to such effect executed by the President or a Vice President of
Alpine dated the Closing Date.
(b) LITIGATION. There shall be no injunction, restraining
order, or other order of any nature, issued by a court of competent
jurisdiction, which shall direct that this Agreement or any of the transactions
contemplated hereby not be consummated as herein provided, and no action, suit,
or proceeding (or investigation that could lead to any action, suit, or
proceeding) challenging such transactions shall have been instituted or
threatened by any person or entity.
(c) CERTIFICATE OF DESIGNATIONS. The Certificate of
Designations shall have been filed with the Delaware Secretary of State.
(d) COMPLETION OF TRANSACTIONS. The following transactions (the
"Concurrent Transactions") shall have occurred or shall occur simultaneously
with the Closing:
(i) the completion of an offering by Alpine of senior notes in
an aggregate amount of no less than $75,000,000 in principal amount (the "Alpine
Senior Note Financing");
(ii) the closing of the acquisition of at least 75 percent of
the outstanding shares of common stock of Adience substantially as described in
the Offering Memorandum;
(iii) the merger of Adience with Alpine or a wholly-owned
subsidiary of Alpine on terms providing for the payment of cash in the amount of
$1.24 per share to the stockholders of Adience other than the sellers of common
stock of Adience described in (ii) above, representing no more than 20
-11-
<PAGE>
percent of the issued and outstanding common stock of Adience, and on such other
terms as Alpine may deem appropriate (the "Adience Merger");
(iv) the execution of a definitive merger agreement relating to
the IDT Merger substantially as described in the Offering Memorandum.
(e) DELIVERIES BY ALPINE. Alpine shall have delivered to the
Noteholders the certificates for the shares of Alpine 8% Preferred Stock as
described in Section 1.04(b).
(f) PREFERRED CONSENTS. The Preferred Consents shall have been
received by Alpine. [Waived Pursuant to Amendment dated as of December 21,
1994]
4.02 CONDITIONS PRECEDENT TO ALPINE'S OBLIGATIONS. The obligation of
Alpine to consummate the transactions contemplated hereby is subject to the
fulfillment prior to or on the Closing Date of each of the following conditions,
any one or more of which may be waived in writing by Alpine:
(a) REPRESENTATIONS AND WARRANTIES TRUE. All of the
representations and warranties of the Noteholders contained in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
as if made on and as of the Closing Date, and Alpine shall have received a
certificate to such effect executed by each Noteholder.
(b) LITIGATION. There shall be no injunction, restraining
order, or other order of any nature, issued by a court of competent
jurisdiction, which shall direct that this Agreement or any of the transactions
contemplated hereby not be consummated as herein provided, and no action, suit,
or proceeding (or investigation that could lead to any action, suit, or
proceeding) challenging such transactions shall have been instituted or
threatened by any person or entity.
(c) DELIVERIES BY THE NOTEHOLDERS. Each of the Noteholders
shall have delivered to Alpine the Adience Senior Notes to be transferred and
exchanged hereunder, as described in Section 1.03(a).
(d) COMPLETION OF TRANSACTIONS. The completion of the
Concurrent Transactions shall have occurred or shall occur simultaneously with
the Closing.
(e) INDENTURE AMENDMENT. The amendment attached to the Consent
shall have been duly accepted and signed by the Trustee and Adience in
accordance with the terms of the Indenture.
-12-
<PAGE>
(f) PREFERRED CONSENTS. The Preferred Consents shall have been
received by Alpine.
ARTICLE V
COVENANTS OF ALPINE
5.01 THE IDT MERGER. Alpine will use its best efforts to effect the
IDT Merger prior to May 31, 1995 and, if the IDT Merger is consummated, will
cause IDT to file a registration statement with the SEC with respect to the IDT
Common Stock and to use its best efforts to cause such registration statement to
become effective.
5.02 REGISTRATION OF THE ALPINE 8% PREFERRED STOCK AND THE COMMON
SHARES UNDER THE SECURITIES ACT. Alpine will use its best efforts to effect the
registration under the Securities Act of the Alpine 8% Preferred Stock and the
Conversion Shares, as soon as practicable after the Closing Date, and, in
connection therewith, Alpine will:
(a) prepare and file with the Securities and Exchange Commission
(the "SEC") on or promptly (but in any event no later than 15 days) after the
Closing, a registration statement with respect to the Alpine 8% Preferred Stock
and the Conversion Shares and use its best efforts to cause such registration
statement to become effective;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
current for a period of not less than 36 months (including such amendments and
supplements as requested by a Noteholder, to the extent such request relates to
information with respect to such Noteholder), and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the Noteholders thereof as set forth in such
registration statement;
(c) furnish to the Noteholders such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus),
and such other documents as the Noteholders may reasonably request in order to
facilitate the disposition of the Alpine 8% Preferred Stock or Conversion Shares
owned by the Noteholders;
-13-
<PAGE>
(d) use its best efforts to register or qualify, on or prior to
the date such registration statement becomes effective, the Alpine 8% Preferred
Stock and the Conversion Shares under the securities or blue sky laws of each of
the 50 states of the United States and do any other related acts which may be
reasonably necessary to enable the Noteholders to consummate the disposition in
such jurisdictions of the Alpine 8% Preferred Stock and the Conversion Shares
owned by the Noteholders; PROVIDED, HOWEVER, that Alpine will not be required
(i) to qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 5.02(d) or (ii) to consent to
general service of process in any such jurisdiction;
(e) notify the Noteholders at any time when a prospectus
relating to the Alpine 8% Preferred Stock or the Conversion Shares is required
to be delivered under the Securities Act, and of the happening of any event as a
result of which, or the fact that, the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and Alpine will prepare
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of Alpine 8% Preferred Stock or Conversion Shares, such
prospectus will not contain any untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(f) use its best efforts to cause the Conversion Shares to be
listed or quoted on each securities exchange or interdealer quotation system on
which similar securities issued by Alpine are then listed or quoted;
(g) provide a transfer agent for all such Alpine 8% Preferred
Stock and Conversion Shares not later than the effective date of such
registration statement;
(h) enter into such customary agreements (including underwriting
agreements on customary terms) and take all such other actions as the
Noteholders reasonably request in order to expedite or facilitate the
disposition of the Alpine 8% Preferred Stock;
(i) make available to each Noteholder, any underwriter
participating in any disposition pursuant to a registration statement, and any
attorney, accountant or other agent or representative retained by any such
Noteholder or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of Alpine
(collectively, the "Records"), as shall be reasonably necessary to enable them
to exercise their due diligence
-14-
<PAGE>
responsibility, and cause Alpine's officers, directors and employees to supply
all information requested by any such Inspector in connection with such
registration statement; PROVIDED that, unless the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, Alpine shall not be required
to provide any information under this paragraph, (1) if Alpine believes, after
consultation with counsel for Alpine and counsel for the Noteholders, that to do
so would cause Alpine to forfeit an attorney-client privilege that was
applicable to such information or (2) if either (i) Alpine has requested and
been granted from the SEC confidential treatment of such information contained
in any filing with the SEC or documents provided supplementally or otherwise or
(ii) Alpine reasonably determines in good faith that such Records are
confidential and so notifies the Inspectors in writing unless prior to
furnishing any such information with respect to (i) or (ii) such Noteholder
requesting such information agrees to enter into a confidentiality agreement in
customary form and subject to customary exceptions; and provided, further that
each such Noteholder agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to Alpine
and allow Alpine at its expense, to undertake appropriate action and to prevent
disclosure of the Records deemed confidential; and
(j) furnish to each Noteholder and to each underwriter, if any,
a signed counterpart, addressed to such Noteholder or underwriter, of (i) an
opinion or opinions of counsel to Alpine, and (ii) a comfort letter or comfort
letters from Alpine's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the Noteholders included in such offering or the
managing underwriter therefor reasonably requests.
5.03 REGISTRATION EXPENSES. All expenses ("REGISTRATION EXPENSES")
incident to Alpine's performance of or compliance with this Article V with
respect to any registration of the Alpine 8% Preferred Stock or Conversion
Shares will be borne by Alpine, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of counsel for Alpine, the expense of any audit, and the expenses and fees for
listing or quoting the securities to be registered on each securities exchange
or interdealer quotation system on which similar securities issued by Alpine are
then listed or quoted. Notwithstanding the foregoing, however, Alpine shall not
be obligated to pay fees and disbursements of counsel for the holders of Alpine
-15-
<PAGE>
8% Preferred Stock or Conversion Shares, and all underwriters' discounts and
commissions in respect of the sale of Alpine 8% Preferred Stock or Conversion
Shares shall be paid by the Noteholders, PRO RATA in accordance with the number
of shares sold in the offering.
5.04 PRECONDITIONS TO PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
No holder of Alpine 8% Preferred Stock or Conversion Shares may participate in
any underwritten registration hereunder unless such person (i) agrees to sell
such person's securities on the basis provided in any customary underwriting
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements, and other documents required
under the terms of such underwriting arrangements.
5.05 INDEMNIFICATION AND CONTRIBUTION.
(a) Alpine shall indemnify and hold harmless the Noteholders and
each of the Noteholders' officers, directors, employees, agents, partners, legal
counsel, and accountants, and each controlling person of each of the foregoing
(within the meaning of the Securities Act) against any losses, claims, damages,
or liabilities, joint or several (or actions in respect thereof), including any
of the foregoing incurred in the settlement of any litigation, commenced or
threatened, to which any of them may be subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement (or alleged untrue statement) of any material fact
contained in any registration statement under which the Alpine 8% Preferred
Stock or the Conversion Shares were registered under the Securities Act or in
any preliminary prospectus or final prospectus contained therein, or in any
amendment or supplement thereto, (ii) any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any other violation by Alpine of
the Securities Act or any state securities law in connection with any such
registration, and shall reimburse each such person entitled to indemnification
under this Section 5.05(a) for any legal or other expenses reasonably incurred
by such person in connection with investigating or defending any such loss,
claim, damage, liability, or action, as and when such expenses are incurred;
PROVIDED, HOWEVER, that Alpine shall not be liable to any such person in any
such case to the extent that any such loss, claim, damage, or liability arises
out of or is based upon any untrue statement or omission made in such
registration statement, preliminary prospectus, or amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
Alpine by such person, specifically for use therein.
-16-
<PAGE>
(b) Each of the Noteholders shall severally indemnify Alpine and
each of Alpine's officers, employees, agents, directors, legal counsel, and
accountants, and each controlling person of each of the foregoing (within the
meaning of the Securities Act) against any losses, claims, damages, or
liabilities (or actions in respect thereof), including any of the foregoing
incurred in the settlement of any litigation, commenced or threatened, joint or
several, to which any of them may be subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement (or alleged untrue statement) of any material fact contained in
any registration statement under which the Alpine 8% Preferred Stock or the
Conversion Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) was made in such
registration statement, preliminary prospectus, or amendment or supplement
thereto solely in reliance upon and in conformity with written information
furnished to Alpine by such Noteholder specifically for use therein, and to
reimburse such persons for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability, or action, as and when such expenses are incurred.
(c) If (i) an indemnified party makes a claim for
indemnification pursuant to this Section 5.05 (subject to the limitations
hereof) but it is found in a final judicial determination, not subject to
further appeal, that such indemnification may not be enforced in such case or
(ii) an indemnified party seeks contribution under the Securities Act, the
Exchange Act, or otherwise, then Alpine (including for this purpose any
contribution made by or on behalf of any director of Alpine, any officer of
Alpine who signed the registration statement, and any controlling person of
Alpine) as one entity and the holders of Alpine 8% Preferred Stock or Conversion
Shares, in the aggregate (including for this purpose any contribution by or on
behalf of a person who would be indemnified by Alpine) as a second entity, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, so that the holders of Alpine 8% Preferred
Stock and Conversion Shares and Alpine are each responsible for the proportion
thereof which reflects as nearly as possible the relative fault of Alpine and
the holders of Alpine 8% Preferred Stock and Conversion Shares in the aggregate
in connection with the facts which resulted in such losses, liabilities, claims,
damages, or expenses. The relative fault,
-17-
<PAGE>
in the case of an untrue statement, alleged untrue statement, omission, or
alleged omission, shall be determined by, among other things, whether such
statement, alleged statement, omission, or alleged omission relates to
information supplied by Alpine or by the holders of Alpine 8% Preferred Stock
and Conversion Shares, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this Section 5.05, each holder of
Alpine 8% Preferred Stock or Conversion Shares and each of such holder's
officers, directors, employees, agents, partners, and legal counsel and
accountants, and each controlling person of each of the foregoing (within the
meaning of the Securities Act or the Exchange Act) shall have the same rights to
contribution as a holder of Alpine 8% Preferred Stock or Conversion Shares, and
Alpine and each of its officers, employees, agents, directors, legal counsel and
accountants, and each controlling person of each of the foregoing (within the
meaning of the Securities Act or the Exchange Act) shall have the same rights to
contribution as Alpine, subject in each case to the provisions of this Section
5.05. Anything in this Section 5.05 to the contrary notwithstanding, no party
shall be liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 5.05 is intended to
supersede any right to contribution under the Securities Act, the Exchange Act,
or otherwise.
(d) Each party entitled to indemnification under this Section
5.05 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has knowledge of the commencement of any action, proceeding,
or investigation in respect of which indemnity or reimbursement may be sought as
provided above; PROVIDED, HOWEVER, that the failure of such Indemnified Party to
notify the Indemnifying Party with respect to a particular action, proceeding,
or investigation shall not relieve the Indemnifying Party from any obligation or
liability (i) which it may have pursuant to this Agreement if the Indemnifying
Party is not substantially prejudiced by the failure to notify or (ii) which it
may have otherwise than pursuant to this Agreement. The Indemnifying Party
shall promptly assume the defense of any Indemnified Party with counsel
reasonably satisfactory to such Indemnified Party, and the fees and expenses of
such counsel shall be at the sole cost and expense of the Indemnifying Party.
The Indemnified Party will cooperate with the Indemnifying Party in the defense
of any action, proceeding, or investigation for which the Indemnifying Party
assumes the defense. Notwithstanding the foregoing, any such Indemnified
-18-
<PAGE>
Party shall have the right to employ separate counsel of its own selection in
any such action, proceeding, or investigation and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (x) the Indemnifying Party has agreed to pay such
fees and expenses, (y) the Indemnifying Party shall have failed promptly to
assume the defense of such action, proceeding, or investigation and employ
counsel reasonably satisfactory to such Indemnified Party, or (z) in the
reasonable judgment of such Indemnified Party there may be one or more defenses
available to such Indemnified Party which are not available to the Indemnifying
Party in respect of such action, proceeding, or investigation, in which case the
Indemnifying Party shall not have the right to assume the defense of such
action, proceeding, or investigation on behalf of such Indemnified Party. An
Indemnifying Party who is not entitled to, or elects not to, assume the defense
of an action, proceeding, or investigation shall not be obligated to pay the
fees and expenses of more than one counsel and appropriate local counsel for all
parties indemnified by such Indemnifying Party pursuant to this Section 5.05
with respect to the same action, proceeding, or investigation, unless in the
reasonable judgment of any such Indemnified Party a conflict of interest may
exist between such Indemnified Party and any other such Indemnified Party with
respect to such action, claim, or proceeding. The Indemnifying Party shall not
be liable for the settlement by any Indemnified Party of any action, proceeding,
or investigation effected without its consent, which consent shall not be
unreasonably withheld. The Indemnifying Party shall not enter into any
settlement in any action, suit, or proceeding to which an Indemnified Party is
party unless such settlement includes a general release of the Indemnified
Party, with no payment by the Indemnified Party of consideration.
5.06 PURCHASE OF ADIENCE COMMON STOCK. Prior to the Adience Merger,
Alpine shall not purchase, either directly or indirectly, any shares of Adience
Common Stock (other than pursuant to the transaction described in Section
4.01(d)(ii)) at a price in excess of $1.24 per share.
ARTICLE VI
MISCELLANEOUS
6.01 NOTICES. All notices or other communications hereunder shall be
in writing and shall be given by registered or certified mail (postage prepaid
and return receipt requested), by an overnight courier service which obtains a
receipt to evidence delivery, or by telex or facsimile transmission (provided
that
-19-
<PAGE>
written confirmation of receipt is provided), addressed to the appropriate party
as his address shall be listed in the preamble hereof or in Exhibit A hereto or
such other address as any party may designate to the other in accordance with
the aforesaid procedure. All notices and other communications sent by overnight
courier service shall be deemed to have been given as of the second Business Day
after delivery thereof to such courier service, those given by telex or
facsimile transmission shall be deemed given when sent, and all notices and
other communications sent by mail shall be deemed given as of the fifth Business
Day after the date of deposit with the United States Postal Service.
6.02 SUCCESSORS AND ASSIGNS. Neither Alpine nor the Noteholders may
sell, assign, transfer, or otherwise convey any of its rights or delegate any of
its duties under this Agreement, except: (a) to a corporation which has
succeeded to substantially all of the business and assets of such party and has
assumed in writing its obligations under this Agreement, and this Agreement
shall be binding on each party hereto and any such successor, and (b) a
Noteholder may transfer or otherwise dispose of the Senior Notes held by it that
are the subject of this Agreement, but only on the condition that the transferee
expressly agrees to assume the Noteholder's obligations under and be bound by
the terms of this Agreement, whereupon the transferee shall be entitled to all
the benefits of this Agreement. Without limiting the generality of the
foregoing, any transferee of Alpine 8% Preferred Stock or Conversion Shares
shall have the rights set forth in Article V, and such rights shall be
enforceable against Alpine by such transferees as third party beneficiaries.
6.03 AMENDMENTS AND WAIVERS. Neither this Agreement nor any term
hereof may be changed or waived (either generally or in a particular instance
and either retroactively or prospectively) absent the written consent of Alpine
and the Noteholders. Each Noteholder acknowledges that Exhibit A to the
Agreement may be amended to reflect additional or deleted parties or correct
minor typographical or mathematical errors, provided that a copy of Exhibit A in
its final form is provided to each Noteholder.
6.04 EXPENSES. Each of the Noteholders and Alpine will be
responsible for the payment of all expenses incurred by it in connection with
the preparation, execution, and delivery of this Agreement, any other documents
relating to the transactions contemplated by this Agreement, and the
consummation of the transactions herein described.
6.05 SURVIVAL OF REPRESENTATIONS, ETC. The representations,
warranties, covenants, and agreements made herein or in any certificate or
document executed in connection herewith shall survive the execution and
delivery of this
-20-
<PAGE>
Agreement and the consummation of the transactions herein described, regardless
of any investigation made at any time by or on behalf of any of the parties
hereto.
6.06 DELAYS OR OMISSIONS; WAIVER. No delay or omission to exercise
any right, power, or remedy accruing to any of the Noteholders or Alpine upon
any breach or default by the other under this Agreement shall impair any such
right, power, or remedy nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.
6.07 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto
contain the entire understanding of the parties with respect to the subject
matter hereof and all prior negotiations, discussions, commitments, and
understandings heretofore had between them with respect thereto are merged
herein.
6.08 HEADINGS AND GENDER. All article and section headings herein
are inserted for convenience only and shall not modify or affect the
construction or interpretation of any provision of this Agreement. Whenever
used herein, the use of any gender shall include all genders.
6.09 COUNTERPARTS; GOVERNING LAW. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to conflicts of laws rules or principles.
6.10 FURTHER ACTIONS. At any time and from time to time, each party
agrees, without further consideration, to take such actions and to execute and
deliver such documents as may be reasonably necessary to effectuate the purposes
of this Agreement.
-21-
<PAGE>
[DEBT EXCHANGE AGREEMENT -- SIGNATURE PAGE]
This Agreement has been duly executed on the date hereinabove set
forth.
THE ALPINE GROUP, INC.
By /s/ Bragi F. Schut
-----------------------------------------
Name: Bragi F. Schut
Title: Executive Vice President and
Secretary
THE NOTEHOLDERS:
REFERENCE IS MADE TO THE COUNTERPART
NOTEHOLDERS' SIGNATURE PAGES TO THE DEBT
EXCHANGE AGREEMENT DATED AS OF OCTOBER 11,
1994, THE AMENDED AND RESTATED DEBT EXCHANGE
AGREEMENT DATED AS OF OCTOBER 11, 1994, THE
AMENDMENT TO THE DEBT EXCHANGE AGREEMENT
DATED AS OF DECEMBER 21, 1994, AND THE
AMENDMENT TO THE DEBT EXCHANGE AGREEMENT
DATED AS OF MARCH 30, 1995, EXECUTED BY EACH
NOTEHOLDER
-22-
<PAGE>
LIST OF EXHIBITS (OMITTED)
Exhibit A - Noteholders and Exchange Consideration
Exhibit B - [Deleted]
Exhibit C - Relative Voting, Dividend, Liquidation, and Other
Rights, Preferences, and Limitations of the Alpine 8%
Preferred Stock
Exhibit D - Form of Consent to Supplemental Indenture
Exhibit E - Limited Liability Provisions
The Company agrees to furnish supplementally copies of any of the foregoing
exhibits to the Securities and Exchange Commission upon request.
<PAGE>
EXHIBIT 10(m)
THE ALPINE GROUP, INC.
1790 Broadway - 15th Floor
New York, New York 10019
May 24, 1995
PolyVision Corporation
866 North Main Street Extension
Wallingford, Connecticut 06492
Gentlemen:
This letter agreement sets forth the terms and conditions under which
The Alpine Group, Inc., a Delaware corporation ("Alpine"), agrees to provide a
$5,000,000 credit commitment to PolyVision Corporation (formerly Information
Display Technology, Inc.), a New York corporation ("PolyVision").
1. CREDIT COMMITMENT.
(a) Subject to the terms and conditions hereof and of the Non-
Negotiable Promissory Note, of even date herewith, made by PolyVision in favor
of Alpine, a copy of which is attached hereto (the "Note"), Alpine agrees from
time to time during the two-year period commencing on the date hereof, to make
loans (each, a "Loan") to PolyVision up to a maximum aggregate amount of
$5,000,000, which amount includes any repayments by affiliates of Alpine on any
indebtedness owed to PolyVision and further includes any accrued and unpaid
interest on amounts advanced and loaned by Alpine hereunder. PolyVision shall
use the proceeds of each Loan for its working capital needs, including to
continue the research and development, and commence the commercialization, of
its PolyVision-TM- display technology. Interest on the outstanding principal
amount of the Note shall be at a rate reflecting Alpine's cost of borrowing such
funds and shall initially be eleven percent (11%) per annum, as more fully set
forth in the Note. Subject to Section 2 below, the maximum credit commitment
may be reduced under certain circumstances.
(b) By written request to Alpine, accompanied by a description
of the use(s) of such loan proceeds, PolyVision may from time to time request
that Alpine make a Loan in the amount specified therein and Alpine will make
such Loan, provided that no such request and loan shall exceed $1,250,000 during
any three (3) month period, including repayments of indebtedness by affiliates
of Alpine. Subject to Alpine's review and approval of the written request,
Alpine may, in its discretion, disburse the amount of the Loan requested by wire
transfer in immediately available funds to an account or accounts designated in
writing by PolyVision, or by check if mutually agreed, within three (3) business
days following PolyVision's written request. Each such request for a Loan shall
constitute PolyVision's representation and warranty to Alpine that no Event of
Default (as such term is defined in the Note) shall have occurred or be
continuing at such time, or would occur after giving effect to any such loan.
(c) Except as otherwise provided in Section 2 below, PolyVision
will pay the entire principal balance then outstanding of the Note together with
accrued interest, in cash, on the tenth annual anniversary of the date hereof.
<PAGE>
2. MANDATORY PAYMENTS.
(a) During the term of the Note, PolyVision will pay, in whole
or in part, the principal balance then outstanding of the Note, together with
accrued interest, with the cash proceeds from the issuance of any note, bond,
debenture, evidence of indebtedness, share of capital stock or any other
security ("securities"), other than working capital financing or secured
financing of assets in the ordinary course of business, issued by PolyVision
after the date hereof (a "Financing"). The obligation of PolyVision to pay the
outstanding balance under the Note pursuant to the preceding sentence shall be
superior and first in priority to any other use of the proceeds of a Financing,
and PolyVision agrees not to enter into any agreement or instrument during the
term of the Note which would modify or alter the foregoing priority.
(b) In the event no amounts are outstanding under the Note at
the time of a Financing, the maximum credit commitment set forth in Section 1(a)
above will be reduced by the amount of the cash proceeds of any such Financing.
3. CHANGE IN CONTROL. A Change in Control (as defined below) during
the term of the Note shall be considered an Event of Default, in which case
PolyVision shall be required, unless waived by Alpine in whole or in part, to
pay the entire principal balance then outstanding of the Note, together with
accrued interest, on or within ten (10) days following the Change in Control. A
"Change in Control" shall be deemed to have occurred when (a) a third person,
including a "group," as such term is defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, other than Alpine or its affiliates, becomes
(other than as a result of a purchase from PolyVision) the beneficial owner of
shares of PolyVision having 10% or more of the total number of votes that may be
cast for the election of directors of PolyVision and such beneficial owner
continues for five consecutive days, or (b) as a result of, or in connection
with, any cash tender or exchange offer, merger or other business combination,
sale of assets or contested election or any combination of the foregoing
transactions, the persons who were directors of PolyVision before such
transaction shall cease for any reason to constitute at least a majority of the
Board of Directors of PolyVision or any successor; PROVIDED, HOWEVER, that no
Change in Control shall occur pursuant to or as a result of (i) the merger of
Alpine PolyVision, Inc. and Posterloid Corporation with and into two separate
wholly-owned subsidiaries of Information Display Technology, Inc. or (ii) the
spin-off dividend of PolyVision Common Stock to the common stockholders of
Alpine.
4. PROVISIONS CONCERNING CONGRESS. Notwithstanding anything to the
contrary contained herein, (a) the indebtedness evidenced hereby is subject to,
and subordinate in right of payment to, the right of Congress Financial
Corporation ("Congress") to receive the prior payment in full of all of the
Obligations (as such term is used in the IDT Financing Agreements, as defined
below), and (b) the terms of the indebtedness evidenced hereby shall not require
any payments in respect hereof at any time prior to the termination of the IDT
Financing Agreements and the indefeasible payment in full of all Obligations of
PolyVision. For purposes hereof, the IDT Financing Agreements shall mean the
Accounts Financing Agreement [Security Agreement], dated June 30, 1993, between
Congress and PolyVision and various supplements thereto, together with all other
agreements, documents and instruments now or any time hereafter executed and/or
delivered in connection therewith or related thereto, as amended by Amendment
No. 1 to Financing Agreements dated September 20, 1994 and Amendment No. 2 to
Financing Agreements dated April 14, 1995 (as the foregoing now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced).
5. REPRESENTATIONS. Each of the parties hereto represents severally
and as to itself only that this letter agreement has been duly
2
<PAGE>
authorized, executed and delivered by it and, assuming the due authorization,
execution and delivery of this letter agreement by the other party hereto,
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except to the extent that enforceability (x) may be
limited by bankruptcy, insolvency or other similar laws affecting or relating to
the enforcement of creditors' rights generally and (y) is subject to general
principles of equity (whether such enforceability is considered in a proceeding
in equity or at law).
6. NOTICES. All notices, requests and demands to or upon PolyVision
or Alpine to be effective shall be in writing and shall be deemed to have been
duly given or made when delivered by hand, or when sent by certified mail,
postage prepaid, addressed as follows or to such other address as may hereafter
be notified by the respective parties hereto:
PolyVision: PolyVision Corporation
866 North Main Street Extension
Wallingford, CT 06492
Attn: Mr. Alan J. Nickerson
Chief Financial Officer and Secretary
Alpine: The Alpine Group, Inc.
1790 Broadway - 15th Floor
New York, NY 10019
Attn: Mr. Bragi F. Schut,
Executive Vice President and Secretary
7. MISCELLANEOUS. This letter agreement and the Note represent the
entire agreement and understanding between Alpine and PolyVision with respect to
the subject matter hereof. This letter agreement and the Note may not be
amended except by an instrument in writing executed by Alpine and PolyVision.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to its choice of law rules.
This letter agreement may be executed in counterparts.
If the foregoing correctly sets forth our agreement, please
acknowledge your acceptance of the terms of this letter agreement by signing and
returning a copy of this letter agreement and the Note to the undersigned.
Very truly yours,
THE ALPINE GROUP, INC.
By:
--------------------------------
Name: Bragi F. Schut
Title: Executive Vice President
Agreed and Accepted
this 24th day of May 1995
POLYVISION CORPORATION
By:
-------------------------------
Name: Alan J. Nickerson
Title: Chief Financial Officer.
3
<PAGE>
EXHIBIT 10(n)
POLYVISION CORPORATION
866 North Main Street Extension
Wallingford, CT 06492
May 24, 1995
The Alpine Group, Inc.
1790 Broadway, Suite 1500
New York, NY 10019
Gentlemen:
This letter will serve to confirm our agreement that in the event
PolyVision Corporation ("PolyVision") is not able to obtain adequate alternative
financing upon the expiration of its credit facility with Congress Financial
Corporation or if the availability under such credit facility and/or the Alpine
credit commitment is inadequate to cover working capital needs, The Alpine
Group, Inc. ("Alpine") agrees to fund working capital deficiencies on a
temporary basis and in an amount not to exceed $2,500,000 on terms and
conditions mutually agreeable to the parties. This letter agreement shall
expire 12 months from the date hereof unless earlier terminated by the parties.
This will also confirm that PolyVision agrees to use all reasonable
efforts to secure such alternative financing (or refinancing), and Alpine agrees
to use reasonable efforts to assist PolyVision in obtaining such financing.
Please confirm your agreement to the terms of this letter agreement by
signing and returning a copy of this letter agreement to the undersigned.
Please confirm your agreement to the terms of this letter agreement by
signing and returning a copy of this letter agreement to the undersigned.
Very truly yours,
POLYVISION CORPORATION
By:
---------------------------------------
Ivan Berkowitz
Chief Executive Officer
By:
---------------------------------------
Alan J. Nickerson
Chief Financial Officer and Secretary
CONFIRMED AND AGREED:
THE ALPINE GROUP, INC.
By:
----------------------------
Bragi F. Schut
Executive Vice President
<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE AGREEMENT (this "Amendment"), dated as of
May 10, 1995, between ALP (TX) QRS 11-28, INC., a Texas corporation
("Landlord"), and SUPERIOR TELETEC INC., a Georgia corporation f/k/a
Superior TeleTec Transmission Products, Inc. ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into that certain Lease
Agreement, dated as of December 16, 1993 (the "Lease"); and
WHEREAS, the parties hereto have agreed to amend the Lease as hereinafter
set forth.
NOW, THEREFORE, intending to be legally bound and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto covenant and agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Lease.
2. TERMINATION EVENTS. The Lease is hereby amended by deleting
clause (i) of Paragraph 18(a) and inserting the following clause in lieu
thereof: "the Leased Premises shall be taken by a Taking".
3. EVENTS OF DEFAULT. The Lease is hereby amended by deleting clause
(vii) of Paragraph 22(a) and inserting the following clause in lieu thereof:
"Tenant or Guarantor shall breach any Covenant".
4. BASIC RENT PAYMENTS. Exhibit D (Basic Rent Payments) to the Lease is
hereby amended by (a) deleting the amount "$22,400.25" appearing in the first
sentence of Paragraph 1 and inserting the amount "$26,566.92" in lieu thereof
and (b) deleting the amount "$525,000" appearing in the first sentence of
Paragraph 3(c)(i) and inserting the amount "$575,000" in lieu thereof.
5. FINANCIAL COVENANTS. The Lease is hereby amended by deleting the
Financial Covenants attached to the Lease as Exhibit E and inserting the
Financial Covenants attached hereto as Exhibit E in lieu thereof; PROVIDED,
however, that at such time as the indebtedness created pursuant to the
Agreement (as defined on Exhibit E attached hereto) is refinanced, the
Lease shall be further amended to incorporate the covenants set forth in the
agreement pursuant to which such indebtedness is
<PAGE>
refinanced and, to the extent that such covenants relate to the subject
matter of the Financial Covenants set forth on Exhibit E attached hereto, to
delete such Financial Covenants.
6. SUCCESSORS AND ASSIGNS. Except as specifically amended by this
Amendment, the terms and conditions of the Lease shall remain in full force and
effect and shall be binding upon Landlord and Tenant and their respective
successors and assigns.
7. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Texas.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
ATTEST: ALP (TX) QRS 11-28, INC.
By: By:
-------------------------- ---------------------------
Title: Title:
----------------------- ------------------------
[Corporate Seal]
ATTEST: SUPERIOR TELETEC INC.
By: By:
-------------------------- ---------------------------
Title: Title:
----------------------- ------------------------
[Corporate Seal]
[Signatures to First Amendment to Lease Agreement]
<PAGE>
CONSENT OF GUARANTOR
THE ALPINE GROUP, INC., a Delaware corporation (the "Guarantor"), hereby
(i) consents to the within First Amendment to Lease Agreement, (ii) agrees
that for purposes of the Guaranty and Suretyship Agreement, dated as of
December 16, 1993 (the "Guaranty"), pursuant to which the Guarantor guaranteed
the obligations of the Tenant (as defined in the Guaranty) under the Lease
(as defined in the Guaranty), the term "Lease" shall mean the Lease as amended
by the within First Amendment to Lease Agreement, and (iii) covenants and
agrees to observe and be bound by the Covenants (as defined in the
Lease) set forth on Exhibit E to the within First Amendment to Lease Agreement.
THE ALPINE GROUP, INC.
By:
----------------------------
Title:
-------------------------
<PAGE>
CONSENT OF BENEFICIARY
The undersigned, as assignee under that certain Assignment of Rentals,
dated December 16, 1993, from ALP (TX) QRS 11-28, Inc., hereby consents to
the within First Amendment to Lease Agreement.
CREDITANSTALT-BANKVEREIN
By:
----------------------------
Title:
-------------------------
--------------------------------------------
By:
---------------------------
Title:
------------------------
<PAGE>
EXHIBIT E
FINANCIAL COVENANTS
ARTICLE I DEFINITIONS
All capitalized terms used in this Exhibit E shall have the meanings
ascribed to such terms below unless otherwise specifically defined in
Paragraph 2 of this Lease or elsewhere in the Agreement (as hereinafter
defined). Provisions in the Agreement referenced in this Exhibit E and not
otherwise specifically defined are hereby incorporated herein as if fully set
forth and shall survive any expiration or termination of the Agreement.
S1."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
Guarantor shall be deemed to be an Affiliate of Guarantor solely by reason of
clause (a) of this sentence. No Purchaser shall be deemed to be an Affiliate of
Tenant or Guarantor solely by reason of ownership of Notes or by reason of
having the benefits of any agreements or covenants of Tenant contained in the
Agreement.
S2."AGREEMENT" means the Note Purchase Agreement, dated as of May 10, 1995,
among Tenant, Guarantor, the Canadian Subsidiary and Nomura Trust, without
giving effect to any amendment thereto.
S3."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., Tenant and the Canadian Subsidiary.
S4."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
<PAGE>
terms thereof and of the Agreement.
S5."BUSINESS DAY" means any day except a Saturday, a Sunday or a legal
holiday in New York City.
S6."CANADIAN SUBSIDIARY" means Superior Cable Corporation, an Ontario
corporation.
S7."CANADIAN SUBSIDIARY SECURITY AGREEMENT" means the Security Agreement
dated the Nomura Closing Date between the Canadian Subsidiary and Nomura Trust.
S8."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.
S9."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.
S10."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.
S11."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 these Covenants, the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with GAAP.
S12."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);
<PAGE>
(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 Tenant or one of its Subsidiaries by Trust Company Bank in an
investment account as to which Tenant 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,
(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,
<PAGE>
but only if and to the extent that Tenant 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) of the Agreement
(or Section 10.2(j) of the Agreement 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.
S13."CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
S14."COLLATERAL AGENT" means Nomura Trust, in its capacity as collateral
agent under the Agreement.
S15."CONSOLIDATED CASH INTEREST EXPENSE" means, for any period,
(a) Consolidated Interest Expense of Tenant and its Subsidiaries
accrued during such period; PLUS
(b) all Consolidated Interest Expense of Tenant 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); PLUS
(c) all Consolidated Interest Expense accrued during such period the
payment of which is
(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 Tenant and its Subsidiaries on
a consolidated basis in accordance with GAAP.
S16."CONSOLIDATED EBITDA" means, for any period,
(a) Consolidated Net Income (Loss); PLUS
<PAGE>
(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 Tenant and its Subsidiaries for such period on
a consolidated basis in accordance with GAAP.
S17."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 Tenant and its Subsidiaries for such period on
a consolidated basis in accordance with GAAP.
S18."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 Tenant and its
Subsidiaries for such period.
S19."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 Tenant and its Subsidiaries for such period
(including without limitation amortization of debt discount and expense and
imputed interest on Capital Lease Obligations).
S20."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 Tenant and its Subsidiaries for such period on
a consolidated basis in accordance with GAAP.
<PAGE>
S21."CONSOLIDATED NET INCOME (LOSS)" means, for any period, the net income
(or loss) of Tenant 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
Tenant, except to the extent of the amount of dividends or other
distributions actually paid to Tenant 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 Tenant or is merged into or consolidated with
Tenant or any of its Subsidiaries or that Person's Properties are acquired
by Tenant 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 Tenant
and its Subsidiaries;
(e) any other extraordinary gains (but not losses) of Tenant or its
Subsidiaries;
(f) the income of any Subsidiary of Tenant 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 Tenant 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 Tenant at the date of acquisition over the cost of the
investment in such Subsidiary;
<PAGE>
(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 Tenant; and
(n) in the case of a successor to Tenant 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.
S22."CONSOLIDATED NET WORTH" means, as of any date,
(a) stated capital attributable to the Capital Stock of Tenant; PLUS
(b) the amount of surplus attributable to the Capital Stock of Tenant
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
(d) minority interests in consolidated Subsidiaries, if any; PLUS
(e) any non-cash reductions in the consolidated net worth of Tenant
as a result of purchase-accounting adjustments in connection with any
acquisitions by Tenant and its Subsidiaries occurring after the Nomura
Closing Date and, to the extent the amounts thereof shall be reasonably
acceptable to Landlord, 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 Tenant as
a result of purchase accounting adjustments in connection with any
acquisitions by Tenant and its Subsidiaries occurring after the Nomura
Closing Date (and, to the extent the amounts thereof shall be reasonably
acceptable to Landlord, 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 Guarantor to Tenant, to the
extent the same would otherwise be included in Consolidated Net Worth.
all as determined as of such date for Tenant and its Subsidiaries on a
consolidated basis in accordance with GAAP
S23."CONSOLIDATED TOTAL LIABILITIES" means, on any date, the total
liabilities appearing on the liabilities side of
<PAGE>
a consolidated balance sheet of Tenant and its Subsidiaries, minus Consolidated
Net Worth, all as determined as of such date in accordance with GAAP.
S24."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 to Property or
services purchased in the ordinary course of business;
(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.
S25."DEPOSIT ACCOUNT AGREEMENT" means an agreement substantially in the
form attached to the Agreement as Exhibit B.
S26."ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
S27."ERISA AFFILIATE" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of Tenant, or under common control
with Tenant, within the meaning of Section 414 of the Code.
<PAGE>
S28."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.
S29."EXISTING NON-PERMITTED DEBT" means all Debt of Guarantor, Tenant and
Guarantor's other Subsidiaries identified in Schedule 4.1(j)(i) to the
Agreement, a copy of which is attached hereto, as Existing Non-Permitted Debt.
S30."FAIR MARKET VALUE" means what a willing buyer would pay to a willing
seller in an arm's-length transaction.
S31."GAAP" means generally accepted accounting principles applied on a
basis consistent with those used in the preparation of the latest financial
statements delivered to Landlord, unless (i) either Guarantor or Tenant shall
have objected to determining such compliance on such basis at the time of
delivery of such financial statements, or (B) Landlord shall so object in
writing within 180 days after delivery of such financial statements, and (ii)
Guarantor, Tenant and Landlord 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 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.
S32."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.
S33."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 any 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
(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
<PAGE>
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 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.
S34."GUARANTOR PLEDGE AGREEMENT" means the Pledge Agreement dated the
Nomura Closing Date from Guarantor to Nomura Trust.
S35."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,
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).
S36."INVESTMENT ACCOUNT AGREEMENT" means an agreement substantially in the
form attached to the Agreement as Exhibit J.
S37."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 Nomura Closing Date or thereafter acquired), or
any signed or filed financing statement (other than true lease and consignment
notices not
<PAGE>
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.
S38."MORTGAGES" means the deeds of trust, trust deeds and mortgages dated
the Nomura Closing Date from Tenant to or for the benefit of Nomura Trust.
S39."MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that
(a) is maintained for employees of Tenant or any ERISA Affiliate; or
(b) was so maintained and in respect of which Tenant 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.
S40."NOMURA CLOSING DATE" means May 10, 1995.
S41."NOMURA TRUST" means Nomura International Trust Company.
S42."NOTES" means, collectively, the Variable Rate Senior Secured
Guaranteed Extendible Revolving Notes, Series A, due 1997, in an aggregate
principal amount not to exceed $85,000,000, and the Senior Secured Guaranteed
Extendable Notes, Series B, due 1997, in the aggregate principal amount of
$55,000,000 issued by Tenant pursuant to the Note Purchase Agreement.
S43."OPERATING LEASE" means any lease of any property (real, personal or
mixed) that is not a Capital Lease.
S44."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.
S45."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.
S46."PLAN" means a Single Employer Plan or a Multiple Employer Plan.
S47."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.
S48."PURCHASER" means a Person listed on Schedule A attached to the Note
Purchase Agreement.
<PAGE>
S49."RELATED DOCUMENTS" means the Notes, the Security Documents, each
Guarantee delivered pursuant to Section 9.10 of the Agreement, the letter
agreement referred to in Section 2.6(b) of the Agreement, the letter agreement,
dated March 17, 1995, between Tenant and Guarantor and Nomura Securities
International, Inc. and all other agreements, instruments and documents now or
hereafter executed pursuant to the Agreement or pursuant thereto or in
connection with the Agreement or therewith, as any of the foregoing may from
time to time be amended, modified or supplemented in accordance with its terms
and the Agreement.
S50."RESTRICTED INVESTMENT" means any Investment other than
(a) any Investment in Cash Equivalents;
(b) any Investment existing on the Nomura Closing Date after giving
effect to the transactions contemplated to occur on the Nomura Closing
Date, and described in Schedules 4.1(e) and 4.1(j)(iv) to the Agreement,
copies of which are attached hereto;
(c) any Investment by Tenant 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, the Canadian Subsidiary or any other
Wholly Owned Subsidiary of Tenant as to which Tenant or such Subsidiary,
prior to the date on which such Investment is made, shall have complied
with its obligations under Section 9.9 of the Agreement and any other loan
or advance to, or Guarantee of the obligations, of Tenant 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 Tenant or any such
Subsidiary;
(e) advances to employees of Tenant 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 Tenant's Supplemental Employee Retirement Plan; and
(f) Debt permitted under Sections 10.1(c) and (i) of the Agreement
and Debt owing by Guarantor to Tenant, to the extent permitted under
Section 10.7 of the Agreement.
S51."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,
<PAGE>
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 Guarantor,
Tenant or any of their respective Subsidiaries that is subordinated in
right of payment to the prior payment of the Rent; or
(ii) the principal of or prepayment charge, if any, or interest
or other amounts with respect to any Debt of Tenant or any of its
Subsidiaries owing to any of Tenant's Affiliates (other than Tenant or
a Wholly Owned Subsidiary of Tenant);
(e) any loan by Tenant or any of its Subsidiaries to Guarantor or any
of its Subsidiaries (other than Tenant 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.
S52."SECURITY DOCUMENTS" means the Tenant Security Agreement, the Canadian
Subsidiary Security Agreement, Guarantor Pledge Agreement, the Deposit Account
Agreements, the Mortgages, each security agreement delivered pursuant to
Section 9.9 of the
<PAGE>
Agreement 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.
S53."SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that
(a) is maintained for employees of Tenant or any ERISA Affiliate and
no Person other than Tenant and the ERISA Affiliates; or
(b) was so maintained and in respect of which Tenant or any ERISA
Affiliate could have liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated.
S54."STATUTE" means any statute, ordinance, code, treaty, directive, law,
rule or regulation of any Governmental Body.
S55."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 Subsidiaries or by one or more of such
Person's other Subsidiaries.
S56."TENANT SECURITY AGREEMENT" means the Pledge and Security Agreement
dated the Nomura Closing Date from Tenant to Nomura Trust.
S57."VOTING STOCK" means, with respect to any Person, Capital Stock of such
Person or 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.
S58."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
<PAGE>
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.
ARTICLE II NEGATIVE AND MAINTENANCE COVENANTS
S1.RESTRICTIONS ON DEBT. Tenant 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 the Agreement, the Notes and the
Related Documents;
(b) Debt of Tenant existing on the Nomura Closing Date and described
on Schedule 4.1(j)(i) to the Agreement, a copy of which is attached hereto
(but excluding in any event the Existing Non-Permitted Debt);
(c) Debt of (i) the Canadian Subsidiary owing to Tenant 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) Tenant owing to Guarantor, to the
extent permitted under Section 10.7 of the Agreement;
(d) (i) Debt secured by Liens permitted by Section 10.2(g) of the
Agreement, 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 Tenant or a Subsidiary of
Tenant under a contract pursuant to which Tenant 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
(f) foreign-currency contracts and copper futures contracts or similar
instruments; PROVIDED, that (i) such contracts are entered into solely as bona
fide hedge and are totally offset by existing obligations owed to or by Tenant
in an
<PAGE>
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. .
S2.RESTRICTIONS ON LIENS. Guarantor and Tenant 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:
(a) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by Section 9.2 of the
Agreement;
(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 of the Agreement;
(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, 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 Tenant 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 Property, with or without
consent of the lessee) that
(i) in the case of any such Lien encumbering real Property of
Tenant or its Subsidiaries that
<PAGE>
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 Tenant 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 Tenant 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 Nomura Closing Date and described in Schedule 4.1(j)(i) to
the Agreement, a copy of which is attached hereto (in each case after
giving effect to the transactions contemplated to occur on the Nomura
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 Tenant or any of
its Subsidiaries after the Nomura 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 2.1(e) of these Covenants 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
(i) 100% of the Fair Market Value of such Property; or
(ii) the purchase price or cost of such acquisition, construction
or improvement;
(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) of the Agreement, so long as the sum of the aggregate
amount of cash and the aggregate 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
<PAGE>
Lien permitted by subsection (f), (g), (h) or (i) of this Section 2.2,
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.
S3.[Intentionally Omitted].
S4.CONSOLIDATION, MERGER OR DISPOSITION OF PROPERTIES; ACQUISITIONS.
Guarantor 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 Tenant 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 Tenant 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 Tenant may merge, amalgamate or consolidate
with or into, or be dissolved or liquidated into, Tenant so long as in any
merger or consolidation involving Tenant, Tenant shall be the surviving or
continuing corporation;
(b) any Subsidiary of Tenant may sell, lease or otherwise dispose of
all or any part of its Properties to Tenant;
(c) Tenant 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) Tenant 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 Nomura Closing Date, pursuant to
this clause (d) shall not exceed $1,000,000.
S5.[Intentionally Omitted].
S6.[Intentionally Omitted].
S7.RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.
(a) Tenant shall not and shall not permit any of its Subsidiaries to,
directly or indirectly, make any Restricted Payment, except
<PAGE>
(i) the declaration and payment of cash dividends and
distributions by a Wholly Owned Subsidiary of Tenant on its Capital Stock
to Tenant or to another Wholly Owned Subsidiary of Tenant;
(ii) the payment of the principal of or interest on intercompany
Debt owed by
(A) a Wholly Owned Subsidiary of Tenant to Tenant or to
another Wholly Owned Subsidiary of Tenant, or
(B) Tenant to a Wholly Owned Subsidiary of Tenant;
(iii) the payment of distributions, dividends or interest payments
on intercompany Debt owed to Guarantor in an amount sufficient to make any
tax payment then required to be paid to any taxing authority or pursuant
to any tax sharing agreement or arrangement; PROVIDED, that such payment is
permitted under Section 10.9 of the Agreement;
(iv) the payment of dividends or other distributions by Tenant to
Guarantor in an aggregate amount, for the period beginning on the Nomura
Closing Date, and ending on the date of any such payment, not exceeding
$10,000,000; and
(v) the payment of dividends or other distributions by Tenant to
Guarantor during any fiscal quarter of Tenant; PROVIDED, that no such
distribution shall be made
(A) prior to the date on which Tenant would be required to
make any prepayment of the Notes under Section 3.2(a) of the Agreement
during such fiscal quarter or if any prepayment required under such Section
shall not have been made,
(B) if, after giving effect thereto, an Event of Default
shall have occurred and be continuing, or
(C) after excluding any dividend or other distribution
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 Tenant immediately preceding the date of such proposed
distribution, or
(2) the aggregate amount of all such distributions
during the period beginning on the Nomura Closing Date shall exceed 9.0% of
Consolidated
<PAGE>
EBITDA for the period beginning on April 30, 1995, and ending on the last
day of the fiscal quarter of Tenant immediately preceding the date of such
proposed distribution.
(b) Tenant shall not, and shall not permit any of its Subsidiaries
to, make any Restricted Investments.
S8.ISSUANCE OF CAPITAL STOCK. Tenant 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 Guarantor. Guarantor shall not sell or otherwise dispose of any
Capital Stock of Tenant. Tenant shall not permit any Subsidiary of Tenant 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
(b) sell or otherwise dispose of any shares of Capital Stock of any
other Subsidiary.
S9.TRANSACTIONS WITH AFFILIATES. Except in the case of transactions
between or among Tenant and its Wholly Owned Subsidiaries, Guarantor 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 Guarantor or such Subsidiary unless
(a) such transaction, is otherwise permitted under the Agreement, is
in the ordinary course of Guarantor's, Tenant's or such Subsidiary's
business and is on fair and reasonable terms that are not less favorable to
Guarantor, Tenant 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 Guarantor (or the executive committee
thereof) shall have determined in writing that such transaction is
permitted under clause (a);
PROVIDED, that Tenant may make payments to Guarantor as provided under a tax-
sharing agreement or arrangement, so long as Tenant 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 Tenant and its Subsidiaries would
have paid if Tenant 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 Tenant and its
Subsidiaries.
S10.COMPLIANCE WITH ERISA. Guarantor shall not, and
<PAGE>
shall not permit any ERISA Affiliate to,
(a) engage in any transaction in connection with which Tenant 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.
S11.CAPITAL EXPENDITURES. Tenant 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 Tenant and its Subsidiaries may
make Capital Expenditures and incur commitments therefor during any fiscal year
of Tenant 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 Tenant and its Subsidiaries for the period beginning on the Nomura
Closing Date and ending on any date of determination during such fiscal year
shall not exceed:
(a) for the fiscal year of Tenant ending April 30, 1996, $7,500,000;
(b) for the fiscal year of Tenant 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 Tenant
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 Tenant during such fiscal year, and
(B) $2,5000,000; and
(c) for the fiscal year of Tenant 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 Tenant
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
<PAGE>
made by Tenant during such fiscal years, and
(B) $5,000,000.
Tenant shall not, and shall not permit any of its Subsidiaries to, make any
commitment for new Capital Expenditures at any time when an Event of Default
shall have occurred and be continuing.
S12.OPERATING LEASES. Tenant 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 Tenant and its Subsidiaries may
enter 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 Tenant and its Subsidiaries during any fiscal year of Tenant 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 Tenant 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.
S13.CERTAIN CONTRACTS. Tenant 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 Tenant or a Wholly Owned
Subsidiary of Tenant, 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 Tenant or any of its Subsidiaries from being a party
to or complying with
<PAGE>
any provision of any lease to which any of them is a party on the Nomura
Closing Date;
(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 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 2.1 of these Covenants, and except
for Investments that are not Restricted Investments, any other contract
that, in economic effect, is substantially equivalent to a Guarantee.
S14.LIMITATION ON DIVIDEND RESTRICTIONS AFFECTING SUBSIDIARIES. Except
pursuant to the Agreement, the Lease and as specified in Schedule 10.14 to the
Agreement, a copy of which is attached hereto, Guarantor 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 Guarantor, Tenant or any other Subsidiary of
Guarantor;
(c) make any loans or advances to Guarantor, Tenant or any other
Subsidiary of Guarantor; or
(d) transfer any of its Property or assets to Guarantor, Tenant or
any other Subsidiary of Tenant, except
(i) non-assignment provisions in leases and other agreements
entered into prior to the Nomura Closing Date; and
(ii) customary non-assignment provisions in leases and other
agreements entered into on or after the Nomura Closing Date, in the ordinary
course of business.
S15.[Intentionally Omitted].
S16.[Intentionally Omitted].
S17.FINANCIAL COVENANTS.
(a) MAINTENANCE OF CONSOLIDATED NET WORTH. Tenant shall not permit
(x) its Consolidated Net Worth
<PAGE>
as of the end of any fiscal quarter, plus (y) any amount theretofore
distributed or advanced by Tenant to Guarantor pursuant to
Section 10.7(a)(iv) of these Covenants, 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 Tenant for
each fiscal quarter of Tenant ending on or after July 31, 1995, with
respect to which Tenant's Consolidated Net Income was greater than zero,
MINUS
(iii) with respect to any third fiscal quarter in any fiscal year of
Tenant beginning with its fiscal year ended on April 30, 1996, if Tenant'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. Tenant shall not permit its
Consolidated EBITDA, measured as of each date set forth below for the
period of four consecutive full fiscal quarters of Tenant 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 date:
<TABLE>
<CAPTION>
Measuring Date Amount
-------------- ------
<S> <C>
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
</TABLE>
(c) INTEREST EXPENSE COVERAGE RATIO. Tenant shall not permit the
ratio of
(i) Consolidated EBITDA for the period of four consecutive full
fiscal quarters of Tenant 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
<PAGE>
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:
<TABLE>
<CAPTION>
Measuring Date Ratio
-------------- -----
<S> <C>
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
</TABLE>
(d) FIXED-CHARGE COVERAGE RATIO. Tenant shall not permit the ratio
of
(i) Consolidated Net Income Available for Fixed Charges for the
period of four consecutive fiscal quarters of Tenant 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:
<TABLE>
<CAPTION>
Measuring Date Ratio
-------------- -----
<S> <C>
July 31, 1995 1.05: 1.00
October 31, 1995 1.10: 1.00
January 31, 1996 1.10: 1.00
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
</TABLE>
(e) CONSOLIDATED TOTAL LIABILITIES/EBITDA RATIO. Tenant shall not
permit the ratio of
(i) Consolidated Total Liabilities as of each date set forth
below to
<PAGE>
(ii) Consolidated EBITDA for the period of four consecutive full
fiscal quarters of Tenant ended on such date, plus, in the case of any such
date that is earlier than July 1, 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 (3) if such
date is January 31, 1996, one and one-third, for purposes of calculating such
ratio:
<TABLE>
<CAPTION>
Measuring Date Ratio
-------------- -----
<S> <C>
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: 1.00
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
</TABLE>
<PAGE>
[Attach Copies of Schedule 4.1(e),
Schedule 4.1(j)(i), Schedule 4.1(j)(iv)
and Schedule 4.2(j)(i)]
<PAGE>
Exhibit 10(p)
THE ALPINE GROUP, INC.,
ISSUER
ADIENCE, INC.
SUPERIOR TELECOMMUNICATIONS, INC.,
SUPERIOR CABLE CORPORATION
SUBSIDIARY GUARANTORS
$153,000,000
12 1/4% Senior Secured Notes due 2003
PURCHASE AGREEMENT
July 14, 1995
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Nomura Securities International, Inc.
First Albany Corporation
c/o Merrill Lynch & Co.
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1201
Ladies and Gentlemen:
The Alpine Group, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Nomura Securities International, Inc. and First Albany
Corporation (collectively, the "Initial
<PAGE>
2
Purchasers") $153,000,000 aggregate principal amount of the Company's 12 1/4%
Senior Secured Notes due 2003 (the "Notes"). The Notes are to be issued
pursuant to an Indenture to be dated on or about in July 14, 1995 (the
"Indenture") among the Company, each Subsidiary Guarantor (as defined below) and
Marine Midland Bank, trustee (the "Trustee"). The obligations of the Company
under the Indenture and the Notes will be guaranteed (the "Subsidiary
Guarantees") by the following wholly owned subsidiaries of the Company,
Superior Telecommunications Inc., a Georgia corporation ("Superior"), Adience,
Inc., a Delaware corporation ("Adience") and Superior Calbe Corporation, a
corporation organized under the laws of Ontario, Canada ("Superior Canada" and,
together with Superior and Adience, together with Superior and Superior Canada
(as defined below) in the event that Superior Canada issues a Subsidiary
Guaranty as set forth in the following paragraph, the "Subsidiary Guarantors"),
pursuant to the Indenture. Additionally, pursuant to the Pledge Agreement
between the Company and the Trustee (the "Pledge Agreement") the Notes are to be
secured by the capital stock of Superior and Adience that is owned by the
Company (the "Pledged Stock"), together with profits and proceeds therefrom and
property received with respect thereto, in addition thereto, in exchange
therefor or in substitution thereof (collectively, the "Collateral"), which will
be pledged to the Trustee.
At such time as the Company completes the refinancing of the DNE
Credit Facility (as defined below), the Notes will also be secured by the stock
of DNE Technologies, Inc., a Delaware corporation ("DNE"), DNE Systems, Inc., a
Delaware corporation ("DNE Systems") and DNE Manufacturing and Service Company,
a Delaware corporation ("DNE Manufacturing" and, together with DNE and DNE
Systems, the "DNE Group") that is owned directly by the Company.
The Notes will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "1933 Act"),
in reliance on an exemption therefrom. The Company and the Subsidiary
Guarantors have prepared a preliminary offering memorandum, dated June 21, 1995
(such preliminary offering memorandum being hereinafter referred to as the
"Preliminary Offering Memorandum"), and is preparing an offering memorandum,
dated July 14, 1995 (such offering memorandum, in the form first furnished to
the Initial Purchasers for use in connection with the offering of the Notes,
being hereinafter referred to as the "Offering Memorandum"), each setting forth
information regarding the Company, the Subsidiary Guarantors, the Subsidiary
Guarantees and the Notes. The Company hereby confirms that it has authorized
the use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Notes.
Concurrent with the offering of the Notes, the Company and certain of
its subsidiaries will enter into a new $85 million revolving credit agreement
with the lenders party thereto and Shawmut Capital Corporation, as agent (the
"New Credit Agreement"). The Company intends to use the net proceeds of the
sale of the Notes together with borrowings under the New Credit Agreement and a
portion of its cash reserves as follows (collectively, "the
<PAGE>
3
Refinancing"; such other defined terms used in this paragraph below and not
previously defined herein are used with the meanings ascribed in the Offering
Memorandum):
1. Superior will repay in full the $140.0 million aggregate
principal amount of the Alcatel Acquisition Notes;
2. The $10.3 million deferred purchase price owed in connection with
the Alcatel Acquisition (the "Deferred Purchase Price") will be
paid;
3. Adience will retire $44,.1 million aggregate principal amount of
the Adience Senior Notes, plus accrued interest, pursuant to the
Debt Exchange Agreement;
4. Adience will terminate the Adience Credit Facility and repay all
amounts outstanding thereunder;
5. the Company will acquire the 12.8% of Adience's common stock not
owned by the Company for $1.6 million in cash pursuant to the
merger of a wholly owned subsidiary of the Company into Adience;
6. The DNE Acquisition Note will be repaid;
7. DNE will terminate the DNE Credit Facility and repay all amounts
outstanding thereunder;
8. Alpine will redeem in full the Alpine 13.5% Senior Notes;
9. Alpine will redeem in full the Alpine 13.5% Debentures;
10. Alpine will repay certain other current indebtedness aggregating
approximately $0.2 million; and
11. Alpine will lend $3.3 million to PolyVision to enable PolyVision
to repay all amounts due under its credit facility and its
outstanding equipment loan
The Company understands that the Initial Purchasers propose to make an
offering of the Notes on the terms set forth in the Offering Memorandum, as soon
as the Initial Purchasers deem advisable after this Agreement has been executed
and delivered, (i) to persons in the United States whom the Initial Purchasers
reasonably believe to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the 1933 Act, as such rule
may be amended from time to time ("Rule 144A"), in transactions under Rule 144A,
(ii)
<PAGE>
4
to a limited number of other institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) and (7) under Regulation D ("Regulation D") of the 1933
Act ("Accredited Investors")) in exempt private sales under the 1933 Act and/or
(iii) to non-U.S. persons outside the United States to whom the Initial
Purchasers reasonably believe offers and sales of the Notes may be made in
reliance upon Regulation S under the 1933 Act ("Regulation S"), in transactions
meeting the requirements of Regulation S, provided that the offers and sales
described in clauses (i), (ii) and (iii) are made in the manner contemplated by
Section 2(d) and Section 2(e) hereof.
The holders of the Notes will be entitled to the benefits of a
Registration Rights Agreement, in a form reasonably satisfactory to the Initial
Purchasers (the "Registration Rights Agreement"), pursuant to which the Company
and the Subsidiary Guarantors will file a registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") registering the Exchange Notes referred to in such Registration
Rights Agreement (the "Exchange Notes") or the Notes under the 1933 Act.
Section 1. REPRESENTATIONS AND WARRANTIES. (a) The Company and
each of the Subsidiary Guarantors, jointly and severally, represent and warrant
to and agree with the Initial Purchasers as of the date hereof and as of the
Closing Time (as hereinafter defined) that:
(i) As of their respective dates, none of the Preliminary
Offering Memorandum, the Offering Memorandum or any amendment or supplement
thereto and, as of the Closing Time, the Offering Memorandum, as amended or
supplemented at such time, included or will include an untrue statement of
a material fact or omitted or will omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that this representation
and warranty does not apply to untrue statements made in or omissions from
the Preliminary Offering Memorandum or any amendment or supplement thereto
that are corrected in the Offering Memorandum or any amendment or
supplement thereto or to statements or omissions made in reliance upon and
in conformity with information furnished in writing by the Initial
Purchasers to the Company or the Subsidiary Guarantors expressly for use in
the Preliminary Offering Memorandum, the Offering Memorandum or any
amendment or supplement thereto.
(ii) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning of
Rule 144A under the 1933 Act) as any securities of the Company registered
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or
listed on a national securities exchange or quoted in an automated
interdealer quotation system. The Company has been advised by the National
Association of Securities Dealers, Inc. PORTAL Market that the Notes will
be designated PORTAL eligible securities in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc.
<PAGE>
5
(iii) The Company is subject to Section 13 or 15(d) of the 1934
Act.
(iv) Neither the Company nor any Subsidiary Guarantor is an open-
end investment company, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(v) None of the Company, any Subsidiary Guarantor or any of
their respective affiliates (as defined in Rule 501(b) under the 1933 Act)
has, directly or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the 1933 Act) which is or will be integrated with the sale of
the Notes in a manner that would require the registration of the Notes
under the 1933 Act, provided that the foregoing representation and warranty
shall not be deemed to apply to actions of the Initial Purchasers or their
affiliates.
(vi) None of the Company, any Subsidiary Guarantor, any of their
respective affiliates or any person (other than the Initial Purchasers or
their affiliates, as to whom the Company and the Subsidiary Guarantors make
no representation) acting on their behalf has engaged, in connection with
the offering of the Notes, (A) in any form of general solicitation or
general advertising (as those terms are defined in Regulation D); (B) in
any public offering within the meaning of Section 4(2) of the 1933 Act; or
(C) in any directed selling efforts (as defined in Rule 902 under the 1933
Act and the Commission's Release No. 33-6863 in the United States in
connection with the Notes proposed to be offered and sold pursuant to
Regulation S by the Initial Purchasers).
(vii) Assuming that the representations and warranties of the
Initial Purchasers in Section 2(d) and Section 2(e) are true, correct and
complete and assuming compliance by the Initial Purchasers with their
covenants in Section 2(d) and Section 2(e), it is not necessary in
connection with the offer, sale and delivery of the Notes to the Initial
Purchasers under, or in connection with the initial resale of such Notes by
the Initial Purchasers in accordance with, this Agreement to register the
Notes or the Subsidiary Guarantees under the 1933 Act or to qualify any
indenture in respect of the Notes under the Trust Indenture Act of 1939, as
amended (the "1939 Act").
(viii) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Offering Memorandum any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Offering Memorandum; and, since the date as of which information is given
in the Offering Memorandum, there has not been any material adverse change
in the condition
<PAGE>
6
(financial or otherwise), earnings or business of the Company and its
subsidiaries, considered as one enterprise, otherwise than as set forth in
the Offering Memorandum.
(ix) The (a) consolidated financial statements of the Company and
its subsidiaries included in the Offering Memorandum present fairly the
consolidated financial position of the Company and its subsidiaries as of
the dates indicated and the consolidated results of operations and changes
in financial position of the Company and its subsidiaries for the periods
specified, (b) the combined financial statements of the Alcatel Business
included in the Offering Memorandum present fairly the combined financial
position of the Alcatel Business as of the dates indicated and the combined
results of operations and changes in financial position of the Alcatel
Business for the periods specified, and (c) the consolidated financial
statements of Adience and its subsidiaries included in the Offering
Memorandum present fairly the consolidated financial position of Adience
and its subsidiaries as of the dates indicated and the consolidated results
of operations and changes in financial position of Adience and its
subsidiaries for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved.
The selected financial data and all operating data included in the Offering
Memorandum present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited consolidated
financial statements of the Company and its subsidiaries included in the
Offering Memorandum. The pro forma financial statements and other pro
forma financial information included in the Offering Memorandum present
fairly the information shown therein in accordance with the adjustments and
assumptions described therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma basis described
therein, and, in the opinion of the Company and the Subsidiary Guarantors,
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(x) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with
corporate power and authority under such laws to own, lease and operate its
properties and conduct its business as described in the Offering
Memorandum; and the Company is duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, unless, in each case, the
failure to so qualify in any jurisdiction would not have a material adverse
effect on the condition (financial or otherwise), earnings or business of
the Company and its subsidiaries, considered as one enterprise.
<PAGE>
7
(xi) The Company's only subsidiaries are set forth on Schedule II
hereto (collectively, the "Subsidiaries"), except for PolyVision France,
S.A., which is inactive and had aggregate total assets of less than
$900,000 as of April 30, 1995. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with corporate power and authority under
such laws to own, lease and operate its properties and conduct its
business; each Subsidiary is duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, unless, in each case, the
failure to so qualify in any jurisdiction would not have a material adverse
effect on the condition (financial or otherwise), earnings or business of
the Company and its subsidiaries, considered as one enterprise. All of the
outstanding shares of capital stock of each Subsidiary have been duly and
authorized and validly issued, are fully paid and non-assessable and,
except with respect to (a) approximately 12.8% of the outstanding common
stock of Adience and (b) outstanding shares of common stock of Adience that
are pledged to certain lenders pursuant to the Adience Credit Facility (as
defined in the Offering Memorandum), are owned directly by the Company or
indirectly by the Company through a Subsidiary Guarantor, free and clear of
any pledge, lien, security interest, charge, claim, equity or encumbrance
of any kind. As of the Closing Time all of the capital stock of each
Subsidiary will be owned directly by the Company or indirectly by the
Company through a Subsidiary Guarantor, free and clear, except with respect
to the interest of the Trustee in the Pledged Stock pursuant to the Pledge
Agreement, of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind.
(xii) The authorized, issued and outstanding capitalization of
the Company is as set forth in the Offering Memorandum under the caption
"Capitalization". All of the outstanding shares of the capital stock of
the Company have been duly and authorized and validly issued and are fully
paid and non-assessable.
(xiii) Each of the Company and the Subsidiaries has good and
marketable title in fee simple to all real property owned by it which is
material (individually or in the aggregate) to the Company and its
subsidiaries, taken as one enterprise, and good and marketable title to all
personal property owned by it which is material (individually or in the
aggregate) to the Company and its subsidiaries, taken as one enterprise, in
each case, free and clear of all liens, charges, encumbrances and
restrictions except such as are described in the Offering Memorandum or
such as are not material (individually or in the aggregate) to the Company
and its subsidiaries, taken as one enterprise; and any real property and
buildings held under lease by the Company or any Subsidiary which are
material (individually or in the aggregate) to the Company and its
subsidiaries, taken as one enterprise, are held by the Company or the
Subsidiary under valid, subsisting and enforceable leases with such
exceptions as are not material (individually or in the aggregate) to the
Company and its subsidiaries, taken as one enterprise.
<PAGE>
8
(xiv) Neither the Company nor any Subsidiary is in violation of
its Articles of Incorporation or by-laws or in default in the performance
or observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument to which it is a party or by which
it is bound or to which any of its property or assets is subject which
default or defaults individually or in the aggregate would have a material
adverse effect on the condition (financial or otherwise), earnings or
business of the Company and its subsidiaries, considered as one enterprise.
The execution and delivery of this Agreement, the Registration Rights
Agreement, the Pledge Agreement, the Indenture and the New Credit Agreement
by the Company and the Subsidiary Guarantors, the issuance and delivery of
the Notes, the delivery of the Pledged Stock and related stock powers
executed in blank, the compliance by the Company and the Subsidiary
Guarantors with all of the provisions of this Agreement, the Notes, the
Registration Rights Agreement, the Pledge Agreement, the Indenture and the
New Credit Agreement, and the consummation by the Company and the
Subsidiaries of the transactions contemplated herein, including the
Refinancing, and in the Registration Rights Agreement (A) do not and will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or, except as disclosed in
the Offering Memorandum with respect to the Pledge Agreement and the New
Credit Agreement, result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any Subsidiary
under any contract, indenture, mortgage, deed of trust, loan agreement,
note, lease or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound or
to which any of the property or assets of the Company or any Subsidiary is
subject, (B) do not and will not result in any violation of the provisions
of the charter or by-laws of the Company or any Subsidiary and (C) do not
and will not result in any violation of any law, rule, regulation,
judgment, order or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of their respective properties or assets other than, in
the case of clauses (A) and (C) above, any breach, default or violation
that individually or in the aggregate will not have a material adverse
effect on the condition (financial or otherwise), earnings or business of
the Company and its subsidiaries, considered as one enterprise; and no
authorization, approval, consent, order, registration, qualification or
license of or with any government, government instrumentality or court,
domestic or foreign, is required for the consummation by the Company and
the Subsidiaries of the transactions contemplated by this Agreement,
including the Refinancing, the Registration Rights Agreement, the
Indenture, the Subsidiary Guarantees and the New Credit Agreement except
the registration under the 1933 Act of the Notes or the Exchange Notes
pursuant to the Registration Rights Agreement, the qualification of the
Indenture under the 1939 Act pursuant to the Registration Rights Agreement
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities or Blue
Sky laws
<PAGE>
9
in connection with the purchase and resale of the Notes by the Initial
Purchasers and the registration of the Notes or the Exchange Notes under
the 1933 Act pursuant to the Registration Rights Agreement.
(xv) Other than as set forth in the Offering Memorandum, there is
no action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company or any Subsidiary Guarantor, threatened against or
affecting the Company or any Subsidiary that could result in any material
adverse change in the condition (financial or otherwise), earnings or
business of the Company and its subsidiaries, considered as one enterprise
or that could materially and adversely affect the properties or assets of
the Company and its subsidiaries, considered as one enterprise, or that
could adversely affect the consummation of the transactions contemplated by
this Agreement, including the Refinancing, the Registration Rights
Agreement, the Indenture, the Pledge Agreement or the New Credit
Agreement; the aggregate of all pending legal or governmental proceedings
that are not described in the Offering Memorandum to which the Company or
any Subsidiary is a party or which affect any of their respective
properties, including any ordinary routine litigation incidental to the
business of the Company or any Subsidiary, would not have a material
adverse effect on the condition (financial or otherwise), earnings or
business affairs of the Company and its subsidiaries, taken as one
enterprise.
(xvi) Other than as described in the Offering Memorandum, neither
the Company nor any subsidiary is in violation of any law, ordinance,
administrative or governmental rule or regulation or court decree
applicable to it, or is not in compliance with any term or condition of, or
has failed to obtain, any license, permit, franchise or other
administrative or governmental authorization necessary to the ownership of
its property or to the conduct of its business, which violation,
non-compliance or failure to obtain would individually or in the aggregate
have a material adverse effect on the condition (financial or otherwise),
earnings or business of the Company and its subsidiaries, considered as one
enterprise.
(xvii) This Agreement has been duly authorized, executed and
delivered by the Company and each Subsidiary Guarantor.
(xviii) Arthur Andersen LLP, which are reporting on certain of the
audited financial statements of the Company, Adience and the Alcatel
Business included in the Offering Memorandum, are independent public
accountants in accordance with the provisions of the 1933 Act and the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations").
<PAGE>
10
(xix) Price Waterhouse LLP, which are reporting on certain of the
audited financial statements of Adience included in the Offering
Memorandum, are independent public accountants in accordance with the
provisions of the 1933 Act and the 1933 Act Regulations.
(xx) The Notes have been duly authorized by the Company and, when
executed, authenticated, issued and delivered in the manner provided for in
the Indenture and sold and paid for as provided in this Agreement, the
Notes will constitute valid and binding obligations of the Company entitled
to the benefits of the Indenture and enforceable against the Company in
accordance with their terms, except as enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law); and the Notes conform to the description
thereof in the Offering Memorandum.
(xxi) The Registration Rights Agreement has been duly authorized
by the Company and each Subsidiary Guarantor and, as of the Closing Time,
will be duly executed and delivered by the Company and each Subsidiary
Guarantor, will constitute a valid and binding obligation of the Company
and each Subsidiary Guarantor enforceable against the Company and each
Subsidiary Guarantor in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting
enforcement of creditors' rights generally, and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and except
as any rights to indemnity and contribution thereunder may be limited by
federal and state securities laws and public policy considerations
underlying such laws; and the Registration Rights Agreement conforms to
the description thereof in the Offering Memorandum.
(xxii) The Indenture has been duly authorized by the Company and
each Subsidiary Guarantor and, when duly executed and delivered by the
Company, each Subsidiary Guarantor and the Trustee, will constitute a valid
and binding obligation of the Company and each Subsidiary Guarantor,
enforceable against the Company and each Subsidiary Guarantor in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law); and the Indenture conforms to the description thereof in the
Offering Memorandum.
<PAGE>
11
(xxiii) The New Credit Agreement has been duly authorized by the
Company and each of the other Subsidiaries party thereto Subsidiary
Guarantors and, when executed and delivered by the Company and each such
subsidiary, will be the valid and binding obligation of the Company and
such subsidiaries, enforceable against each of them in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditor's rights generally, by general equitable principles
(regardless of whether such enforceability may be limited is considered in
a proceeding in equity or at law) and, as to rights of indemnification, by
principles of public policy. The New Credit Agreement, when executed and
delivered, will conform to the description thereof in the Offering
Memorandum.
(xxiv) The Indenture and the Pledge Agreement will create, in favor
of the Trustee, on behalf of the holders of the Notes and the Exchange
Notes, a valid and perfected security interest in the Collateral.
(xxv) The Company will use the proceeds of the sale of the Notes,
together with borrowings under the New Credit Agreement and a portion of
its cash reserves to consummate, in all material respects, the Refinancing
transactions at the Closing Time, except that (A) the Company will call the
Alpine 13.5% Debentures for redemption at the Closing Time, (B) the merger
of the Company's wholly owned subsidiary into Adience will have occurred,
but the Company's payment for the remainder of the shares of Adience not
then owned by the Company will occur subsequent to the Closing Time, (C)
the Deferred Purchase Price will be paid on its due date of August 11, 1995
and (D) the replacement of the DNE Credit Facility with the New Credit
Agreement and the repayment of the DNE Acquisition Note require the
consents of two of DNE's creditors, and will be repaid promptly after
receipt of such consents. The Company will use its reasonable best efforts
to obtain such consents as promptly as possible.
(xxvi) Each of the Company and the Subsidiaries owns, possesses or
has obtained all material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary to own or
lease, as the case may be, and to operate its properties and to carry on
its business as presently conducted, and neither the Company nor any
Subsidiary has received any notice of proceedings relating to revocation or
modification of any such material licenses, permits, certificates,
consents, orders, approvals or authorizations.
(xxvii) Each of the Company and the Subsidiaries owns or possesses,
or can acquire on reasonable terms, adequate patents, patent licenses,
trademarks, service marks and trade names necessary to carry on its
business as presently conducted in all material respects, and neither the
Company nor any Subsidiary has received any notice of infringement of or
conflict with asserted rights of others with respect to any patents,
<PAGE>
12
patent licenses, trademarks, service marks or trade names that in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
could materially adversely affect the condition (financial or
otherwise), earnings or business of the Company and its subsidiaries,
considered as one enterprise.
(xxviii) To the best knowledge of the Company, no labor problem
exists with its employees or with employees of the Subsidiaries or is
imminent that could materially adversely affect the Company and its
subsidiaries, considered as one enterprise, and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of its
or the Subsidiaries' principal suppliers, contractors or customers that
could be expected to materially adversely affect the condition (financial
or otherwise), earnings or business of the Company and its subsidiaries,
considered as one enterprise.
(xxix) All United States federal income tax returns of the Company
and the Subsidiaries required by law to be filed have been filed and all
taxes shown by such returns or otherwise assessed, which are due and
payable, have been paid, except assessments against which appeals have been
or will be promptly taken and as to which adequate reserves have been
provided. The Company and the Subsidiaries each has filed all other tax
returns that are required to have been filed by it pursuant to applicable
foreign, state, local or other law except insofar as the failure to file
such returns would not have a material adverse effect on the condition
(financial or otherwise), earnings or business of the Company and its
subsidiaries, considered as one enterprise, and has paid all taxes due
pursuant to such returns or pursuant to any assessment received by the
Company and the Subsidiaries, except for such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been
provided. The charges, accruals and reserves on the books of the Company
in respect of any income and corporate tax liability for any years not
finally determined are adequate to meet any assessments or re-assessments
for additional income tax for any years not finally determined, except to
the extent of any inadequacy that would not have a material adverse effect
on the condition (financial or otherwise), earnings or business of the
Company and its subsidiaries, considered as one enterprise.
(xxx) The Company and the Subsidiaries each maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's general
or specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
<PAGE>
13
(xxxi) The Company and each of the Subsidiary Guarantors is, and
immediately after the Closing Time will be, Solvent. As used herein, the
term "Solvent" means, with respect to the Company and each Subsidiary
Guarantor, on a particular date, that on such date (A) the fair market
value of the assets of the Company and such Subsidiary Guarantor, as the
case may be, is greater than the total amount of liabilities (including
contingent liabilities) of the Company or such Subsidiary Guarantor, as the
case may be, (B) the present fair salable value of the assets of the
Company and such Subsidiary, as the case may be, is greater than the amount
that will be required to pay the probable liabilities of the Company or
such Subsidiary Guarantor, as the case may be, on its debts as they become
absolute and matured, (C) the Company and such Subsidiary Guarantor, as the
case may be, is able to realize upon its assets and pay its debts and other
liabilities, including contingent obligations, as they mature and (D) the
Company and such Subsidiary Guarantor, as the case may be, does not have an
unreasonably small capital.
(xxxii) Except as disclosed in the Offering Memorandum and except as
would not individually or in the aggregate have a material adverse effect
on the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as one
enterprise, (A) the Company and the Subsidiaries are each in compliance
with all applicable Environmental Laws, (B) the Company and the
Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened Environmental Claims
against the Company or any of the Subsidiaries.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any
judicial or administrative interpretation thereof including any judicial or
administrative order, consent decree or judgment, relating to the
environment, health, safety or any chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority. "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigations or proceedings
relating in any way to any Environmental Law.
(xxxiii) The Company has not taken and will not take, directly or
indirectly, any action that is designed to or that has constituted or that
might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Notes.
<PAGE>
14
(b) Any certificate signed by any officer of the Company or any
Subsidiary Guarantor and delivered to the Initial Purchasers or their counsel in
connection with the offering of the Notes contemplated by this Agreement shall
be deemed a representation and warranty by the Company or such Subsidiary
Guarantor, as the case may be, to the Initial Purchasers as to the matters
covered thereby.
Section 2. PURCHASE, SALE AND RESALE OF THE NOTES; CLOSING;
REPRESENTATIONS AND WARRANTIES OF THE INITIAL PURCHASERS. (a) On the basis of
the representations and warranties herein contained, and subject to the terms
and conditions herein set forth, the Company agrees to sell the Notes to the
Initial Purchasers, and the Initial Purchasers agree, severally and not jointly,
to purchase from the Company the respective principal amount of Notes set forth
in Schedule I hereto opposite their names, at the purchase price of 88.756% of
the principal amount thereof plus accrued interest, if any, from July 21, 1995
to the date of payment and delivery.
(b) Payment of the purchase price for, and delivery of, the Notes
shall be made at the offices of Shearman & Sterling, 599 Lexington Avenue, New
York, New York 10022, or at such other place as shall be agreed upon by the
Company and the Initial Purchasers, at 9:00 A.M. on July 21, 1995, or at such
other time not more than ten full business days thereafter as the Initial
Purchasers and the Company shall determine (such date and time of payment and
delivery being herein called the "Closing Time"). Payment shall be made to the
Company by certified or official bank check or checks in New York Clearing House
or similar next day funds payable to the order of the Company against delivery
of the Notes to the Initial Purchasers for their respective accounts.
(c) The Notes shall be in such denominations ($1,000 or an integral
multiple thereof) and registered in such names as the Initial Purchasers may
request in writing at least one full business day before the Closing Time. The
Notes will be made available in New York City for examination and packaging by
the Initial Purchasers not later than 2:00 P.M. on the business day prior to the
Closing Time.
(d) The Initial Purchasers have advised the Company that they propose
to offer the Notes for sale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum. The Initial Purchasers hereby
represent and warrant to, and agree with, the Company and the Subsidiary
Guarantors that they (i) are Qualified Institutional Buyers, (ii) have not and
will not solicit offers for, or offer or sell, the Notes by means of any form of
general solicitation or general advertising (as those terms are defined in
Regulation D) or in any manner involving a public offering within the meaning of
Section 4(2) of the 1933 Act, or with respect to Notes sold in reliance on
Regulation S, by means of any directed selling efforts as defined in Rule 902
under the 1933 Act and the Commission's Release No. 33-6863, and (iii) will
solicit offers for the Notes only from, and will offer, sell or deliver the
Notes, as part of their initial offering, only to (A) persons in the United
States whom they reasonably believe to
<PAGE>
15
be Qualified Institutional Buyers or, if any such person is buying for one or
more institutional accounts for which such person is acting as fiduciary or
agent, only when such person has represented to them in writing that each such
account is a Qualified Institutional Buyer, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, and, in each case,
in a transaction under Rule 144A, (B) a limited number of other institutional
investors whom they reasonably believe to be Accredited Investors or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchasers in writing that each such account is an Accredited
Investor, PROVIDED, HOWEVER, that such Accredited Investor must complete and
deliver to them an investment letter in the form of Exhibit A to the Offering
Memorandum prior to acceptance of any order by the Initial Purchasers and (C)
non-U.S. persons outside the United States to whom they reasonably believe
offers and sales of the Notes may be made in reliance upon Regulation S, in
transactions meeting the requirements of Regulation S; PROVIDED that, with
respect to clauses (B) and (C), each such transfer of Notes is effected by the
delivery to such purchaser of Notes in definitive form and registered in its
name (or its nominee's name) on the books maintained by the Trustee.
(e) In connection with sales outside the United States, the Initial
Purchasers represent and warrant to, and agree with the Company and the
Subsidiary Guarantors that they will not offer, sell or deliver Notes to, or for
the account or benefit of, U.S. persons (i) as part of the Initial Purchasers'
distribution at any time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the Closing Time, and they will send to each
dealer to whom they sell such Notes during such period, a confirmation or other
notice setting forth the restrictions on offers and sales of the Notes within
the United States or to, or for the account or benefit of, U.S. persons.
Section 3. CERTAIN COVENANTS OF THE COMPANY AND THE SUBSIDIARY
GUARANTORS. The Company and each of the Subsidiary Guarantors, jointly and
severally, covenant with the Initial Purchasers as follows:
(a) The Company will promptly deliver to the Initial Purchasers,
without charge, during the period from the date hereof to the date of the
completion of the distribution of the Notes by the Initial Purchasers,
copies of the Offering Memorandum, as it may then be amended or
supplemented, or the Preliminary Offering Memorandum, as it may then be
amended or supplemented, in such quantities as the Initial Purchasers may
from time to time reasonably request.
(b) The Company will not at any time make any amendment or supplement
to the Offering Memorandum, of which the Initial Purchasers shall not have
previously been advised and furnished a copy, or to which the Initial
Purchasers or counsel for the Initial Purchasers shall reasonably object.
<PAGE>
16
(c) If at any time prior to completion of the distribution of the
Notes by the Initial Purchasers any event shall occur or condition exist as
a result of which it is necessary, in the opinion of counsel for the
Initial Purchasers or counsel for the Company, to amend or supplement the
Offering Memorandum in order that the Offering Memorandum will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading or if, in the opinion of counsel for the Initial Purchasers or
counsel for the Company, it is necessary to amend or supplement the
Offering Memorandum to comply with applicable law, the Company will
promptly prepare such amendment or supplement as may be necessary to
correct such untrue statement or omission or to comply with applicable law,
as the case may be, and furnish the Initial Purchasers such number of
copies as the Initial Purchasers may reasonably request.
(d) The Company will promptly from time to time take such action as
the Initial Purchasers may request to qualify the Notes for offering and
sale under the securities laws of such states or other jurisdictions as the
Initial Purchasers may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions
for a period of not less than one year from the date of the Offering
Memorandum; PROVIDED that in connection therewith neither the Company nor
any Subsidiary Guarantor shall be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction or shall, except as set forth in the Registration Rights
Agreement, be required to make an offer to exchange the Exchange Notes for
Notes.
(e) During a period of three years from the Closing Time, the Company
will furnish the Initial Purchasers with copies of all reports or other
communications (financial or other) furnished to holders of the Notes, and
deliver to the Initial Purchasers (i) promptly after they are publicly
available, copies of any reports and financial statements furnished to or
filed with the Commission or any securities regulatory authority by the
Company or any Subsidiary Guarantor (except for confidential portions of
reports filed with such authorities on a confidential basis); and (ii) such
additional information concerning the business and financial condition of
the Company or the Subsidiary Guarantors as the Initial Purchasers may from
time to time reasonably request.
(f) None of the Company, any Subsidiary Guarantor or any of their
respective affiliates will solicit any offer to buy or offer or sell the
Notes by means of any form of general solicitation or general advertising
(as those terms are defined in Regulation D), or by means of any directed
selling efforts (as defined in Rule 902 under the 1933 Act and the
Commission's Release No. 33-6863) in the United States in connection with
Notes being offered and sold pursuant to Regulation S, prior to the
<PAGE>
17
effectiveness of a Registration Statement with respect to the Notes or the
Exchange Notes.
(g) None of the Company, any Subsidiary Guarantor or any of their
respective affiliates (as defined in Rule 501(b) of the 1933 Act) will
offer, sell or solicit offers to buy or otherwise negotiate in respect of
any security (as defined in the 1933 Act) which will be integrated with the
sale of the Notes in a manner that would require the registration of the
Notes under the 1933 Act.
(h) None of the Company or any Subsidiary Guarantor will be or
become, at any time prior to the expiration of three years after the
Closing Time, an open-end investment trust, unit investment trust or face-
amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act nor be or become a closed end
investment company required to be registered, but not registered,
thereunder.
(i) From and after the Closing Time, the Company and each Subsidiary
Guarantor will, so long as the Notes are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the 1933 Act, and
the Company is neither subject to Section 13 or 15(d) of the 1934 Act, nor
exempt from reporting pursuant to Rule 12g3-2 under the 1934 Act, furnish
to holders of Notes and prospective purchasers of Notes designated by such
holders, upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
1933 Act to permit compliance with Rule 144A in connection with resales of
the Notes.
(j) The Company will use its best efforts in cooperation with the
Initial Purchasers to permit the Notes to be eligible for clearance and
settlement through The Depository Trust Company.
(k) Each certificate representing a Note will bear the following
legend until such legend shall no longer be necessary or advisable because
such Note is no longer subject to the restrictions on transfer described
therein:
THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER
SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
<PAGE>
18
FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS NOTE BY
ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH NOTE, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH ALPINE
OR ANY AFFILIATE OF ALPINE WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF THIS NOTE) ONLY (A) TO ALPINE, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A, (D) PURSUANT TO OFFERS AND SALE TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPHS (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR", FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, AND WHO DELIVERS A
LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT A HERETO TO THE TRUSTEE
OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO
ALPINE'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (I) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS NOTE IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
<PAGE>
19
(l) The Company will use the net proceeds received by it from the
sale of the Notes in the manner specified in the Offering Memorandum under
the caption "Use of Proceeds".
(m) For a period of 180 days from the date hereof, the Company will
not, without the prior written consent of the Initial Purchasers, directly
or indirectly, sell, offer to sell, contract to sell, or announce or file a
registration statement for the offering of, any debt securities of the
Company designed to be traded or distributed in the public or private
securities markets, except pursuant to this Agreement or the Registration
Rights Agreement.
Section 4. PAYMENT OF EXPENSES. The Company and the Subsidiary
Guarantors, jointly and severally, covenant and agree with the Initial
Purchasers that the Company and the Subsidiary Guarantors will pay or cause to
be paid all costs and expenses incident to the performance of the Company's and
the Subsidiary Guarantors' respective obligations under this Agreement, the
Notes, the Registration Rights Agreement and the Indenture, including the
following: (i) the fees, disbursements and expenses of the Company's and the
Subsidiary Guarantors' counsel and accountants and all other expenses incurred
in connection with the preparation and printing of the Preliminary Offering
Memorandum and the Offering Memorandum and any amendments and supplements
thereto and the Indenture; and the mailing and delivering of copies thereof to
the Initial Purchasers and any dealers; (ii) the cost of printing or producing
this Agreement, the Registration Rights Agreement, the Blue Sky Memorandum, any
Legal Investment Survey and any other documents in connection with the offering,
purchase, sale and delivery of the Notes; (iii) all other expenses in connection
with the qualification of the Notes and the Subsidiary Guarantees for offering
and sale under state securities laws as provided in Section 3(e) hereof,
including the reasonable fees and disbursements of counsel for the Initial
Purchasers in connection with such qualification and in connection with the Blue
Sky survey and any Legal Investment Survey; (iv) the cost of preparing
certificates representing the Notes; (v) any fees charged by rating agencies for
rating the Notes; (vi) the fees and expenses of the Trustee, including the fees
and disbursements of counsel for the Trustee, in connection with the Indenture
and the Notes; (vii) all expenses and taxes incident to the sale and delivery
of the Notes to be sold by the Company to the Initial Purchasers hereunder;
(viii) all fees and expenses in connection with the pledge of the Pledged Stock,
including any transfer or stamp taxes; (ix) the cost of obtaining approval for
the trading of the Notes through PORTAL; and (x) all other costs and expenses
incident to the performance of the Company's and the Subsidiary Guarantors'
obligations hereunder that are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this Section
and Section 6 and Section 7 hereof, the Initial Purchasers will pay all of their
own costs and expenses, including the fees of its counsel and any advertising
expenses connected with any offers and sales of the Notes the Initial Purchasers
may make.
<PAGE>
20
If this Agreement is terminated by the Initial Purchasers in
accordance with the provisions of Section 5 or Section 9(a)(i), the Company and
the Subsidiary Guarantors, jointly and severally, agree to reimburse the Initial
Purchasers for all their out-of-pocket expenses, including the fees and
disbursements of the Initial Purchasers' counsel.
Section 5. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
Initial Purchasers' obligations to purchase and pay for the Notes hereunder at
the Closing Time shall be subject to the condition that all representations and
warranties and other statements of the Company or any Subsidiary contained
herein or in certificates of the officers of the Company or any Subsidiary are,
as of the date hereof and such Closing Time, true and correct, the condition
that the Company and the Subsidiary Guarantors shall have performed all of their
respective obligations hereunder theretofore to be performed, and the following
additional conditions:
(a) At the Closing Time, Shearman & Sterling, counsel for the Initial
Purchasers, shall have furnished to the Initial Purchasers their written
opinion, dated the Closing Time, with respect to the Offering Memorandum,
the validity of the Notes and the Indenture and such other related matters
as the Initial Purchasers may reasonably request. In giving such opinion,
such counsel may state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and the Subsidiaries and
certificates of public officials, and such counsel shall have received such
papers and information as they may reasonably request to enable them to
pass upon such matters; provided that such certificates have been delivered
to the Initial Purchasers.
(b) At the Closing Time, Proskauer Rose Goetz & Mendelsohn LLP,
counsel for the Company and the Subsidiary Guarantors, shall have furnished
to the Initial Purchasers their written opinion, dated the Closing Time, in
form and substance satisfactory to the Initial Purchasers and the Initial
Purchasers' counsel, to the effect set forth in Exhibit A hereto. In
giving such opinion, such counsel may rely or furnish to the Initial
Purchasers separate opinions from other counsel (satisfactory to counsel
for the Initial Purchasers and in form and substance satisfactory to
counsel for the Initial Purchasers) as to all matters governed by the laws
of jurisdictions other than the law of the State of New York, the federal
law of the United States and the General Corporation Law of the State of
Delaware, in the case of reliance on such opinion the opinion of counsel
for the Company and the Subsidiary Guarantors shall state that they believe
the Initial Purchasers and they are entitled to so rely. Such counsel may
also state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of officers
of the Company and the Subsidiaries and certificates of public officials;
PROVIDED that such certificates have been delivered to the Initial
Purchasers.
<PAGE>
21
Such opinion shall be to such further effect with respect to other
legal matters relating to this Agreement and the sale of the Notes pursuant
to this Agreement as the Initial Purchasers' counsel may reasonably
request.
(c) At the Closing Time, Rogers & Hardin, special Georgia counsel for
the Company and the Subsidiary Guarantors, shall have furnished to the
Initial Purchasers their written opinion, dated the Closing Time, in form
and substance satisfactory to the Initial Purchasers and the Initial
Purchasers' counsel, regarding Superior, to the effect set forth in
paragraphs B, D, G, H, I, and J of Exhibit A hereto.
(d) At the Closing Time, Sonnenschein, Nath & Rosenthal; Reed Smith
Shaw & McClay; Titus & McConomy; Miller, Turetsky, Rule, McLennan & Stern;
and Damon & Money LLP shall have furnished to the Initial Purchasers their
written opinion, dated the Closing Time, in form and substance satisfactory
to the Initial Purchasers and the Initial Purchasers' counsel regarding
Adience, DNE and Superior, respectively, to the effect that statements in
the Offering Memorandum under the captions "Business - Environmental
Matters" and "Business - Legal Proceedings", insofar as such statements
constitute a summary of the legal matters, documents or proceedings
therein, fairly summarize the matters referred to therein.
(e) On or prior to the execution hereof and also at the Closing Time,
Arthur Andersen LLP shall have furnished to the Initial Purchasers a letter
or letters, in form and substance satisfactory to the Initial Purchasers,
to the effect set forth in Exhibit B hereto.
(f) On or prior to the execution hereof Price Waterhouse LLP shall
have furnished to the Initial Purchasers a letter or letters, in form and
substance satisfactory to the Initial Purchasers as to their independence
with respect to Adience.
(g) At the Closing Time, (1) the Offering Memorandum, as it may then
be amended or supplemented, shall not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, (2) there shall not have been, since the respective
dates as of which information is given in the Offering Memorandum, any
material adverse change in the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, (3) no action, suit or proceeding at law or in
equity shall be pending or, to the knowledge of the Company or any
Subsidiary, threatened against the Company or any Subsidiary other than as
set forth in the Offering Memorandum and no proceedings shall be pending
or, to the knowledge of the Company or any Subsidiary, threatened against
the Company or any Subsidiary before or by any government, governmental
<PAGE>
22
instrumentality or court, domestic or foreign, or any, provincial or other
commission, board or administrative agency wherein an unfavorable decision,
ruling or finding could materially adversely affect the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Company and its subsidiaries, considered as one enterprise, other
than as set forth in the Offering Memorandum, (4) the Company and each
Subsidiary Guarantor shall have complied in all material respects with all
agreements and satisfied all conditions to be performed or satisfied by
them under this Agreement at or prior to the Closing Time, and (5) the
other representations and warranties of the Company and the Subsidiary
Guarantors set forth in Section 1(a) shall be accurate as though expressly
made at and as of the Closing Time. At the Closing Time, the Initial
Purchasers shall have received a certificate of the Chief Executive
Officer, and the Chief Financial Officer, of the Company and each
Subsidiary Guarantor, dated as of the Closing Time, to such effect.
(h) At the Closing Time, the Registration Rights Agreement, in form
and substance reasonably satisfactory to the Initial Purchasers, shall have
been duly executed, delivered and be in full force and effect.
(i) At the Closing Time, the New Credit Agreement and related
documents, in form and substance reasonably satisfactory to the Initial
Purchasers, shall have been duly executed, delivered and be in full force
and effect.
(j) At the Closing Time, the Pledged Stock shall have been duly
delivered to the Trustee, together with fully executed stock powers
prepared in blank.
(k) The Refinancing transactions will have been consummated in all
material respects (including the execution and delivery of the New Credit
Agreement and the initial borrowing thereunder), except that (A) the
Company will have called the Adience 13.5% Debentures for redemption, (B)
the merger of the Company's wholly owned subsidiary into Adience will have
occurred, but the Company's payment for the remainder of the shares of
Adience not then owned by the Company will occur subsequent to the Closing
Time, (c) the Deferred Purchase Price will not have been paid and (iv) the
replacement of the DNE Credit Facility with the New Credit Agreement and
the repayment of the DNE Acquisition Note require the consent of two of
DNE's creditors, the DNE Credit Facility and the DNE Acquisition Note will
be repaid promptly after receipt of such consents.
(l) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Time, there shall not have been any downgrading, nor
any notice given of any intended or potential downgrading or of a possible
change that does not indicate the direction of the possible change, in the
rating accorded any of the Company's long term senior debt, including the
Notes, by any "nationally recognized statistical rating
<PAGE>
23
organization", as such term is defined for purposes of Rule 436(g)(2) under
the 1933 Act.
(m) At the Closing Time, you shall have received a solvency
certificate of the chief financial officer of the Company and each of the
Subsidiary Guarantors, in form and substance satisfactory to you and dated
as of the Closing Time.
(n) On the day prior to the Closing Time the Company will have cash
and cash equivalents of not less than $46,000,000 available for use in the
consummation of the Refinancing transactions.
(o) At the Closing Time, counsel for the Initial Purchasers shall
have been furnished with all such documents, certificates and opinions as
it may reasonably request for the purpose of enabling it to pass upon the
issuance and sale of the Notes as contemplated in this Agreement and the
matters referred to in Section 5(a) and in order to evidence the accuracy
and completeness of any of the representations, warranties or statements of
the Company and the Subsidiary Guarantors, the performance of any of the
covenants of the Company and the Subsidiary Guarantors, or the fulfillment
of any of the conditions herein contained.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by the Initial Purchasers on notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party except as provided in Section 4 herein.
Notwithstanding any such termination, the provisions of Sections 4, 6, 7 and 8
herein shall remain in effect.
Section 6. INDEMNIFICATION. (a) The Company and each of the
Subsidiary Guarantors, jointly and severally, agree to indemnify and hold
harmless each Initial Purchaser and each person, if any, who controls any
Initial Purchaser within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the Offering
Memorandum (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or investigation or proceeding by any
governmental agency or body,
<PAGE>
24
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of the
Company and the Subsidiary Guarantors; and
(iii) against any and all expense whatsoever, as incurred
(including fees and disbursements of counsel chosen by the Initial
Purchasers), reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened in connection with, or any claim
whatsoever based upon, any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or subparagraph (ii) above;
PROVIDED, HOWEVER, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information furnished in writing to the Company or the
Subsidiary Guarantors by any Initial Purchaser expressly for use in the
Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto).
(b) Each Initial Purchasers agrees to indemnify and hold
harmless the Company and the Subsidiary Guarantors, their respective directors,
officers and each person, if any, who controls the Company or any Subsidiary
Guarantor within the meaning of Section 15 of the 1933 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in Section 6(a), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Preliminary
Offering Memorandum or the Offering Memorandum (or any amendment or supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Company or any Subsidiary Guarantor by such Initial Purchaser
expressly for use in the Preliminary Offering Memorandum or the Offering
Memorandum (or any amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. An indemnifying party may participate
at its own expense in the defense of such action. In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
Section 7. CONTRIBUTION. In order to provide for just and
equitable contribution in circumstances under which the indemnity provided for
in Section 6 is for any reason held to
<PAGE>
25
be unenforceable by the indemnified parties although applicable in accordance
with its terms, the Company, the Subsidiary Guarantors and the Initial
Purchasers shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity incurred by
the Company, the Subsidiary Guarantors and the Initial Purchasers, as incurred,
in such proportions that (a) the Initial Purchasers are responsible for that
portion represented by the percentage that the Initial Purchasers' commission
appearing on the cover page of the Offering Memorandum bears to the price to
investors appearing thereon, and (b) the Company and the Subsidiary Guarantors,
jointly and severally, are responsible for the balance; PROVIDED, HOWEVER, that
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls any of the Initial Purchasers within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Initial Purchasers, and each director of the Company or any
Subsidiary Guarantor, and each person, if any, who controls the Company or any
Subsidiary Guarantor within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Company or the Subsidiary Guarantors, as
the case may be.
Section 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. The representations, warranties, indemnities, agreements and other
statements of the Company or any Subsidiary Guarantor or the officers of any of
them set forth in or made pursuant to this Agreement will remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the Company, any Subsidiary Guarantor or any Initial Purchaser or any person who
controls the Company, any Subsidiary Guarantor or any Initial Purchaser and
will survive delivery of and payment for the Notes.
Section 9. TERMINATION OF AGREEMENT. (a) The Initial Purchasers
may terminate this Agreement, by notice to the Company, at any time at or prior
to the Closing Time (i) if there has been, since the respective dates as of
which information is given in the Offering Memorandum, any material adverse
change in the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
or any outbreak of hostilities or escalation thereof or other calamity or crisis
the effect of which is such as to make it, in the judgment of the Initial
Purchasers, impracticable to market the Notes or enforce contracts for the sale
of the Notes, or (iii) if trading in any securities of the Company has been
suspended by the Commission or the American Stock Exchange, or if trading
generally on either the New York Stock Exchange or the American Stock Exchange
or in the over-the-counter market has been suspended, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for securities
have been required, by such exchange or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority or
(iv) if a banking moratorium has been declared by either federal or New York
authorities.
<PAGE>
26
(b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party,
except to the extent provided in Section 4. Notwithstanding any such
termination, the provisions of Section 4, Section 6, Section 7 and Section 8
shall remain in effect.
Section 10. DEFAULT. If one or more of the Initial Purchasers shall
fail at the Closing Time to purchase the Notes that it or they are obligated to
purchase (the "Defaulted Notes"), the non-defaulting Initial Purchasers shall
have the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Initial Purchasers to purchase all, but not less than all,
of the Defaulted Notes in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the non-defaulting Initial Purchasers have not
completed such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Notes does not
exceed 10% of the aggregate principal amount of the Notes to be purchased,
the non-defaulting Initial Purchasers shall be obligated to purchase the
full amount thereof in the proportions that their respective purchase
obligations bear to the purchase obligations of all non-defaulting Initial
Purchasers, or
(b) if the aggregate principal amount of Defaulted Notes exceeds 10%
of the aggregate principal amount of the Notes to be purchased, this
Agreement shall terminate without liability on the part of any non-
defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either the non-defaulting Initial Purchasers or the Company
shall have the right to postpone the Closing Time for a period not exceeding
seven days in order to effect any required changes in the Offering Memorandum or
in any other documents or arrangements. As used in this Agreement, the term
"Initial Purchaser" includes any person substituted for an Initial Purchaser
under this Section 10.
Section 11. NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
if delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Initial Purchasers shall be directed to Merrill Lynch, Pierce,
Fenner & Smith Incorporated, at Merrill Lynch World Headquarters, North Tower,
World Financial Center, New York, New York 10281, attention of Karen Schmitt,
with copies to Shearman & Sterling, 599 Lexington Avenue, New York, New York
10022, attention of Jonathan Jewett. Notices to the Company or any Subsidiary
Guarantor, or all of them, shall be directed to them at 1790 Broadway, 15th
Floor, New York, New York 10019, attention of Chief Financial Officer.
<PAGE>
27
Section 12. PARTIES. This Agreement is made solely for the benefit
of the Initial Purchasers, the Company and the Subsidiary Guarantors and, to the
extent expressed, any person controlling the Company, the Subsidiary Guarantors
or any Initial Purchaser, and the directors and the officers of the Company and
the Subsidiary Guarantors and their respective executors, administrators,
successors and assigns and no other person shall acquire or have any right under
or by virtue of this Agreement. The term "successors and assigns" shall not
include any purchaser, as such purchaser, from the Initial Purchasers of the
Notes.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK. SPECIFIED TIMES OF THE DAY REFER TO NEW
YORK CITY TIME.
Section 14. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and, when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
------------------
<PAGE>
28
If the foregoing is in accordance with the Initial Purchasers'
understanding of our agreement, please sign and return to us a counterpart
hereof, whereupon this instrument will become a binding agreement among the
Company, the Subsidiary Guarantors and the Initial Purchasers in accordance with
its terms.
Very truly yours,
THE ALPINE GROUP, INC.
By
-------------------------
Name:
Title:
ADIENCE, INC.
By
-------------------------
Name:
Title:
SUPERIOR TELECOMMUNICATIONS INC.
By
-------------------------
Name:
Title:
SUPERIOR CABLE CORPORATION
By
-------------------------
Name:
Title:
<PAGE>
29
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
NOMURA SECURITIES INTERNATIONAL, INC.
FIRST ALBANY CORPORATION
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
---------------------------------
Name:
Title:
<PAGE>
SCHEDULE 1
Principal Amount
of Notes
Initial Purchasers to Be Purchased
------------------ ----------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . $
Nomura Securities International, Inc.. . . . . . . . . . . . .
First Albany Corporation . . . . . . . . . . . . . . . . . . .
Total
<PAGE>
SCHEDULE II
SUBSIDIARIES OF THE COMPANY
State/Country of
Subsidiary Name Incorporation Ownership
--------------- ------------- ---------
DNE Systems, Inc. Delaware Alpine (100%)
PolyVision France, S.A. France Alpine (100%)
Adience, Inc. Delaware Alpine (100%)
Superior Telecommunications Inc. Georgia Alpine (100%)
DNE Manufacturing & Service
Company Delaware DNE (100%)
DNE Technologies, Inc. Delaware DNE (100%)
Adience Canada, Inc. Ontario, Canada Adience (100%)
Superior Cable Corporation Ontario, Canada Adience (100%)
<PAGE>
Exhibit 10(q)
EMPLOYMENT AGREEMENT
(Steven S. Elbaum)
AGREEMENT made as of this 8th day of September 1993 between The Alpine
Group, Inc., a Delaware corporation (the "Company"), and Steven S. Elbaum (the
"Executive").
The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the future growth and success of the Company is
expected to be substantial. Whereas the Executive resigned his partnership in
his law firm to assume the office of Chief Executive Officer in 1984; and
whereas Executive has served as the Chief Executive Officer of the Company since
1984 and the Company's market value has increased significantly since 1984 for
the benefit of all shareholders of the Company. The Board desires to provide
for the continued employment of the Executive with the Company which the Board
has determined will reinforce and encourage the continued attention and
dedication of the Executive to the Company as a member of the Company's
management, in the best interest of the Company and its shareholders. Whereas,
the Executive is willing to commit himself to serve the Company, on the terms
and conditions herein provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into an employment agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to serve the Company, on the terms and conditions
set forth herein,
2. TERM. The employment of the Executive by the Company hereunder will
commence on September 1, 1993 (the "Commencement Date") and will continue in
effect (a) until either party gives notice to the other, as provided in Section
6(e), that it does not wish to continue the Executive's employment hereunder or
(b) unless terminated as provided in Sections 6(a), (b), (c) or (d).
3. POSITION AND DUTIES. The Executive shall serve as Chief Executive
Officer and Chairman of the Board of Directors of the Company with the
responsibility and authority to manage and supervise the Company's operations in
the ordinary course of its business and shall have such responsibilities, duties
and authority as are generally associated with each such position and as may
from time to time be assigned to the Executive by the Board that are consistent
with such responsibilities, duties and authority. The Executive shall devote
substantially all of his working time and efforts to the business and affairs of
the
<PAGE>
Company provided that the Executive may be involved in charitable activities and
other passive investments that do not materially detract from the discharge of
his responsibilities hereunder. The Company shall continue to nominate the
Executive as a director of the Company during the term hereof consistent with
the Company's By-laws. In the event of a voluntary termination as set forth in
Section (e)(ii) hereof, Executive shall, unless otherwise requested by the
Company, immediately resign the positions of Chairman and/or Chief Executive
Officer.
4. COMPENSATION AND RELATED MATTERS.
(a) SALARY. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive an annual base salary at a
rate not less than $275,000 or such higher rate as may from time to time be
determined by the Board, such salary to be paid in substantially equal
installments in accordance with the normal payroll practice of the Company. The
Executive's salary will be reviewed at least annually.
(b) ANNUAL BONUS. The Company will pay the Executive an annual bonus
(the "Annual Bonus") within 60 days following the last day of the Company's
fiscal year in an amount not less than 50% of the Executive's annual base salary
then in effect, provided the Company achieves its identified performance
objectives (as approved by the Company's Board of Directors), it being
understood that if the Company exceeds such objectives, the Company will pay the
Executive an additional bonus which shall be reasonable, in the sole discretion
of the Compensation Committee of the Company's Board of Directors (the
"Compensation Committee"), in relation to such performance. The Compensation
Committee reserves the right, in its sole discretion, to make a partial bonus
payment to the Executive for a fiscal year in which the Company does not achieve
its identified performance objectives. The Executive shall be entitled to a
pro-rata portion of the Annual Bonus and additional bonus for any period less
than a full fiscal year for which he is entitled to his salary.
(c) STOCK OPTIONS. On the Commencement Date, the Compensation
Committee will grant the Executive stock options (the "Stock Options") to
purchase 30,000 shares of common stock of the Company (the "Company Stock").
The Stock Options will have exercise prices per share equal to the following
percentages of the average of the high and low sales prices of the Company Stock
on the American Stock Exchange on the Commencement Date and will be exercisable
in the following amounts and on the following dates:
2
<PAGE>
No. of Shares Exercise Price First Exercisable
------------- -------------- ------------------------
7,500 105% Upon the 1st Anniversary
of the Commencement Date
7,500 105% Upon the 2nd Anniversary
of the Commencement Date
7,500 110% Upon the 3rd Anniversary
of the Commencement Date
7,500 115% Upon the 4th Anniversary
of the Commencement Date
Such Stock Options are intended to be "incentive stock options" and will be
granted under the Company's 1987 Equity Incentive Plan, as amended, and be
evidenced by the Company's standard stock option agreement, which will contain
provisions not inconsistent with this Agreement.
In the event of termination of employment (i) by the Executive, under
Section 6(e)(ii) or without Good Reason, prior to the fourth anniversary of the
Commencement Date or (ii) pursuant to Section 6(c),all Stock Options not
theretofore exercisable will lapse and be forfeited. In the event the
Executive's employment is terminated for any other reason prior to the fourth
anniversary of the Commencement Date all Stock options not theretofore
exercisable will thereupon become exercisable. Except as provided in Section 9
each Stock Option will expire 10 years after it is granted.
(d) RESTRICTED STOCK GRANT. On the Commencement Date, the Company
will grant to the Executive 100,000 shares of the Company's stock pursuant to
the Restricted Stock Plan, as amended, or other plan, which restricted shares
shall be set aside in the custody, control and possession of the Company and
released to the Executive at the rate of 25,000 shares on each anniversary of
the Commencement Date, provided that in the event Executive's employment is
terminated under Sections 6(a) or (b) prior to the second anniversary of the
Commencement Date or under Section 6(c) or by Executive without Good Reason,
prior to the fourth anniversary of the Commencement Date, then the scheduled
releases on any subsequent anniversary of the Commencement Date shall be
cancelled and forfeited. Any shares not released shall be cancelled and retired
by the Company.
In consideration of the grant set forth in this Section 4(d),
Executive agrees to and shall release the Company
3
<PAGE>
from any and all claims he may have relating to anti-dilution adjustments to
which he is entitled under the Stock Option Agreement dated December 5, 1984
between the Executive and the Company.
(e) EXISTING STOCK OPTIONS. The following sets forth stock options
previously granted to the Executive ("Existing Stock Options") all of which are
presently exercisable by the Executive as at the Commencement Date:
Existing Stock Options Year of Grant Exercise Price
---------------------- ------------- --------------
140,000 1991 2.50
Unless waived by the Executive in writing, at the Commencement Date
the Existing Stock Options shall be deemed exercised by the Executive and
Company Stock issued therefor by the Company to the Executive as at the
Commencement Date, provided that the Company stock issued therefor shall be set
aside in the custody, control and possession of the Company and released to the
Executive at the rate of 28,000 shares on each anniversary of the Commencement
Date, provided that in the event Executive's employment is terminated under
Sections 6(a), (b), (c) or by Executive without Good Reason, prior to the fifth
anniversary of the Commencement Date, then the scheduled releases on any
subsequent anniversary of the Commencement Date shall be cancelled and
forfeited, Any Company stock not released shall be cancelled and retired by the
Company. The Exercise Price shall be deemed paid by the Executive, provided
that in the event the Executive's employment is terminated under Sections 6(a)
or (b) prior to the second anniversary of the Commencement Date or under Section
6(c) or by Executive under Section 6(e)(ii) or without Good Reason, prior to the
fifth anniversary of the Commencement Date, he shall pay to the Company an
amount equal to the aggregate Exercise Price of $350,000 multiplied by a
fraction the numerator of which is the number of months less than 60 Executive
was employed by the Company from and after the Commencement Date and the
denominator of which is 60.
(f) "GROSS-UP" PAYMENT. Not less than 10 days prior to the due date
of the Executive's federal income tax return for every taxable year of the
Executive in which his income tax liability is affected by the matters contained
in Sections 4(d) or 4(e) (to the extent of the credited exercise price) or in
which he may be liable for an excise taxes under Section 280G of the Internal
Revenue Code, the Company will pay to the Executive an amount necessary to
indemnify and hold harmless the Executive from (i) any and all federal, state or
local income tax, exercise taxes or other liability or payment shown to be due
or arising from or related to the matters contained in Sections 4(d) or 4(e) (to
the extent of the credited exercise price) and (ii) any additional income or
excise taxes arising from or related to a
4
<PAGE>
reimbursement provided for in the preceding clause (i). The Executive will
timely furnish the Company with a written statement prepared by the Executive's
certified public accountant setting forth the amount of the required payment and
the due date or dates of such tax liability. Any payment by the Company
hereunder with respect to the matters contained in Section 4(d) or 4(e) shall be
subject to repayment by the Executive in the event that any shares of Company
Stock acquired upon exercise of the Stock Options to which such payment relates
are sold within the fifth anniversary of the Commencement Date, to the extent of
the proceeds of such sale; PROVIDED, HOWEVER, that in the event any such shares
are not sold within such period, the Company and the Executive shall enter into
an appropriate agreement providing for the repayment by the Executive of any and
all outstanding such amounts paid by the Company,
(g) EXPENSES. During the term of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Executive in performing
services hereunder, including (i) all expenses of travel and living expenses
while away from home or business or at the request of and in the service of the
Company and (ii) an automobile, plus all expenses of maintaining and operating
the automobile, provided that all such expenses are accounted for in accordance
with the policies and procedures established by the Company.
(h) OTHER BENEFITS. The Company shall maintain in full force and
effect, and the Executive shall be entitled to participate in, all of the fringe
benefit plans and arrangements of the Company in effect on the date hereof
(including, without limitation, each group life insurance and accident plan,
medical and dental insurance plans, and disability plan).
(i) ANNUAL PHYSICAL EXAMINATION. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
undergoing an annual physical examination by a licensed physician.
(j) CLUB MEMBERSHIP. During the Term, the Company shall reimburse
the Executive for membership fees, dues and special assessments incurred by the
Executive in connection with his membership in a country club.
(k) TAX AND FINANCIAL PLANNING. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
connection with obtaining professional tax and financial planning advice.
5. OFFICES. Subject to Section 3, the Executive agrees to serve without
additional compensation, if elected or appointed thereto, as a director of the
Company and any of its subsidiaries and in one or more executive offices of any
of the Company's
5
<PAGE>
subsidiaries, provided that the Executive is indemnified for serving in any and
all such capacities.
6. TERMINATION. The Executive's employment hereunder may be terminated
only under the following circumstances:
(a) DEATH. The Executive's employment hereunder shall terminate upon
his death.
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive months,
and within thirty (30) days after written notice of termination is given (which
may occur before or after the end of such six month period) shall not have
returned to the performance of his duties hereunder on a full-time basis, the
Company may terminate the Executive's employment hereunder.
(c) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (i) the willful
and continued failure by the Executive to substantially perform his duties
hereunder (other than any such failure resulting from the Executive's
disability) after written notice is delivered by the Company that specifically
identifies the manner in which the Company believes the Executive has not
substantially performed his duties, which is not cured by the Executive within
30 days after such written notice, or (ii) the willful engaging by the Executive
in misconduct which is materially injurious to the Company, monetarily or
otherwise (including, but not limited to, conduct that constitutes competitive
activity pursuant to Section 9 hereof). For purposes of this paragraph, an act,
or failure to act, on the Executive's part shall not be considered "willful" if
done, or omitted to be done, by him in good faith and with reasonable belief
that his action or omission was in the best interest of the Company.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive may
terminate his employment hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) A failure by the Company to comply with any material
provision of this Agreement which has not been cured within thirty (30) days
after written notice of such noncompliance has been given by the Executive to
the Company;
(ii) Any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirement of Section (f) hereof (and for purposes of this Agreement no such
purported termination shall be effective);
6
<PAGE>
(iii) The assignment to the Executive of any duties materially
inconsistent with his status as the Chief Executive Officer of the Company or a
material adverse alteration in the nature or status of his responsibilities in
connection with such responsibilities. For purposes of this Agreement, "Chief
Executive Officer of the Company" shall mean that if a reorganization or merger
of the Company occurs, the Executive will be the Chief Executive Officer of (1)
the Company if it is the surviving entity in any merger, acquisition or other
business combination with the Company, or (2) the successor entity to the
Company in any merger, acquisition or other business combination with the
Company;
(iv) A person or business organization, or affiliated group of
persons or business organizations who, or which, do not now own or control 20%
or more of the voting stock of the Company, acquire ownership or control of 20%
or more of the voting stock of the Company, or its successor, and thereafter the
Company (or its successor) terminates the Executive's employment under Section
6(e)(i) of this Agreement, in which event such termination shall be deemed to
occur under this Section 6(d) and not under Section 6(e);
(v) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement.
(e) TERMINATION ELECTION.
(i) A notice to Executive by the Company will constitute an
election by the Company to terminate the Executive's employment 60 days
following the date of delivery of the notice;
(ii) A notice to the Company by the Executive will constitute an
election by the Executive to terminate Executive's employment on 180 days
following the date of delivery of the notice;
(iii) In no event, however, shall the Term of the Executive's
employment hereunder extend beyond the end of the month in which the Executive's
sixty-fifth (65th) birthday occurs.
(f) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive (other than termination pursuant
to Section 6(a) hereof) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 14 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean only a notice which is
based upon, and shall indicate, the specific termination provision in this
Agreement relied upon and, except for a termination election under Section 6(e)
hereof, shall set
7
<PAGE>
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive's employment is terminated pursuant to Section 6(b) above,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a full-
time basis during such thirty (30) day period and not earlier than the end of
the consecutive 6 month disability period), (iii) if the Executive's employment
is terminated pursuant to Section 6(c) above, the date specified in the Notice
of Termination, and (iv) if the Executive's employment is terminated by either
of the elections pursuant to Section 6(e) above, the applicable date of
termination determined under Section 6(e) above, and (v) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given; provided, however, that, if within thirty (30) days after
any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period") the Executive shall continue to receive, or receive the
benefit of (as the case may be), all items described in Section 4 hereinabove at
the rate then in effect for such period until his employment is terminated
pursuant to Section 6(b) hereof, or such longer period required to effectuate
the gross up payments under Section 4(f) hereof, provided that payments so made
to the Executive during the first 180 days of the disability period shall be
reduced by the sum of the amounts, if any, payable to the Executive at or prior
to the time of any such payment under disability benefit plans of the Company or
under the Social Security disability insurance program, and which amounts were
not previously applied to reduce any such payment.
(b) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for twelve months following the Date of
Termination due to Disability, all employee welfare benefit plans and programs
in which the Executive was entitled to participate immediately prior to the
8
<PAGE>
Date of Termination provided that the Executive's continued participation is
possible under the general terms and provisions of such plans and programs. In
the event that the Executive's participation in any such plan or program is
barred, the Company shall arrange to provide the Executive with benefits
substantially similar to those which the Executive would otherwise have been
entitled to receive under such plans and programs from which his continued
participation is barred.
(c) If the Executive's employment is terminated by his death, the
Company shall pay (i) any amounts due to, or for the benefit of, or which would
otherwise have been paid to the Executive under Section 4 hereof for a period
ending twelve (12) months after the date of his death and (ii) such amount
required to effectuate and satisfy when due the gross up payments to Executive
under Section 4(f) hereof.
(d) If the Executive's employment shall be terminated by the Company
for Cause, the Company shall pay all amounts under Section 4 hereof due to, or
for the benefit of, the Executive through the Date of Termination at the rate in
effect at the time Notice of Termination is given and the Company shall have no
further obligations to the Executive under this Agreement.
(e) (i) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof prior to the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to two times the
annual base salary in effect immediately prior to termination plus an amount due
or estimated to be due in respect of all payments to be made under Sections 4(b)
and (f);
(ii) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof after the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one-half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (f);
(iii) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof prior to the third anniversary but after the first
anniversary of the Commencement Date, the Company shall pay to the Executive an
amount equal to one times the annual base salary in effect immediately prior to
termination plus an amount due or estimated to be due in respect of all payments
to be made under Sections 4(b) and (f);
(iv) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof after the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one half
times the annual base salary in effect immediately prior to termination
9
<PAGE>
plus an amount due or estimated to be due in respect of all payments to be made
under Sections 4(b) and (f);
(v) The amounts payable to Executive as a multiple of base
salary, as described in Sections 7(e)(i) and (ii) shall be paid to Executive on
the Date of Termination, and as described in Sections 7(e)(iii) and (iv) above,
in 12 equal monthly installments beginning in the month following Date of
Termination.
(f) If the Executive shall terminate his employment for Good Reason,
then
(i) The Company shall pay all amounts due to, or for the benefit
of, the Executive under Section 4 through the Date of Termination at
the rate in effect at the time Notice of Termination is given and all
other unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination under Section 4(f) or any compensation plan or
program of the Company at the time such payments are due;
(ii) In lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of the termination of his
employment, the Company shall pay as severance pay to the Executive a
salary and bonus severance payment equal to three times the prior year
bonus and annual base salary in effect immediately prior to the
Executive's termination, provided, however, that in the event the
termination of the Executive's employment occurs after the third
anniversary of the Commencement Date, the salary and bonus severance
payment will equal two times the prior year bonus and annual base
salary in effect immediately prior to the Executive's termination.
Said salary and bonus severance payment shall be paid in a lump sum
within 30 days after the Date of Termination;
(iii) The Company shall pay to the Executive any deferred
compensation, including, but not limited to deferred bonuses,
allocated or credited to the Executive or his account as of the Date
of Termination;
(iv) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for 36 months following the date of
termination of the Executive's employment if such date is prior to the
third anniversary of the Commencement Date, and if such date is on or
after the third anniversary of the Commencement Date, for 18 months
following the date of the termination of the Executive's employment,
all employee welfare benefit plans and programs in which the Executive
was entitled to participate immediately
10
<PAGE>
prior to the Date of Termination provided that the Executive's
continued participation is possible under the general terms and
provisions of such plans and programs.
In the event that the Executive's participation in any such plan or
program is barred, the Company shall arrange to provide the Executive
with benefits substantially similar to those which the Executive would
otherwise have been entitled to receive under such plans and programs
from which his continued participation is barred.
8. DEATH/ASSIGNMENT OF STOCK OPTIONS. In the event of the Executive's
death, whether his death occurs during or after the Term of this Agreement, all
unexercised and exercisable Stock Options will be assigned to his Estate.
9. TERMINATION/UNEXERCISED STOCK OPTIONS. In the event of the
termination of the employment of the Executive for any reason, all unexercised
and exercisable stock options granted to him hereunder must be exercised by him,
or his estate (or heir(s)) as the case may be, before the second anniversary of
the termination of his employment, but in no event after the tenth anniversary
of the date of grant thereof, any such options not exercised by that date will
lapse immediately thereafter.
10. MITIGATION. In the event that the Executive receives benefits from
other employment after the Date of Termination, the benefits to be provided by
the Company under the provisions of Section 7(b) shall be correspondingly
reduced.
11. ANTI-DILUTION/RECAPITALIZATION OF THE COMPANY. In the Event of any
change in the number of issued shares of Company Stock resulting from a
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend, or other increase or decrease in such shares, then
appropriate adjustments shall be made by the Company with respect to outstanding
unexercised Stock Options and/or the aggregate number of shares of Company Stock
of the Company in respect of which Stock Options may be exercised.
12. NONCOMPETITION.
(a) So long as the Executive is employed by the Company under this
Agreement and unless this Agreement is terminated for any reason, the Executive
agrees not to enter into competitive endeavors.
(b) During the term of this Agreement and any period thereafter
during which or in respect of which the Executive receives payments from the
Company under Section 7, the Executive will retain in confidence any and all
confidential information
11
<PAGE>
known to him concerning the Company and its business and shall not use or
disclose such information without the approval of the Company except to the
extent such information has previously become public or as may be required by
law.
13. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 12 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live, all such amounts
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
14. NOTICE. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
12
<PAGE>
If to the Executive:
Mr. Steven S. Elbaum
44 Duffield Drive
So, Orange, NJ 07079
If to the Company:
The Alpine Group, Inc.
1790 Broadway
15th Floor
New York, NY 10019-1412
Attn: Corporate Secretary
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company as may be
specifically designed by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions as
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of New York without regard to its
conflicts of law principles.
16. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto and any prior agreement
of the
13
<PAGE>
parties hereto in respect of the subject matter contained herein is hereby
terminated and cancelled, PROVIDED, HOWEVER, that this Agreement should not
supersede any existing benefit or agreement which provides such benefit,
including, without limitation, life or disability insurance agreements and
retirement plans currently in effect,
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
ATTEST: THE ALPINE GROUP, INC.
By: (SEAL)
------------------------ --------------------------------
Name: Bragi F. Schut
Title: Executive Vice President
ATTEST: EXECUTIVE
By:
------------------------ --------------------------------
Steven S. Elbaum
14
<PAGE>
Exhibit 10(r)
AMENDMENT TO EMPLOYMENT AGREEMENT
(Steven S. Elbaum)
AGREEMENT dated as of September 8, 1993 by and between The Alpine
Group, Inc., a Delaware corporation (the "Company"), and Stephen S. Elbaum (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated as of the date hereof (the "Employment Agreement); and
WHEREAS, Section 4 of the Employment Agreement contains certain
provisions included in error, which the parties hereto desire to correct and
amend.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 4(e) of the Employment Agreement is hereby amended to
read in full as follows:
"(e) FURTHER RESTRICTED STOCK GRANT. The Company will make a
further grant to the Executive of 50,000 shares of Company Stock
pursuant to the Restricted Stock Plan, as amended, or other plan,
which restricted shares shall be set aside in the custody, control and
possession of the Company and released to the Executive at the rate of
10,000 shares on May 1, 1995 and September 8, 1995, 1996, 1997 and
1998, provided that, in the event the Executive's employment is
terminated under Sections 6(a) or (b) prior to the second anniversary
of the Commencement Date or under Section 6(c) or by Executive without
Good Reason prior to the fifth anniversary of the Commencement Date,
the total number of restricted shares to be released to the Executive
shall be 50,000 multiplied by a fraction the numerator of which is the
number of months the Executive is employed by the Company from and
after the Commencement Date and the denominator of which is 60. Any
and all unreleased shares shall be forfeited by the Executive and
cancelled and retired by the Company."
2. The first sentence of Section 4(f) of the Employment Agreement is
hereby amended by deleting the parenthetical clause "(to the extent of the
credited exercise price)" in the fifth and twelfth lines thereof.
<PAGE>
3. The last sentence of Section 4(f) of the Employment Agreement is
hereby amended to read in full as follows:
"Any payment by the Company hereunder with respect to the matters
contained in Section 4(d) (but not with respect to the matters
contained in Section 4(e)) shall be subject to repayment by the
Executive in the event of a sale at any time prior to the fifth
anniversary of the Commencement Date of any of the shares of Company
Stock acquired under Sections 4(d) and to the extent of the proceeds
of such sale; PROVIDED, HOWEVER, in the event any such amount has not
been repaid by the fifth anniversary of the Commencement Date, the
Company and the Executive shall enter into an appropriate agreement
providing for the repayment by the Executive of any any all
outstanding such amounts paid by the Company."
4. Except as expressly amended hereby, the Employment Agreement
shall not be altered, amended or modified and shall continue in full force and
effect, Any future documents confirming or otherwise relating to the stock
option or restricted stock grants under Sections 4(c), 4(d) or 4(e) of the
Employment Agreement, as amended, shall be subject and pursuant to the
Employment Agreement, as amended, and, in the event of any conflict between
related provisions, the Employment Agreement, as amended, shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE ALPINE GROUP, INC.
by
---------------------------------------------
Name: Bragi F. Schut
Title: Exec. Vice President
THE EXECUTIVE
---------------------------------------------
Steven S. Elbaum
2
<PAGE>
Exhibit 10(s)
EMPLOYMENT AGREEMENT
(Bragi F. Schut)
AGREEMENT made this 8th day of September 1993 between The Alpine Group,
Inc., a Delaware corporation (the "Company"), and Bragi F. Schut (the
"Executive").
The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the future growth and success of the Company is
expected to be substantial. Whereas the Executive has served as the Executive
Vice President of the Company since 1986 and the Board desires to provide for
the continued employment of the Executive with the Company which the Board has
determined will reinforce and encourage the continued attention and dedication
of the Executive to the Company as a member of the Company's management, in the
best interest of the Company and its shareholders. The Executive is willing to
commit himself to serve the Company, on the terms and conditions herein
provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into an employment agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to serve the Company, on the terms and conditions
set forth herein.
2. TERM. The employment of the Executive by the Company hereunder and as
provided in Section 1 will commence on September 1, 1993 (the "Commencement
Date") and will continue in effect (a) until either party gives notice to the
other, as provided in Section 6(e), that it does not wish to continue the
Executive's employment hereunder or (b) unless terminated as provided in
Sections 6(a), (b), (c) and (d).
3. POSITION AND DUTIES. The Executive shall serve as Executive Vice
President and member of the Board of Directors of the Company with such
responsibilities, duties and authority as are from time to time assigned to the
Executive by the Chief Executive Officer or the Board of Directors. The
Executive shall devote substantially all of his working time and efforts to the
business and affairs of the Company provided that the Executive may be involved
in charitable, trade association activities and other passive investments that
do not materially detract from the discharge of his responsibilities hereunder.
<PAGE>
4. COMPENSATION AND RELATED MATTERS.
(a) SALARY. During the period of the Executive's
employment hereunder, the Company shall pay to the Executive an annual base
salary at a rate not less than $172,000 or such higher rate as may from time to
time be determined by the Board, such salary to be paid in substantially equal
installments in accordance with the normal payroll practice of the Company. The
Executive's salary will be reviewed at least annually.
(b) ANNUAL BONUS. The Company will pay the Executive an annual bonus
(the "Annual Bonus") within 60 days following the last day of the Company's
fiscal year in an amount not less than 35% of the Executive's annual base salary
then in effect, provided the Company achieves its identified performance
objectives (as approved by the Company's Board of Directors), it being
understood that if the Company exceeds such objectives, the Company will pay the
Executive an additional bonus which shall be reasonable, in the sole discretion
of the Compensation Committee of the Company's Board of Directors (the
"Compensation Committee"), in relation to such performance. The Compensation
Committee reserves the right, in its sole discretion, to make a partial bonus
payment to the Executive for a fiscal year in which the Company does not achieve
its identified performance objectives. The Executive shall be entitled to a
pro-rata portion of the Annual Bonus and additional bonus for any period less
than a full fiscal year for which he is entitled to his salary.
(c) STOCK OPTIONS. On the Commencement Date, the Compensation
Committee will grant the Executive stock options (the "Stock Options") to
purchase 15,000 shares of common stock of the Company (the "Company Stock").
The Stock Options will have exercise prices per share equal to the following
percentages of the average of the high and low sales prices of the Company Stock
on the American Stock Exchange on the Commencement Date and will be exercisable
in the following amounts and on the following dates:
No. of Shares Exercise Price First Exercisable
------------- -------------- -----------------
3,750 105% Upon the 1st Anniversary
of the Commencement Date
3,750 105% Upon the 2nd Anniversary
of the Commencement Date
3,750 110% Upon the 3rd Anniversary
of the Commencement Date
3,750 115% Upon the 4th Anniversary
of the Commencement Date
2
<PAGE>
Such Stock Options are intended to be "incentive stock options" and will be
granted under the Company's 1987 Equity Incentive Plan, as amended, and be
evidenced by the Company's standard stock option agreement, which will contain
provisions not inconsistent with this Agreement.
In the event of termination of employment (i) by the Executive, under
Section 6(e)(ii) or without Good Reason prior to the fourth anniversary of the
Commencement Date or (ii) pursuant to Section 6(c), all Stock Options not
theretofore exercisable will lapse and be forfeited. In the event the
Executive's employment is terminated for any other reason prior to the fourth
anniversary of the Commencement Date all Stock Options not theretofore
exercisable will thereupon become exercisable. Except as otherwise provided
herein or in Section 9 each Stock Option will expire 10 years after it is
granted.
(d) RESTRICTED STOCK GRANT. On the Commencement Date, the Company
will grant to the Executive 25,000 shares of the Company's stock pursuant to the
Restricted Stock Plan, as amended, or other plan, which restricted shares shall
be set aside in the custody, control and possession of the Company and released
to the Executive at the rate of 6,250 shares on each anniversary of the
Commencement Date, provided that in the event Executive's employment is
terminated under Sections 6(a) or (b) prior to the second anniversary of the
Commencement Date or under Section 6(c) or by Executive without Good Reason,
prior to the fourth anniversary of the Commencement Date, then the scheduled
releases on any subsequent anniversary of the Commencement Date shall be
cancelled and forfeited. Any shares not released shall be cancelled and retired
by the Company.
(e) EXISTING STOCK OPTIONS. The following sets forth stock options
previously granted to the Executive ("Existing Stock Options") all of which are
presently exercisable by the Executive as at the Commencement Date:
Existing Stock Options Year of Grant Exercise Price
---------------------- ------------- --------------
40,000 1992 $2.938
Unless waived by the executive in writing, at the Commencement Date the
existing Stock Options shall be deemed exercised by the Executive and Company
Stock issued therefor by the Company to the Executive as at the Commencement
Date, provided that the Company stock issued therefor shall be set aside in the
custody, control and possession of the Company and released to the Executive at
the rate of 8,000 shares on each anniversary of the Commencement Date provided
that in the event Executive's employment is terminated under Sections 6(a), (b),
(c) or by Executive without Good Reason, prior to the fifth anniversary of the
Commencement Date, then the scheduled releases
3
<PAGE>
on any subsequent anniversary of the Commencement Date shall be cancelled and
forfeited. Any Company stock not released shall be cancelled and retired by the
Company. The Exercise Price shall be deemed paid by the Executive, provided
that in the event the Executive's employment is terminated under Sections 6(a)
or (b) prior to the second anniversary of the Commencement Date or under Section
6(c) or by Executive under Section 6(e)(ii) or without Good Reason, prior to the
fifth anniversary of the Commencement Date, he shall pay to the Company an
amount equal to the aggregate Exercise Price of $100,000 multiplied by a
fraction the numerator of which is the number of months less than 60 Executive
was employed by the Company from and after the Commencement Date and the
denominator of which is 60.
(f) "GROSS-UP" PAYMENT. Not less than 10 days prior to the due date
of the Executive's federal income tax return for every taxable year of the
Executive in which his income tax liability is affected by the matters contained
in Section 4(d) or 4(e) (to the extent of the credited exercise price) or in
which he may be liable for an excise tax under Section 280G of the Internal
Revenue Code, the Company will pay to the Executive an amount necessary to
indemnify and hold harmless the Executive from (i) any and all federal, state or
local income tax, excise taxes or other liability or payment shown to be due or
arising from or related to the matters contained in Section 4(d) or 4(e) (to the
extent of the credited exercise price) and (ii) any additional income or excise
taxes arising from or related to the reimbursement provided for in preceding
clause (i). The Executive will timely furnish the Company with a written
statement prepared by the Executive's certified public accountant setting forth
the amount of the required payment and the due date or dates of such tax
liability. Any payment by the Company hereunder with respect to the matters
contained in Section 4(d) or 4(e) shall be subject to repayment by the Executive
in the event that any shares of Company Stock acquired upon exercise of the
Stock Options to which such payment relates are sold within the fifth
anniversary of the Commencement Date, to the extent of the proceeds of such
sale; PROVIDED, HOWEVER, that in the event any such shares are not sold within
such period, the Company and the Executive shall enter into an appropriate
agreement providing for the repayment by the Executive of any and all
outstanding such amounts paid by the Company.
(g) EXPENSES. During the term of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Executive in performing
services hereunder, including (i) all expenses of travel and living expenses
while away from home or business or at the request of and in the service of the
Company and (ii) an automobile, plus all expenses of maintaining and operating
the automobile, provided that all such expenses are accounted for in accordance
with the policies and procedures established by the Company.
4
<PAGE>
(h) OTHER BENEFITS. The Company shall maintain in full force and
effect, and the Executive shall be entitled to participate in, all of the fringe
benefit plans and arrangements of the Company in effect on the date hereof
(including, without limitation, each group life insurance and accident plan,
medical and dental insurance plans, and disability plan).
(i) ANNUAL PHYSICAL EXAMINATION. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
undergoing an annual physical examination by a licensed physician.
(j) TAX AND FINANCIAL PLANNING. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
connection with obtaining professional tax and financial planning advice.
5. OFFICES. Subject to Section 3, the Executive agrees to serve without
additional compensation, if elected or appointed thereto, as a director of the
Company and any of its subsidiaries and in one or more executive offices of any
of the Company's subsidiaries, provided that the Executive is indemnified for
serving in any and all such capacities.
6. TERMINATION. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
(a) DEATH. The Executive's employment hereunder shall terminate upon
his death.
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive months,
and within thirty (30) days after written notice of termination is given (which
may occur before or after the end of such six month period) shall not have
returned to the performance of his duties hereunder on a full-time basis, the
Company may terminate the Executive's employment hereunder.
(c) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (i) the willful
and continued failure by the Executive to substantially perform his duties
hereunder (other than any such failure resulting from the Executive's
disability) after written notice is delivered by the Company that specifically
identifies the manner in which the Company believes the Executive has not
substantially performed his duties, which is not cured within 30 days after such
written notice, or (ii) the willful engaging by the Executive in misconduct
which is materially injurious to the Company, monetarily or otherwise
5
<PAGE>
(including, but not limited to, conduct that constitutes competitive activity
pursuant to Section 9 hereof). For purposes of this paragraph, an act, or
failure to act, on the Executive's part shall not be considered "willful" if
done, or omitted to be done, by him in good faith and with reasonable belief
that his action or omission was in the best interest of the Company.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive may
terminate his employment hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) A failure by the Company to comply with any material
provision of this Agreement which has not been cured within ten (30) days after
notice of such noncompliance has been given by the Executive to the Company;
(ii) Any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirement of Section (f) hereof (and for purposes of this Agreement no such
purported termination shall be effective);
(iii) A person or business organization, or affiliated group of
persons or business organizations who, or which, do not now own or control 20%
or more of the voting stock of the Company, acquire ownership or control of 20%
or more of the voting stock of the Company, or its successor, and thereafter (x)
the Executive is assigned any duties materially inconsistent with his status as
an executive officer of the Company or the nature or status of his
responsibilities as such are materially adversely altered or (y) the Company (or
its successor) terminates the Executive's employment under Section 6(e)(i) of
this Agreement, in which event such termination shall be deemed to occur under
this Section 6(d) and not under Section 6(e).
(e) TERMINATION ELECTION.
(i) A notice to Executive by the Company will constitute an
election by the Company to terminate the Executive's employment 60 days
following the date of delivery of the notice;
(ii) A notice to the Company by the Executive will constitute an
election by the Executive to terminate Executive's employment 180 days following
the date of delivery of the notice;
(iii) In no event, however, shall the Term of the Executive's
employment hereunder extend beyond the end of the month in which the Executive's
sixty-fifth (65th) birthday occurs.
(f) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive (other
6
<PAGE>
than termination pursuant to subsection (a) hereof) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 14 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean only a notice which is based upon, and shall indicate, the specific
termination provision in this Agreement relied upon and, except for a
termination under Section 6(e) hereof, shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive's employment is terminated pursuant to Section 6(b) above,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a full-
time basis during such thirty (30) day period and not earlier than the end of
the consecutive 6 month disability period), (iii) if the Executive's employment
is terminated pursuant to Section 6(c) above, the date specified in the Notice
of Termination, (iv) if the Executive's employment is terminated by either of
the elections pursuant to Section 6(e) above, the applicable date of termination
determined under Section 6(e) above, and (v) if the Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given; provided, however, that, if within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding and final arbitration
award or by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having
been perfected).
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period") the Executive shall continue to receive, or receive the
benefit of (as the case may be), all items described in Section 4 hereinabove at
the rate then in effect for such period until his employment is terminated
pursuant to Section 6(b) hereof or such longer period required to effectuate the
gross up payments under Section 4(e) hereof, provided that payments so made to
the Executive during the first 180 days of the disability period shall be
reduced by the sum of the,amounts, if any, payable to the Executive at or prior
to the time of any such payment under disability benefit plans of the Company or
under the Social Security disability insurance program, and which amounts were
not previously applied to reduce any such payment.
7
<PAGE>
(b) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for twelve months following the Date of
Termination due to Disability, all employee welfare benefit plans and programs
in which the Executive was entitled to participate immediately prior to the Date
of Termination provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been entitled to
receive under such plans and programs from which his continued participation is
barred.
(c) If the Executive's employment is terminated by his death, the
Company shall pay any amounts due to, or for the benefit of, or which would
otherwise have been paid to the Executive under Section 4 hereof for a period
ending twelve (12) months after the date of his death or such longer period
required to effectuate the gross up payments under Section 4(e) hereof.
(d) If the Executive's employment shall be terminated by the Company
for Cause or by the Executive for other than Good Reason, the Company shall pay
all amounts under Section 4 hereof due to, or for the benefit of, the Executive
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations to the
Executive under this Agreement.
(e) (i) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof prior to the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one-half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (f);
(ii) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof after the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one times the
annual base salary in effect immediately prior to termination plus an amount due
or estimated to be due in respect of all payments to be made under Sections 4(b)
and (f);
(iii) If the Executive's employment is terminated by the Executive
under Section 6.(e)(ii) hereof prior to the third anniversary but after the
first anniversary of the Commencement Date, the Company shall pay to the
Executive an amount equal to one times the annual base salary in effect
immediately prior to termination plus an amount due or estimated to be due in
respect of all payments to be made under Sections 4(b) and (f);
8
<PAGE>
(iv) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof after the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (f);
(v) The amounts payable to Executive as a multiple of base
salary, as described in Sections 7(e)(i) and (ii) shall be paid to Executive on
the Date of Termination, and as described in Sections 7(e)(iii) and (iv) above,
shall be paid to Executive in 12 equal monthly installments beginning in the
month following Date of Termination.
(f) If the Executive shall terminate his employment for Good Reason,
then
(i) The Company shall pay all amounts due to, or for the benefit
of, the Executive under Section 4 through the Date of Termination at
the rate in effect at the time Notice of Termination is given and all
other unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination under Section 4(f) or any compensation plan or
program of the Company at the time such payments are due;
(ii) In lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of the termination of his
employment, the Company shall pay as severance pay to the Executive a
salary and bonus severance payment equal to two times the prior year
bonus and annual base salary in effect immediately prior to the
Executive's termination, provided, however, that in the event the
termination of the Executive's employment occurs after the third
anniversary of the Commencement Date, the salary and bonus severance
payment will equal one and one-half times the prior year bonus and
annual base salary in effect immediately prior to the Executive's
termination. Said salary and bonus severance payment shall be paid in
a lump sum within 30 days after the Date of Termination;
(iii) The Company shall pay to the Executive any deferred
compensation, including, but not limited to deferred bonuses,
allocated or credited to the Executive or his account as of the Date
of Termination;
(iv) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for 24 months following the date of
termination of the Executive's employment if such date is prior to the
9
<PAGE>
third anniversary of the Commencement Date, and if such date is on or
after the third anniversary of the Commencement Date, for 18 months
following the date of the termination of the Executive's employment,
all employee welfare benefit plans and programs in which the Executive
was entitled to participate immediately prior to the Date of
Termination provided that the Executive's continued participation is
possible under the general terms and provisions of such plans and
programs.
In the event that the Executive's participation in any such plan or
program is barred, the Company shall arrange to provide the Executive
with benefits substantially similar to those which the Executive would
otherwise have been entitled to receive under such plans and programs
from which his continued participation is barred.
8. DEATH/ASSIGNMENT OF STOCK OPTIONS. In the event of the Executive's
death, whether his death occurs during or after the Term of this Agreement, all
unexercised and exercisable Stock Options will be assigned to his Estate.
9. TERMINATION/UNEXERCISED STOCK OPTIONS. In the event of the
termination of the employment of the Executive for any reason, all unexercised
and exercisable stock options granted to him hereunder must be exercised by him,
or his estate (or heir(s)) as the case may be, before the second anniversary of
the termination of his employment, but in no event after the tenth anniversary
of the date of grant thereof, any such options not exercised by that date will
lapse immediately thereafter.
10. MITIGATION. In the event that the Executive receives benefits from
other employment after the Date of Termination, the benefits to be provided by
the Company under the provisions of Section 7(b) shall be correspondingly
reduced.
11. ANTI-DILUTION/RECAPITALIZATION OF THE COMPANY. In the Event of any
change in the number of issued shares of Company Stock resulting from a
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend, or other increase or decrease in such shares, then
appropriate adjustments shall be made by the Company with respect to outstanding
unexercised Stock Options and/or the aggregate number of shares of Company Stock
of the Company in respect of which Stock Options may be exercised.
12. NONCOMPETITION.
(a) So long as the Executive is employed by the Company under this
Agreement and unless this Agreement is
10
<PAGE>
terminated for any reason, the Executive agrees not to enter into competitive
endeavors.
(b) During the term of this Agreement and any period thereafter
during which or in respect of which the Executive receives payments from the
Company under Section 7, the Executive will retain in confidence any and all
confidential information known to him concerning the Company and its business
and shall not use or disclose such information without the approval of the
Company except to the extent such information has previously become public or as
may be required by law.
13. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 12 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live, all such amounts
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
14. NOTICE. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
11
<PAGE>
If to the Executive:
Mr. Bragi F. Schut
172 Pacific Street
Brooklyn, New York 11201
If the Company:
The Alpine Group, Inc.
1790 Broadway
15th Floor
New York, NY 10019-1412
Attn: Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company as may be
specifically designed by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions as
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of New York without regard to its
conflicts of law principles.
16. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto and any prior agreement
of the parties hereto in respect of the subject matter contained herein
12
<PAGE>
is hereby terminated and cancelled, provided, however, that this Agreement shall
not supersede any existing benefit or agreement which provides such benefit,
including, without limitation, life or disability insurance agreements and
retirement plans currentl in effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
ATTEST: THE ALPINE GROUP, INC.
BY: (SEAL)
------------------------- ------------------------------------
Name:
Title:
ATTEST: THE ALPINE GROUP, INC.
BY:
------------------------- ------------------------------------------
Bragi F. Schut
13
<PAGE>
Exhibit 10(t)
AMENDMENT TO EMPLOYMENT AGREEMENT
(Bragi F. Schut)
AGREEMENT dated as of September 8, 1993 by and between The Alpine Group,
Inc., a Delaware corporation (the "Company"), and Bragi F. Schut (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated as of the date hereof (the "Employment Agreement"); and
WHEREAS, Section 4 of the Employment Agreement contains certain provisions
included in error, which the parties hereto desire to correct and amend.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 4(e) of the Employment Agreement is hereby amended to read in
full as follows:
"(e) ANNUITY PAYMENTS. The Company shall pay $283,500 to the
Executive in fifteen annual installments of $18,900 each starting on the
date the Executive reaches age 60 and ending on the date the Executive
reaches age 74, provided that, in the event the Executive's employment is
terminated under Sections 6(a) or (b) prior to the second anniversary of
the Commencement Date or under Section 6(c) or by the Executive without
Good Reason prior to the fifth anniversary of the Commencement Date, the
amount of each such annual installment shall be multiplied by a fraction
the numerator of which is the number of months the Executive is employed by
the Company from and after the Commencement Date and the denominator of
which is 60."
2. The first sentence of Section 4(f) of the Employment Agreement is
hereby amended by deleting the words "or 4(e) (to the extent of the credited
exercise price)" in the fourth and fifth lines thereof and in the eleventh and
twelfth lines thereof.
3. The last sentence of Section 4(f) of the Employment Agreement is
hereby amended to read in full as follows:
"Any payment by the Company hereunder with respect to the matters
contained in Section 4(d) shall be subject to repayment by the Executive in
the event of a sale at any time prior to the fifth anniversary of the
Commencement Date of any of the shares of Company Stock acquired under
Section
<PAGE>
4(d) and to the extent of the proceeds of such sale; PROVIDED, however, in
the event any such amount has not been repaid by the fifth anniversary of
the Commencement Date, the Company and the Executive shall enter into an
appropriate agreement providing for the repayment by the Executive of any
any all outstanding such amounts paid by the Company."
4. Except as expressly amended hereby, the Employment Agreement shall not
be altered, amended or modified and shall continue in full force and effect.
Any future documents confirming or otherwise relating to the stock option or
restricted stock grants under Section 4(c) or Section 4(d) of the Employment
Agreement shall be subject and pursuant to the Employment Agreement, as amended,
and, in the event of any conflict between related provisions, the Employment
Agreement, as amended, shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE ALPINE GROUP, INC.
by
Name:
Title:
THE EXECUTIVE
Bragi F. Schut
2
<PAGE>
Exhibit 10(u)
EMPLOYMENT AGREEMENT
(David S. Aldridge)
AGREEMENT made this 10th day of November, 1993 between The Alpine Group,
Inc., a Delaware corporation (the "Company"), and David S. Aldridge (the
"Executive").
The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the future growth and success of the Company is
expected to be substantial. Whereas the Executive has served as the Chief
Financial Officer of Superior TeleTec Inc. ("STT") since 1986 and the Board
desires to provide for the employment of the Executive with the Company after
the merger of STT into the Company, the Board has determined that such
employment will reinforce and encourage the attention and dedication of the
Executive to the Company as a member of the Company's management, in the best
interest of the Company and its shareholders. The Executive is willing to
commit himself to serve the Company, on the terms and conditions herein
provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into an employment agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to serve the Company from the Company's offices in
Atlanta, Georgia, on the terms and conditions set forth herein.
2. TERM. The employment of the Executive by the Company hereunder and as
provided in Section 1 will commence on the date of the merger of STT into the
Company (the "Commencement Date") and will continue in effect (a) until either
party gives notice to the other, as provided in Section 6(e), that it does not
wish to continue the Executive's employment hereunder or (b) unless terminated
as provided in Section 6(a), (b), (c) and (d).
3. POSITION AND DUTIES. The Executive shall serve as Chief Financial
Officer of the Company with such responsibilities, duties and authority as are
from time to time assigned to the Executive by the Chief Executive Officer or
the Board. The Executive shall devote substantially all of his working time and
efforts to the business and affairs of the Company provided that the Executive
may be involved in charitable, trade association activities and other passive
<PAGE>
investments that do not materially detract from the discharge of his
responsibilities hereunder.
4. COMPENSATION AND RELATED MATTERS.
(a) SALARY. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive an annual base salary at a
rate not less than $150,000 or such higher rate as may from time to time be
determined by the Board, such salary to be paid in substantially equal
installments in accordance with the normal payroll practice of the Company. The
Executive's salary will be reviewed at least annually.
(b) ANNUAL BONUS. The Company will pay the Executive an annual bonus
(the "Annual Bonus") within 60 days following the last day of the Company's
fiscal year in an amount not less than 35% of the Executive's annual base salary
then in effect, provided the Company achieves its targeted performance
objectives for such year based upon that year's operating plan (as approved by
the Company's Board of Directors), it being understood that if the Company
exceeds such objectives, the Company will pay the Executive an additional bonus
which shall be reasonable, in the Company's sole discretion, in relation to such
performance. The Executive shall be entitled to a prorata portion of the Annual
Bonus and additional bonus for any period less than a full fiscal year for which
he is entitled to his salary.
(c) STOCK OPTIONS. On the Commencement Date, the Company will grant
the Executive 50,000 stock options (the "Stock Options") to purchase shares of
common stock of the Company ("Company Stock") at an exercise price equal to 105%
of the average of the high and low price of the Company's Stock on the American
Stock Exchange during the trading day prior to the Commencement Date.
The Stock options will become exercisable by the Executive in the following
amounts on the following dates:
12,500 Upon the 1st Anniversary of the Commencement Date
25,000 Upon the 2nd Anniversary of the Commencement Date
37,500 Upon the 3rd Anniversary of the Commencement Date
50,000 Upon the 4th Anniversary of the Commencement Date
In the event of the termination of employment (i) by the
2
<PAGE>
Executive, under Section 6(e)(ii) or without Good Reason prior to the fourth
anniversary of the Commencement Date or (ii) pursuant to Section 6(c), all Stock
Options not theretofore exercisable will lapse and be forfeited. In the event
the Executive's employment is terminated for any other reason prior to the
fourth anniversary of the Commencement Date all Stock Options not theretofore
exercisable will thereupon become exercisable. Except as otherwise provided
herein or in Section 9 each Stock Option will expire 10 years after it is
granted.
(d) RESTRICTED STOCK GRANT. On the Commencement Date, the Company
will grant to the Executive 25,000 shares of the Company's Stock pursuant to the
Restricted Stock Plan, as amended, or other plan, which restricted shares shall
be set aside in the custody, control and possession of the Company and released
to the Executive at the rate of 6,250 shares on each anniversary of the
Commencement Date, provided that in the event Executive's employment is
terminated under Sections 6(a) or (b) prior to the second anniversary of the
Commencement Date or under Section 6(c) or by Executive without Good Reason,
prior to the fourth anniversary of the Commencement Date, then the scheduled
releases on any subsequent anniversary of the Commencement Date shall be
cancelled and forfeited. Any shares not released shall be cancelled and retired
by the Company.
(e) EXISTING STOCK OPTIONS. The following sets forth options
previously granted to the Executive ("Existing Stock Options") to acquire the
number of shares of STT Common Stock set forth below, all of which are presently
exercisable by the Executive as at the Commencement Date:
Existing Stock Options Year of Grant Exercise Price
---------------------- ------------- --------------
40,000 1992 $2.938
The number of shares of Company Stock issuable upon the exercise of
the Existing Stock Options shall be determined as provided in clause (ii) of the
first sentence of Section 1.11 of the Agreement and Plan of Merger dated June
17, 1993, between STT and the Company. The Existing Stock Options shall be
deemed exercised by the Executive and Company Stock issued therefor by the
Company to the Executive as at the Commencement Date. The Exercise Price shall
be deemed paid by the Executive, provided that in the event the Executive's
employment is terminated under Sections 6(a) or (b) prior to the second
anniversary of the Commencement Date or under Section 6(c) or by Executive
without Good Reason, prior to the fifth anniversary of the Commencement Date, he
(or his estate if the termination occurs under Section 6(a)) shall pay to the
Company an amount equal to the aggregate Exercise Price of $117,500 multiplied
by a fraction the numerator of which is the number of months less than 60
Executive
3
<PAGE>
was employed by the Company from and after the Commencement Date and the
denominator of which is 60.
(f) "GROSS-UP" PAYMENT. Not less than 10 days prior to the due date
of the Executive's federal income tax return for every taxable year of the
Executive in which his income tax liability is affected by the matters contained
in Section 4(d) or 4(e) (to the extent of the credited exercise price) or in
which he may be liable for an excise tax under Section 280G of The Internal
Revenue Code, the Company will pay to the Executive an amount necessary to
indemnify and hold harmless the Executive from (i) any and all federal, state or
local income tax, excise taxes or other liability or payment shown to be due or
arising from or related to the matters contained in Section 4(d) or 4(e) (to the
extent of the credited exercise price) and (ii) any additional income or excise
taxes arising from or related to the reimbursement provided for in preceding
clause (i). The Executive will timely furnish the Company with a written
statement prepared by the Executive's certified public accountant setting forth
the amount of the required payment and the due date or dates of such tax
liability.
(g) EXPENSES. During the term of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Executive in performing
services hereunder, including (i) all expenses of travel and living expenses
while away from home or business or at the request of and in the service of the
Company and (ii) an automobile, plus all expenses of maintaining and operating
the automobile, provided that all such expenses are accounted for in accordance
with the policies and procedures established by the Company.
(h) OTHER BENEFITS. The Company shall maintain in full force and
effect, and the Executive shall be entitled to participate in, all of the fringe
benefit plans and arrangements of the Company in effect on the date hereof
(including, without limitation, each group life insurance and accident plan,
medical and dental insurance plans, and disability plan). The Company also
agrees to assume all obligations of STT to the Executive or his beneficiary, as
the case may be, under STT's Supplemental Retirement Plan ("SERP"), including
those obligations stated in Section 5.15 of the Merger Agreement dated June 17,
1993 between STT and the Company. Further, the Company agrees to make all
premium payments required on that certain UNUM executive disability policy
maintained on behalf of the Executive.
(i) ANNUAL PHYSICAL EXAMINATION. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
undergoing an annual physical examination by a licensed physician.
4
<PAGE>
(j) TAX AND FINANCIAL PLANNING. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
connection with obtaining professional tax and financial planning advice.
5. OFFICES. Subject to Section 3, the Executive agrees to serve without
additional compensation, if elected or appointed thereto, as a director of the
Company and any of its subsidiaries and in one or more executive offices of any
of the Company's subsidiaries, provided that the Executive is indemnified for
serving in any and all such capacities.
6. TERMINATION. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
(a) DEATH. The Executive's employment hereunder shall terminate upon
his death.
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive months,
and within thirty (30) days after written notice of termination is given (which
may occur before or after the end of such six month period) shall not have
returned to the performance of his duties hereunder on a full-time basis, the
Company may terminate the Executive's employment hereunder.
(c) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (i) the willful
and continued failure by the Executive to substantially perform his duties
hereunder (other than any such failure resulting from the Executive's
disability) after written notice is delivered by the Company that specifically
identifies the manner in which the Company believes the Executive has not
substantially performed his duties, which is not cured within 30 days after such
written notice, or (ii) the willful engaging by the Executive in misconduct
which is materially injurious to the Company, monetarily or otherwise
(including, but not limited to, conduct that constitutes competitive activity
pursuant to Section 9 hereof). For purposes of this paragraph, an act, or
failure to act, on the Executive's part shall not be considered "willful" if
done, or omitted to be done, by him in good faith and with reasonable belief
that his action or omission was in the best interest of the Company.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive may
terminate his employment hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
5
<PAGE>
(i) a failure by the Company to comply with any material
provision of this Agreement which has not been cured within ten (10) days after
notice of such noncompliance has been given by the Executive to the Company;
(ii) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirement of Section (f) hereof (and for purposes of this Agreement no such
purported termination shall be effective);
(iii) person or business organization, or affiliated group of
persons or business organizations who, or which, do not now own or control 20%
or more of the voting stock of the company, acquire ownership or control of 20%
or more of the voting stock of the Company, or its successor;
(iv) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement;
(v) executive's work location is other than the Atlanta, Georgia
metropolitan area; or
(vi) the Assignment to Executive of any duties materially
inconsistent with his status as Chief Financial Officer.
(e) TERMINATION ELECTION.
(i) A notice to Executive by the Company will constitute an
election by the Company to terminate the Executive's employment 180 days
following the date of delivery of the notice if such notice is given prior to
the third anniversary Of the Commencement Date and thereafter 30 days following
the date of delivery of the notice.
(ii) A notice to the Company by the Executive will constitute an
election by the Executive to terminate Executive's employment 60 days following
the date of delivery of the notice.
(iii) In no event, however, shall the Term of the Executive's
employment hereunder extend beyond the end of the month in which the Executive's
sixty-fifth (65th) birthday occurs.
(f) NOTICE OF TERMINATION. Any termination of the Executive's employment
by the Company or by the Executive (other than termination pursuant to
subsection (a) hereof) shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 14 hereof. For purposes of
6
<PAGE>
this Agreement, a "Notice of Termination" shall mean only a notice which is
based upon, and shall indicate, the specific termination provision in this
Agreement relied upon and, except for a termination under Section 6(e) hereof,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated pursuant to Section 6(b) above,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period and not earlier than the end
of the consecutive six month disability period), (iii) if the Executive's
employment is terminated pursuant to Section 6(c) above, the date specified in
the Notice of Termination, (iv) if the Executive's employment is terminated by
either of the elections pursuant to Section 6(e) above, the applicable date of
termination determined under Section 6(e) above, and (v) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given; provided, however, that, if within thirty (30) days after
any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period") the Executive shall continue to receive, or receive the
benefit of (as the case may be), all items described in Section 4 hereinabove at
the rate then in effect for such period until his employment is terminated
pursuant to Section 6(b) hereof or such longer period required to effectuate the
gross up payments under Section 4(f) hereof, provided that payments so made to
the Executive during the first 180 days of the disability period shall be
reduced by the sum of the amounts, if any, payable to the Executive at or prior
to the time of any such payment under disability benefit plans of the company or
under the Social Security disability insurance program, and which amounts were
not previously applied to reduce any such payment.
7
<PAGE>
(b) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for twelve months following the Date of
Termination due to Disability, all employee welfare benefit plans and programs
in which the Executive was entitled to participate immediately prior to the Date
of Termination provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been entitled to
receive under such plans and programs from which his continued participation is
barred.
(c) If the Executive's employment is terminated by his death, the
Company shall pay any amounts due to, or for the benefit of, or which would
otherwise have been paid to the Executive under Section 4 hereof for a period
ending twelve (12) months after the date of his death or such longer period
required to effectuate the gross up payments under Section 4(f) hereof.
(d) If the Executive's employment shall be terminated by the Company
for Cause the Company shall pay all amounts under Section 4 hereof due to, or
for the benefit of, the Executive through the Date of Termination at the rate in
effect at the time Notice of Termination is given and the Company shall have no
further obligations to the Executive under this Agreement, although nothing
shall affect Executive's rights and the Company's obligations under the SERP.
(e) (i) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof prior to the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one-half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (f);
(ii) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof after the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one times the
annual base salary in effect immediately prior to termination plus an amount due
or estimated to be due in respect of all payments to be made under Sections 4(b)
and (f);
(iii) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof prior to the third anniversary but after the first
anniversary of the Commencement Date, the Company shall pay to the Executive an
amount equal to one times the annual base salary in effect immediately prior to
8
<PAGE>
termination plus an amount due or estimated to be due in respect of all payments
to be made under Sections 4 (b) and (f);
(iv) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof after the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one-half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (f); and
(v) The amounts payable to Executive as a multiple of base
salary, as described in Sections 7(e)(i) and (ii) shall be paid to Executive on
the Date of Termination, and as described in Sections 7(e)(iii) and (iv) above,
shall be paid to Executive in 12 equal monthly installments beginning in the
month following Date of Termination.
(f) If the Executive shall terminate his employment for Good Reason,
then
(i) The Company shall pay all amounts due to, or for the benefit
of, the Executive under Section 4 through the Date of Termination at the rate in
effect at the time Notice of Termination is given and all other unpaid amounts,
if any, to which the Executive is entitled as of the Date of Termination under
Section 4(f) or any compensation plan or program of the Company at the time such
payments are due;
(ii) In lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of the termination of his
employment, the Company shall pay as severance pay to the Executive a salary and
bonus severance payment equal to two times the prior year bonus and annual base
salary in effect immediately prior to the Executive's termination, provided,
however, that in the event the termination of the Executive's employment occurs
after the third anniversary of the Commencement Date, the salary and bonus
severance payment will equal one and one-half times the prior year bonus and
annual baser salary in effect immediately prior to the Executive's termination.
Said salary and bonus severance payment shall be paid in a lump sum within 30
days after the Date of Termination;
(iii) The Company shall pay to the Executive any deferred
compensation, including, but not limited to deferred bonuses, allocated or
credited to the Executive or his account as of the date of termination; and
(iv) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for 24 months following the date of
termination of the Executive's employment
9
<PAGE>
if such date is prior to the third anniversary of the Commencement Date, and if
such date is on or after the third anniversary of the Commencement Date, for 18
months following the date of the termination of the Executive's employment, all
employee welfare benefit plans and programs in which the Executive was entitled
to participate immediately prior to the Date of Termination provided that the
Executive's continued participation is possible under the general terms and
provisions of such plans and programs. In the event that the Executive's
participation in any such plan or program is barred, the Company shall arrange
to provide the Executive with benefits substantially similar to those which the
Executive would otherwise have been entitled to receive under such plans and
programs from which his continued participation is barred.
8. DEATH/ASSIGNMENT OF STOCK OPTIONS. In the event of the Executive's
death, whether his death occurs during or after the Term of this Agreement, all
unexercised and exercisable Stock Options will be assigned to his Estate.
9. TERMINATION/UNEXERCISED STOCK OPTIONS. In the event of the
termination of the employment of the Executive for any reason, all unexercised
and exercisable stock options granted to him hereunder must be exercised by him,
or his estate (or heir(s)) as the case may be, before the second anniversary of
the termination of his employment, but in no event after the tenth anniversary
of the date of grant thereof, any such options not exercised by that date will
lapse immediately thereafter.
10. MITIGATION. In the event that the Executive receives benefits from
other employment after the Date of Termination, the benefits to be provided by
the Company under the provisions of Section 7(b) shall be correspondingly
reduced.
11. ANTI-DILUTION/RECAPITALIZATION OF THE COMPANY. In the event of any
change in the number of issued shares of Company stock resulting from a
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend, or other increase or decrease in such shares, then
appropriate adjustments shall be made by the Company with respect to outstanding
unexercised Stock options and/or the aggregate number of shares of Company Stock
of the Company in respect of which Stock Options may be exercised.
12. NONCOMPETITION.
(a) So long as the Executive is employed by the Company under this
Agreement and unless this Agreement is terminated for any reason, the Executive
agrees not to enter into competitive endeavors.
10
<PAGE>
(b) During the term of this Agreement and any period thereafter
during which or in respect of which the Executive receives payments from the
Company under Section 7, the Executive will retain in confidence any and all
confidential information known to him concerning the Company and its business
and shall not use or disclose such information without the approval of the
Company except to the extent such information has previously become public or as
may be required by law.
13. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 12 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devises and legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devise, legatee, or other designee or, if there be
no such designee, to the Executive's estate.
14. NOTICE. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
11
<PAGE>
If to the Executive:
Mr. David S. Aldridge
310 Landfall Road
Atlanta, GA 30328
If the Company:
The Alpine Group, Inc.
1790 Broadway
15th Floor
New York, NY 10019-1412
Attn: Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of New York without regard to its
conflicts of law principles.
16. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
office, employee or
12
<PAGE>
representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein in hereby terminated
and cancelled.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
ATTEST: THE ALPINE GROUP, INC.
BY: (SEAL)
------------------------- ------------------------------------
Name:
Title:
ATTEST: EXECUTIVE
BY:
------------------------- ------------------------------------------
David S. Aldridge
13
<PAGE>
Exhibit 10(v)
EMPLOYMENT AGREEMENT
--------------------
(James R. Kanely)
AGREEMENT made as of this 10th day of November, 1993 between The Alpine
Group, Inc., a Delaware corporation (the "Company"), and James R. Kanely (the
"Executive").
The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the future growth and success of the Company is
expected to be substantial. Whereas the Executive has served as President and
Chief Executive Officer of Superior TeleTec Inc. ("STT") since 1984 and the
Board desires to provide for the employment of the Executive with the Company
after the merger of STT into the Company, the Board has determined that such
employment will reinforce and encourage the attention and dedication of the
Executive to the Company as a member of the Company's management, in the best
interest of the Company and its shareholders. The Executive is willing to
commit himself to serve the Company, on the terms and conditions herein
provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into an employment agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to serve the Company, on the terms and conditions
set forth herein.
2. TERM. The employment of the Executive by the Company hereunder will
commence on the effective date of the merger of STT into the Company (the
"Commencement Date") and will continue in effect (a) until either party gives
notice to the other, as provided in Section 6(e), that it does not wish to
continue the Executive's employment hereunder or (b) unless terminated as
provided in Sections 6(a), (b), (c) or (d).
3. POSITION AND DUTIES. The Executive shall serve as President and Chief
Operating Officer of the Company with the responsibility and authority to manage
and supervise the Company's operations in the ordinary course of its business
and shall have such responsibilities, duties and authority as are generally
associated with each such position and as may from time to time be assigned to
the Executive by the Board that are consistent with such responsibilities,
duties and authority. The Executive shall devote substantially all of his
working time and efforts to the business and affairs of the Company provided
that the Executive may be involved in other investments that do not materially
detract from the discharge of his responsibilities
<PAGE>
hereunder. The Company shall continue to nominate the Executive as a director of
the Company during the term hereof consistent with the Company's By-laws. In the
event of a voluntary termination as set forth in Section 6(e)(ii) hereof,
Executive shall, unless otherwise requested by the Company, resign the positions
of President and Chief Operating Officer.
4. COMPENSATION AND RELATED MATTERS.
(a) SALARY. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive an annual base salary at a
rate not less than $250,000 or such higher rate as may from time to time be
determined by the Board, such salary to be paid in substantially equal
installments in accordance with the normal payroll practice of the Company. The
Executive's salary will be reviewed at least annually.
(b) ANNUAL BONUS. The Company will pay the Executive an annual bonus
(the "Annual Bonus") within 60 days following the last day of the Company's
fiscal year in an amount not less than 50% of the Executive's annual base salary
then effect, provided the Company achieves its targeted performance objectives
for such year based upon that year's operating plan (as approved by the
Company's Board), it being understood that if the Company exceeds such
objectives, the Company will pay the Executive an additional bonus which shall
be reasonable, in the Company's sole discretion, in relation to such
performance. The Executive shall be entitled to a prorata portion of the Annual
Bonus and additional bonus for any period less than a full fiscal year for which
he is entitled to his salary. Annual Bonus paid by the Company to Executive
shall in no case be less than $125,000 for each of the first two fiscal years
after the Commencement Date.
(c) STOCK OPTIONS. On the Commencement Date, the Company will grant
the Executive 100,000 stock options (the "Stock Options") to purchase shares of
common stock of the Company ("Company Stock") at an exercise price equal to 105%
of the average of the high and low price of the Company's Stock on the American
Stock Exchange during the trading day prior to the date of approval of this
Agreement by the Company's Board of Directors. The Stock Options will become
exercisable by the Executive in the following amounts on the following dates:
25,000 Upon the 1st Anniversary of the
Commencement Date
50,000 Upon the 2ndt Anniversary of the
Commencement Date
75,000 Upon the 3rd Anniversary of the
Commencement Date
2
<PAGE>
100,000 Upon the 4th Anniversary of the
Commencement Date
In the event of termination of employment (i) by the Executive, under Section
6(e)(ii) or without Good Reason, prior to the fourth anniversary of the
Commencement Date or (ii) pursuant to Section 6(c), all Stock Options not
theretofore exercisable will lapse and be forfeited. In the event the
Executive's employment is terminated for any other reason prior to the fourth
anniversary of the Commencement Date all Stock Options not theretofore
exercisable will thereupon become exercisable. Except as provided in Section 9
each Stock Option will expire 10 years after it is granted.
(d) RESTRICTED STOCK GRANT. On the Commencement Date, the Company
will grant to the Executive 30,000 shares of the Company's Stock pursuant to the
Restricted Stock Plan, as amended, or other plan, which restricted shares shall
be set aside and released to the Executive at the rate of 7,500 shares on each
anniversary of the Commencement Date, provided that in the event Executive's
employment is terminated under Sections 6(a) or (b) prior to the second
anniversary of the Commencement Date or under Section 6(c) or by Executive
without Good Reason, prior to the fifth anniversary of the Commencement Date,
then the scheduled releases on any subsequent anniversary of the Commencement
Date shall be cancelled and forfeited. Any shares not released shall be
cancelled and retired by the Company.
(e) EXISTING STOCK OPTIONS. The following sets forth options
previously granted to the Executive ("Existing Stock Options") to acquire the
number of shares of STT common stock set forth below, all of which will be
exercisable by the Executive as at the Commencement Date:
NUMBER OF SHARES YEAR OF GRANT EXERCISE PRICE
65,000 1992 $2.938
The number of shares of Company Stock issuable upon the exercise of
the Existing Stock Options shall be determined as provided in clause (ii) of the
first sentence of Section 1.11 of the Agreement and Plan of Merger dated June
17, 1993, between STT and the Company. The Existing Stock Options shall be
deemed exercised by the Executive and Company Stock issued therefor by the
Company to the Executive as at the Commencement Date. The Exercise Price shall
be deemed paid by the Executive, provided that in the event the Executive's
employment is terminated under Sections 6(a) or (b) prior to the second
anniversary of the Commencement Date or under Section 6(c) or by Executive
without Good Reason, prior to the fifth anniversary of the Commencement Date, he
(or his estate if the termination occurs under Section 6(a)) shall pay to the
Company an amount equal to the aggregate Exercise Price of $190,970 multiplied
by a fraction the numerator
3
<PAGE>
of which is the number of months less than 60 Executive was employed by the
Company from and after the Commencement Date and the denominator of which is 60.
(f) "GROSS-UP" PAYMENT. Not less than 10 days prior to the due date
of the Executive's federal income tax return for every taxable year of the
Executive in which his income tax liability is affected by the matters contained
in Sections 4(d) and (e) (to the extent of the credited exercise price), or in
which he may be liable for excise taxes under Section 280G of the Internal
Revenue Code, the Company will pay to the Executive an amount necessary to
indemnify and hold harmless the Executive from (i) any and all federal, state or
local income tax or other liability or payment shown to be due or arising from
or related to the matters contained in Sections 4(d) and (e) (to the extent of
the credited exercise price) and (ii) any additional income or excise taxes
arising from or related to the reimbursement provided for in the preceding
clause (i). The Executive will timely furnish the Company with a written
statement prepared by the Executive's certified public accountant setting forth
the amount of the required payment and the due date or dates of such tax
liability.
(g) EXPENSES. During the term of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Executive in performing
services hereunder, including (i) all expenses of travel and living expenses
while away from home for business at the request of and in the service of the
Company and (ii) an automobile, plus all expenses of maintaining and operating
the automobile, provided that all such expenses are accounted for in accordance
with the policies and procedures established by the Company.
(h) OTHER BENEFITS. The Company shall maintain in full force and
effect, and the Executive shall be entitled to participate in, all of the fringe
benefit plans and arrangements of the Company in effect on the date hereof
(including, without limitation, each group life insurance and accident plan,
medical and dental insurance plans, and disability plan). The Company also
agrees to assume all obligations of STT to the Executive or his beneficiary, as
the case may be, under STT's Supplemental Retirement Plan ("SERP"), including
those obligations stated in Section 5.15 of the Merger Agreement dated June 17,
1993 between STT and the Company. Further, the Company agrees to make all
premium payments required on that certain UNUM executive disability policy
maintained on behalf of the Executive.
(i) ANNUAL PHYSICAL EXAMINATION. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
undergoing an annual physical examination by a licensed physician.
4
<PAGE>
(j) TAX AND FINANCIAL PLANNING. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
connection with obtaining professional tax and financial planning advice.
5. OFFICES. Subject to Section 3, the Executive agrees to serve without
additional compensation, if elected or appointed thereto, as a director of the
Company and any of its subsidiaries and in one or more executive offices of any
of the Company's subsidiaries, provided that the Executive is indemnified for
serving in any and all such capacities.
6. TERMINATION. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
(a) DEATH. The Executive's employment hereunder shall terminate upon
his death.
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive months,
and within thirty (30) days after written notice of termination is given (which
may occur before or after the end of such six month period) shall not have
returned to the performance of his duties hereunder on a full-time basis, the
Company may terminate the Executive's employment hereunder.
(c) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (i) the willful
and continued failure by the Executive to substantially perform his duties
hereunder (other than any such failure resulting from the Executive's
disability) after written notice is delivered by the Company that specifically
identifies the manner in which the Company believes the Executive has not
substantially performed his duties, which is not cured by the Executive within
30 days after such written notice, or (ii) the willful engaging by the Executive
in misconduct which is materially injurious to the Company, monetarily or
otherwise (including, but not limited to, conduct that constitutes competitive
activity pursuant to Section 9 hereof). For purposes of this paragraph, an act,
or failure to act, on the Executive's part shall not be considered "willful" if
done, or omitted to be done, by him in good faith and with reasonable belief
that his action or omission was in the best interest of the Company.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive may
terminate his employment hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
5
<PAGE>
(i) a failure by the Company to comply with any material
provision of this Agreement which has not been cured within thirty (30) days
after written notice of such noncompliance has been given by the Executive to
the Company;
(ii) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirement of Section (f) hereof (and for purposes of this Agreement no such
purported termination shall be effective);
(iii) the assignment to the Executive of any duties materially
inconsistent with his status as the President and Chief Operating Officer of the
Company or a material adverse alteration in the nature or status of his
responsibilities in connection with such responsibilities. For purposes of this
Agreement, "President and Chief Operating Officer of the Company" shall mean
that if a reorganization or merger of the Company occurs, the Executive will be
the President and Chief Operating Officer of (1) the Company if it is the
surviving entity in any merger, acquisition or other business combination with
the Company, or (2) the successor entity to the Company in any merger,
acquisition or other business combination with the Company;
(iv) a person or business organization, or affiliated group of
persons or business organizations who, or which, do not now own or control 20%
or more of the voting stock of the Company, acquire ownership or control of 20%
or more of the voting stock of the Company, or its successor;
(v) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement.
(e) TERMINATION ELECTION.
(i) A notice to Executive by the Company will constitute an
election by the Company to terminate the Executive's employment 180 days
following the date of delivery of the notice if such notice is given prior to
the third anniversary of the Commencement Date and thereafter 30 days following
the date of delivery of the notice.
(ii) A notice to the Company by the Executive will constitute
an election by the Executive to terminate Executive's employment on the last day
of the 6th month following the date of delivery of the notice.
(iii) In no event, however, shall the Term of the Executive's
employment hereunder extend beyond the end of the month in which the Executive's
sixty-fifth (65th) birthday occurs.
6
<PAGE>
(f) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive (other than termination pursuant
to Section 6(a) hereof) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 14 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean only a notice which is
based upon, and shall indicate, the specific termination provision in this
Agreement relied upon and, except for a termination election under Section 6(e)
hereof, shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive's employment is terminated pursuant to Section 6(b) above,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a full-
time basis during such thirty (30) day period and not earlier than the end of
the 6 month disability period), (iii) if the Executive's employment is
terminated pursuant to Section 6(c) above, the date specified in the Notice of
Termination, and (iv) if the Executive's employment is terminated by either of
the elections pursuant to Section 6(e) above, the applicable date of termination
determined under Section 6(e) above, and (v) if the Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given; provided, however, that if within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding and final arbitration
award or by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having
been perfected).
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period") the Executive shall continue to receive, or receive the
benefit of (as the case may be), all items described in Section 4 hereinabove at
the rate then in effect for such period until his employment is terminated
pursuant to Section 6(b) hereof or such longer period required to effectuate the
gross up payments under Section 4(f) hereof, provided that payments so made to
the Executive during the first 180 days of the disability period shall be
reduced by the sum of the amounts, if any, payable to the Executive at or prior
to the time of any such payment under disability benefit plans of the Company or
under the Social Security disability insurance
7
<PAGE>
program, and which amounts were not previously applied to reduce any such
payment.
(b) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for twelve months following the Date of
Termination due to Disability, all employee welfare benefit plans and programs
in which the Executive was entitled to participate immediately prior to the Date
of Termination provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been entitled to
receive under such plans and programs from which his continued participation is
barred.
(c) If the Executive's employment is terminated by his death, the
Company shall pay (i) any amounts due to, or for the benefit of, or which would
otherwise have been paid to the Executive under Section 4 hereof for a period
ending twelve (12) months after the date of his death and (ii) such amount
required to effectuate and satisfy when due the gross up payments to Executive
under Section 4(f) hereof.
(d) If the Executive's employment shall be terminated by the Company
for Cause, the Company shall pay all amounts under Section 4 hereof due to, or
for the benefit of, the Executive through the Date of Termination at the rate in
effect at the time Notice of Termination is given and the Company shall have no
further obligations to the Executive under this Agreement, although nothing
shall effect Executive's rights and the Company's obligations under the SERP.
(e) (i) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof prior to the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one-half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (f).
(ii) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof after the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to the annual base
salary in effect immediately prior to termination plus an amount due or
estimated to be due in respect of all payments to be made under Sections 4(b)
and (f).
(iii) If the Executive's employment is terminated by the
Executive under Section 6(e)(ii) hereof prior to the third anniversary but after
the first anniversary of the Commencement
8
<PAGE>
Date, the Company shall pay to the Executive an amount equal to one times the
annual base salary in effect immediately prior to termination plus an amount due
or estimated to be due in respect of all payments to be made under Sections 4(b)
and (f).
(iv) If the Executive's employment is terminated by the
Executive under Section 6(e)(ii) hereof after the third anniversary of the
Commencement Date, the Company shall pay to the Executive an amount equal to one
and one half times the annual base salary in effect immediately prior to
termination plus an amount due or estimated to be due in respect of all payments
to be made under Sections 4(b) and (f).
(v) The amounts payable to Executive as a multiple of base
salary, as described in Sections 7(e)(i) and (ii) shall be paid to Executive on
the Date of Termination, and as described in Sections 7(e)(i) and (iii) above,
shall be paid to Executive in 12 equal monthly installments beginning in the
month following Date of Termination.
(f) If the Executive shall terminate his employment for Good Reason,
then
(i) The Company shall pay all amounts due to, or for the
benefit of, the Executive under Section 4 through the Date of Termination at the
rate in effect at the time Notice of Termination is given and all other unpaid
amounts, if any, to which the Executive is entitled as of the Date of
Termination under Section 4(g) or any compensation plan or program of the
Company at the time such payments are due;
(ii) In lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of the termination of his
employment, the Company shall pay as severance pay to the Executive a salary and
bonus severance payment equal to three times the prior year bonus and annual
base salary in effect immediately prior to the Executive's termination,
provided, however, that in the event the termination of the Executive's
employment occurs after the third anniversary of the Commencement Date, the
salary and bonus severance payment will equal two times the prior year bonus and
annual base salary in effect immediately prior to the Executive's termination.
Said salary and bonus severance payment shall be paid in a lump sum within 30
days after the Date of Termination.
(iii) The Company shall pay to the Executive any deferred
compensation, including, but not limited to deferred bonuses, allocated or
credited to the Executive or his account as of the Date of Termination.
(iv) The Company shall maintain in full force and effect, for
the continued benefit of the Executive for 36 months following the date of
termination of the Executive's
9
<PAGE>
employment if such date is prior to the third anniversary of the Commencement
Date, and if such date is on or after the third anniversary of the Commencement
Date, for 24 months following the date of the termination of the Executive's
employment, all employee welfare benefit plans and programs in which the
Executive was entitled to participate immediately prior to the Date of
Termination provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan is barred, the Company shall
arrange to provide the Executive with benefits substantially similar to those
which the Executive would otherwise have been entitled to receive under such
plans and programs from which his continued participation is barred.
8. DEATH/ASSIGNMENT OF STOCK OPTIONS. In the event of the Executive's
death, whether his death occurs during or after the Term of this Agreement, all
unexercised and exercisable Stock Options will be assigned to his Estate.
9. TERMINATION/UNEXERCISED STOCK OPTIONS. In the event of the
termination of the employment of the Executive for any reason, all unexercised
and exercisable stock options granted to him hereunder must be exercised by him,
or his estate (or heir(s)) as the case may be, before the second anniversary of
the termination of his employment, but in no event after the tenth anniversary
of the date of grant thereof, any such options not exercised by that date will
lapse immediately thereafter.
10. MITIGATION. In the event that the Executive receives benefits from
other employment after the Date of Termination, the benefits to be provided by
the Company under the provisions of Section 7(b) shall be correspondingly
reduced.
11. ANTI-DILUTION/RECAPITALIZATION OF THE COMPANY. In the event of any
change in the number of issued shares of Company Stock resulting from a
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend, or other increase or decrease in such shares, then
appropriate adjustments shall be made by the Company with respect to outstanding
unexercised Stock Options and/or the aggregate number of shares of Company Stock
of the Company in respect of which Stock Options may be exercised.
12. NONCOMPETITION.
(a) So long as the Executive is employed by the Company under this
Agreement and unless this Agreement is terminated for any reason, the Executive
agrees not to enter into competitive endeavors.
(b) During the Term of this Agreement and any period thereafter
during which or in respect of which the Executive
10
<PAGE>
receives payments from the Company under Section 7, the Executive will retain in
confidence any and all confidential information known to him concerning the
Company and its businesses and shall not use or disclose such information
without the approval of the Company except to the extent such information has
previously become public or as may be required by law.
13. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 12 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live, all such amounts
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
14. NOTICE. For purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
11
<PAGE>
If to the Executive:
James R. Kanely
65 Mountain Creek Trace
Atlanta, GA 30328
If to the Company:
The Alpine Group, Inc.
1790 Broadway
15th Floor
New York, NY 10019-1412
Attn: Corporate Secretary
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of New York without regard to its
conflicts of law principles.
16. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and canceled.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
ATTEST: THE ALPINE GROUP, INC.
By: (SEAL)
------------------------------- -----------------
Name:
Title:
ATTEST: EXECUTIVE
------------------------------- ---------------------------
James R. Kanely
13
<PAGE>
Exhibit 10(w)
EMPLOYMENT AGREEMENT
(Justin F. Deedy, Jr.)
AGREEMENT made this 10th day of November, 1993 between The Alpine Group,
Inc., a Delaware corporation (the "Company"), and Justin F. Deedy, Jr. (the
"Executive")
The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the future growth and success of the Company is
expected to be substantial. Whereas the Executive has served as the Vice
President of superior TeleTec Inc. ("STT") and the Board desires to provide for
the employment of the Executive with the Company after the merger of STT into
the Company, the Board has determined that such employment will reinforce and
encourage the attention and dedication of the Executive to the Company as a
member of the company's management, in the best interest of the Company and its
shareholders. The Executive is willing to commit himself to serve the Company,
on the terms and conditions herein provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into an employment agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to serve the Company from the Company's offices in
Atlanta, Georgia, on the terms and conditions set forth herein.
2. TERM. The employment of the Executive by the Company hereunder and as
provided in Section 1 will commence on the date of the merger of STT into the
Company (the "Commencement Date") and will continue in effect (a) until either
party gives notice to the other, as provided in Section 6(e), that it does not
wish to continue the Executives employment hereunder or (b) unless terminated as
provided in Section 6(a),(b),(c)and(d).
3. POSITION AND DUTIES. The Executive shall serve as President of
Superior TeleTec Transmission Products, Inc. ("STTPI") with such
responsibilities, duties and authority as are from time to time assigned to the
Executive by the Company's Chief Operating Officer or Chief Executive Officer or
by the Board. The Executive shall devote substantially all of his Working time
and efforts to the business and affairs of the Company provided that the
Executive may be involved in charitable, trade association activities and other
passive investments that do not materially detract from the discharge of his
responsibilities hereunder.
<PAGE>
4. COMPENSATION AND RELATED MATTERS.
(a) SALARY. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive an annual base salary at a
rate not less than $125,000 or such higher rate as may from time to time be
determined by the Board, such salary to be paid in substantially equal
installments in accordance with the normal payroll practice of the Company. The
Executive's salary will be reviewed at least annually.
(b) ANNUAL BONUS. The Company will pay the Executive an annual bonus
(the "Annual Bonus") within 60 days following the last day of the Company's
fiscal year in an amount not less than 30% of the Executive's annual base salary
then in effect, provided the Company achieves its targeted performance
objectives for such year based upon that year's operating plan (as approved by
the Company's Board of Directors), it being understood that if the Company
exceeds such objectives, the Company will pay the Executive an additional bonus
which shall be reasonable, in the Company's sole discretion, in relation to such
performance. The Executive shall be entitled to a pro rata portion of the
Annual Bonus and additional bonus for any period less than a full fiscal year
for which he is entitled to his salary.
(c) STOCK OPTIONS. On the Commencement Date, the Company will grant
the Executive 25,000 stock options (the "Stock Options") to purchase shares of
common stock of the Company ("Company Stock") at an exercise price equal to 105%
of the average of the high and low price of the Company's Stock on the American
Stock Exchange during the trading day prior to the Commencement Date .
The Stock Options will become exercisable by the Executive in the following
amounts on the following dates:
6,250 Upon the 1st Anniversary of the Commencement Date
12,500 Upon the 2nd Anniversary of the Commencement Date
18,750 Upon the 3rd Anniversary of the Commencement Date
25,000 Upon the 4th Anniversary of the Commencement Date
In the event of the termination of employment (i) by the Executive,
under Section 6(e)(ii) or without Good Reason prior to the fourth anniversary of
the Commencement Date or (ii) Pursuant to Section 6(c), all Stock Options not
theretofore exercisable will lapse and be forfeited. In the event the
Executive's employment is terminated for any other reason prior to the fourth
anniversary of the Commencement Date all Stock Options not theretofore
exercisable will thereupon become exercisable. Except as otherwise provided
herein or in Section 9 each Stock Option will expire 10 years after it is
granted.
2
<PAGE>
(d) RESTRICTED STOCK GRANT. On the Commencement Date, the Company
will grant to the Executive 15,000 shares of the Company's Stock pursuant to the
Restricted Stock Plan, as amended, or other plan, which restricted shares shall
be set aside in the custody, control and possession of the Company and released
to the Executive at the rate of 3,750 shares on each anniversary of the
Commencement Date, provided that in the event Executive's employment is
terminated under Sections 6(a) or (b) prior to the second anniversary of the
Commencement Date or under Section 6(c) or by Executive without Good Reason,
prior to the fourth anniversary of the Commencement Date, then the scheduled
releases on any subsequent anniversary of the Commencement Date shall be
cancelled and forfeited. Any shares not released shall be cancelled and retired
by the Company.
(e) EXISTING STOCK OPTIONS. The following sets forth options
previously granted to the Executive ("Existing Stock Options") to acquire the
number of shares of STT Common Stock set forth below, all of which are presently
exercisable by the Executive as at the Commencement Date:
Existing Stock Options Year of Grant Exercise Price
---------------------- ------------- --------------
15,000 1992 $2.938
20,000 1989 2.125
The number of shares of Company Stock issuable upon the exercise of the
Existing Stock Options shall be determined as provided in clause (ii) of the
first sentence of Section 1.11 of the Agreement and Plan of Merger dated June
17, 1993, between STT and the Company. The Existing Stock options shall be
deemed exercised by the Executive and Company Stock issued therefor by the
Company to the Executive as at the Commencement Date. The Exercise Price shall
be deemed paid by the Executive, provided that in the event the Executive's
employment is terminated under Sections 6(a) or (b) prior to the second
anniversary of the Commencement Date or under Section 6(c) or by Executive
without Good Reason, prior to the fifth anniversary of the Commencement Date, he
(or his estate if the termination occurs under Section 6(a)) shall pay to the
Company an amount equal to the aggregate Exercise Price of $86,570 multiplied by
a fraction the numerator of which is the number of months less than 60 Executive
was employed by the Company from and after the Commencement Date and the
denominator of which is 60.
(f) "GROSS-UP" PAYMENT. Not less than 10 days prior to the due date
of the Executive's federal income tax return for every taxable year of the
Executive in which his income tax liability is affected by the matters contained
in Section 4(d) or 4(e) (to the extent of the credited exercise price) or in
which he may be liable for an excise tax under Section 280G of the Internal
Revenue Code, the Company will pay to the Executive an amount necessary to
indemnify and hold harmless the Executive
3
<PAGE>
from (i) any and all federal, state or local income tax, excise taxes or other
liability or payment shown to be due or arising from or related to the matters
contained in Section 4(d) or 4(e) (to the extent of the credited exercise price)
and (ii) any additional income or excise taxes arising from or related to the
reimbursement provided for in preceding clause (i). The Executive will timely
furnish the Company with a written statement prepared by the Executive's
certified public accountant setting forth the amount of the required payment and
the due date or dates of such tax liability.
(g) EXPENSES. During the term of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Executive in performing
services hereunder, including (i) all expenses of travel and living expenses
while away from home or business or at the request of and in the service of the
Company and (ii) an automobile, plus all expenses of maintaining and operating
the automobile, provided that all such expenses are accounted for in accordance
with the policies and procedures established by the Company.
(h) OTHER BENEFITS. The Company shall maintain in full force and
effect, and the Executive shall be entitled to participate in, all of the fringe
benefit plans and arrangements of the Company in effect on the date hereof
(including, without limitation, each group life insurance and accident plan,
medical and dental insurance plans, and disability plan). The Company also
agrees to assume all obligations of STT to the Executive or his beneficiary, as
the case may be, under STT's Supplemental Retirement Plan ("SERP"), including
those obligations stated in Section 5.15 of the Merger Agreement dated June 17,
1993 between STT and the Company. Further, the Company agrees to make all
premium payments required on that certain UNUM executive disability policy
maintained on behalf of the Executive.
(i) ANNUAL PHYSICAL EXAMINATION. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
undergoing an annual physical examination by a licensed physician.
(j) TAX AND FINANCIAL PLANNING. During the Term, the Company shall
reimburse the Executive for the reasonable expenses incurred by the Executive in
connection with obtaining professional tax and financial planning advice.
5. OFFICES. Subject to Section 3, the Executive agrees to serve without
additional compensation, if elected or appointed thereto, as a director of the
Company and any of its subsidiaries and in one or more executive offices of any
of the Company's subsidiaries, provided that the Executive is indemnified for
serving in any and all such capacities.
4
<PAGE>
6. TERMINATION. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
(a) DEATH. The Executive's employment hereunder shall terminate upon
his death.
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive months,
and within thirty (30) days after written notice of termination is given (which
may occur before or after the end of such six month period) shall not have
returned to the performance of his duties hereunder on a full-time basis, the
Company may terminate the Executive's employment hereunder.
(c) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (i) the willful
and continued failure by the Executive to substantially perform his duties
hereunder (other than any such failure resulting from the Executive's
disability) after written notice is delivered by the Company that specifically
identifies the manner in which the Company believes the Executive has not
substantially performed his duties, which is not cured within 30 days after such
written notice, or (ii) the willful engaging by the Executive in misconduct
which is materially injurious to the Company, monetarily or otherwise
(including, but not limited to, conduct that constitutes competitive activity
pursuant to Section 9 hereof). For purposes of this paragraph, an act, or
failure to act, on the Executive's part shall not be considered "willful" if
done, or omitted to be done, by him in good faith and with reasonable belief
that his action or omission was in the best interest of the Company.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive may
terminate his employment hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) a failure by the Company to comply with any material
provision of this Agreement which has not been cured within ten (10) days after
notice of such noncompliance has been given by the Executive to the Company;
(ii) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirement of Section (f) hereof (and for purposes of this Agreement no such
purported termination shall be effective);
(iii) a person or business organization, or affiliated group of
persons or business organizations who, or
5
<PAGE>
which, do not now own or control 20% or more of the voting stock of the Company,
acquire ownership or control of 20% or more of the voting stock of the Company,
or its successor;
(iv) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement;
(v) executives work location is other than the Atlanta, Georgia
Metropolitan Area; or
(vi) the Assignment to Executive of any duties materially
inconsistent with his status as President of STTPI,
(e) TERMINATION ELECTION.
(i) A notice to Executive by the Company will constitute an
election by the Company to terminate the Executive's employment 180 days
following the date of delivery of the notice if such notice is given prior to
the third anniversary of the Commencement Date and thereafter 30 days following
the date of delivery of the notice.
(ii) A notice to the Company by the Executive will constitute an
election by the Executive to terminate Executive's employment 60 days following
the date of delivery of the notice.
(iii) In no event, however, shall the Term of the Executive's
employment hereunder extend beyond the end of the month in which the Executive's
sixty-fifth (65th) birthday occurs.
(f) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive (other than termination pursuant
to subsection (a) hereof) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 14 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean only a notice which is
based upon, and shall indicate, the specific termination provision in this
Agreement relied upon and, except for a termination under Section 6(e) hereof,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive's employment is terminated pursuant to Section 6(b) above,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a full-
time basis during such thirty (30) day period and not earlier than the end of
the consecutive 6 month disability
6
<PAGE>
period), (iii) if the Executive's employment is terminated pursuant to Section
6(c) above, the date specified in the Notice of Termination, (iv) if the
Executive's employment is terminated by either of the elections pursuant to
Section 6(e) above, the applicable date of termination determined under Section
6(e) above, and (v) if the Executive's employment is terminated for any other
reasons, the date on which a Notice of Termination is given; provided, however,
that, if within thirty (30) days after any Notice of Termination is given the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding and final arbitration award or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected).
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period") the Executive shall continue to receive, or receive the
benefit of (as the case may be), all items described in Section 4 hereinabove at
the rate then in effect for such period until his employment is terminated
pursuant to Section 6(b) hereof or such longer period required to effectuate the
gross up payments under Section 4(f) hereof, provided that payments so made to
the Executive during the first 180 days of the disability period shall be
reduced by the sum of the amounts, if any, payable to the Executive at or prior
to the time of any such payment under disability benefit plans of the Company or
under the Social Security disability insurance program, and which amounts were
not previously applied to reduce any such payment.
(b) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for twelve months following the Date of
Termination due to Disability, all employee welfare benefit plans and programs
in which the Executive was entitled to participate immediately prior to the Date
of Termination provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been entitled to
receive under such plans and programs from which his continued participation is
barred,
(c) If the Executive's employment is terminated by his death, the
Company shall pay any amounts due to, or for the benefit of, or which would
otherwise have been paid to the Executive under Section 4 hereof for a period
ending twelve (12)
7
<PAGE>
months after the date of his death or such longer period required to effectuate
the gross up payments under Section 4(f) hereof.
(d) If the Executive's employment shall be terminated by the Company
for Cause the Company shall pay all amounts under Section 4 hereof due to, or
for the benefit of, the Executive through the Date of Termination at the rate in
effect at the time Notice of Termination is given and the Company shall have no
further obligations to the Executive under this Agreement, although nothing
shall effect Executive's rights and the Company's obligations under the SERP.
(e) (i) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof prior to the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one-half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (f);
(ii) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof after the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one times the
annual base salary in effect immediately prior to termination plus an amount due
or estimated to be due in respect of all payments to be made under Sections 4(b)
and (f);
(iii) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof prior to the third anniversary but after the first
anniversary of the Commencement Date, the Company shall pay to the Executive an
amount equal to one times the annual base salary in effect immediately prior to
termination plus an amount due or estimated to be due in respect of all payments
to be made under Sections 4(b) and (f);
(iv) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof after the third anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one-half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (f); and
(v) The amounts payable to Executive as a multiple of base
salary, as described in Sections 7(e)(i) and (ii) shall be paid to Executive on
the Date of Termination, and as described in Sections 7(e)(iii) and (iv) above,
shall be paid to Executive in 12 equal monthly installments beginning in the
month following Date of Termination.
(f) If the Executive shall terminate his employment
for Good Reason, then
8
<PAGE>
(i) The Company shall pay all amounts due to, or for the benefit
of, the Executive under Section 4 through the Date of Termination at the rate in
effect at the time Notice of Termination is given and all other unpaid amounts,
if any, to which the Executive is entitled as of the Date of Termination under
Section 4(f) or any compensation plan or program of the Company at the time such
payments are due;
(ii) In lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of the termination of his
employment, the Company shall pay as severance pay to the Executive a salary and
bonus severance payment equal to two times the prior year bonus and annual base
salary in effect immediately prior to the Executive's termination, provided,
however, that in the event the termination of the Executive's employment occurs
after the third anniversary of the Commencement Date, the salary and bonus
severance payment will equal one and one-half times the prior year bonus and
annual base salary in effect immediately prior to the Executive's termination.
Said salary and bonus severance payment shall be paid in a lump sum within 30
days after the Date of Termination;
(iii) The Company shall pay to the Executive any deferred
compensation, including, but not limited to deferred bonuses, allocated or
credited to the Executive or his account as of the Date of Termination; and
(iv) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for 24 months following the date of
termination of the Executive's employment if such date is prior to the third
anniversary of the Commencement Date, and if such date is on or after the third
anniversary of the Commencement Date, for 18 months following the date of the
termination of the Executive's employment, all employee welfare benefit plans
and programs in which the Executive was entitled to participate immediately
prior to the Date of Termination provided that the Executive's continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that the Executive's participation in any such plan
or program is barred, the Company shall arrange to provide the Executive with
benefits substantially similar to those which the Executive would otherwise have
been entitled to receive under such plans and programs from which his continued
participation is barred.
8. DEATH/ASSIGNMENT OF STOCK OPTIONS. In the event of the Executive's
death, whether his death occurs during or after the Term of this Agreement, all
unexercised and exercisable Stock Options will be assigned to his Estate.
9. TERMINATION/UNEXERCISED STOCK OPTIONS. In the event of the
termination of the employment of the Executive for any reason, all unexercised
and exercisable stock options granted to
9
<PAGE>
him hereunder must be exercised by him, or his estate (or heir(s)) as the case
may be, before the second anniversary of the termination of his employment, but
in no event after the tenth anniversary of the date of grant thereof, any such
options not exercised by that date will lapse immediately thereafter.
10. MITIGATION. In the event that the Executive receives benefits from
other employment after the Date of Termination, the benefits to be provided by
the Company under the provisions of Section 7(b) shall be correspondingly
reduced.
11. ANTI-DILUTION/RECAPITALIZATION OF THE COMPANY. In the event of any
change in the number of issued shares of Company Stock resulting from a
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend, or other increase or decrease in such shares, then
appropriate adjustments shall be made by the Company with respect to outstanding
unexercised Stock Options and/or the aggregate number of shares of Company Stock
of the Company in respect of which Stock Options may be exercised.
12. NONCOMPETITION.
(a) So long as the Executive is employed by the Company under this
Agreement and unless this Agreement is terminated for any reason, the Executive
agrees not to enter into competitive endeavors.
(b) During the term of this Agreement and any period thereafter
during which or in respect of which the Executive receives payments from the
Company under Section 7, the Executive will retain in confidence any and all
confidential information known to him concerning the Company and its business
and shall not use or disclose such information without the approval of the
Company except to the extent such information has previously become public or as
may be required by law.
13. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on
10
<PAGE>
which any such succession becomes effective shall be deemed the Date of
Termination. As used in the Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
12 or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live, all such amounts
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
14. NOTICE. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Justin F. Deedy, Jr.
4816 Upper Brandon Place
Marietta, Georgia 30068
If to the Company:
The Alpine Group, Inc.
1790 Broadway
15th Floor
New York, NY 10019-1412
Attn: Chief Executive officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar
11
<PAGE>
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
New York without regard to its conflicts of law principles.
16. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument
18. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein in
hereby terminated and cancelled,
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
ATTEST: THE ALPINE GROUP, INC.
___________________________ By_________________________(SEAL)
Name: Brag F. Schut
Title: Executive Vice President
ATTEST: EXECUTIVE
__________________________ __________________________________
Justin F. Deedy, Jr.
12
<PAGE>
Exhibit 10(x)
SECOND AMENDMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AGREEMENT (this "Amendment"), dated as
of July 21, 1995, between ALP (TX) QRS 11-28, INC., a Texas corporation
("Landlord"), and SUPERIOR TELECOMMUNICATIONS, INC., a Georgia corporation f/k/a
Superior TeleTec, Inc. and Superior TeleTec Transmission Products, Inc.
("Tenant").
W I T N E S S E T H :
WHEREAS, Landlord and Tenant have entered into that certain Lease
Agreement, dated as of December 16, 1993, as amended by a First Amendment to
Lease Agreement, dated as of May 10, 1995 (the "Lease"); and
WHEREAS, the parties hereto have agreed to amend the Lease as
hereinafter set forth.
NOW, THEREFORE, intending to be legally bound and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the Lease.
2. FINANCIAL COVENANTS. The Lease is hereby amended by deleting the
Financial Covenants attached to the Lease as Exhibit E and inserting the
Financial Covenants attached hereto as Exhibit E in lieu thereof.
3. SUCCESSORS AND ASSIGNS. Except as specifically amended by this
Amendment, the terms and conditions of the Lease shall remain in full force and
effect and shall be binding upon Landlord and Tenant and their respective
successors and assigns.
4. GOVERNING LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Texas.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
ATTEST: ALP (TX) QRS 11-28, INC.
By: By:
-------------------------- -----------------------------------------
Title: Title:
----------------------- --------------------------------------
[Corporate Seal]
ATTEST: SUPERIOR TELECOMMUNICATIONS, INC.
By: By:
-------------------------- -----------------------------------------
Title: Senior Vice President Title: Assistant Secretary
[Corporate Seal]
(Signatures to Second Amendment to Lease Agreement)
2
<PAGE>
_________________________________________________________________
THE ALPINE GROUP, INC.,
as Borrower
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
LOAN AND SECURITY AGREEMENT
Dated: July 21, 1995
$85,000,000.00
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
THE FINANCIAL INSTITUTIONS
PARTY HERETO FROM TIME TO TIME, as Lenders
and
SHAWMUT CAPITAL CORPORATION, as Agent
______________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. CREDIT FACILITIES. . . . . . . . . . . . . . . . . . . . . 1
1.1. Revolver Facility . . . . . . . . . . . . . . . . . . . . . 1
1.2. LC Facility . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. INTEREST, FEES AND CHARGES . . . . . . . . . . . . . . . 6
2.1. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3. Computation of Interest and Fees. . . . . . . . . . . . . . 8
2.4. Reimbursement of Expenses . . . . . . . . . . . . . . . . . 8
2.5. Bank Charges. . . . . . . . . . . . . . . . . . . . . . . . 8
2.6. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7. Increased Costs . . . . . . . . . . . . . . . . . . . . . . 9
2.8. Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . 10
2.9. Funding Losses. . . . . . . . . . . . . . . . . . . . . . . 11
2.10. Maximum Interest. . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. LOAN ADMINISTRATION . . . . . . . . . . . . . . . . . . . . 12
3.1. Manner of Borrowing and Funding Revolver Loans. . . . . . . 12
3.2. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3. Marshalling; Payments Set Aside . . . . . . . . . . . . . . 18
3.4. Allocation of Payments from Borrower and Borrower
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 18
3.5. Application of Payments and Collections . . . . . . . . . . 19
3.6. All Loans to Constitute One Obligation. . . . . . . . . . . 20
3.7. Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . 20
3.8. Gross Up for Taxes. . . . . . . . . . . . . . . . . . . . . 20
3.9. Withholding Tax Exemption . . . . . . . . . . . . . . . . . 20
SECTION 4. TERM AND TERMINATION. . . . . . . . . . . . . . . . . . . . 21
4.1. Term of Commitments . . . . . . . . . . . . . . . . . . . . 21
4.2. Termination . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5. SECURITY INTERESTS. . . . . . . . . . . . . . . . . . . . . 22
5.1. Security Interest in Borrower Collateral. . . . . . . . . . 22
5.2. Subsidiary and Other Collateral.. . . . . . . . . . . . . . 23
5.3. Lien Perfection; Further Assurances . . . . . . . . . . . . 23
SECTION 6. COLLATERAL ADMINISTRATION . . . . . . . . . . . . . . . . . 23
6.1. General Provisions. . . . . . . . . . . . . . . . . . . . . 23
6.2. Administration of Accounts. . . . . . . . . . . . . . . . . 24
6.3. Administration of Inventory . . . . . . . . . . . . . . . . 25
6.4. Payment of Charges. . . . . . . . . . . . . . . . . . . . . 26
SECTION 7. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . 26
7.1. General Representations and Warranties. . . . . . . . . . . 26
(ii)
<PAGE>
7.2. Continuous Nature of Representations and Warranties . . . . 31
7.3. Survival of Representations and Warranties. . . . . . . . . 31
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS . . . . . . . . . . . . 31
8.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . 31
8.2. Negative Covenants. . . . . . . . . . . . . . . . . . . . . 36
8.3. Specific Financial Covenants. . . . . . . . . . . . . . . . 41
SECTION 9. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . 42
9.1. Conditions Precedent to Initial Credit Extensions . . . . . 42
9.2. Conditions Precedent to all Credit Extensions . . . . . . . 44
9.3. Limited Waiver of Conditions Precedent. . . . . . . . . . . 45
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT . . . . . 45
10.1. Events of Default . . . . . . . . . . . . . . . . . . . . . 45
10.2. Acceleration of the Obligations . . . . . . . . . . . . . . 47
10.3. Other Remedies. . . . . . . . . . . . . . . . . . . . . . . 47
10.4. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.5. Remedies Cumulative; No Waiver. . . . . . . . . . . . . . . 49
SECTION 11. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.1. Appointment, Authority and Duties of Agent. . . . . . . . . 49
11.2. Collateral Interests. . . . . . . . . . . . . . . . . . . . 51
11.3. Reliance By Agent . . . . . . . . . . . . . . . . . . . . . 51
11.4. Action Upon Default . . . . . . . . . . . . . . . . . . . . 51
11.5. Ratable Sharing . . . . . . . . . . . . . . . . . . . . . . 52
11.6. Indemnification of Agent. . . . . . . . . . . . . . . . . . 52
11.7. Limitation on Responsibilities of Agent . . . . . . . . . . 53
11.8. Successor Agent and Co-Agents . . . . . . . . . . . . . . . 53
11.9. Consents, Amendments and Waivers under Transaction
Documents . . . . . . . . . . . . . . . . . . . . . . . . 54
11.10. Due Diligence and Non-Reliance. . . . . . . . . . . . . . . 56
11.11. Representations and Warranties of Lenders . . . . . . . . . 56
11.12. The Required Lenders. . . . . . . . . . . . . . . . . . . . 57
11.13. Several Obligations . . . . . . . . . . . . . . . . . . . . 57
11.14. Agent in its Individual Capacity. . . . . . . . . . . . . . 57
11.15. Third Party Beneficiaries . . . . . . . . . . . . . . . . . 57
11.16. Notice of Transfer. . . . . . . . . . . . . . . . . . . . . 57
11.17. Replacement of Certain Lenders. . . . . . . . . . . . . . . 57
11.18. Remittance of Payments and Collections. . . . . . . . . . . 58
SECTION 12. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS. . . . 58
12.1. Successors and Assigns. . . . . . . . . . . . . . . . . . . 58
12.2. Participations. . . . . . . . . . . . . . . . . . . . . . . 59
12.3. Assignments . . . . . . . . . . . . . . . . . . . . . . . . 60
12.4. Certain Restrictions on Assignments and Participations. . . 60
12.5. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 61
13.1. Power of Attorney . . . . . . . . . . . . . . . . . . . . . 61
(iii)
<PAGE>
13.2. General Indemnity . . . . . . . . . . . . . . . . . . . . . 61
13.3. Survival of All Indemnities . . . . . . . . . . . . . . . . 62
13.4. Modification of Agreement . . . . . . . . . . . . . . . . . 62
13.5. Severability. . . . . . . . . . . . . . . . . . . . . . . . 62
13.6. Cumulative Effect; Conflict of Terms. . . . . . . . . . . . 62
13.7. Execution in Counterparts . . . . . . . . . . . . . . . . . 62
13.8. Agent's or Required Lenders' Consent. . . . . . . . . . . . 62
13.9. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
13.10. Credit Inquiries. . . . . . . . . . . . . . . . . . . . . . 63
13.11. Time of Essence . . . . . . . . . . . . . . . . . . . . . . 63
13.12. Entire Agreement; Appendix A and Exhibits . . . . . . . . . 63
13.13. Interpretation. . . . . . . . . . . . . . . . . . . . . . . 63
13.14. Governing Law; Consent To Forum . . . . . . . . . . . . . . 63
13.15. Waivers by Borrower . . . . . . . . . . . . . . . . . . . . 64
(iv)
<PAGE>
LIST OF EXHIBITS
Exhibit A Form of Revolver Note
Exhibit B Form of Notice of Borrowing
Exhibit C Borrower's Business Locations
Exhibit C-1 Subsidiaries' Business Locations
Exhibit D Jurisdictions in which Borrower and each Subsidiary is Authorized
to do Business
Exhibit E Capital Structure of Borrower
Exhibit F Corporate Names
Exhibit G Tax Identification Numbers of Subsidiaries
Exhibit H Patents, Trademarks, Copyrights and Licenses
Exhibit I Contracts Restricting Borrower's Right to Incur Debts; Surety
Obligations
Exhibit J Litigation
Exhibit K Capitalized Leases
Exhibit L Operating Leases
Exhibit M Pension Plans
Exhibit N Labor Contracts
Exhibit O Compliance Certificate
Exhibit P Opinion Letter
Exhibit Q Permitted Liens
Exhibit R Form of Assignment and Acceptance
Exhibit S Form of Notice
The Alpine Group, Inc. shall furnish supplementally a copy of any of these
omitted exhibits to the Commission upon request.
(v)
<PAGE>
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made on July 21, 1995, by and among THE
ALPINE GROUP, INC. ("Borrower"), a Delaware corporation with its chief executive
office and principal place of business at 1790 Broadway, New York, New York
10019; the various financial institutions listed on the signature pages hereof
and their respective successors and assigns which become "Lenders" as provided
herein (such banks and lending institutions and their respective assigns
referred to collectively herein as "Lenders," and individually as a "Lender");
and SHAWMUT CAPITAL CORPORATION ("Agent"), a Connecticut corporation with an
office at 300 Galleria Parkway, N.W., Suite 800, Atlanta, Georgia 30339, in its
capacity as "Agent" pursuant to Section 11 hereof. Capitalized terms used in
this Agreement have the meanings assigned to them in Appendix A, General
Definitions. Accounting terms not otherwise specifically defined herein shall
be construed in accordance with GAAP consistently applied.
SECTION 1. CREDIT FACILITIES
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders severally agree to the extent and in the manner hereinafter
set forth to make their respective Pro Rata shares of the Credit Facilities
available to Borrower, in an aggregate amount up to $85,000,000, as follows:
1.1. REVOLVER FACILITY.
1.1.1. REVOLVER LOANS. Each Lender agrees, severally to the extent
of its Commitment and not jointly with the other Lenders, upon the terms and
subject to the conditions set forth herein, to make Revolver Loans to Borrower
on any Business Day during the period from the date hereof through the day
before the Commitment Termination Date, not to exceed in aggregate principal
amount outstanding at any time such Lender's Commitment at such time, which
Revolver Loans may be repaid and reborrowed in accordance with the provisions of
this Agreement; PROVIDED, HOWEVER, that Lenders shall have no obligation
whatsoever to make any Revolver Loan if at the time of the proposed funding
thereof the aggregate principal amount of all of the Revolver Loans then
outstanding exceeds, or would exceed after the funding of such Revolver Loan,
the Borrowing Base. Each Borrowing of Revolver Loans shall be funded by Lenders
Pro Rata in accordance with their respective Commitments; but the failure of a
Lender to make any Revolver Loan shall not in itself relieve any other Lender of
its Pro Rata obligation to lend. The Revolver Loans shall bear interest as set
forth in Section 2.1. hereof. Each Revolver Loan shall, at the option of
Borrower, be made or continued as, or converted into, part of one or more
Borrowings that, unless specifically provided herein, shall consist entirely of
Base Rate Advances or LIBOR Rate Advances. The initial Borrowing hereunder
shall be a Base Rate Advance and shall be in a principal amount in excess of
$250,000. Each Borrowing comprised of LIBOR Rate Advances shall be for an
aggregate principal amount of not less than $5,000,000 or a greater integral
multiple of $1,000,000. At no time shall the number of Borrowings outstanding
under this Section 1.1.1 exceed 4; PROVIDED, HOWEVER, that, for purposes of
determining the number of Borrowings outstanding and the minimum amount for
Borrowings resulting from conversions or continuations, all Borrowings of Base
Rate Advances under the Revolver Facility shall be considered as one Borrowing.
1.1.2. OUT-OF-FORMULA LOANS. If the unpaid balance of
Revolver Loans outstanding at any time should exceed the Borrowing Base at such
time, such Revolver Loans shall nevertheless constitute Obligations that are
secured by the Collateral and entitled to all of the benefits of the Loan
Documents. In the event that Borrower requests and Lenders are willing in their
sole and absolute discretion to make Out-of-Formula Loans, such Out-of-Formula
Loans shall be payable ON DEMAND, shall be secured by the Collateral and shall
bear interest as provided in this Agreement for Revolver Loans generally.
1.1.3. USE OF PROCEEDS. The proceeds of the Revolver Loans shall
be used by Borrower solely for one or more of the following purposes: (i) to
enable Borrower to make Permitted Subsidiary Advances; (ii) to pay any
installment of principal or accrued interest in respect of the Senior Notes as
the same becomes due; (iii) to pay certain fees and transaction expenses
associated with the closing of the transactions described herein; (iv) to pay
any of the Obligations; and (v) to make expenditures for other lawful corporate
purposes of Borrower to the extent such expenditures are not prohibited by the
Senior Note Documents, this Agreement or Applicable Law. In no event may any
Revolver Loan proceeds be used by Borrower to make a contribution to the equity
of any Subsidiary, to purchase or carry any Margin Stock or for any related
purpose that violates the provisions of Regulations G, T, U or X of the Board of
Governors, or to make any Restricted Payment for which the Restricted Payment
Conditions have not been satisfied, or for any purpose other than as expressly
stated herein. The initial Revolver Loan shall be used by Borrower solely to
make a Permitted Subsidiary Advance to Superior to enable Superior
(vi)
<PAGE>
to repay a portion of the Indebtedness of Superior owed to the Superior/Alcatel
Noteholders and to enable Borrower to pay fees and expenses associated with the
establishment of the Credit Facilities as described in this Agreement and
payable under the Loan Documents.
1.1.4. REVOLVER NOTES. Borrower's obligation to pay the principal
of, and interest on, the Revolver Loans to each Lender shall be evidenced by the
records of Agent and such Lender and by the Revolver Note payable to such Lender
(or the assignee of such Lender) completed in conformity with this Agreement.
All outstanding principal amounts and accrued interest under the Revolver Loans
shall be due and payable as set forth in Section 3.2 hereof.
1.2. LC FACILITY.
1.2.1. PROCUREMENT OF LETTERS OF CREDIT. Shawmut agrees, during the
term of this Agreement and for so long as no Default or Event of Default exists,
to request from Bank one or more Letters of Credit on Borrower's request
therefor from time to time, subject to the following terms and conditions:
(i) Borrower acknowledges that Bank's willingness to issue
any Letter of Credit is conditioned upon Bank's receipt of (A) the LC
Guaranty duly executed and delivered to Bank by Shawmut, (B) an LC
Application with respect to the requested Letter of Credit and (C) such
other instruments and agreements as Bank may customarily require for the
issuance of a letter of credit of equivalent type and amount as the
requested Letter of Credit. Shawmut shall join with Borrower or one or
more Borrower Subsidiaries in executing an LC Application and shall issue
an LC Guaranty in connection with Borrower's request to Bank for the
issuance of a Letter of Credit if (x) Shawmut receives from Borrower, at
least 3 Business Days prior to the date on which Borrower desires to submit
such LC Application to Bank, an LC Request and (y) each of the LC
Conditions is satisfied on the date of Shawmut's receipt of the LC Request.
Any Borrower Letter of Credit issued on the Closing Date shall be for an
amount in Dollars that is greater than $250,000 and any Canadian Letter of
Credit issued on the Closing Date shall be for an amount in Canadian
Dollars that is greater than Cdn$1,000,000.
(ii) In no event shall Shawmut or any other Lender have any
liability or obligation to Borrower or any Subsidiary for any failure or
refusal by Bank to issue, for Bank's delay in issuing, or for any error of
Bank in issuing any Letter of Credit, unless such failure or refusal is the
direct and proximate result of Shawmut's gross negligence or willful
misconduct.
(iii) If Shawmut shall pay any amount under a LC Guaranty
with respect to any Letter of Credit, then Borrower shall reimburse Shawmut
for such payment in accordance with the applicable Reimbursement Agreement
and such obligations to reimburse Shawmut shall be unconditional and
irrevocable.
1.2.2. PARTICIPATIONS.
(i) Immediately upon the issuance by Bank of any Letter of
Credit, each Lender (other than Shawmut) shall be deemed to have
irrevocably and unconditionally purchased and received from Shawmut,
without recourse or warranty, an undivided interest and participation equal
to the Pro Rata share of such Lender (a "Participating Lender") in all
Reimbursement Obligations arising in connection with such Letter of Credit
and any security therefor or guaranty pertaining thereto, but in no event
greater than an amount which, when added to such Lender's Pro Rata share of
all Revolver Loans and Reimbursement Obligations then outstanding, exceeds
such Lender's Commitment.
(ii) If Shawmut makes any payment under an LC Guaranty and
Borrower does not repay or cause to be repaid the amount of such payment on
the Reimbursement Date, Shawmut shall promptly notify Agent, which shall
promptly notify each Participating Lender, of such payment and each
Participating Lender shall promptly and unconditionally pay to Agent, for
the account of Shawmut, in Dollars (or, in the case of Reimbursement
Obligations in connection with Canadian Letters of Credit, Canadian
Dollars) in immediately available funds, the amount of such Participating
Lender's Pro Rata share of such payment, and Agent shall promptly pay such
amounts to Shawmut. If a Participating Lender does not make its Pro Rata
share of the amount of such payment available to Agent, such defaulting
Lender agrees to pay to Agent for the account of Shawmut, forthwith ON
DEMAND, such amount together with interest thereon at the Federal Funds
Rate. The failure of any Participating Lender to make available to Agent
for the account of Shawmut such Participating Lender's
(vii)
<PAGE>
Pro Rata share of the Reimbursement Obligations shall not relieve any
other Participating Lender of its obligation hereunder to make available
to Agent its Pro Rata share of the Reimbursement Obligations, but no
Participating Lender shall be responsible for the failure of any other
Participating Lender to make available to Agent its Pro Rata share of the
Reimbursement Obligations on the date such payment is to be made.
(iii) Whenever Shawmut receives a payment on account of the
Reimbursement Obligations, including any interest thereon, as to which
Agent has previously received payments from any Lender for the account of
Shawmut, Shawmut shall promptly pay to each Participating Lender which has
funded its participating interest therein, in immediately available funds,
an amount equal to such Participating Lender's Pro Rata share thereof.
(iv) The obligation of each Participating Lender to make
payments to Agent for the account of Shawmut in connection with Shawmut's
payment under a LC Guaranty shall be absolute, unconditional and
irrevocable, not subject to any counterclaim, setoff, qualification or
exception whatsoever (other than for Shawmut's gross negligence or willful
misconduct), and shall be made in accordance with the terms and conditions
of this Agreement under all circumstances and irrespective of whether or
not Borrower may assert or have any claim for any lack of validity or
unenforceability of this Agreement or any of the other Loan Documents; the
existence of any Default or Event of Default; any draft, certificate or
other document presented under a Letter of Credit having been determined to
be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or the
existence of any setoff or defense any Obligor may have with respect to any
of the Obligations.
(v) Neither Shawmut nor any of its officers, directors,
employees or agents shall be liable to any Participating Lenders for any
action taken or omitted to be taken under or in connection with any of the
LC Documents or Canadian Financing Documents except as a result of actual
gross negligence or willful misconduct on the part of Shawmut. Shawmut
does not assume any responsibility for any failure or delay in performance
or breach by any Subsidiary or any other Person of any of its obligations
under any of the LC Documents or Canadian Financing Documents. Shawmut
does not make to Participating Lenders any express or implied warranty,
representation or guaranty with respect to the Collateral, the LC
Documents, the Canadian Financing Documents or any Subsidiary or other
Obligor. Shawmut shall not be responsible to any Participating Lender for
any recitals, statements, information, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of, any of the LC Documents or Canadian Financing Documents;
the validity, genuineness, enforceability, collectibility, value or
sufficiency of any of the Collateral or the perfection of any Lien therein;
or the assets, liabilities, financial condition, results of operations,
business, creditworthiness or legal status of any Subsidiary or any other
Obligor or any Account Debtor. In connection with its administration of
and enforcement of rights or remedies under any of the LC Documents or
Canadian Financing Documents, Shawmut shall be entitled to act, and shall
be fully protected in acting upon, any certification, notice or other
communication in whatever form believed by Shawmut, in good faith, to be
genuine and correct and to have been signed or sent or made by a proper
Person. Shawmut may consult with and employ legal counsel, accountants and
other experts and to advise it concerning its rights, powers and privileges
under the LC Documents or Canadian Financing Documents and shall be
entitled to act upon, and shall be fully protected in any action taken in
good faith reliance upon, any advise given by such experts. Shawmut may
employ agents and attorneys-in-fact in connection with any matter relating
to the LC Documents, Canadian Financing Documents or Subsidiary Collateral
and shall not be liable for the negligence, default or misconduct of any
such agents or attorneys-in-fact selected by Shawmut with reasonable care.
Shawmut shall not have any liability to Participating Lenders by reason of
Shawmut's refraining to take any action under any of the LC Documents or
Canadian Financing Documents without having first received written
instructions from the Required Lenders to take such action.
(vi) The duties and responsibilities of Shawmut to each
Participating Lender, and the rights of each Participating Lender in
connection with its purchase of a participation in Reimbursement
Obligations, shall be determined as if Shawmut were Agent and each
Participating Lender were a Lender and the relative rights and
responsibilities of such parties were as set forth in Section 11 of this
Agreement.
1.2.3. CASH COLLATERAL ACCOUNT. If any Reimbursement Obligations,
whether or not then due or payable in whole or in part, shall for any reason be
outstanding on the sooner to occur of the date on which an Event of Default
exists or the Commitment Termination Date, Borrower and Guarantors shall be
jointly and severally obligated to deposit with Agent, in cash or Cash
Equivalents, an amount in Dollars equal to the maximum aggregate amount of all
Reimbursement Obligations then outstanding with respect to Borrower Letters of
Credit and an amount in Canadian Dollars equal to the maximum aggregate amount
of all Reimbursement Obligations then outstanding with respect to Canadian
Letters of Credit. If Borrower or Guarantors fail
(viii)
<PAGE>
promptly to make such deposit as required herein, Lenders may (and shall upon
direction of the Required Lenders) advance such amount as a Revolver Loan
(whether or not an Out-of-Formula Condition or Subsidiary Out-of-Formula
Condition is created thereby). Such cash or Cash Equivalents shall (together
with any interest accrued thereon) be held by Agent in the Cash Collateral
Account and may be invested in Cash Equivalents. Borrower hereby pledges to
Agent and grants to Agent a security interest in, for the benefit of Agent in
such capacity and for the Pro Rata benefit of Lenders, all such Cash Collateral
held in the Cash Collateral Account from time to time and all proceeds thereof,
as security for the payment of all Obligations, whether or not then due or
payable. From time to time after cash or Cash Equivalents are deposited in the
Cash Collateral Account, Agent may apply Cash Collateral then held in the Cash
Collateral Account to the payment of any amounts, in such order as Agent may
elect, as shall be or shall become due and payable by Borrower to Agent or any
Lender with respect to the Reimbursement Obligations which may be then
outstanding. Neither Borrower nor any other Person claiming by, through or
under or on behalf of Borrower shall have any right to withdraw any of the Cash
Collateral held in the Cash Collateral Account, including any accrued interest,
except that upon termination or expiration of all Letters of Credit and the
payment and satisfaction of all of the Reimbursement Obligations outstanding,
any Cash Collateral remaining in the Cash Collateral Account shall be returned
to Borrower unless an Event of Default then exists (in which event Agent may
apply such Cash Collateral to the payment of any other Obligations outstanding,
with any surplus to be turned over to Borrower).
1.2.4. INDEMNIFICATION.
(i) In addition to any other indemnity which Borrower may
have to Agent or any Lender under any of the other Loan Documents
(including any of the Reimbursement Agreements) and without limiting such
other indemnification provisions, Borrower hereby agrees to indemnify Agent
and Lenders and to hold Agent and Lenders harmless from and against any and
all claims, demands, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever (including reasonable attorneys' fees and expenses) which
Agent or Lenders may (other than as the actual result of their own gross
negligence or willful misconduct) incur or be subject to as a consequence,
directly or indirectly, of (a) the issuance of, payment or failure to pay
or any performance or failure to perform under any Letter of Credit or LC
Guaranty or (b) any suit, investigation or proceeding as to which Agent or
any Lender is or may become a party to as a consequence, directly or
indirectly, of the issuance of any Letter of Credit or any LC Guaranty or
the payment or failure to pay thereunder.
(ii) Each Participating Lender agrees to indemnify Shawmut
(to the extent Shawmut is not reimbursed by Borrower or any other Obligor,
but without limiting the indemnification obligations of Borrower under this
Agreement), on a Pro Rata basis, from and against any and all claims,
demands, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever (including reasonable attorneys' fees and expenses) which may be
imposed on, incurred by or asserted against Shawmut in any way related to
or arising out of its administration or enforcement of rights or remedies
under any of the LC Documents or Canadian Financing Documents or any of the
transactions contemplated thereby (including costs and expenses which
Borrower is obligated to pay under Section 13.2 hereof), provided that no
Participating Lender shall be liable to Shawmut for any of the foregoing to
the extent that they result solely from the willful misconduct or gross
negligence of Shawmut.
SECTION 2. INTEREST, FEES AND CHARGES
2.1. INTEREST.
2.1.1. RATES OF INTEREST. Borrower agrees to pay interest in
respect of all unpaid principal amounts of the Revolver Loans from the
respective dates such principal amounts are advanced until paid (whether at
stated maturity, on acceleration or otherwise) at a variable rate per annum
equal to the applicable rate indicated below:
(i) for each Base Rate Advance, the Base Rate in effect
from time to time PLUS 0.375%; or
(ii) for each LIBOR Rate Advance, the relevant Adjusted
LIBOR Rate for the applicable Interest Period selected by Borrower in
conformity with this Agreement PLUS 2.25%.
Upon determining the Adjusted LIBOR Rate for any Interest Period requested by
Borrower, Agent shall promptly notify Borrower thereof by telephone and, if so
requested by Borrower, confirmed in writing. Such determination shall, absent
manifest error, be final, conclusive and binding on all parties and for all
(ix)
<PAGE>
purposes. The applicable rate of interest for all Revolver Loans bearing
interest based upon the Base Rate shall be increased or decreased, as the case
may be, by an amount equal to any increase or decrease in the Base Rate, with
such adjustments to be effective as of the opening of business on the day that
any such change in the Base Rate becomes effective. Interest on each Revolver
Loan shall accrue from and including the date of such Revolver Loan to but
excluding the date of any repayment thereof; PROVIDED, HOWEVER, that, if a
Revolver Loan is repaid on the same day made, one day's interest shall be paid
on such Revolver Loan. The rate of interest in effect hereunder on the date
hereof, expressed in simple interest terms, is 9.125% per annum, based upon a
Base Rate in effect on the date hereof of 8.75%.
2.1.2. INTEREST PERIODS. In connection with the making or
continuation of, or conversion into, a LIBOR Rate Advance, Borrower shall select
an interest period (each an "Interest Period") to be applicable to such LIBOR
Rate Advance, which interest period shall commence on the date such LIBOR Rate
Advance is made and shall end on a numerically corresponding day in the 1st, 3rd
or 6th month thereafter; PROVIDED, HOWEVER, that:
(i) the initial Interest Period for a LIBOR Rate
Advance shall commence on the date of such borrowing (including the date of
any conversion from an Advance of another type) and each Interest Period
occurring thereafter in respect of such Advance shall commence on the date
on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, provided that if any Interest Period in
respect of LIBOR Rate Advances (other than a LIBOR Rate Advance referred to
in Section 3.1.1(iii) hereof) would otherwise expire on a day which is not
a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(iii) any Interest Period which begins on a day for
which there is no numerically corresponding day in the calendar month at
the end of such Interest Period shall expire on the last Business Day of
such calendar month;
(iv) no Interest Period shall extend beyond the last
day of the Term.
2.1.3. INTEREST RATE NOT ASCERTAINABLE. If Agent shall determine
(which determination shall, absent manifest error, be final, conclusive and
binding upon all parties) that on any date for determining the Adjusted LIBOR
Rate for any Interest Period, by reason of any changes arising after the date of
this Agreement affecting the London interbank market or any Lender's or Bank's
position in such market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Adjusted LIBOR Rate, then, and in any such event, Agent shall forthwith give
notice (by telephone confirmed in writing) to Borrower of such determination.
Until Agent notifies Borrower that the circumstances giving rise to the
suspension described herein no longer exist, the obligation of Lenders to make
LIBOR Rate Advances shall be suspended, and such affected Loans then outstanding
shall, at the end of the then applicable Interest Period or at such earlier time
as may be required by Applicable Law, bear the same interest as Base Rate
Advances.
2.1.4. DEFAULT RATE OF INTEREST. Upon and after the occurrence of
an Event of Default, and during the continuance thereof, the principal amount of
all Loans shall bear interest at a variable rate per annum equal to 2% above the
interest rate otherwise applicable from time to time to Base Rate Advances (the
"Default Rate").
2.2. FEES.
2.2.1. CLOSING FEE. Borrower shall pay the closing fee referenced
in the Fee Letter, in accordance with the terms of the Fee Letter, which shall
be fully earned and (except to the extent otherwise required by Applicable Law)
nonrefundable on the Closing Date and shall be paid concurrently with and from
the proceeds of the initial Revolver Loan hereunder.
2.2.2. LC FACILITY FEES. Borrower, Superior and Adience shall pay,
or shall cause an applicant under an LC Application (other than Shawmut) to pay,
all fees at any time payable to Bank for each Letter of Credit, including an
issuance charge of $150 for each Letter of Credit and a charge of $100 for each
amendment to a Letter of Credit. Borrower shall also pay or cause to be paid to
Agent for the Pro Rata benefit of Lenders, in consideration of Shawmut's
arranging for the issuance of each Letter of Credit and each Participating
Lender's participation in the Reimbursement
(x)
<PAGE>
Obligations, a fee equal to 1.75% per annum of the face amount of each Letter of
Credit outstanding from time to time, which fee shall be deemed fully earned
upon issuance of each such Letter of Credit. In no event shall Shawmut be
liable to Bank, Borrower or any other Person for any fees payable in respect of
any Letter of Credit by reason of Shawmut's joining in any LC Application or
otherwise.
2.2.3. UNUSED LINE FEE. Borrower shall pay to Agent for the Pro
Rata benefit of Lenders a fee equal to 0.375% per annum of the amount by which
the Average Revolver Loan Balance is less than $85,000,000. The unused line fee
shall be payable monthly, in arrears, on the first day of each calendar month
after the Closing Date.
2.2.4. AUDIT AND APPRAISAL FEES. Borrower shall reimburse Lenders
for all reasonable costs and expenses incurred by Lenders in connection with all
audits and appraisals of any Obligor's books and records and such other matters
pertaining to any Obligor or any Collateral as any such Lender shall deem
appropriate. On the Closing Date, Borrower shall pay to Shawmut an appraisal
fee of $5,000 plus all out-of-pocket expenses incurred by Shawmut in connection
with the audit and appraisal of Borrower's business and Properties prior to the
Closing Date.
2.2.5. AGENCY FEE. In consideration of Shawmut's syndication of
the Credit Facilities and service as Agent hereunder, Borrower shall pay to
Agent an agency fee of $100,000 per annum, which fee shall be payable on the
Closing Date and on each anniversary of the Closing Date.
2.3. COMPUTATION OF INTEREST AND FEES. All interest, fees and other
charges provided for in this Agreement shall be calculated daily and shall be
computed on the actual number of days elapsed over a year of 360 days. Each
payment received by Agent in immediately available funds shall be deemed applied
by Agent on account of the Obligations (subject to final payment), on the day
such payment is received in Agent's account located in Chicago, Illinois, and
Agent shall be deemed to have received such payment on the date specified in
Section 3.5 hereof.
2.4. REIMBURSEMENT OF EXPENSES. If, at any time or times regardless of
whether or not an Event of Default then exists, Agent, any Lender or any
Participant incurs legal or accounting expenses or any other out-of-pocket costs
or expenses in connection with (i) the negotiation and preparation of this
Agreement or any of the other Transaction Documents, any amendment of or
modification of this Agreement or any of the other Transaction Documents, or any
sale or attempted sale of any interest herein to a Participant; (ii) the
administration of this Agreement or any of the other Transaction Documents and
the transactions contemplated hereby and thereby; (iii) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Agent, any Lender, an
Obligor or any other Person) in any way relating to the Collateral, this
Agreement or any of the other Transaction Documents or Borrower's affairs; (iv)
any attempt to enforce any rights of Agent, any Lender or any Participant
against Borrower or any other Person which may be obligated to Agent or a Lender
by virtue of this Agreement or any of the other Transaction Documents, including
the Account Debtors; or (v) any attempt to inspect, verify, protect, preserve,
restore, collect, sell, liquidate or otherwise dispose of or realize upon the
Collateral; then all such reasonable legal and accounting expenses and other
out-of-pocket costs and expenses of Lender shall be charged to Borrower. All
amounts chargeable to Borrower under this Section 2.4 shall be Obligations
secured by all of the Borrower Collateral, shall be payable ON DEMAND to Agent,
Lenders or to such Participant, as the case may be, and shall bear interest from
the date such demand is made until paid in full at the rate applicable to
Revolver Loans constituting Base Rate Advances from time to time. Borrower
shall also reimburse Agent for expenses incurred by Agent in its administration
of any Collateral to the extent and in the manner provided in Section 6 hereof
or in any of the other Transaction Documents.
2.5. BANK CHARGES. Borrower shall pay to Agent, ON DEMAND, any and all
fees, costs or expenses which Agent, any Lender or any Participant pays to a
bank or other similar institution (including any fees paid by Agent or any
Lender to any Participant) arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower, by Agent, any
Lender or any Participant, of proceeds of Loans made by Lenders to Borrower
pursuant to this Agreement and (ii) the depositing for collection, by Agent, any
Lender or any Participant, of any Payment Item received or delivered to Agent,
any Lender or any Participant on account of the Obligations.
2.6. ILLEGALITY. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (i) any change in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration thereof shall make it unlawful for a Lender to make or maintain a
LIBOR Rate Advance or to give effect to its obligations as contemplated hereby
with respect to a LIBOR Rate Advance or (ii) at any time such Lender determines
that the making or continuance of any LIBOR Rate Advance has become
impracticable as a result of a contingency occurring after the date hereof which
adversely affects the London interbank market or the position of such Lender in
such market, then such Lender shall promptly after such determination give
Borrower notice thereof and may (1) declare that LIBOR Rate Advances will not
thereafter be made by such Lender, whereupon any request by a Borrower for a
LIBOR Rate Advance shall be deemed a request for a Base Rate Advance unless such
Lender's declaration shall be subsequently
(xi)
<PAGE>
withdrawn (which declaration shall be withdrawn promptly after the cessation of
the circumstances described in clause (i) or (ii) above); and (2) require that
all outstanding LIBOR Rate Advances made by such Lender be converted to Base
Rate Advances, under the circumstances of clause (i) or (ii) of this Section 2.6
insofar as such Lender determines the continuance of LIBOR Advances to be
impracticable, in which event all such LIBOR Rate Advances shall be
automatically converted to Base Rate Advances as of the date of Borrower's
receipt of the aforesaid notice from such Lender.
2.7. INCREASED COSTS. If, by reason of (a) after the date hereof, the
introduction of or any change (including any change by way of imposition or
increase of Statutory Reserves or other reserve requirements) in or in the
interpretation of any law or regulation, or (b) the compliance with any
guideline or request from any central bank or other governmental authority or
quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law):
(i) any Lender shall be subject to any tax, duty or
other charge with respect to any LIBOR Rate Advance or its obligation to
make LIBOR Rate Advances, or shall change the basis of taxation of payment
to any Lender of the principal of or interest on its LIBOR Rate Advances or
its obligation to make LIBOR Rate Advances (except for changes in the rate
of tax on the overall net income of such Lender imposed by the jurisdiction
in which such Lender's principal executive office is located); or
(ii) any reserve (including any imposed by the Board of
Governors of the Federal Reserve System), special deposits or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender shall be imposed or deemed applicable or any
other condition affecting its LIBOR Rate Advances or its obligation to make
LIBOR Rate Advances shall be imposed on Lender or the London interbank
market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining LIBOR Rate Advances
(except to the extent already included in the determination of the applicable
Adjusted LIBOR Rate for LIBOR Rate Advances), or there shall be a reduction in
the amount received or receivable by such Lender, then Lender shall promptly
after determining such increased costs give Borrower notice thereof and Borrower
shall from time to time, upon written notice from and demand by such Lender
(with a copy of such notice and demand to Agent), pay to Agent for the account
of such Lender, within 5 Business Days after the date specified in such notice
and demand, an additional amount sufficient to indemnify such Lender against
such increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower by such Lender, shall be final, conclusive and binding for
all purposes, absent manifest error. If any Lender shall advise Borrower at any
time that, because of the circumstances described hereinabove in this Section
2.7 or any other circumstances arising after the date of this Agreement
affecting such Lender or the London interbank market or such Lender's position
in such market, the Adjusted LIBOR Rate, as determined by Agent, will not
adequately and fairly reflect the cost to such Lender of funding LIBOR Rate
Advances, then, and in any such event:
(i) Agent shall forthwith give 30 days prior written
notice to Borrower and Lenders of such advice;
(ii) Borrower's right to request and such Lender's
obligation to make LIBOR Rate Advances shall be immediately suspended and
Borrower's right to continue a LIBOR Rate Advance as such beyond the then
applicable Interest Period shall also be suspended, until each condition
giving rise to such suspension no longer exists; and
(iii) such Lender shall make an Advance as part of the
requested Borrowing of LIBOR Rate Advances as a Base Rate Advance, which
Base Rate Advance shall, for all purposes, be considered part of such
Borrowing.
For purposes of this Section 2.7, all references to a Lender shall be
deemed to include any bank holding company or bank parent of such Lender.
2.8. CAPITAL ADEQUACY. If after the date hereof any Lender determines that
(a) the adoption of any Applicable Law, rule or regulation regarding capital
requirements for banks or bank holding companies or the subsidiaries thereof,
(b) any change in the interpretation or administration of any such law, rule or
regulation by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or (c) compliance by
such Lender or its holding company with any request or directive of any such
governmental authority, central bank or comparable agency regarding capital
adequacy (whether or not having the force of law), has the effect of reducing
the return on such Lender's capital to a level below that which such Lender
could have achieved (taking into consideration such Lender's and its holding
company's policies with respect to capital adequacy immediately before such
adoption, change or compliance and assuming that such Lender's capital was fully
utilized prior to such adoption, change or compliance) but for such
(xii)
<PAGE>
adoption, change or compliance as a consequence of such Lender's commitment to
make the Loans pursuant hereto by any amount deemed by such Lender to be
material:
(i) Agent shall promptly, after such Lender's
determination of such occurrence, give notice thereof to Borrower and
Lenders; and
(ii) Borrower shall pay to Agent, for the account of
such Lender, as an additional fee from time to time, ON DEMAND, such amount
as such Lender certifies to be the amount reasonably calculated to
compensate such Lender for such reduction.
A certificate of such Lender claiming entitlement to compensation as set
forth above will be conclusive in the absence of manifest error. Such
certificate will set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to such Lender
(including the basis for such Lender's determination of such amount), and the
method by which such amounts were determined. In determining such amount, such
Lender may use any reasonable averaging and attribution method. For purposes of
this Section 2.8 all references to a Lender shall be deemed to include any bank
holding company or bank parent of such Lender.
2.9. FUNDING LOSSES. If for any reason (other than due to a default by a
Lender or as a result of a Lender's refusal to honor a LIBOR Rate Advance
request due to circumstances described in Section 2.6 or 2.7 hereof) a Borrowing
of, or conversion to or continuation of, LIBOR Rate Advances does not occur on
the date specified therefor in a Notice of Borrowing or Notice of Conversion/
Continuation (whether or not withdrawn), or if any repayment (including any
conversions pursuant to Section 3.1.1(iii) hereof) of any of its LIBOR Rate
Advances occurs on a date that is not the last day of an Interest Period
applicable thereto, or if for any reason Borrower defaults in its obligation to
repay LIBOR Rate Advances when required by the terms of this Agreement, then
Borrower shall pay to Lenders, in addition to any amounts that may be due
hereunder, an amount (if a positive number) computed pursuant to the following
formula:
L = (R - T) x P x D
---------------
360
where
L = amount payable
R = interest rate applicable to the LIBOR Rate Advance
unborrowed or prepaid
T = effective interest rate per annum at which any readily
marketable bond or other obligations of the United
States, selected at Agent's sole discretion, maturing
on or near the last day of the then applicable or
requested Interest Period for such Revolver Loan and in
approximately the same amount as such Revolver Loan,
can be purchased by such Lender on the day of such
payment of principal or failure to borrow
P = the amount of principal paid or the amount of the
requested Revolver Loan
D = the number of days remaining in the Interest Period as
of the date of such prepayment or the number of days in
the requested Interest Period
Borrower shall pay such amount upon presentation by Agent of a statement setting
forth the amount and Agent's calculation thereof pursuant hereto, which
statement shall be deemed true and correct absent manifest error. For purposes
of this Section 2.9, all references to a Lender shall be deemed to include any
bank holding company or bank parent of such Lender.
2.10. MAXIMUM INTEREST. Regardless of any provision contained in this
Agreement or any of the other Loan Documents, in no contingency or event
whatsoever shall the aggregate of all amounts that are contracted for, charged
or received by Agent and Lenders pursuant to the terms of this Agreement or any
of the other Loan Documents and that are deemed interest under Applicable Law
exceed the highest rate permissible under any Applicable Law. No agreements,
conditions, provisions or stipulations contained in this Agreement or any of the
other Loan Documents or the exercise by Agent of the right to accelerate the
payment or the maturity of all or any portion of the Obligations, or the
exercise of any option whatsoever contained in any of the
(xiii)
<PAGE>
Loan Documents, or the prepayment by Borrower of any of the Obligations, or the
occurrence of any contingency whatsoever, shall entitle Agent or any Lender to
charge or receive in any event, interest or any charges, amounts, premiums or
fees deemed interest by Applicable Law (such interest, charges, amounts,
premiums and fees referred to herein collectively as "Interest") in excess of
the Maximum Rate and in no event shall Borrower be obligated to pay Interest
exceeding such Maximum Rate, and all agreements, conditions or stipulations, if
any, which may in any event or contingency whatsoever operate to bind, obligate
or compel Borrower to pay Interest exceeding the Maximum Rate shall be without
binding force or effect, at law or in equity, to the extent only of the excess
of Interest over such Maximum Rate. If any Interest is charged or received in
excess of the Maximum Rate ("Excess"), Borrower acknowledges and stipulates that
any such charge or receipt shall be the result of an accident and bona fide
error, and such Excess, to the extent received, shall be applied first to reduce
the principal Obligations and the balance, if any, returned to Borrower, it
being the intent of the parties hereto not to enter into a usurious or otherwise
illegal relationship. The right to accelerate the maturity of any of the
Obligations does not include the right to accelerate any interest that has not
otherwise accrued on the date of such acceleration, and Agent and Lenders do not
intend to collect any unearned interest in the event of any such acceleration.
Borrower recognizes that, with fluctuations in the rates of interest set forth
in Section 2.1.1 of this Agreement, and the Maximum Rate, such an unintentional
result could inadvertently occur. All monies paid to Agent or any Lender
hereunder or under any of the other Loan Documents, whether at maturity or by
prepayment, shall be subject to any rebate of unearned interest as and to the
extent required by Applicable Law. By the execution of this Agreement, Borrower
covenants that (i) the credit or return of any Excess shall constitute the
acceptance by Borrower of such Excess, and (ii) Borrower shall not seek or
pursue any other remedy, legal or equitable, against Agent or any Lender, based
in whole or in part upon contracting for, charging or receiving any Interest in
excess of the Maximum Rate. For the purpose of determining whether or not any
Excess has been contracted for, charged or received by Agent or any Lender, all
interest at any time contracted for, charged or received from Borrower in
connection with any of the Loan Documents shall, to the extent permitted by
Applicable Law, be amortized, prorated, allocated and spread in equal parts
throughout the full term of the Obligations. Borrower, Agent and Lenders shall,
to the maximum extent permitted under Applicable Law, (i) characterize any non-
principal payment as an expense, fee or premium rather than as Interest and (ii)
exclude voluntary prepayments and the effects thereof. The provisions of this
Section 2.10 shall be deemed to be incorporated into every Loan Document
(whether or not any provision of this Section is referred to therein). All such
Loan Documents and communications relating to any Interest owed by Borrower and
all figures set forth therein shall, for the sole purpose of computing the
extent of Obligations, be automatically recomputed by Borrower, and by any court
considering the same, to give effect to the adjustments or credits required by
this Section 2.10.
SECTION 3. LOAN ADMINISTRATION
3.1. MANNER OF BORROWING AND FUNDING REVOLVER LOANS. Borrowings of
Revolver Loans (whether as LIBOR Rate Advances or Base Rate Advances) shall be
made and funded as follows:
3.1.1. REVOLVER LOAN REQUESTS.
(i) Whenever Borrower desires to make a Borrowing
under Section 1.1 of this Agreement (other than a Borrowing resulting from
a conversion or continuation pursuant to subsection (iii) below), such
Borrower shall give Agent prior written notice (or telephonic notice
promptly confirmed in writing) of such Borrowing request (a "Notice of
Borrowing"), which written notice shall be in the form of EXHIBIT B annexed
hereto. Such Notice of Borrowing shall be given by Borrower no later than
11:00 a.m. (Atlanta time) at the office of Agent designated by Agent from
time to time (a) on the Business Day of the requested date of such
Borrowing in the case of Base Rate Advances and (b) at least 3 Business
Days prior to the requested date of such Borrowing in the case of LIBOR
Rate Advances. Notices received after 11:00 a.m. shall be deemed received
on the next Business Day. All Revolver Loans made on the Closing Date
shall be made as Base Rate Advances and thereafter may be made, continued
as or converted into Base Rate Advances or LIBOR Rate Advances. Each
Notice of Borrowing shall be irrevocable and shall specify (a) the
principal amount of the Borrowing (which, in the case of each LIBOR Rate
Advance, shall be in the minimum amount of $5,000,000 or integral multiples
of $1,000,000 above such amount), (b) the date of Borrowing (which shall be
a Business Day), (c) whether the Borrowing is to consist of Base Rate
Advances or LIBOR Rate Advances and the amount of each such Advance, (d) in
the case of LIBOR Rate Advances, the duration of the Interest Period to be
applicable thereto, and (e) if such Borrowing is to be used in whole or in
part to fund a Permitted Subsidiary Advance, the amount of each such
Permitted Subsidiary Advance and the Borrower Subsidiary to which such
Permitted Subsidiary Advance is to be made. Borrower irrevocably
authorizes and directs Agent to disburse the proceeds of any Borrowing to
be used to fund a Permitted Subsidiary Advance directly to the Borrower
Subsidiary to which Borrower intends to fund such Permitted Subsidiary
Advance. Borrower may not request any LIBOR Rate Advances if a Default or
Event of Default has occurred.
(xiv)
<PAGE>
(ii) Unless payment is otherwise timely made by
Borrower, the becoming due of any amount required to be paid under this
Agreement or any of the other Loan Documents as principal, accrued
interest, fees or other charges (including the repayment of any
Reimbursement Obligations) shall be deemed irrevocably to be a request for
a Revolver Loan on the due date of, and in an aggregate amount required to
pay, such principal, accrued interest, fees or other charges, and the
proceeds of each such Revolver Loan may be disbursed by Agent by way of
direct payment of the relevant Obligation and shall bear interest as a Base
Rate Advance. Neither Agent nor any Lender shall have any obligation to
Borrower to honor any deemed request for a Revolver Loan when an Out-of-
Formula Condition exists or would result therefrom, but may do so in their
discretion and without regard to the existence of, and without being deemed
to have waived, any Default or Event of Default.
(iii) Whenever Borrower desires to convert all or a
portion of an outstanding Base Rate Advance or LIBOR Rate Advance into one
or more Advances of another type, or to continue outstanding a LIBOR Rate
Advance for a new Interest Period, Borrower shall give Agent written notice
(or telephonic notice promptly confirmed in writing) at least 1 Business
Day before the conversion into a Base Rate Advance and at least 3 Business
Days before the conversion into or continuation of a LIBOR Rate Advance.
Such notice (a "Notice of Conversion/Continuation") shall be given prior to
11:00 a.m. (Atlanta time) on the date specified. Each such Notice of
Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Advance to be converted or continued, the
date of such conversion or continuation, whether the Advance is being
converted into or continued as a LIBOR Rate Advance (and, if so, the
duration of the Interest Period to be applicable thereto) or a Base Rate
Advance. If, upon the expiration of any Interest Period in respect of any
LIBOR Rate Advance, Borrower shall have failed, or pursuant to the
following sentence be unable, to deliver the Notice of
Conversion/Continuation, Borrower shall be deemed to have elected to
convert such LIBOR Rate Advance to a Base Rate Advance. So long as any
Default or Event of Default shall have occurred and be continuing, no
Advance may be converted into or continued as (upon expiration of the
current Interest Period) a LIBOR Rate Advance. No conversion of any LIBOR
Rate Advance shall be permitted except on the last day of the Interest
Period in respect thereof.
(iv) In no event shall the number of LIBOR Rate
Advances outstanding at any time exceed 3.
(v) As an accommodation to Borrower, Agent may permit
telephonic requests for Borrowings and electronic transmittal of
instructions, authorizations, agreements or reports to Agent by Borrower.
Unless Borrower specifically directs Agent in writing not to accept or act
upon telephonic or electronic communications from Borrower, Agent shall
have no liability to Borrower for any loss or damage suffered by such
Borrower as a result of Agent's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have
been sent to Agent by Borrower and Agent shall have no duty to verify the
origin of any such communication or the authority of the person sending it.
3.1.2. ADVANCES BY LENDERS.
(i) Subject to its receipt of notice from Agent of a
Notice of Borrowing as provided in this Section 3.1.2(i), each Lender shall
timely honor its Commitment by funding its Pro Rata share of each Revolver
Loan that is properly requested by Borrower and that Borrower is entitled
to receive under the Loan Agreement. Agent shall notify Lenders of each
Notice of Borrowing by 12:00 noon (Atlanta time) on the proposed funding
date (in the case of Base Rate Advances) or by 3:00 p.m. (Atlanta time) 2
Business Days before the proposed funding date (in the case of LIBOR Rate
Advances). Each Lender shall deposit with Agent an amount equal to its Pro
Rata share of the Revolver Loan requested by Borrower at Agent's designated
bank in immediately available funds not later than 1:30 p.m. (Atlanta time)
on the date of funding of such Revolver Loan, unless Agent's notice to
Lenders is received after 12:00 noon (Atlanta time) on the proposed funding
date of a Base Rate Advance, in which event Lenders shall deposit with
Agent their respective Pro Rata shares of the requested Revolver Loan on or
before 11:00 a.m. (Atlanta time) of the next Business Day. Subject to its
receipt of such amounts from Lenders, Agent shall make such proceeds
received by it available to Borrower by disbursing such proceeds in
accordance with Borrower's disbursement instructions set forth in the
applicable Notice of Borrowing. Unless Agent shall have been notified in
writing by a Lender prior to the proposed time of funding that such Lender
does not intend to deposit with Agent an amount equal such Lender's Pro
Rata share of the requested Revolver Loan, Agent may assume that such
Lender has deposited or promptly will deposit its share with Agent and
Agent may in its discretion disburse a corresponding amount to Borrower on
the applicable funding date. If a Lender's Pro Rata share of such Revolver
Loan is not in fact deposited with Agent, then, if Agent has disbursed to
Borrower an amount corresponding to such defaulting Lender's Pro Rata share
of the Revolver Loan, such defaulting Lender
(xv)
<PAGE>
agrees to pay, and in addition Borrower agrees to repay, to Agent forthwith
on demand such corresponding amount, together with interest thereon, for
each day from the date such amount is disbursed by Agent to or for the
benefit of Borrower until the date such amount is paid or repaid to Agent,
(a) in the case of Borrower, at the interest rate applicable to such
Borrowing and (b) in the case of such Lender, at the Federal Funds Rate.
(ii) Notwithstanding the provisions of Section
3.1.2(i), Lenders agree that, in order to facilitate the administration of
Revolver Loans under the Loan Agreement, settlement among them may take
place on a periodic basis in accordance with the provisions of this Section
3.1.2(ii). To the extent and in the manner hereinafter provided,
settlement among the Lenders as to Revolver Loans may occur periodically on
dates determined from time to time by Agent (each a "Settlement Date"),
which may occur before or after the occurrence or during the continuance of
a Default or Event of Default and whether or not all of the conditions set
forth in Section 9 of this Agreement have been met; PROVIDED, HOWEVER, that
if so requested in writing by any Lender to Agent, settlement shall occur
on each Business Day during any period that an Event of Default exists. On
each Settlement Date, payment shall be made by or to each Lender in the
manner provided herein in accordance with the Settlement Report delivered
by Agent to Lenders in respect of such Settlement Date so that, as of each
Settlement Date and after giving effect to the transactions to take place
on such Settlement Date, each Lender shall hold its Pro Rata share of the
Revolver Loans.
(A) If Agent elects, in its discretion, but subject to the
consent of the Required Lenders, to settle accounts between the
Lenders with respect to principal amounts of Revolver Loans less
frequently than each Business Day, then Agent shall designate
periodic Settlement Dates which may occur on any Business Day,
PROVIDED that Agent shall designate as a Settlement Date each
date on which interest on the Loans is payable pursuant to the
terms of this Agreement and a Settlement Date shall occur at
least once every 7 days. Agent shall designate a Settlement Date
by delivering to each Lender a Settlement Report not later than
12:00 noon (Atlanta time) on the proposed Settlement Date, which
Settlement Report shall cover the period beginning on the next
preceding Settlement Date and ending on such designated
Settlement Date.
(B) Between Settlement Dates, Agent may request Shawmut and
Shawmut may (but shall in no events be obligated to) advance to
Borrower out of Shawmut's own funds the entire principal amount
of any Base Rate Advance requested or deemed requested pursuant
to this Agreement (any such Revolver Loan funded exclusively by
Shawmut being referred to as a "Non-Ratable Loan"). The making
of each Non-Ratable Loan by Shawmut shall be deemed to be a
purchase by Shawmut of a 100% participation in each other
Lender's Pro Rata share of the amount of such Non-Ratable Loan.
All payments of principal, interest and any other amounts with
respect to such Non-Ratable Loan shall be payable to and received
by Agent for the account and sole benefit of Shawmut. At any
time requested by Shawmut, with notice to Agent and the other
Lenders, the other Lenders shall pay to Shawmut, as a repurchase
of such participation, an amount equal to 100% of each Lender's
Pro Rata share of the outstanding principal amount of such Non-
Ratable Loan. Any payments received by Agent between Settlement
Dates which in accordance with the terms of this Agreement are to
be applied to the reduction of the outstanding principal balance
of Revolver Loans shall be paid over to and retained by Shawmut
for such application, and such payment to and retention by
Shawmut shall be deemed, to the extent of each other Lender's Pro
Rata share of such payment, to be a purchase by each other Lender
of a participation in the Revolver Loans (including the
repurchase of participations in Non-Ratable Loans held by
Shawmut). At any time requested by any other Lender, with notice
thereof to Agent and Shawmut, Shawmut shall pay to Agent, for the
account of such other Lender, as a repurchase of such
participation, an amount equal to such other Lender's Pro Rata
share of such amounts (after application thereof to the
repurchase of any participations of Shawmut in such other
Lender's Pro Rata share of any Non-Ratable Loans) paid only to
Shawmut by Agent. Effective as of the date of receipt of each
Settlement Report, the Dollar amounts of each Lender's share of
the Revolver Loans outstanding shall be adjusted in such manner
as shall result in each Lender holding as of such date a
percentage of such Revolver Loans equal to such Lender's Pro Rata
share thereof.
(C) If any amounts received by Shawmut in respect of any
Revolver Loans are later required to be returned or repaid by
Shawmut to Borrower or any other Obligor or their respective
representatives or successors-in-
(xvi)
<PAGE>
interest, whether by court order, settlement or otherwise, in
excess of Shawmut's Pro Rata share of all such amounts required
to be returned by Lenders, the other Lenders shall, upon demand
by Shawmut with notice to Agent, pay to Agent for the account of
Shawmut, an amount equal to the excess of the other Lender's
respective Pro Rata shares of all such amounts required to be
returned by Lenders over the amount, if any, returned directly by
Shawmut.
(D) Payment by each Lender to Agent pursuant to this
Section 3.1.2 shall be made not later than 1:00 p.m. (Atlanta
time) on the Business Day such payment is due, PROVIDED that if
such payment is due on Agent's demand, such demand is made on the
paying Lender not later than 10:00 a.m. (Atlanta time) on such
Business Day.
(iii) If any Lender shall, at any time, fail to make any
payment to Agent required hereunder, Agent may, but shall not be required
to, retain payments that would otherwise be made to such Lender hereunder
and apply such payments to such Lender's defaulted obligations hereunder,
at such time, and in such order, as Agent may elect in its sole discretion.
With respect to the payment of any funds under Section 3.1.2(ii), whether
from Agent to a Lender or from a Lender to Agent, the party failing to make
the full payment when due pursuant to the terms hereof shall, upon demand
by the other party, pay such amount together with interest on such amount
at the Federal Funds Rate. The failure of any Lender to fund its portion
of any Revolver Loan shall not relieve any other Lenders of its obligation,
if any, hereunder to fund its portion of the Revolver Loan on the date of
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make any Advance to be made by such Lender on the date of any
Borrowing. Solely for purposes of voting or consenting to matters with
respect to any of the Loan Documents, Collateral or any Obligations and
determining a defaulting Lender's Pro Rata share of payments and proceeds
of Collateral, a Lender which has failed to fund its portion of any
Revolver Loan shall not be deemed to be a "Lender" and such Lender's
Commitment shall be deemed to be zero (0).
3.1.3. DISBURSEMENT AUTHORIZATION. Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each Revolver Loan requested, or
deemed to be requested pursuant to this Section 3.1.3, as follows: (i) the
proceeds of each Revolver Loan requested under Section 3.1.1(i) shall be
disbursed by Agent in Dollars in immediately available funds, in the case of the
initial Borrowing, in accordance with the terms of the written disbursement
letter from Borrower, and in the case of each subsequent Borrowing, by wire
transfer to such bank account as may be agreed upon by Borrower and Agent from
time to time or elsewhere if pursuant to a written direction from Borrower; and
(ii) the proceeds of each Revolver Loan requested under Section 3.1.1(ii) shall
be disbursed by Agent by way of direct payment of the relevant interest or other
Obligation.
3.2. PAYMENTS. All payments of principal of and interest on the Revolver
Loans, Reimbursement Obligations and other Obligations which are payable to
Agent or any Lender shall be made to Agent in Dollars (except that payment of
Canadian Reimbursement Obligations shall be made in Canadian Dollars) without
any offset or counterclaim and free and clear of (and without deduction for) any
present or future Taxes, and, with respect to payments made other than by
application of balances in the Payment Account, in immediately available funds
not later than 12:00 noon (Atlanta time) on the date due. Except where
evidenced by notes or other instruments issued or made by Borrower to Agent or
any Lender specifically containing payment provisions which are in conflict with
this Section 3.2 (in which event the conflicting provisions of said notes or
other instruments shall govern and control), the Obligations shall be due and
payable as follows:
3.2.1. REPAYMENT OF REVOLVER LOANS. Borrower's obligation to
pay the principal of, and interest on, the Revolver Loans shall be evidenced by
the Revolver Notes and by the records of Agent and Lenders and all outstanding
principal amounts and accrued interest with respect to the Revolver Loans shall
be due and payable as follows:
(i) Any portion of the Revolver Loans consisting of
the principal amount of Base Rate Advances shall be paid by Borrower to
Agent, for the Pro Rata benefit of Lenders, immediately upon the earliest
of (a) the receipt by Agent of any proceeds or payments of any of the
Borrower Collateral or any Borrower Subsidiary Collateral, to the extent of
such proceeds or payments, (b) the repayment of any Subsidiary Advance, or
(c) the Commitment Termination Date. Interest accrued on the principal
amount of Base Rate Advances outstanding from time to time shall be paid as
provided in Section 3.2.2 hereof.
(ii) Any portion of the Revolver Loans consisting of
the principal amount of LIBOR Rate Advances outstanding shall be paid by
Borrower to Agent, for the Pro Rata benefit of Lenders, unless converted to
a Base Rate Advance or continued as a LIBOR Rate Advance in accordance
with the terms of this Agreement, upon the earliest of (a) the last day of
the Interest Period applicable
(xvii)
<PAGE>
thereto, or (b) the Commitment Termination Date. In no event shall
Borrower be authorized to pay any LIBOR Rate Advance prior to the last day
of the Interest Period applicable thereto unless otherwise agreed in
writing by Agent, Borrower is otherwise expressly authorized or required by
any other provision of this Agreement to pay any LIBOR Rate Advance
outstanding on a date other than the last day of the Interest Period
applicable thereto, and Borrower pays to Agent, for the Pro Rata benefit of
Lenders, concurrently with any prepayment of a LIBOR Rate Advance the
amount due Agent and Lenders under Section 2.9 hereof as a result of such
prepayment. Interest accrued on the principal amount of each LIBOR Rate
Advance shall be paid as provided in Section 3.2.2 hereof.
(iii) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if an Out-of-Formula Condition shall exist,
Borrower shall, ON DEMAND, repay the outstanding Revolver Loans bearing
interest as Base Rate Advances in an amount sufficient to reduce the
aggregate unpaid principal amount of all Revolver Loans by an amount equal
to such excess; and, if such payment of Base Rate Advances is not
sufficient to cure the Out-of-Formula Condition, then Borrower shall
immediately either (a) deposit with Agent, for the Pro Rata benefit of
Lenders, for application to any outstanding Revolver Loans bearing interest
as LIBOR Rate Advances as the same become due and payable at the end of the
applicable Interest Periods, cash or Cash Equivalents in an amount
sufficient to cure such Out-of-Formula Condition and any such cash or Cash
Equivalents shall be held by Agent, pending disbursement of same to
Lenders, in the Cash Collateral Account subject to Agent's Lien thereon, or
(b) pay the Revolver Loans outstanding that bear interest as LIBOR Rate
Advances to the extent necessary to cure such Out-of-Formula Condition and
also pay to Agent any and all amounts required by Section 2.9 hereof to be
paid by reason of the prepayment of a LIBOR Rate Advance prior to the last
day of the Interest Period applicable thereto.
(iv) Borrower shall have the right to prepay any
Revolver Loan hereunder without the payment of any premium, penalty or
other charge except to the extent otherwise specifically provided in
Sections 2.9 and 4.2.3 of this Agreement.
3.2.2. INTEREST. Interest accrued on the Revolver Loans shall be
due on the earliest of (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, with respect to any Advance (whether a Base Rate Advance or
LIBOR Rate Advance), (ii) the last day of the applicable Interest Period in the
case of a LIBOR Rate Advance, or (iii) the Commitment Termination Date. With
respect to any Base Rate Advance converted into a LIBOR Rate Advance on a day
when interest would not otherwise have been payable with respect to such Base
Rate Advance, accrued interest to the date of such conversion on the amount of
such Base Rate Advance shall be paid on the conversion date.
3.2.3. COSTS, FEES AND CHARGES. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Agent, or to any other Person designated by Agent in
writing.
3.2.4. OTHER OBLIGATIONS. The balance of the Obligations requiring
the payment of money, including the Reimbursement Obligations, shall be payable
by Borrower to Agent, for the Pro Rata benefit of Lenders, as and when provided
in this Agreement, the Other Agreements or the Security Documents, or, if no
date of payment is otherwise specified in the Loan Documents, ON DEMAND.
3.3. MARSHALLING; PAYMENTS SET ASIDE. None of Agent or any Lender shall be
under any obligation to marshall any assets in favor of Borrower or any other
Obligor or against or in payment of any or all of the Obligations. To the
extent that Borrower makes a payment or payments to Agent or Lenders or any of
such Persons receives payment from the proceeds of any Collateral or exercises
its right of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
3.4. ALLOCATION OF PAYMENTS FROM BORROWER AND BORROWER SUBSIDIARIES. All
monies to be applied to the Obligations, whether such monies represent voluntary
payments by Borrower or any Guarantor or are received pursuant to demand for
payment or realized from any disposition of Borrower Collateral or Borrower
Subsidiary Collateral, shall be allocated among Agent and such of the Lenders as
are entitled thereto (and, with respect to monies allocated to Lenders, on a Pro
Rata basis unless otherwise provided herein): (i) first, to Agent and Shawmut
to pay principal and accrued interest on any portion of the Revolver Loans which
Agent or Shawmut may have advanced on behalf of any Lender and for which Agent
or Shawmut has not been reimbursed by such Lender or Borrower; (ii) second, to
Shawmut to pay the principal amount of and any accrued interest on any payment
made by Shawmut
(xviii)
<PAGE>
under a Borrower LC Guaranty to the extent that Shawmut has not been reimbursed
in full pursuant to an applicable Reimbursement Agreement and has not received
from each Participating Lender a participation payment as required by Section
1.2.2 hereof; (iii) third, to Agent and Shawmut to pay the amount of
Extraordinary Expenses that have not been reimbursed to Agent or Shawmut by
Borrower or Lenders, together with interest accrued thereon; (iv) fourth, to
Agent to pay any Indemnified Amount that has not been paid to Agent by Borrower
or Lenders, together with interest accrued thereon; (v) fifth, to Agent to pay
any fees due and payable to Agent; (vi) sixth, to Lenders for any Indemnified
Amount that they have paid to Agent and for any Extraordinary Expenses that they
have reimbursed to Agent; (vii) seventh, to the Participating Lenders to pay
principal and interest on their participations in the Borrower Reimbursement
Obligations outstanding (or, to the extent any of the Borrower Reimbursement
Obligations are contingent and an Event of Default then exists, deposited in the
Cash Collateral Account to provide security for the payment of the Borrower
Reimbursement Obligations); and (viii) eighth, to Lenders in payment of the
unpaid principal and accrued interest in respect of the Loans and any other
Obligations then outstanding.
3.4.1. ALLOCATION OF PAYMENTS FROM CANADIAN SUBSIDIARIES. All
monies to be applied to the Canadian Reimbursement Obligations of a Canadian
Subsidiary whether such monies represent voluntary payments by such Canadian
Subsidiary or are received pursuant to demand for payment or realized from any
disposition of such Canadian Subsidiary's Canadian Subsidiary Collateral, shall
be allocated among Agent and such of the Lenders as are entitled thereto (and,
with respect to monies allocated to Lenders, on a Pro Rata basis unless
otherwise provided herein): (i) first, to Shawmut to pay the amount of any
Canadian Reimbursement Obligations in respect of which Shawmut has not been
reimbursed pursuant to the applicable Reimbursement Agreement and has not
received from each Lender a participation payment as required by Section 1.2.2
hereof; (ii) second, to Shawmut to pay the amount of any Extraordinary Expenses
that have been incurred by Shawmut under any of the Canadian Financing Documents
signed by such Canadian Subsidiary and that have not been reimbursed to Shawmut
by Borrower, such Canadian Subsidiary or Lenders, together with interest accrued
thereon; (iii) third, to Lenders for any Extraordinary Expenses for which such
Canadian Subsidiary is liable and which Lenders have reimbursed to Shawmut; and
(iv) fourth, to Lenders to pay principal and interest on their participations in
the Canadian Reimbursement Obligations outstanding that arose from such Canadian
LC Guaranty (or, to the extent any of such Canadian Reimbursement Obligations
are contingent and an Event of Default exists, deposited in the Cash Collateral
Account to provide security for the payment of such Canadian Reimbursement
Obligations).
3.4.2. ALLOCATION SOLELY FOR BENEFIT OF AGENT AND LENDERS. The
allocations set forth in this Section 3.4 are solely to determine the rights and
priorities of Agent and Lenders as among themselves and may be changed by Agent
and Lenders without notice to or the consent of approval of Borrower or any
other Person.
3.5. APPLICATION OF PAYMENTS AND COLLECTIONS. All payments received by
Agent by 12:00 noon (Atlanta time) in immediately available funds on any
Business Day shall be deemed received on that Business Day. All payments
received by Agent after 12:00 noon (Atlanta time) in immediately available funds
on any Business Day shall be deemed received on the following Business Day.
Borrower irrevocably waives the right to direct the application of any and all
payments and collections at any time or times hereafter received by Agent or any
Lender from or on behalf of Borrower, and Borrower does hereby irrevocably agree
that Agent shall have the continuing exclusive right to apply and reapply any
and all such payments and collections received at any time or times hereafter by
Agent or its agent against the Obligations, in such manner as Agent may deem
advisable, notwithstanding any entry by Agent upon any of its books and records.
If as the result of collections of Accounts as authorized by Section 6.2.6
hereof a credit balance exists, such credit balance shall not accrue interest in
favor of Borrower, but shall be available to Borrower at any time or times for
so long as no Default or Event of Default exists.
3.6. ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Revolver Loans shall
constitute one general Obligation of Borrower and shall be secured by Agent's
Lien upon all of the Collateral.
3.7. LOAN ACCOUNTS; THE REGISTER; ACCOUNT STATED.
3.7.1. LOAN ACCOUNTS. Each Lender shall maintain in accordance
with its usual and customary practices an account or accounts (a "Loan Account")
evidencing the Indebtedness of Borrower to such Lender resulting from each Loan
owing to such Lender from time to time, including the amount of principal and
interest payable and paid to such Lender from time to time hereunder and under
the Note payable to such Lender.
3.7.2. THE REGISTER. Agent shall maintain a register (the
"Register") which shall include a master account and a subsidiary account for
each Lender and in which accounts (taken together) shall be recorded (i) the
date and amount of each Borrowing made hereunder, the Type of each Advance
comprising such Borrowing and any Interest Period applicable thereto, (ii) the
effective date and amount of each Assignment and Acceptance
(xix)
<PAGE>
delivered to and accepted by it and the parties thereto, (iii) the amount of any
principal or interest due and payable or to become due and payable from Borrower
to each Lender hereunder or under the Notes, and (iv) the amount of any sum
received by Agent from Borrower or any other Obligor and each Lender's share
thereof. The Register shall be available for inspection by Borrower or any
Lender at the offices of Agent at any reasonable time and from time to time upon
reasonable prior notice.
3.7.3. ENTRIES BINDING. The entries made in the Register and each
Loan Account shall constitute rebuttably presumptive evidence of the information
contained therein; PROVIDED, HOWEVER, that if a copy of information contained in
the Register or any Loan Account is provided to any Person, or any Person
inspects the Register or any Loan Account, at any time or from time to time,
then the information contained in the Register or the Loan Account, as
applicable shall be conclusive and binding on such Person for all purposes
absent manifest error, unless such Person notifies Agent in writing within 30
days after such Person's receipt of such copy or such Person's inspection of the
Register or Loan Account of its intention to dispute the information contained
therein.
3.8. GROSS UP FOR TAXES. If Borrower shall be required by Applicable Law
to withhold or deduct any Taxes from or in respect of any sum payable under this
Agreement or any of the other Transaction Documents, (a) the sum payable to
Agent or such Lender shall be increased as may be necessary so that, after
making all required withholding or deductions, Agent or such Lender (as the case
may be) receives an amount equal to the sum it would have received had no such
withholding or deductions been made, (b) Borrower shall make such withholding or
deductions, and (c) Borrower shall pay the full amount withheld or deducted to
the relevant taxation authority or other authority in accordance with Applicable
Law.
3.9. WITHHOLDING TAX EXEMPTION. At least 5 Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States or any State agrees that it will deliver to Borrower and Agent 2 duly
completed copies of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Lender is entitled to receive payment under
this Agreement and its Note without deduction or withholding of any United
States federal income taxes. Each Lender which so delivers a Form 1001 or 4224
further undertakes to deliver to Borrower and Agent 2 additional copies of such
form (or a successor form) on or before the date that such form expires
(currently, 3 successive calendar years for Form 1001 and one calendar year for
Form 4224) or becomes obsolete or after the occurrence of any event requiring a
change in the most form so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by Borrower or
Agent, in each case, certifying that such Lender is entitled to receive payments
under this Agreement and its Note without deduction or withholding of any United
States federal income taxes, unless an event (including any change in treaty,
law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required that renders all such forms inapplicable or that
would prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises Borrower and Agent that it is not capable
or receiving payments without any deduction or withholding of United States
federal income taxes.
SECTION 4. TERM AND TERMINATION OF COMMITMENTS
4.1. TERM OF COMMITMENTS. Subject to each Lender's right to cease making
Loans to Borrower when any Default exists or upon termination of the Commitments
as provided in Section 4.2 hereof, the Commitments shall be in effect for a
period of 5 years from the date hereof through July 21, 2000 (the "Term").
4.2. TERMINATION.
4.2.1. TERMINATION BY AGENT. Agent may (and upon the
direction of the Required Lenders to the extent not inconsistent with Section
11.9.3, shall) terminate the Commitments without notice upon or after the
occurrence of an Event of Default.
4.2.2. TERMINATION BY BORROWER. Upon at least 90 days prior
written notice to Agent, Borrower may, at its option, terminate the Commitments;
PROVIDED, HOWEVER, no such termination by Borrower shall be effective until
Borrower has paid all of the Obligations in immediately available funds and all
Reimbursement Obligations have expired or have been cash collateralized in
accordance with Section 1.2.3 hereof. Any notice of termination given by
Borrower shall be irrevocable unless Agent otherwise agrees in writing.
Borrower may elect to terminate the Commitments in their entirety only. No
section of this Agreement, type of Loan available hereunder or Commitment may be
terminated singly.
(xx)
<PAGE>
4.2.3. TERMINATION CHARGES. On the effective date of
termination of the Commitments pursuant to Section 4.2.2 Borrower shall pay to
Agent, for the Pro Rata benefit of Lenders (in addition to the then outstanding
principal, accrued interest and other charges owing under the terms of this
Agreement and any of the other Loan Documents), as liquidated damages for the
loss of the bargain and not as a penalty, an amount equal to 1% of the Average
Revolver Loan Balance for the 180-day period immediately preceding the effective
date of termination if termination occurs during the first 12-month period of
the Term (July 21, 1995 through July 20, 1996); 0.5% of the Average Revolver
Loan Balance for the 180-day period immediately preceding the effective date of
termination if termination occurs during the second 12-month period of the Term
(July 21, 1996 through July 20, 1997); and 0.25% of the Average Revolver Loan
Balance for the 180-day period immediately preceding the effective date of
termination if termination occurs during the third 12-month period of the Term
(July 21, 1997 through July 20, 1998). There shall be no liquidated damages
charge if Borrower terminates the Commitments at any time on or after the third
12-month period of the Term.
4.2.4. EFFECT OF TERMINATION. All of the Obligations shall be
immediately due and payable upon the effective date of termination by Agent or,
in the case of a termination by Borrower, upon the date specified in Borrower's
notice of termination of the Commitments as the effective date of such
termination, and on the effective date of any termination (whether by Agent or
Borrower) Lenders shall have no obligation to make any Loans and Shawmut shall
have no obligation to join in execution of any LC Application or issue any LC
Guaranties to or for the direct or indirect benefit of Borrower or any other
Person. All undertakings, agreements, covenants, warranties and representations
of Borrower contained in the Loan Documents shall survive any such termination
and Agent shall retain its Liens in the Collateral and all of its rights and
remedies under the Loan Documents notwithstanding such termination until
Borrower has paid the Obligations to Agent and Lenders, in full, in immediately
available funds, together with the applicable termination charge, if any.
Notwithstanding the payment in full of the Obligations, Agent shall not be
required to terminate its security interests in any of the Collateral unless,
with respect to any loss or damage Agent may incur as a result of the dishonor
or return of any Payment Items applied to the Obligations, Agent shall have
received either (i) a written agreement, executed by Borrower, each Borrower
Subsidiary and any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the Obligations, indemnifying Agent and Lenders from
any such loss or damage; or (ii) such monetary reserves and Liens on the
Collateral for such period of time as Agent, in its reasonable discretion, may
deem necessary to protect Agent from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1. SECURITY INTEREST IN BORROWER COLLATERAL. To secure the prompt
payment and performance of all of the Obligations, Borrower hereby grants to
Agent, for the benefit of itself as Agent and for the Pro Rata benefit of
Lenders, a continuing security interest in and Lien upon all of the following
Property and interests in Property of Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located:
(i) All Accounts;
(ii) All Inventory;
(iii) All Instruments;
(iv) All Chattel Paper;
(v) All Documents;
(vi) All General Intangibles;
(vii) All Deposit Accounts;
(viii) All monies now or at any time or times hereafter in the
possession or under the control of Agent or any Lender or a bailee or
Affiliate of Agent or any Lender;
(ix) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (i) through (viii)
above, including proceeds of and unearned premiums with respect to
insurance policies insuring any of the Collateral; and
(xxi)
<PAGE>
(x) All books and records (including customer lists, credit
files, computer programs, print-outs, and other computer materials and
records) of Borrower pertaining to any of (i) through (ix) above.
5.2. SUBSIDIARY AND OTHER COLLATERAL. In addition to the items of Property
referred to in Section 5.1 above, the Obligations shall also be secured by all
of the Borrower Subsidiary Collateral pursuant to the Subsidiary Security
Agreements, the Cash Collateral to the extent provided herein, and all of the
other items of Property from time to time described in any of the Security
Documents as security for any of the Obligations.
5.3. LIEN PERFECTION; FURTHER ASSURANCES. Borrower shall execute or cause
to be executed such UCC-1 financing statements as are required by the Code and
such other instruments, assignments or documents as are necessary to perfect
Agent's Lien upon any of the Collateral, and shall take such other action as may
be required to perfect or to continue the perfection of Agent's Lien upon the
Collateral. Unless prohibited by Applicable Law, Borrower hereby authorizes
Agent to execute and file any such financing statement on Borrower's behalf.
The parties agree that a carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof. At Agent's request, Borrower shall also
promptly execute or cause to be executed and shall deliver to Agent any and all
documents, instruments and agreements deemed necessary by Agent and Lenders to
give effect to or carry out the terms or intent of the Transaction Documents.
SECTION 6. COLLATERAL ADMINISTRATION
6.1. GENERAL PROVISIONS.
AI_58. LOCATION OF COLLATERAL. All tangible items of Borrower
Collateral, other than Inventory in transit, shall at all times be kept by
Borrower at one or more of the business locations of Borrower set forth in
EXHIBIT C hereto and shall not be moved therefrom, without the prior written
approval of Agent, except that prior to an Event of Default and Agent's
acceleration of the maturity of the Obligations in consequence thereof, Borrower
may make sales of its Inventory in the ordinary course of business. All items
of Borrower Subsidiary Collateral and Canadian Subsidiary Collateral, other than
Inventory in transit, shall at all times be kept by a Borrower Subsidiary or
Canadian Subsidiary, as the case may be, at one or more of the business
locations of such Borrower Subsidiary or Canadian Subsidiary set forth in
EXHIBIT C-1 hereto and shall not be moved therefrom, without the prior written
approval of Agent, except that prior to an Event of Default and Agent's
acceleration of the maturity of the Obligations in consequence thereof, each
Borrower Subsidiary and Canadian Subsidiary may (i) make sales of its Inventory
in the ordinary course of its business and (ii) may move Inventory or any
records relating to any Collateral to a location in the United States (or, in
the case of a Canadian Subsidiary, in Ontario, Canada) other than those shown on
EXHIBIT C-1 hereto so long as Borrower has given Agent at least 10 Business
Days' prior written notice of such new location and prior to moving any
Inventory to such location Borrower has caused the Subsidiary which owns such
Inventory to execute and deliver to Agent and Shawmut UCC-1 financing statements
and any other appropriate documentation to perfect or continue the perfection of
Agent's and Shawmut's respective Liens with respect to such Inventory and all
proceeds thereof.
6.1.2. INSURANCE OF COLLATERAL. Borrower shall maintain and
shall cause each Subsidiary to maintain and pay for insurance upon all
Collateral wherever located as provided herein and in any of the other
Transaction Documents.
6.1.3. PROTECTION OF COLLATERAL. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping any
Collateral, all Taxes imposed under any Applicable Law on any of the Collateral
or in respect of the sale thereof, and all other payments required to be made by
Agent to any Person to realize upon any Collateral shall be borne and paid by
Borrower and Guarantors. If Borrower or Guarantors fail to pay promptly any
portion thereof when due, Agent may, at its option, but shall not be required
to, pay the same and charge Borrower and Guarantors therefor. Agent shall not
be liable or responsible in any way for the safekeeping of any of the Collateral
or for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Agent's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other Person whomsoever, but the same shall be at
Borrower's sole risk.
6.2. ADMINISTRATION OF ACCOUNTS.
6.2.1. RECORDS AND SCHEDULES OF ACCOUNTS. Borrower shall keep
and cause each Restricted Subsidiary to keep accurate and complete records of
their respective Accounts and all payments and collections thereon and shall
submit and shall cause each Restricted Subsidiary
(xxii)
<PAGE>
to submit to Agent and Lenders on such periodic basis as Agent shall request
(but in no event more frequently than once each week when no Default or Event of
Default exists) and, in the case of each Borrower Subsidiary, all reports and
schedules referenced under the Subsidiary Loan Documents.
6.2.2. DISCOUNTS, ALLOWANCES, DISPUTES. If any Borrower
Subsidiary grants any discounts, allowances or credits that are not shown on the
face of the invoice for the Account involved, Borrower shall cause such Borrower
Subsidiary to report such discounts, allowances or credits, as the case may be,
to Borrower, who shall report such discounts, allowances or credits to Agent as
part of the next required aged trial balance of all accounts (the "Schedule of
Accounts"). If any amounts due and owing in excess of $100,000 are in dispute
between any Borrower Subsidiary and any Account Debtor, Borrower shall provide
Agent with written notice thereof at the time of submission of the next Schedule
of Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and after the occurrence of an
Event of Default, Agent shall have the right to settle or adjust all disputes
and claims directly with the Account Debtor and to compromise the amount or
extend the time for payment of any Accounts comprising a part of the Collateral
upon such terms and conditions as Agent may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including attorney's fees, to
Borrower.
6.2.3. TAXES. If an Account of Borrower or a Restricted
Subsidiary includes a charge for any Tax payable to any governmental taxing
authority, Agent is authorized, in its sole discretion, to pay the amount
thereof to the proper taxing authority for the account of Borrower and to charge
Borrower and such Restricted Subsidiary therefor; PROVIDED, HOWEVER, that
neither Agent nor Lenders shall be liable for any Taxes that may be due by
Borrower or any Subsidiary.
6.2.4. ACCOUNT VERIFICATION. Whether or not a Default or an
Event of Default has occurred, Agent shall have the right, at any time or times
hereafter, in the name of Agent, any designee of Agent, Borrower or any
Restricted Subsidiary, to verify the validity, amount or any other matter
relating to any Accounts of Borrower or any Restricted Subsidiary by mail,
telephone, telegraph or otherwise. Borrower shall, and shall cause each
Restricted Subsidiary to, cooperate fully with Agent in an effort to facilitate
and promptly conclude any such verification process.
6.2.5. MAINTENANCE OF LOCKBOX; COLLECTION OF ACCOUNTS.
Borrower shall cause each Borrower Subsidiary (other than any DNE Group member
that may be a Borrower Subsidiary at the time in question) to maintain a
Dominion Account pursuant to a lockbox arrangement acceptable to Agent with such
bank as may be selected by such Borrower Subsidiary and be acceptable to Agent.
Borrower shall cause each such Borrower Subsidiary to issue to each such lockbox
bank an irrevocable letter of instruction directing such bank to deposit all
payments or other remittances received in the lockbox to the Dominion Account.
Borrower shall enter into agreements, in form satisfactory to Agent, with each
bank at which a Dominion Account is maintained by which such bank shall
immediately transfer to the Payment Account or the Concentration Account (as
determined by Agent from time to time) all monies deposited to the Dominion
Account. All funds deposited in each Dominion Account or in the Concentration
Account shall subject to Agent's Lien. Borrower shall obtain the agreement (in
favor of and in form and content satisfactory to Agent and Lenders) by each bank
at which a Dominion Account or the Concentration Account is maintained to waive
any offset rights against the funds deposited into such Dominion Account or
Concentration Account, except offset rights in respect of charges incurred in
the administration of such Dominion Account or Concentration Account. Neither
Agent nor Lenders assume any responsibility to Borrower or any other Obligor for
such lockbox arrangement, Dominion Account or Concentration Account, including
any claim of accord and satisfaction or release with respect to deposits
accepted by any bank thereunder.
6.2.6. COLLECTION OF ACCOUNTS AND PROCEEDS OF COLLATERAL. To
expedite collection, Borrower shall, and shall cause each Borrower Subsidiary
to, endeavor in the first instance to make collection of Borrower's and such
Borrower Subsidiary's Accounts for Agent and Lenders. All remittances received
by Borrower or a Borrower Subsidiary in respect of its Accounts, together with
the proceeds of any other Collateral, shall be held by Borrower or such Borrower
Subsidiary as trustee of an express trust for Agent's benefit and each Borrower
Subsidiary shall immediately deposit same in kind in its Dominion Account.
Agent retains the right at all times after the occurrence of a Default or an
Event of Default to notify Account Debtors of Borrower and each Borrower
Subsidiary that Accounts have been assigned to Agent and to collect Accounts
directly in its own name and to charge to Borrower and Guarantors the collection
costs and expenses, incurred by Agent or Lenders, including reasonable
attorneys' fees.
6.3. ADMINISTRATION OF INVENTORY.
6.3.1. RECORDS AND REPORTS OF INVENTORY. Borrower shall cause
each Restricted Subsidiary to keep accurate and complete records of its
Inventory and Borrower shall furnish Agent and Lenders inventory reports
respecting such Inventory in form and detail satisfactory to
(xxiii)
<PAGE>
Agent and Lenders at such times as Agent and Lenders may request, but prior to
the occurrence of a Default or Event of Default, no more frequently than once
each week.
6.3.2. RETURNS OF INVENTORY. Borrower shall not permit any
Borrower Subsidiary to return any of its Inventory to a supplier or vendor
thereof, or any other Person, whether for cash, credit against future purchases
or then existing payables, or otherwise, unless (i) such return is in the
ordinary course of business of such Borrower Subsidiary and such Person; (ii) no
Default or Event of Default exists or would result therefrom; (iii) the return
of such Inventory will not result in an Out-of-Formula Condition; (iv) Borrower
promptly notifies Agent thereof if the value of all Inventory returned in any
month exceeds $100,000 in the case of Adience and $250,000 in the case of
Superior, and, during any period any member of the DNE Group is a Borrower
Subsidiary, $50,000 in the aggregate in the case of the DNE Group; and (v) any
payments received by such Borrower Subsidiary in connection with any such return
is promptly turned over to Agent for application to the Obligations.
6.4. PAYMENT OF CHARGES. All amounts chargeable to Borrower or any
Restricted Subsidiary under Section 6 hereof shall be Obligations secured by all
of the Borrower Collateral and Borrower Subsidiary Collateral, shall be payable
ON DEMAND and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Base Rate Advances from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1. GENERAL REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders
to enter into this Agreement and to establish the Credit Facilities hereunder,
Borrower warrants and represents to Agent and Lenders that:
7.1.1. ORGANIZATION AND QUALIFICATION. Each of Borrower and
its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on EXHIBIT D hereto and in all other states and jurisdictions in which
the failure of Borrower or any of such Subsidiaries to be so qualified would
have a Material Adverse Effect.
7.1.2. CORPORATE POWER AND AUTHORITY. Each of Borrower and
its Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Transaction Documents
to which it is a party. The execution, delivery and performance of this
Agreement and each of the other Transaction Documents have been duly authorized
by all necessary corporate action and do not and will not (i) require any
consent or approval of the shareholders of Borrower or any Subsidiary; (ii)
contravene Borrower's or any Subsidiary's charter, articles or certificate of
incorporation or by-laws; (iii) violate, or cause Borrower or any Subsidiary to
be in default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to Borrower or any Subsidiary; (iv) result in a breach of or
constitute a default under any indenture (including the Senior Noteholder
Indenture) or loan or credit agreement or any other material agreement, lease or
instrument to which Borrower or any Subsidiary is a party or by which it or its
Properties may be bound or affected; or (v) result in, or require, the creation
or imposition of any Lien (other than Permitted Liens) upon or with respect to
any of the Properties now owned or hereafter acquired by Borrower or any
Subsidiary.
7.1.3. LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and
each of the other Transaction Documents when delivered under this Agreement will
be, a legal, valid and binding obligation of each of Borrower and its
Subsidiaries signatories thereto enforceable against them in accordance with the
respective terms of such Transaction Documents, except as the enforceability
thereof may be limited by bankruptcy, insolvency or other similar laws of
general application affecting the enforcement of creditors' rights.
7.1.4. CAPITAL STRUCTURE. As of the date hereof, EXHIBIT E
hereto states (i) the correct name of each Subsidiary, its jurisdiction of
incorporation and the percentage of its Voting Stock owned by each Person, (ii)
the name of each of Borrower's corporate Affiliates and the nature of the
affiliation and (iii) the number of authorized, issued and treasury shares of
Borrower and each Subsidiary. Borrower has good title to all of the shares it
purports to own of the stock of each of its Subsidiaries, free and clear in each
case of any Lien other than Permitted Liens. All such shares have been duly
issued and are fully paid and non-assessable.
7.1.5. CORPORATE NAMES. During the 5-year period preceding
the date of this Agreement, neither Borrower nor any Subsidiary has been known
as or used any corporate, fictitious or trade names except those listed on
EXHIBIT F hereto. Except as set forth on EXHIBIT F,
(xxiv)
<PAGE>
neither Borrower nor any Subsidiary has been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets of
any Person.
7.1.6. BUSINESS LOCATIONS; AGENT FOR PROCESS. As of the date
hereof, the chief executive office and other places of business of Borrower and
each Subsidiary are as listed on EXHIBIT C and EXHIBIT C-1 hereto. During the
5-year period preceding the date of this Agreement, neither Borrower nor any
Subsidiary has had an office, place of business or agent for service of process
other than as listed on EXHIBIT C and EXHIBIT C-1. Except as shown on EXHIBIT C
and EXHIBIT C-1 on the date hereof, no Inventory of Borrower or any Subsidiary
is stored with a bailee, warehouseman or similar Person, nor is any Inventory
consigned to any Person.
7.1.7. TITLE TO PROPERTIES; PRIORITY OF LIENS. Borrower and
each Subsidiary has good and marketable title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of its real Property, and good
title to all of its personal Property, in each case, free and clear of all Liens
except Permitted Liens. Borrower has paid or discharged, and has caused each
Subsidiary to pay and discharge, all lawful claims which, if unpaid, might
become a Lien against any Properties of Borrower or such Subsidiary that is not
a Permitted Lien. The Liens granted to Agent under Section 5 hereof are first
priority Liens, subject only to those Permitted Liens which are expressly
permitted by the terms of this Agreement to have priority over the Liens of
Agent.
7.1.8. ACCOUNTS. Agent may rely, in determining which
Accounts are Eligible Accounts, on all statements and representations made by
Borrower or any Restricted Subsidiary with respect to any Account. Unless
otherwise indicated in writing to Agent, with respect to each Account of
Superior, Adience, or a Canadian Subsidiary, Borrower warrants that:
(i) It is genuine and in all respects what it purports
to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, BONA FIDE sale and
delivery of goods by Superior, Adience or a Canadian Subsidiary in the
ordinary course of its business and substantially in accordance with the
terms and conditions of all purchase orders, contracts or other documents
relating thereto and forming a part of the contract between Superior,
Adience or a Canadian Subsidiary and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated
in the duplicate invoice covering such sale or rendition of services, a
copy of which has been furnished or is available to Agent on request;
(iv) Such Account, and Agent's (or, in the case of
Accounts owned by Adience Canada, Shawmut's) security interest therein, is
not, and will not (by voluntary act or omission of any Obligor) be in the
future, subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition except for disputes resulting
in returned goods where the amount in controversy is deemed by Agent to be
immaterial, and each such Account is absolutely owing to Superior, Adience
or a Canadian Subsidiary and is not contingent in any respect or for any
reason;
(v) The contract under which such Account arose does
not condition or restrict Adience's, Superior's or a Canadian Subsidiary's
right to assign to Agent, Borrower or Shawmut, as the case may be, the
right to payment thereunder unless Adience, Superior or a Canadian
Subsidiary has obtained the Account Debtor's consent to such collateral
assignment or complied with any conditions to such assignment (regardless
of whether under the Code or other Applicable Law any such restrictions are
ineffective to prevent the grant of a Lien upon such Account in favor of
Agent, Borrower or Shawmut);
(vi) None of Superior, Adience or a Canadian Subsidiary
has made any agreement with any Account Debtor thereunder for any
extension, compromise, settlement or modification of any such Account or
any deduction therefrom, except discounts or allowances which are granted
by Superior, Adience or a Canadian Subsidiary in the ordinary course of its
business for prompt payment and which are reflected in the calculation of
the net amount of each respective invoice related thereto and are reflected
in the Schedules of Accounts submitted to Agent pursuant to Section 6.2.1
hereof;
(xxv)
<PAGE>
(vii) To the best of Borrower's Knowledge, there are no
facts, events or occurrences which are reasonably likely to impair the
validity or enforceability of any Accounts of Superior, Adience or a
Canadian Subsidiary or reduce the amount payable thereunder from the face
amount of the invoice and statements delivered to Agent with respect
thereto;
(viii) To the best of Borrower's Knowledge, the Account
Debtor thereunder (1) had the capacity to contract at the time any contract
or other document giving rise to the Account was executed and (2) such
Account Debtor is Solvent; and
(ix) To the best of Borrower's Knowledge, there are no
proceedings or actions which are threatened or pending against any Account
Debtor thereunder and which are reasonably likely to result in any material
adverse change in such Account Debtor's financial condition or the
collectibility of such Account.
7.1.9. FINANCIAL STATEMENTS; FISCAL YEAR. The Consolidated
and consolidating balance sheets of Borrower and such other Persons described
therein (including the accounts of all Subsidiaries of Borrower for the
respective periods during which a Subsidiary relationship existed) as of April
30, 1995, and the related statements of income, changes in stockholder's equity,
and changes in financial position for the periods ended on such dates, have been
prepared in accordance with GAAP, and present fairly the financial positions of
Borrower and such Persons at such dates and the results of Borrower's operations
for such periods. Since April 30, 1995, there has been no material change in
the condition, financial or otherwise, of Borrower and such other Persons as
shown on the Consolidated balance sheet as of such date and no material change
in the aggregate value of equipment and real Property owned by Borrower or such
other Persons, except for (i) the acquisition by Superior of the assets of
Alcatel Cable and Alcatel Canada pursuant to the Alcatel Transaction Documents
and (ii) changes in the ordinary course of business, none of which transactions
or changes, individually or in the aggregate has been materially adverse.
7.1.10. FULL DISCLOSURE. The financial statements referred to
in Section 7.1.9 hereof do not contain any untrue statement of a material fact
and neither this Agreement nor any other written statement contains or omits any
material fact necessary to make the statements contained herein or therein not
materially misleading. There is no fact or circumstances in existence on the
date hereof which Borrower has failed to disclose to Agent in writing that may
reasonably be expected to have a Material Adverse Effect.
7.1.11. SOLVENT FINANCIAL CONDITION. Each of Borrower and its
Subsidiaries is now Solvent and, after giving effect to the Loans to be made
hereunder, the Letters of Credit to be issued in connection herewith, the
issuance of the Senior Notes and application of the proceeds thereof as
contemplated by the Offering Memorandum, the transactions contemplated by the
Adience Merger Documents and the consummation of the other transactions
described in the Transaction Documents, Borrower and each of its Subsidiaries
will be Solvent.
7.1.12. SURETY OBLIGATIONS. Except as set forth on EXHIBIT I
hereto on the date hereof, neither Borrower nor any of its Subsidiaries is
obligated as surety or indemnitor under any surety or similar bond or other
contract issued or entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.
7.1.13. TAXES. The federal tax identification number of each
of Borrower and the Borrower Subsidiaries is as shown on EXHIBIT G hereto.
Borrower and each Subsidiary has filed all federal, state and local tax returns
and other reports it is required by law to file and has paid, or made provision
for the payment of, all Taxes upon it, its income and Properties as and when
such Taxes are due and payable, except to the extent being Properly Contested.
The provision for Taxes on the books of Borrower and each Subsidiary are
adequate for all years not closed by applicable statutes, and for its current
Fiscal Year.
7.1.14. BROKERS. There are no claims against any Obligor for
brokerage commissions, finder's fees or investment banking fees in connection
with the transactions contemplated by this Agreement or any of the other
Transaction Documents.
7.1.15. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Each of
Borrower and its Subsidiaries owns or possesses all the patents, trademarks,
service marks, trade names, copyrights and licenses necessary for the present
and planned future conduct of its business without any conflict with the rights
of others of which Borrower has Knowledge. All patents, trademarks, service
marks, tradenames, copyrights, licenses and other similar rights owned by
Borrower or any of its Subsidiaries on the date hereof are listed on EXHIBIT H
hereto.
(xxvi)
<PAGE>
7.1.16. GOVERNMENTAL CONSENTS. Each of Borrower and its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as now owned or leased by it.
7.1.17. COMPLIANCE WITH LAWS. Each of Borrower and its
Subsidiaries has duly complied with, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all Applicable Law (except to the extent that any such noncompliance with
Applicable Law would not reasonably be expected to have a Material Adverse
Effect) and there have been no citations, notices or orders of noncompliance
issued to Borrower or any of the Subsidiaries under any such law, rule or
regulation. No Inventory has been produced in violation of the Fair Labor
Standards Act (29 U.S.C. Section 201 ET SEQ.), as amended. With respect to
matters arising under any Environmental Laws, the representations and warranties
contained in the Environmental Certificate are true and correct on the date
hereof.
7.1.18. RESTRICTIONS. Neither Borrower nor any of the
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which has or could be reasonably expected to have a
Material Adverse Effect. Except as set forth on EXHIBIT I hereto, neither
Borrower nor any of the Subsidiaries is a party or subject to any contract or
agreement (other than this Agreement) which restricts its right or ability to
incur Indebtedness, none of which prohibit the execution of or compliance with
this Agreement or the other Loan Documents by Borrower or any of the
Subsidiaries, as applicable.
7.1.19. LITIGATION. Except as set forth on EXHIBIT J hereto,
there are no actions, suits, proceedings or investigations pending on the date
hereof, or to the Knowledge of Borrower, threatened on the date hereof, against
or affecting Borrower or any of the Subsidiaries, or the business, operations,
Properties, prospects, profits or condition of Borrower or any of the
Subsidiaries, which, if determined adversely to Borrower or any Subsidiary,
would have a Material Adverse Effect. To the best Knowledge of Borrower,
neither Borrower nor any of its Subsidiaries is in default on the date hereof
with respect to any order, writ, injunction, judgment, decree or rule of any
court, governmental authority or arbitration board or tribunal.
7.1.20. NO DEFAULTS. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or Borrower's performance hereunder, constitute a Default or an Event of
Default. Neither Borrower nor any of its Subsidiaries is in default, and no
event has occurred and no condition exists which constitutes, or which with the
passage of time or the giving of notice or both would constitute, a default in
the payment of any Indebtedness of Borrower or a Subsidiary to any Person for
Money Borrowed.
7.1.21. LEASES. EXHIBIT K hereto is a complete listing of all
material capitalized leases of Borrower and its Subsidiaries on the date hereof
and EXHIBIT L hereto is a complete listing of all material operating leases of
Borrower and its Subsidiaries on the date hereof. Each of Borrower and its
Subsidiaries is in substantial compliance with all of the terms of each of its
respective capitalized and operating leases and there is no basis upon which the
lessors under any such leases could terminate same or declare Borrower or any of
its Subsidiaries in default thereunder.
7.1.22. PENSION PLANS. Except as disclosed on EXHIBIT M
hereto, neither Borrower nor any of its Subsidiaries has any Plan on the date
hereof. Borrower and each of its Subsidiaries is in full substantial compliance
with the requirements of ERISA and the regulations promulgated thereunder with
respect to each Plan. No fact or situation that is reasonably likely to result
in a material adverse change in the financial condition of Borrower or any of
the Subsidiaries exists in connection with any Plan. Neither Borrower nor any
of its Subsidiaries has any withdrawal liability in connection with a
Multiemployer Plan.
7.1.23. TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any materially adverse
modification or change in, the business relationship between any Borrower
Subsidiary and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of such Borrower
Subsidiary, or with any material supplier or group of suppliers, and there
exists no condition or state of facts or circumstances which is reasonably
likely to have a Material Adverse Effect or prevent any Borrower Subsidiary from
conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.
7.1.24. LABOR RELATIONS. Except as described on EXHIBIT N
hereto, neither Borrower nor any of the Subsidiaries is a party to any
collective bargaining agreement on the date hereof. On the date hereof, there
are no material grievances, disputes or controversies with any union or any
other organization of Borrower's or any Subsidiary's employees, or, to
Borrower's Knowledge, any threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
(xxvii)
<PAGE>
7.1.25. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. No Obligor 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, 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.
7.1.26. MARGIN STOCK. Neither Borrower nor any of its
Subsidiaries is engaged, principally or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
Margin Stock.
7.2. CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's or any Subsidiary's business or operations
that may occur after the date hereof in the ordinary course of business so long
as Agent has consented to such changes or such changes are not violative of any
provision of this Agreement. Notwithstanding the foregoing, representations and
warranties which by their terms are applicable only to a specific date shall be
deemed made only at and as of such date.
7.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent,
Lenders and the parties thereto and the closing of the transactions described
therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1. AFFIRMATIVE COVENANTS. For so long as there are any Commitments
outstanding and thereafter until payment in full of the Obligations Borrower
covenants that, unless otherwise consented to by Agent in writing, it shall:
8.1.1. VISITS AND INSPECTIONS. Permit representatives of
Agent, from time to time, as often as may be reasonably requested, but only
during normal business hours and (except when a Default or Event of Default
exists) upon reasonable prior notice to Borrower, to visit and inspect the
Properties of Borrower and each Subsidiary, inspect, audit and make extracts
from its books and records, and discuss with its officers, its employees and its
independent accountants, Borrower's and each Subsidiary's business, assets,
liabilities, financial condition, business prospects and results of operations.
Representatives of each Lender shall be authorized to accompany Agent on each
such visit and inspection and to participate with Agent therein.
8.1.2. NOTICES. Notify Agent and Lenders in writing, promptly
after obtaining Knowledge thereof, (i) of the commencement of any litigation
affecting any Obligor or any of its Properties, whether or not the claim is
considered by Borrower to be covered by insurance, and of the institution of any
administrative proceeding, to the extent that such litigation or proceeding, if
determined adversely to such Obligor, would reasonably be expected to have a
Material Adverse Effect; (ii) of any material labor dispute to which any Obligor
may become a party, any strikes or walkouts relating to any of its plants or
other facilities, and the expiration of any labor contract to which it is a
party or by which it is bound; (iii) of any material default by any Obligor
under any note, indenture, loan agreement, mortgage, lease, deed, guaranty or
other similar agreement relating to any Indebtedness of such Obligor exceeding
$500,000; (iv) of any Default or Event of Default; (v) of any default by any
Person under any note or other evidence of Indebtedness payable to an Obligor in
an amount exceeding $500,000; (vi) of any judgment against any Obligor in an
amount exceeding $500,000; (vii) of the assertion by any Person of any
Intellectual Property Claim, the adverse resolution of which would reasonably be
expected to have a Material Adverse Effect; (viii) of any violation or asserted
violation of ERISA or any Environmental Law, the adverse resolution of which
would reasonably be expected to have a Material Adverse Effect; (ix) of any
amendment or modification to any of the Senior Note Documents or Adience Senior
Note Indenture; and (x) of any Environmental Release by an Obligor or on any
Property owned or occupied by an Obligor. In addition, Borrower shall give
Agent at least 10 Business Days' prior written notice of any Obligor's opening
of any new office or place of business.
8.1.3. FINANCIAL STATEMENTS. Keep, and cause each Subsidiary
to keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and cause to be prepared and to be furnished to
Agent and Lenders the following (all to be prepared in accordance with GAAP
applied on a consistent basis, unless Borrower's certified public accountants
concur in any change therein, such change is disclosed to Agent and is
consistent with GAAP and, if required by the Required Lenders, the financial
covenants set forth in Section 8.3 are amended in a manner reasonably requested
by the Required Lenders to take into account the effects of such change):
(xxviii)
<PAGE>
(i) as soon as available and in any event within 120 days
after the close of each Fiscal Year, unqualified audited financial
statements of Borrower and its Restricted Subsidiaries as of the end of
such Fiscal Year, on a Consolidated and consolidating basis, certified
without material qualification by a firm of independent certified public
accountants of recognized national standing selected by Borrower but
reasonably acceptable to Agent (except for a qualification for a change in
accounting principles with which the accountant concurs), and setting forth
in each case in comparative form the corresponding Consolidated and
consolidating figures for the preceding Fiscal Year;
(ii) as soon as available and in any event within 45 days
after the end of each month hereafter (but within 60 days after the last
month in a Fiscal Year), including the last month of Borrower's fiscal
year, unaudited interim financial statements of Borrower and its Restricted
Subsidiaries as of the end of such month and of the portion of Borrower's
financial year then elapsed, on a Consolidated and consolidating basis,
certified by the principal financial officer of Borrower as prepared in
accordance with GAAP and fairly presenting the Consolidated financial
position and results of operations of Borrower and its Restricted
Subsidiaries for such month and period subject only to changes from audit
and year-end adjustments and except that such statements need not contain
notes;
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements, financial statements or
reports which Borrower has made generally available to its shareholders and
copies of any regular, periodic and special reports or registration
statements which Borrower files with the Securities and Exchange Commission
or any governmental authority which may be substituted therefor, or any
national securities exchange;
(iv) promptly after the filing thereof, copies of any annual
report to be filed in accordance with ERISA in connection with each Plan;
and
(v) such other data and information (financial and
otherwise) as Agent, from time to time, may reasonably request, bearing
upon or related to the Collateral or Borrower's and each of its
Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this Section 8.1.3, Borrower shall deliver to Agent and Lenders
a copy of the accountants' letter to Borrower's management that is prepared in
connection with such financial statements and also shall cause to be prepared
and shall deliver to Agent and Lenders a certificate of the aforesaid certified
public accountants stating to Agent and Lenders that, based upon such
accountants' audit of the Consolidated financial statements of Borrower and its
Subsidiaries performed in connection with their examination of said financial
statements, nothing came to their attention that caused them to believe that
Borrower was not in compliance with Sections 8.2.2, 8.2.3, 8.2.4, 8.2.8,
8.2.9(v) or 8.3 hereof, or, if they are aware of such noncompliance, specifying
the nature thereof, and acknowledging, in a manner satisfactory to Agent, that
they are aware that Agent and Lenders are relying on such financial statements
in making their decisions with respect to the Loans. Concurrently with the
delivery of the financial statements described in clauses (i) and (ii) of this
Section 8.1.3, or more frequently if requested by any Lender during any period
that a Default or Event of Default, Borrower shall cause to be prepared and
furnished to Agent and Lenders a Compliance Certificate in the form of EXHIBIT O
hereto executed by the chief financial officer of Borrower.
8.1.4. LANDLORD AND STORAGE AGREEMENTS. Provide Agent with
copies of all existing agreements, and promptly after execution thereof provide
Agent with copies of all future agreements, between any Obligor and any landlord
or warehouseman which owns any premises at which any Collateral may, from time
to time, be kept.
8.1.5. MONTHLY BANK STATEMENTS. If requested by Agent,
deliver to Agent and Lenders, as soon as available, a copy of each monthly
statement prepared by the applicable depository bank with respect to each of
Borrower's and each Borrower Subsidiary's respective depository accounts.
8.1.6. PROJECTIONS. No later than 30 days prior to the end of
each fiscal year of Borrower, deliver to Agent and Lenders the Projections of
Borrower for the forthcoming 3 years, year by year, and for the forthcoming
fiscal year, month by month.
8.1.7. TAXES. Pay and discharge, and cause each Subsidiary
to pay and discharge, all Taxes prior to the date on which such Taxes become
delinquent or penalties attach thereto, except and to the extent only that such
Taxes are being Properly Contested.
(xxix)
<PAGE>
8.1.8. COMPLIANCE WITH LAWS. Comply and cause each Subsidiary
to comply, with all Applicable Law, including all laws, statutes, regulations
and ordinances regarding the collection, payment and deposit of Taxes, ERISA and
all Environmental Laws, and obtain and keep in force any and all licenses,
permits, franchises, or other governmental authorizations necessary to the
ownership of its Properties or to the conduct of its business, to the extent
that any such failure to comply, obtain or keep in force would be reasonably
likely to have a Material Adverse Effect. Without limiting the generality of
the foregoing, if any Environmental Release shall occur at or on any of the
Properties of Borrower or any Restricted Subsidiary, Borrower shall, or shall
cause the applicable Subsidiary to, act immediately to investigate the extent
of, and to make appropriate remedial action to eliminate, such Environmental
Release, whether or not ordered or otherwise directed to do so by any
governmental authority or agency.
8.1.9. INSURANCE. In addition to the insurance required
herein with respect to the Collateral, maintain and cause each Restricted
Subsidiary to maintain, with financially sound and reputable insurers, insurance
with respect to its Properties and business against such casualties and
contingencies of such type (including product liability, business interruption,
larceny, embezzlement, or other criminal misappropriation insurance) and in such
amounts as is customary in the business of Borrower or such Restricted
Subsidiary.
8.1.10. EXECUTION OF SUBSIDIARY GUARANTIES, SUBSIDIARY SECURITY
AGREEMENTS AND CONTRIBUTION AGREEMENT. Cause each Subsidiary Guarantor on the
Closing Date to execute and deliver to Agent a Subsidiary Guaranty, a Subsidiary
Security Agreement and the Contribution Agreement, and promptly cause each
Person that hereafter becomes a Restricted Subsidiary (other than a member of
the DNE Group for so long as it is contractually prohibited by the CDA from
doing so) to become a party to the Non-Subordinated Subsidiary Guaranty and the
Contribution Agreement and to execute and deliver to Agent a Subsidiary Security
Agreement.
8.1.11. REPAYMENT OF AND RECORDS CONCERNING ALLOCATED NOTE
PROCEEDS AMOUNT AND ADIENCE DEBT EXCHANGE NOTE. Cause the Allocated Note
Proceeds Amount owing by each Borrower Subsidiary and any member of the DNE
Group (whether or not any DNE Group member is at the time in question a Borrower
Subsidiary) to be evidenced by an Allocated Proceeds Note duly executed by such
Borrower Subsidiary or DNE Group member, as the case may be; require each
Borrower Subsidiary or DNE Group member, as the case may be, to pay such
Allocated Proceeds Note in accordance with the terms thereof, and keep accurate
and complete records concerning the Allocated Note Proceeds Amount and all
payments with respect thereto; and require Adience to pay the Adience Debt
Exchange Note in accordance with the terms thereof and keep accurate and
complete records concerning the Adience Debt Exchange Note and all payments with
respect thereto. If on any date Borrower uses any proceeds of Revolver Loans to
pay when due any installment of principal or interest in respect of the Senior
Notes, to make or fund Restricted Payments when each of the Restricted Payment
Conditions is satisfied at the time of and after giving effect to such
Restricted Payment, to fund any advance in connection with the PolyVision Loans,
or to pay any of the Obligations (other than interest accrued on the Revolver
Loans), then, in any such event, Borrower shall, to the extent any balance is
outstanding on the Allocated Proceeds Notes or the Adience Debt Exchange Note,
concurrently require each Borrower Subsidiary to make payments of principal or
accrued interest on the Allocated Note Proceeds Amount owing by such Borrower
Subsidiary (and, when the Allocated Note Proceeds Amounts of all Borrower
Subsidiaries have been paid in full, shall require Adience to make payments of
principal and accrued interest on the Adience Debt Exchange Note) in an amount
which, when aggregated with amounts paid or funded on or about the same date by
the other Borrower Subsidiaries on account of their respective Allocated Note
Proceeds Amounts, is equal to the amount of such Revolver Loan proceeds so used
by Borrower. Borrower shall, to the extent necessary to enable a Borrower
Subsidiary to pay any portion of such payments, fund a Permitted Subsidiary
Advance to such Borrower Subsidiary. In no event shall Borrower forgive, or
permit any Borrower Subsidiary (or any DNE Group member) to prepay, the whole or
any part of its Allocated Proceeds Note or the Allocated Note Proceeds Amount
evidenced thereby; nor shall Borrower forgive, or permit Adience to prepay, in
whole or in part the Adience Debt Exchange Note. Borrower shall not sell or
assign any of the Allocated Proceeds Notes or Adience Debt Exchange Note or any
interest therein, grant or suffer to exist any Lien (other than a Permitted
Lien) upon any of the Allocated Proceeds Notes or Adience Debt Exchange Note, or
amend or consent to any modification of any Allocated Proceeds Notes or Adience
Debt Exchange Note.
8.1.12. REPAYMENT OF AND RECORDS REGARDING SUBSIDIARY AND
PAYMENT ITEM ADVANCES. Keep accurate and complete records with respect to each
Borrower Subsidiary concerning all Subsidiary Advances outstanding to such
Borrower Subsidiary and Payment Item Advances outstanding to such Borrower
Subsidiary from time to time, all payments applied thereto and interest accrued
thereon. Any Payment Items that constitutes Property of a Borrower Subsidiary
and that is received by Agent or Borrower shall be deemed applied by Borrower on
its books first to reduce any outstanding amounts owing by such Borrower
Subsidiary under its Subsidiary Loan Agreement on the date of receipt of such
Payment Item in the Concentration Account and the balance of any such Payment
Items shall either be returned to such Borrower Subsidiary if so requested by
such Borrower Subsidiary when no Subsidiary Advances are outstanding to it or,
to the extent an unauthorized Payment Item Advance is not thereby created,
applied to reduce any Subsidiary Advances owing by any other Borrower
Subsidiary. In no event, however, shall the aggregate amount of all Payment
Item Advances and Loans owing at any time or times by Adience to Superior exceed
$5,000,000 and in no event shall the aggregate of all Payment Item Advances
owing at any time or times by
(xxx)
<PAGE>
Superior to Adience exceed $1,500,000. All Subsidiary Advances shall be repaid
as provided in the Subsidiary Loan Agreement under which such Subsidiary Advance
was made. Each Payment Item Advance shall be repaid by the Borrower Subsidiary
owing same on demand to the Borrower Subsidiary to which such Payment Item
Advance is owed.
8.1.13. EXCESS AVAILABILITY. Maintain during each and every
period of 30 consecutive days after the date of this Agreement an Average
Availability of at least $5,000,000.
8.1.14. ADIENCE SENIOR NOTES. Cause the unpaid principal
balance of the Adience Senior Notes to be reduced on the Closing Date from the
proceeds of the Senior Notes to an amount no greater than $5,000,000.
8.1.15. ADIENCE/SUPERIOR DOCUMENTS. Cause the Adience/Superior
Documents to be duly executed and delivered by the parties thereto, in form and
content reasonably acceptable to Agent, within 45 days after the Closing Date.
8.1.16. CONSENT OF CDA. Make a diligent and good faith effort
to satisfy each of the DNE Loan Conditions, including, obtaining the consent of
CDA to the execution and delivery by Borrower and the DNE Group of Subsidiary
Loan Documents and the execution and delivery by the DNE Group of the Non-
Subordinated Subsidiary Guaranty and a Subsidiary Security Agreement.
8.1.17. POST-FUNDING CASH BALANCES. Within 5 Business Days
after the Closing Date, a Senior Officer of Borrower shall certify in writing to
Agent and Lenders the amount of cash and Cash Equivalents of Borrower and the
Restricted Subsidiaries and the amount of the balances in the Investment
Accounts.
8.2. NEGATIVE COVENANTS. For so long as there are any Commitments
outstanding and thereafter until payment in full of the Obligations, Borrower
covenants that, unless Agent has first consented thereto in writing, it shall
not and shall not permit any Restricted Subsidiary to:
8.2.1. FUNDAMENTAL CHANGES. Enter into any transaction to
merge, consolidate or amalgamate with any Person, or liquidate, wind up or
dissolve itself.
8.2.2. RESTRICTED PAYMENTS. Make, directly or indirectly, any
Restricted Payment except as follows: (i) Distributions by a Restricted
Subsidiary (other than a Borrower Subsidiary or a Canadian Subsidiary) to
Borrower to the extent allowed under Applicable Law; (ii) Restricted Payments by
Borrower to the extent that such payments are not made, directly or indirectly,
in whole or in part, from any proceeds of any Collateral (other than proceeds
deposited into a Deposit Account subject to Agent's Lien to the extent that such
proceeds were derived from the disposition of Property of an Obligor on which
Agent did not have a Lien or from the sale or issuance of Securities by an
Obligor) or from the proceeds of any Revolver Loans or Subsidiary Advances and
provided that Borrower is permitted to make such Restricted Payments under the
terms of the Senior Note Documents; and (iii) Restricted Payments by Borrower
that are to be made, directly or indirectly, in whole or in part from the
proceeds of any Revolver Loans to the extent that each of the Restricted Payment
Conditions is satisfied.
8.2.3. LOANS. Make any loans or other advances of money
(other than for salary, travel advances, advances against commissions and other
similar advances in the ordinary course of business) to any Person (including a
Borrower, a Subsidiary or an Affiliate); PROVIDED, HOWEVER, that (i) Borrower
may fund the PolyVision Loans pursuant to the PolyVision Loan Documents, (ii)
for so long as no Default or Event of Default exists or would result therefrom,
(x) Borrower may make Permitted Subsidiary Advances to each Borrower Subsidiary
(including DNE after each of the DNE Loan Conditions is satisfied) and (y)
Superior may make Permitted Superior/Adience Loans, and (iii) Borrower may, on
or about the Closing Date and pursuant to the Debt Exchange Agreement lend to
Adience, the amount of the shares of the 8% preferred stock of Borrower required
by the Debt Exchange Agreement in exchange for the Adience Debt Exchange Note.
Without limiting the generality of the foregoing, in no event shall Borrower be
permitted to make any loan or other advance of money to a Subsidiary except for
Permitted Subsidiary Advances.
8.2.4. TOTAL INDEBTEDNESS. Create, incur, assume, guarantee
or suffer to exist any Indebtedness, except:
(i) Obligations owing to Agent or Lenders pursuant to
any of the Transaction Documents;
(ii) Subordinated Debt existing on the date of this
Agreement;
(xxxi)
<PAGE>
(iii) Indebtedness of any Subsidiary to Borrower that
exists on the date hereof, that results from Permitted Subsidiary Advances,
or that constitutes such Subsidiary's Allocated Note Proceeds Amount;
(iv) accounts payable by Borrower or a Restricted
Subsidiary to trade creditors and current operating expenses (other than
for Money Borrowed) which are not aged more than 90 days from billing date
or more than 30 days from the due date, in each case incurred in the
ordinary course of business and paid within such time period, unless the
same are being Properly Contested;
(v) Indenture Obligations of Borrower under (and as
defined in) the Senior Noteholder Indenture (as in effect on the date
hereof);
(vi) Contingent liabilities of a Subsidiary Guarantor
under a Senior Note Guaranty;
(vii) obligations to pay Rentals permitted by Section
8.2.13;
(viii) Permitted Purchase Money Indebtedness;
(ix) Permitted Superior/Adience Loans;
(x) foreign currency contracts and copper futures
contracts or similar instruments, provided that (a) such contracts are
entered into solely as a bona fide hedge and are totally offset by existing
obligations owed to or by Borrower or a Subsidiary in an equivalent amount
and (b) the aggregate 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;
(xi) Indebtedness for Money Borrowed by Borrower or a
Subsidiary (including Indebtedness of Adience under the Adience Senior
Notes and Indebtedness of DNE to the CDA on the date hereof), but only to
the extent that such Indebtedness is outstanding on the date of this
Agreement, is disclosed in the Offering Memorandum and is not to be
satisfied on or about the Closing Date from the proceeds of the Senior
Notes or the proceeds of the initial Revolver Loans, together with any
extension, renewals or refinancings of such Indebtedness provided that the
principal amount of such Indebtedness is not increased;
(xii) contingent liabilities arising out of
endorsements of checks and other negotiable instruments for deposit or
collection in the ordinary course of business;
(xiii) Indebtedness of the Canadian Subsidiaries to the
Canadian Lender under the Canadian Financing Documents; and
(xiv) Indebtedness not included in paragraphs (i)
through (xiii) above which is not secured by a Lien (unless such Lien is a
Permitted Lien) and does not exceed at any time, in the aggregate, the sum
of $5,000,000 (LESS the amount of Purchase Money Indebtedness outstanding
at such time) as to Borrower and all of its Subsidiaries.
8.2.5. AFFILIATE TRANSACTIONS. Enter into, or be a party to
any transaction with any Affiliate or stockholder, except (i) the transactions
contemplated by the Transaction Documents; (ii) payment of customary directors'
fees and indemnities; (iii) transactions with Affiliates that were consummated
prior to the date hereof and that are described in the Offering Memorandum; and
(iv) in the ordinary course of and pursuant to the reasonable requirements of
Borrower's or such Subsidiary's business and upon fair and reasonable terms
which are fully disclosed to Agent and are no less favorable to Borrower or such
Subsidiary than would obtain in a comparable arm's length transaction with a
Person not an Affiliate or stockholder of Borrower or such Subsidiary.
8.2.6. LIMITATION ON LIENS. Create or suffer to exist any
Lien upon any of its Property, income or profits, whether now owned or hereafter
acquired, except:
(xxxii)
<PAGE>
(i) Liens at any time granted in favor of Agent or, in
the case of any Canadian Subsidiary Collateral, in favor of Shawmut;
(ii) Liens for Taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due or being Properly
Contested;
(iii) A statutory Lien arising in the ordinary course of
Borrower's or a Subsidiary's business by operation of law or regulation,
but only if payment in respect of any such Lien is not at the time required
or the Indebtedness secured by such Lien is being Properly Contested and
such Lien does not materially detract from the value of the Property of
Borrower or such Subsidiary and does not materially impair the use thereof
in the operation of Borrower's or such Subsidiary's business;
(iv) Purchase Money Liens securing Permitted Purchase
Money Indebtedness;
(v) Liens securing Indebtedness of a Borrower
Subsidiary to Borrower or another Subsidiary, so long as such Liens are
(unless and to the extent otherwise agreed by Agent in writing) at all
times junior in priority to any Liens in favor of Agent in the same
Property;
(vi) A Lien arising by virtue of the rendition, entry
or issuance against Borrower or any Subsidiary, or any Property of Borrower
or any Subsidiary, of any judgment, writ, order, or decree for so long as
such Lien is in existence for less than 30 consecutive days after it first
arises, is at all times junior in priority to any Liens in favor of Agent
or Shawmut and is being Properly Contested;
(vii) Liens arising from Borrower's pledge of the
Capital Stock of a Restricted Subsidiary and proceeds thereof as security
for the Senior Notes, but only if the instruments pursuant to which any
such pledge is effected expressly provide that the pledgee thereunder
(including any successor pledgee) is not permitted (unless and until it
acquires ownership of such Capital Stock by lawful foreclosure of its Lien
thereon) to exercise any right to vote such Capital Stock for the purpose
of causing such Restricted Subsidiary's directors to place such Restricted
Subsidiary into bankruptcy or causing new board members to be elected for
such purpose;
(viii) Liens on Margin Stock;
(ix) Liens incurred or deposits made in the ordinary
course of business to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Money Borrowed), statutory
obligations and other similar obligations or arising as a result of
progress payments under government contracts, provided that, to the extent
any such Liens attach to any of the Collateral, such Liens are at all times
subordinate and junior to the Liens upon the Collateral in favor of Agent
or Shawmut;
(x) easements, rights-of-way, restrictions, covenants
or other agreements of record and other similar charges or encumbrances on
real Property of Borrower or a Subsidiary that do not interfere with the
ordinary conduct of the business of Borrower or such Subsidiary;
(xi) Liens granted in favor of the Canadian Lender by
Superior Canada to secure Indebtedness of Superior Canada under any of the
Canadian Financing Agreements signed by Superior Canada, and Liens granted
in favor of the Canadian Lender by Adience Canada to secure Indebtedness of
Adience Canada under any of the Canadian Financing Agreements signed by
Adience Canada;
(xii) any Lien arising out of the refinancing,
extension, renewal or refunding of any Indebtedness secured by any Lien
permitted by clauses (iv), (viii) or (xi) above, provided that (A) such
Indebtedness is not secured by any additional assets of Borrower or any
Subsidiary and (B) the amount of such Indebtedness secured by any such Lien
is not increased;
(xxxiii)
<PAGE>
(xiii) Liens in existence immediately prior to the
Closing Date that are satisfied in full and released on the Closing Date as
a result of the application of Borrower's cash on hand at the Closing Date,
the proceeds of the Senior Notes and the initial Revolver Loans to be made
on the Closing Date;
(xiv) Liens in existence on the date hereof on Property
of a Canadian Subsidiary in favor of Ford Credit Canada Limited or General
Motors Acceptance Corporation of Canada Limited, or any of their respective
Affiliates, in connection with and to secure motor vehicle financings or
leases, provided that not later than 60 days after the date hereof such
Liens either shall be released of record in their entirety or shall be
modified so as to limit the Lien to the motor vehicles financed by such
Persons in favor of a Canadian Subsidiary and proceeds thereof.
(xv) such other Liens as appear on EXHIBIT P hereto, to
the extent provided therein; and
(xvi) such other Liens as Agent may hereafter approve in
writing.
8.2.7. SUBORDINATED DEBT. Make any payment of any part or all
of any Subordinated Debt or take any other action or omit to take any other
action in respect of any Subordinated Debt, except in accordance with the
subordination agreement relative thereto.
8.2.8. CAPITAL EXPENDITURES. Make Capital Expenditures
(including, by way of capitalized leases) which (i) in the aggregate, as to
Borrower and its Subsidiaries, exceed $8,500,000 during any Fiscal Year or (ii)
in the aggregate as to Adience exceeds, during Fiscal Year 1996, the sum of
$3,000,000 plus net proceeds from Adience's disposition of assets (other than
Collateral) during such Fiscal Year, or, during any Fiscal Year thereafter,
exceeds $4,000,000.
8.2.9. DISPOSITION OF ASSETS. Sell, lease, consign or
otherwise dispose of any of its Properties or any interest therein, including
any disposition of Property as part of a sale and leaseback transaction, to or
in favor of any Person, except (i) sales of Inventory in the ordinary course of
business for so long as no Event of Default exists hereunder, (ii) dispositions
of Property (other than Inventory) in the ordinary course of business, (iii) a
transfer of Property to Borrower by a Subsidiary, (iv) transfers by Borrower of
substantially all of the Capital Stock it owns in PolyVision (other than
preferred stock) in connection with the retirement in part of the Adience Senior
Notes pursuant to the Debt Exchange Agreement and the acquisition by Borrower of
the remaining Capital Stock of Adience on or about the Closing Date, (v) any
sale or other disposition of any of the PolyVision Stock, provided that the net
proceeds from such sales, up to an aggregate of $8,600,000, are turned over to
Agent promptly after Borrower's receipt thereof for application to the
Obligations; (vi) dispositions expressly authorized by other provisions of this
Agreement; (vii) transfers of all or any part of the Capital Stock of PolyVision
that is at any time owned by Borrower to a Plan established by Borrower; and
(viii) the sale by Adience of its Property consisting of a condominium.
8.2.10. STOCK OF SUBSIDIARIES. Permit any of the Subsidiaries
to issue any additional shares of its Capital Stock except director's qualifying
shares.
8.2.11. BILL-AND-HOLD SALES, ETC. Make a sale to any customer
on a bill-and-hold, guaranteed sale, sale and return, sale on approval or
consignment basis, or any sale on a repurchase or return basis.
8.2.12. CONDUCT OF BUSINESS. Engage in any business other than
the business engaged in by it on the Closing Date and any business or activities
which are substantially similar, related or incidental thereto, except that the
foregoing shall not be deemed to restrict Borrower from making any business
acquisitions that are not otherwise in violation of this Agreement.
8.2.13. LEASES. Become a lessee under any operating lease
(other than a lease under which Borrower or any of the Subsidiaries is lessor)
of Property if the aggregate Rentals payable during any current or future period
of 12 consecutive months under the lease in question and all other leases under
which Borrower or any of the Subsidiaries is then lessee would exceed
$1,000,000. The term "Rentals" means, as of the date of determination, all
payments which the lessee is required to make by the terms of any lease.
8.2.14. TAX CONSOLIDATION. File or consent to the filing of
any consolidated income tax return with any Person other than a Subsidiary.
(xxxiv)
<PAGE>
8.2.15. FISCAL YEAR. Establish a fiscal year different from
the Fiscal Year.
8.2.16. CORPORATE DOCUMENTS. Amend, modify or otherwise change
any of the terms or provisions in any of its corporate charter, articles of
incorporation, bylaws or other governing documents as in effect on the Closing
Date, except for changes that do not affect in any way Borrower's or such
Restricted Subsidiary's rights and obligations to enter into and perform the
Transaction Documents to which it is a party to pay all of the Obligations and
that do not have a Material Adverse Effect.
8.2.17. SUBSIDIARY ADVANCES AND PARTICIPATIONS THEREIN;
AMENDMENTS TO SUBSIDIARY LOAN DOCUMENTS. Make any Subsidiary Advance unless
such Subsidiary Advance is a Permitted Subsidiary Advance; sell or assign any
interest in any of the Subsidiary Advances or Subsidiary Loan Documents to any
Person other than Agent for its benefit and the Pro Rata benefit of Lenders;
amend, modify or otherwise alter any of the terms or provisions contained in any
of the Subsidiary Loan Documents, or execute any new instruments or agreements
to evidence, secure the payment of or otherwise govern the transactions
described in any of the Subsidiary Loan Documents; release or subordinate any
Lien granted by a Borrower Subsidiary to Borrower under any of the Subsidiary
Loan Documents or otherwise; or permit any Borrower Subsidiary to violate any
provision of any of the Subsidiary Loan Documents.
8.2.18. AMENDMENTS TO SENIOR NOTE DOCUMENTS. Amend any of the
Senior Note Documents to change (unless such change is to extend) the maturity
date of the Senior Notes; to require more frequent payments of interest under
the Senior Notes; to increase the rate of interest payable in respect of the
Senior Notes; to alter any subordination provisions contained in any Senior Note
Guaranty; or to amend any provision of any Senior Note Stock Pledge so as to
cause an Event of Default to occur under this Agreement.
8.2.19. SUBSIDIARY INDEBTEDNESS. Except for the PolyVision
Loans, waive, forgive, reduce (other than as the result of a bona fide payment),
convert to an Equity Interest or accept an Equity Interest in exchange for,
permit to be prepaid (except for mandatory prepayments required in accordance
with the terms hereof of an Allocated Proceeds Note), subordinate or defer the
time of payment of, release any Obligor liable for or any Lien securing, or
otherwise modify or amend amy instrument or other document evidencing or
securing, any Indebtedness of any Subsidiary to Borrower or of any Subsidiary to
another Subsidiary. With respect to the PolyVision Loans and PolyVision Loan
Documents, Borrower shall not extend the term thereunder during which loans may
be made under the PolyVision Loan Documents or increase the amount of the
PolyVision Loans that may be outstanding from time to time.
8.3. SPECIFIC FINANCIAL COVENANTS. For so long as there are any
Commitments outstanding and thereafter until payment in full of the Obligations,
Borrower covenants that, unless otherwise consented to by Agent in writing, it
shall:
8.3.1. CONSOLIDATED ADJUSTED TANGIBLE NET WORTH. Maintain at
all times a Consolidated Adjusted Tangible Net Worth of not less than
($59,000,000).
8.3.2. CONSOLIDATED NET WORTH. Maintain at all times a
Consolidated Net Worth of not less than $42,000,000.
8.3.3. CONSOLIDATED CASH INTEREST COVERAGE RATIO. Maintain a
Consolidated Cash Interest Coverage Ratio, determined (a) as of October 31,
1995, for the portion of the Fiscal Year then elapsed since August 1, 1995, of
at least 1.1 to 1, (b) as of the last day of each month, commencing November 30,
1995 and ending April 30, 1996, for the portion of the Fiscal Year then elapsed
since August 1, 1995, of at least 1.1 to 1, (c) for the 10-month period ending
May 31, 1996, and for the 11-month period ending June 30, 1996, of at least 1.1
to 1, and (d) as of the last day of each month, commencing July 31, 1996 and
continuing through April 30, 1997, for the 12-month period ending on such day,
of at least 1.1 to 1; and commencing May 31, 1997, maintain a Consolidated Cash
Interest Coverage Ratio, determined as of the last day of each month for the 12-
month period ending on such day, of at least 1.35 to 1.
8.3.4. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Maintain a
Consolidated Fixed Charge Coverage Ratio, for the 3-month period ending October
31, 1995, for the 6-month period ending January 31, 1996, and for the 9-month
period ending April 30, 1996, of not less than 0.75 to 1, and thereafter
maintain a Consolidated Fixed Charge Coverage Ratio, determined as of the last
day of each fiscal quarter of Borrower for the portion of the Fiscal Year then
ended, of not less than 1.0 to 1, commencing May 31, 1996.
(xxxv)
<PAGE>
8.3.5. ADDITIONAL FINANCIAL COVENANTS. Comply with any and all
financial covenants set forth in any of the Senior Note Documents, whether or
not compliance therewith is waived under the Senior Note Indenture or otherwise.
SECTION 9. CONDITIONS PRECEDENT
9.1. CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSIONS. Notwithstanding
any other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Agent and Lenders under the other
sections of this Agreement, Lenders shall not be required to make the initial
Revolver Loans requested by Borrower under the Revolver Facility or to extend
credit pursuant to the LC Facility unless, on or before July 31, 1995, each of
the following conditions has been and continues to be satisfied:
9.1.1. LOAN DOCUMENTS. Each of the Loan Documents to be
executed on or about the Closing Date shall be in form and substance
satisfactory to Agent and Lenders, shall have been duly executed and delivered
to Agent by each of the signatories thereto and shall be accepted by Agent and
Lenders;
9.1.2. SUBSIDIARY LOAN DOCUMENTS. The Subsidiary Loan
Documents in form and substance satisfactory to Agent and Lenders shall have
been duly executed and delivered by Superior and Adience and any other Obligor
signatory thereto and shall be accepted by Agent and Lenders, and Borrower shall
have duly executed and delivered to Agent, for the benefit of Agent and the Pro
Rata benefit of Lenders, the Subsidiary Loan Documents Assignment and all of the
original Subsidiary Loan Documents signed by Superior and Adience;
9.1.3. CANADIAN FINANCING AGREEMENTS. Superior Canada and
Adience Canada shall have entered into separate Canadian Financing Agreements
with the Canadian Lender providing for the Canadian Lender to make available
revolving credit facilities to Superior Canada and Adience Canada up to the
maximum principal amounts of Cdn$10,000,000 and Cdn$3,000,000, respectively, but
not to exceed at any time a Canadian Subsidiary's Canadian Borrowing Base at
such time; providing for the charge by the Canadian Lender of a per annum simple
interest rate on the outstanding principal amount under the revolving credit
facility to each Canadian Subsidiary equal, at the Canadian Lender's option,
either (i) to the Canadian Lender's prime rate for Canadian Dollar loans or (ii)
the Canadian Lender's rate for corporate bankers acceptances plus 0.625% per
annum; providing that the Canadian Financing Agreements, and all other
instruments and agreements executed in connection therewith, may be assigned and
transferred, in whole or in part to Shawmut or to Agent for the Pro Rata benefit
of Lenders, without notice to or the consent of either of the Canadian
Subsidiaries; granting to the Canadian Lender a duly perfected, first priority
Lien upon all of the Canadian Subsidiary Collateral of each Canadian Subsidiary;
and containing such other terms and conditions as shall be acceptable to or
required by Agent or Shawmut and each of the Other Canadian Financing Documents
shall have been duly executed and delivered by each of the signatories thereto
and shall have been reviewed and found acceptable in all respects by Lenders;
9.1.4. CONSOLIDATED AVAILABILITY. Agent shall have
determined, and Lenders shall be satisfied that, immediately after Lenders have
made the initial Revolver Loans and Bank has issued the Canadian Letters of
Credit and any Borrower Letters of Credit to be issued on the Closing Date, and
Borrower has paid (or made provision for payment of) all closing costs incurred
in connection with the Credit Facilities and the Senior Note Documents, the sum
of the following is not less than $25,000,000: (i) the Availability PLUS (ii)
the excess of the Canadian Borrowing Base of each Canadian Subsidiary over the
aggregate of the loans outstanding under the Canadian Financing Agreements.
9.1.5. EVIDENCE OF PERFECTION AND PRIORITY OF LIENS. Agent
shall have received copies of all filing receipts or acknowledgments issued by
any governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Agent and Shawmut in the Collateral and evidence in form
satisfactory to Agent and Lenders that such Liens constitute valid and perfected
security interests and Liens, and that there are no other Liens upon any
Collateral except for Permitted Liens.
9.1.6. ARTICLES OF INCORPORATION. Agent shall have received a
copy of the Articles or Certificate of Incorporation of Borrower and each
Obligor, and all amendments thereto, certified by the Secretary of State or
other appropriate officials of the jurisdiction of Borrower's and each Obligor's
states of incorporation.
9.1.7. GOOD STANDING CERTIFICATES. Agent shall have received
good standing certificates for Borrower and each Obligor, issued by the
Secretary of State or other appropriate official of Borrower's or any Obligor's
jurisdiction of incorporation and each jurisdiction where the conduct of
Borrower's or any Obligor's business activities or ownerships of its Property
necessitates qualification.
(xxxvi)
<PAGE>
9.1.8. OPINION LETTERS. Agent shall have received a
favorable, written opinion of Proskauer Rose Goetz & Mendelsohn LLP and the
respective local counsel to Borrower and Agent, covering the matters set forth
on EXHIBIT P attached hereto, and shall have received such other favorable,
written opinions of Canadian counsel to each Canadian Subsidiary regarding the
Canadian Financing Documents as Agent and Lenders may require.
9.1.9. INSURANCE. Agent shall have received copies of the
casualty insurance policies of Borrower and each Obligor with respect to the
Collateral, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee with respect to each such
policy and copies of Borrower's and each Obligor's liability insurance policies,
together with endorsements naming Agent as a co-insured, all as required by the
Transaction Documents.
9.1.10. LOCKBOX; DOMINION AND CONCENTRATION ACCOUNTS. Agent
shall have received the duly executed agreements establishing the Lockbox and
each Dominion Account, and (if requested by Agent) the Concentration Account, in
each case with a financial institution acceptable to Agent for the collection or
servicing of the Accounts.
9.1.11. LANDLORD AGREEMENTS. Agent shall have received all
landlord or warehouseman agreements with respect to all premises leased by
Borrower or any Subsidiary Guarantor and which are disclosed on EXHIBIT C and
EXHIBIT C-1 hereto.
9.1.12. ISSUANCE OF SENIOR NOTES. Agent shall have received
advances satisfactory to it that, contemporaneously with the funding of the
initial Revolver Loans, Borrower shall have issued and received the net proceeds
of the Senior Notes in accordance with the Senior Note Documents;
9.1.13. ALLOCATED PROCEEDS NOTES. Each of the Allocated
Proceeds Notes shall have been duly executed and delivered to Borrower, in form
and substance satisfactory to Borrower and Lenders, and shall have been
delivered to Agent by Borrower pursuant to the Allocated Proceeds Notes Pledge.
9.1.14. SOLVENCY CERTIFICATES. Agent and Lenders shall have
received certificates satisfactory to them from each Obligor's officers that,
after giving effect to the financing under the Loan Agreement and the issuance
of the Letters of Credit, each Obligor is Solvent;
9.1.15. ALCATEL ASSIGNMENT. Agent shall have received,
reviewed and found acceptable the duly executed Alcatel Transaction Documents
Assignment;
9.1.16. ADIENCE/HEAT MERGER. Agent shall have received,
reviewed and found acceptable all of the Adience Merger Documents and the
transactions contemplated thereby shall have been consummated or provision
therefor made to occur on the Closing Date;
9.1.17. POLYVISION MERGER. Agent shall have received, reviewed
and found acceptable the IDT Merger Documents, and evidence that the PolyVision
merger shall have been consummated in accordance with Applicable Law;
9.1.18. ALLOCATION OF FUNDING PROCEEDS. Borrower's proposed
allocation of the proceeds from the Senior Notes and proceeds of the initial
Revolver Loans to pay Indebtedness of Borrower and its Subsidiaries (including
the application of Senior Note Proceeds to retire all but approximately
$5,000,000 of the Adience Senior Notes) shall be as set forth in the Sources and
Uses Agreement and Agent shall have received from Borrower disbursement
authorization letter directing that the proceeds of the initial Revolver Loans
to be made by Lenders be disbursed to Superior, via an account established
therefor by Borrower at NationsBank of Georgia, N.A., for repayment by Superior
of Indebtedness to the Superior/Alcatel Noteholders as of such date;
9.1.19. NO LABOR DISPUTES. Agent shall have received
assurances satisfactory to it that there are no threats of strikes or work
stoppages by any employees, or organization of employees, of any Obligor which
Agent reasonably determines may have a Material Adverse Effect;
(xxxvii)
<PAGE>
9.1.20. COMPLIANCE WITH LAWS AND OTHER AGREEMENTS. Agent shall
have determined or received assurances satisfactory to it that none of the
Transaction Documents or any of the transactions contemplated thereby violate
any applicable law, court order or agreement binding upon any Obligor; and
9.1.21. NO MATERIAL ADVERSE CHANGE. No material adverse change
in the financial condition of any Obligor or the quality, quantity or value of
any Collateral shall have occurred since April 30, 1995.
9.2. CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Notwithstanding any
other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Agent and Lenders under the other
sections of this Agreement, Lenders shall not be required to make any Loans or
otherwise extend any credit to or for the benefit of Borrower under any of the
Credit Facilities, unless and until each of the following conditions has been
and continues to be satisfied:
9.2.1. NO DEFAULTS. No Default or Event of Default shall
exist;
9.2.2. SATISFACTION OF CONDITIONS IN OTHER LOAN DOCUMENTS.
Each of the conditions precedent set forth in any other Loan Document shall have
been and shall remain satisfied;
9.2.3. NO LITIGATION. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of, this Agreement or the consummation of the transactions contemplated
hereby; and
9.3. LIMITED WAIVER OF CONDITIONS PRECEDENT. If Lenders shall make any
Revolver Loan under this Agreement at a time when any of the foregoing
conditions precedent are not satisfied (regardless of whether the failure of
satisfaction of any such conditions precedent was known or unknown to Agent or
Lenders), the funding of such Revolver Loan shall not operate as a waiver of the
right of Agent and Lenders to insist upon the satisfaction of all conditions
precedent with respect to each subsequent Revolver Loan requested by Borrower or
a waiver of any Default or Event of Default as a consequence of the failure of
any such conditions to be satisfied, unless Agent, with the prior consent of the
Required Lenders, in writing waives the satisfaction of any condition precedent
in which event such waiver shall only be applicable for the specific instance
given and only to the extent and for the period of time expressly stated in such
written waiver.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events or conditions shall constitute an "Event of Default" (each of
which Events of Default shall be deemed to be continuing unless and until waived
by Agent and Lenders in accordance with the provisions of Section 11.9 hereof):
10.1.1. PAYMENT OF OBLIGATIONS. Borrower shall fail to pay any of
the Obligations on the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise).
10.1.2. MISREPRESENTATIONS. Any representation, warranty or other
written statement to Agent or any Lender by or on behalf of any Obligor, whether
made in or furnished in compliance with or in reference to any of the
Transaction Documents, proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
10.1.3. BREACH OF SPECIFIC COVENANTS. Borrower shall fail or neglect
to perform, keep or observe any covenant contained in Sections 5.3, 6.1.1,
6.2.4, 6.2.5, 6.2.6, 8.1.1, 8.1.3, 8.1.11, 8.1.13, 8.1.14, 8.1.15, 8.2 or 8.3
hereof on the date that Borrower is required to perform, keep or observe such
covenant.
10.1.4. BREACH OF OTHER COVENANTS. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Agent's and the Required
Lender's satisfaction within 20 days after the sooner to occur of any Senior
Officer's receipt of notice of such breach from Agent or the date on which such
failure or neglect first becomes known to any Senior Officer; PROVIDED, HOWEVER,
that such notice and opportunity to cure shall not
(xxxviii)
<PAGE>
apply in the case of any failure to perform, keep or observe any covenant which
is not capable of being cured at all or within such 20-day period or which is a
willful and knowing breach by Borrower.
10.1.5. DEFAULT UNDER SECURITY DOCUMENTS/OTHER AGREEMENTS. An event
of default under any of the Security Documents or Other Agreements shall occur.
10.1.6. DEFAULT UNDER CANADIAN FINANCING DOCUMENTS. An event of
default under any of the Canadian Financing Documents shall occur.
10.1.7. DEFAULT UNDER SENIOR NOTE INDENTURE. An event of default
under any of the Senior Note Documents shall occur.
10.1.8. OTHER DEFAULTS. There shall occur any default or event of
default on the part of Borrower or any Restricted Subsidiary under any
agreement, document or instrument to which Borrower or any Restricted Subsidiary
is a party or by which Borrower or any Restricted Subsidiary or any of their
respective Properties is bound, creating or relating to any Indebtedness
(including the Adience Senior Notes) in excess of $1,000,000 if the payment or
maturity of such Indebtedness is accelerated in consequence of such event of
default or demand for payment of such Indebtedness is made.
10.1.9. UNINSURED LOSSES. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Agent shall have permitted) by insurance if the amount not
covered by insurance exceeds $250,000, or payments by Adience (or by another
Obligor on behalf of Adience) during any period of 12 consecutive months of an
aggregate amount that exceeds $2,000,000 in the defense (including payments for
legal fees) or the disposition (whether such disposition is by payment of a
judgment, arbitration aware or settlement) of Asbestos Claims to the extent that
such $2,000,000 in aggregate amount is not covered by insurance or is not
reimbursed to Adience by an insurance company within the same 12-month period in
which such payments were made by Adience (or by another Obligor on Adience's
behalf).
10.1.10. MATERIAL ADVERSE EFFECT. There shall occur any event or
condition that has a Material Adverse Effect.
10.1.11. INSOLVENCY PROCEEDING OF BORROWER. Borrower shall commence,
or shall consent to the commencement against it of, any Insolvency Proceeding or
any Insolvency Proceeding shall be commenced against Borrower and the same shall
not have been dismissed within 60 days after the commencement thereof.
10.1.12. INSOLVENCY PROCEEDING OF A RESTRICTED SUBSIDIARY. A
Restricted Subsidiary shall commence, or shall consent to the commencement
against it of, any Insolvency Proceeding or any Insolvency Proceeding shall be
commenced against a Restricted Subsidiary and the same shall not have been
dismissed within 60 days after the commencement thereof.
10.1.13. BUSINESS DISRUPTION; CONDEMNATION. There shall occur a
cessation of a substantial part of the business of any Obligor for a period
which significantly affects such Obligor's capacity to continue its business, on
a profitable basis; or any Obligor shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by such Obligor which is
necessary to the continued or lawful operation of its business; or any Obligor
shall be enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs; or any material lease or agreement pursuant to which any Obligor leases
or occupies any premises on which any Collateral is located shall be canceled or
terminated prior to the expiration of its stated term and such cancellation or
termination has a Material Adverse Effect or results in an Out-of-Formula
Condition or Subsidiary Out-of-Formula Condition; or any material part of the
Collateral shall be taken through condemnation or the value of such Property
shall be materially impaired through condemnation.
10.1.14. CHANGE OF OWNERSHIP. Borrower shall cease to own and
control, beneficially and of record, all of the Capital Stock of Superior,
Adience or DNE Systems; Superior shall cease to own and control, beneficially
and of record, all of the Capital Stock of Superior Canada; Adience shall cease
to own and control, beneficially and of record, all of the Capital Stock Adience
Canada; or DNE Systems shall cease to own and control, beneficially and of
record, all of the Capital Stock of DNE and DNE Manufacturing.
10.1.15. ERISA. A Reportable Event shall occur which Agent, in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower, any Subsidiary of Borrower or
(xxxix)
<PAGE>
any Obligor is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan resulting from Borrower's, such
Subsidiary's or such Obligor's complete or partial withdrawal from such Plan.
10.1.16. CHALLENGE TO AGREEMENT. Any Obligor or any of its
Affiliates shall challenge or contest in any action, suit or proceeding the
validity or enforceability of any of the Transaction Documents, the legality or
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Agent.
10.1.17. REPUDIATION OF OR DEFAULT UNDER SUBSIDIARY GUARANTY. Any
Guarantor shall revoke or attempt to revoke the Subsidiary Guaranty signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
10.1.18. CRIMINAL FORFEITURE. Borrower or any Restricted Subsidiary
shall be convicted under any criminal law that could lead to a forfeiture of any
Property of Borrower or such Restricted Subsidiary that would have a Material
Adverse Effect.
10.2. ACCELERATION OF THE OBLIGATIONS. Without in any way limiting the
right of Agent to demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence of an Event of Default, Agent may in its discretion (and, upon
receipt of written instructions to do so from the Required Lenders, shall)
declare the principal of and any accrued interest on the Revolver Loans and all
other Obligations owing under any of the Loan Documents to be, whereupon the
same shall become without further notice or demand (all of which notice and
demand Borrower expressly waives), forthwith due and payable and Borrower shall
forthwith pay to Agent the entire principal of and accrued and unpaid interest
on the Revolver Loans and other Obligations plus reasonable attorneys' fees and
expenses if such principal and interest are collected by or through an attorney-
at-law. Notwithstanding the foregoing, upon the occurrence of an Event of
Default specified in Section 10.1.11 hereof, all of the Obligations shall become
automatically due and payable without declaration, notice or demand by Agent and
the Commitments shall automatically terminate.
10.3. OTHER REMEDIES. Upon and after the occurrence of an Event of
Default, Agent may in its discretion (and, upon receipt of written direction of
the Required Lenders, shall) exercise from time to time the following rights and
remedies:
10.3.1. All of the rights and remedies of a secured party under
the Code or under other Applicable Law, and all other legal and equitable rights
to which Agent may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Transaction Documents, and none of which
shall be exclusive.
10.3.2. The right to take immediate possession of any of the
Borrower Collateral or Borrower Subsidiary Collateral, and to (i) require
Borrower to assemble the Borrower Collateral or Borrower Subsidiary Collateral,
at Borrower's expense, and make it available to Agent at a place designated by
Agent which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Borrower Collateral or Borrower Subsidiary Collateral on said premises until
sold (and if said premises be the Property of Borrower, then Borrower agrees not
to charge Agent for storage thereof).
10.3.3. The right to sell or otherwise dispose of all or any
Borrower Collateral or Borrower Subsidiary Collateral in its then condition, or
after any further manufacturing or processing thereof, at public or private sale
or sales, with such notice as may be required by law, in lots or in bulk, for
cash or on credit, all as Agent, in its sole discretion, may deem advisable.
Borrower agrees that any requirement of notice to Borrower or any other Obligor
of any proposed public or private sale or other disposition of Borrower
Collateral or Borrower Subsidiary Collateral by Agent shall be deemed reasonable
notice thereof if given at least 10 days prior thereto, and such sale may be at
such locations as Agent may designate in said notice. Agent shall have the
right to conduct such sales on Borrower's or any other Obligor's premises,
without charge therefor, and such sales may be adjourned from time to time in
accordance with Applicable Law. Agent shall have the right to sell, lease or
otherwise dispose of the Borrower Collateral or Borrower Subsidiary Collateral,
or any part thereof, for cash, credit or any combination thereof, and Agent may
purchase all or any part of the Borrower Collateral or Borrower Subsidiary
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any Borrower
Collateral or Borrower Subsidiary Collateral may be applied, after allowing 2
Business Days for collection, first to the costs, expenses and attorneys' fees
incurred by Agent in collecting the Obligations, in enforcing the rights of
Agent under the Loan Documents and in collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling and delivering any
Collateral, second to the interest due upon any of the Obligations; and third,
to the principal of the Obligations. If any deficiency shall arise, Borrower
and each Guarantor shall remain jointly and severally liable to Agent therefor.
(xl)
<PAGE>
10.3.4. Agent is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Agent's benefit.
10.4. SETOFF. In addition to any Liens granted under any of the Loan
Documents and any rights now or hereafter available under Applicable Law, Agent
and each Lender (and each of their respective Affiliates) is hereby authorized
by Borrower at any time that an Event of Default exists, without notice to
Borrower or any other Person (any such notice being hereby expressly waived) to
set off and to appropriate and to apply any and all deposits, general or special
(including Indebtedness evidenced by certificates of deposit whether matured or
unmatured (but not including trust accounts)) and any other Indebtedness at any
time held or owing by Agent, such Lender or any of their Affiliates to or for
the credit or the account of Borrower against and on account of the Obligations
of Borrower arising under the Transaction Documents to Agent, such Lender or any
of their Affiliates, including all Loans and Reimbursement Obligations and all
claims of any nature or description arising out of or in connection with this
Agreement, irrespective of whether or not (i) Agent or such Lender shall have
made any demand hereunder or (ii) Agent, at the request or with the consent of
the Required Lenders shall have declared the principal of and interest on the
Loans and other amounts due hereunder to be due and payable as permitted by this
Agreement and even though such Obligations may be contingent or unmatured.
Notwithstanding the foregoing, each of Agent and Lenders agree with each other
that it shall not, without the express consent of the Required Lenders, and that
it shall (to the extent that it is lawfully entitled to do so) upon the request
of the Required Lenders, exercise its setoff rights hereunder against any
accounts of Borrower now or hereafter maintained with Agent, such Lender or any
Affiliate of any of them. If any party (or its Affiliate) exercises the right
of setoff provided for hereunder, such party shall be obligated to share any
such setoff in the manner and to the extent required by Section 11.5.
10.5. REMEDIES CUMULATIVE; NO WAIVER. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Transaction Documents, or in
any document referred to herein or contained in any agreement supplementary
hereto or in any schedule or in any Subsidiary Guaranty given to Agent or
contained in any other agreement between Agent and Borrower, heretofore,
concurrently, or hereafter entered into, shall be deemed cumulative to and not
in derogation or substitution of any of the terms, covenants, conditions, or
agreements of Borrower herein contained. The failure or delay of Agent to
require strict performance by Borrower of any provision of this Agreement or to
exercise or enforce any rights, Liens, powers, or remedies hereunder or under
any of the aforesaid agreements or other documents or security or Collateral
shall not operate as a waiver of such performance, Liens, rights, powers and
remedies, but all such requirements, Liens, rights, powers, and remedies shall
continue in full force and effect until all Loans and all other Obligations
owing or to become owing from Borrower to Agent shall have been fully satisfied.
None of the undertakings, agreements, warranties, covenants and representations
of Borrower contained in this Agreement or any of the other Transaction
Documents and no Event of Default by Borrower under this Agreement or any other
Transaction Documents shall be deemed to have been suspended or waived by Agent,
unless such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Agent
and directed to Borrower.
SECTION 11. AGENT
11.1. APPOINTMENT, AUTHORITY AND DUTIES OF AGENT.
11.1.1. Each Lender hereby irrevocably appoints and designates
Shawmut as Agent to act as herein specified. Agent may, and each Lender by its
acceptance of a Note shall be deemed irrevocably to have authorized Agent to,
enter into all Transaction Documents relating to any Collateral, for its benefit
and the Pro Rata benefit of Lenders, including the Security Documents, the
Superior Canada Security Agreement, the Senior Noteholder Trustee Intercreditor
Agreement, the Subsidiary Collateral Intercreditor Agreement, the Adience Senior
Note Subordination Agreement, and the Canadian Intercreditor Agreement, and,
except as otherwise provided in this Section 11, to exercise such rights and
powers under this Agreement and the other Transaction Documents as are
specifically delegated to Agent by the terms hereof and thereof, together with
such other rights and powers as are reasonably incidental thereto. Each Lender
agrees that any action taken by Agent or the Required Lenders in accordance with
the provisions of this Agreement or the other Transaction Documents, and the
exercise by Agent or the Required Lenders of the power set forth herein or
therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all Lenders. Without limiting the
generality of the foregoing, Agent shall have the sole and exclusive right and
authority to (a) act as the disbursing and collecting agent for Lenders with
respect to all payments and collections arising in connection with this
Agreement and the other Loan Documents; (b) execute and deliver as Agent each
Transaction Document and accept delivery of each such agreement delivered by
Borrower or any other Obligor; (c) act as collateral agent for Lenders for
purposes of the perfection of all security interest and Liens created by such
agreements and, subject to the direction of the Required Lenders, for all other
purposes stated therein, PROVIDED that Agent
(xli)
<PAGE>
hereby appoints, authorizes and directs each of the Lenders to act as collateral
sub-agent for Agent and the other Lenders for purposes of the perfection of all
security interest and Liens with respect to Borrower's or each other Obligor's
Deposit Accounts maintained with, and all cash and Cash Equivalents held by,
such Lender; (d) subject to the direction of the Required Lenders, manage,
supervise or otherwise deal with the Collateral; (e) take such action as is
necessary or desirable to maintain the perfection and priority of the security
interest and Liens created or to be created by the Transaction Documents; and
(f) except as may be otherwise specifically restricted by the terms of this
Agreement and subject to the direction of the Required Lenders, exercise all
remedies given to Agent or Lenders with respect to any of the Collateral under
the Transaction Documents relating thereto, Applicable Law or otherwise.
11.1.2. Agent (which term, as used in this sentence and in Section
11.6 hereof, shall include reference to Agent's Affiliates and to the officers,
directors, employees and agents of Agent's Affiliates) shall not: (a) have any
duties or responsibilities except those expressly set forth in this Agreement
and the other Transaction Documents, and shall not by reason of this Agreement
or any of the other Transaction Documents be a trustee or fiduciary for any
Lender (or any Lender's participants); (b) be responsible to any Lender (or any
Lender's participants) for any recitals, statements, representations or
warranties contained in this Agreement or any of the other Transaction Documents
or in any certificate or other document referred to or provided for in, or
received by any Lender under, this Agreement or any of the other Transaction
Documents, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Collateral, this Agreement or any of the
other Transaction Documents or any other document referred to or provided for
herein or therein, or for any failure by Borrower, any Guarantor or any other
Person (other than Agent) who is at any time a signatory to any of the
Transaction Documents to perform any of its obligations hereunder or thereunder;
(c) be required to initiate or conduct any litigation or collection proceedings
hereunder or under any of the other Transaction Documents except to the extent
directed to do so by the Required Lenders during the continuance of any Event of
Default; or (d) be responsible for any action taken or omitted to be taken
hereunder or under any of the other Transaction Documents or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own willful misconduct or gross
negligence.
11.1.3. Agent may perform any of its duties by or through its agents
and employees and may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Borrower shall promptly
(and in any event, on demand) reimburse Agent for all reasonable expenses
(including all Extraordinary Expenses) incurred by Agent pursuant to any of the
provisions hereof or of any of the other Transaction Documents or in the
execution of any of Agent's duties hereby or thereby created or in the exercise
of any right or power herein or therein imposed or conferred upon it or Lenders
(excluding, however, general overhead expenses), and each Lender agrees promptly
to pay to Agent, ON DEMAND, such Lender's Pro Rata share of any such
reimbursement for expenses (including Extraordinary Expenses) that is not timely
made by Borrower to Agent.
11.1.4. The rights, remedies, powers and privileges conferred upon
Agent hereunder and under the other Transaction Documents may be exercised by
Agent without the necessity of the joinder of any other parties unless otherwise
required by Applicable Law. If Agent shall request instructions from the
Required Lenders with respect to any act or action (including the failure to
act) in connection with this Agreement or any of the other Transaction
Documents, Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from the Required
Lenders; and Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder or under any of the Transaction Documents in accordance with
the instructions of the Required Lenders.
11.1.5. Agent shall promptly, upon receipt thereof, forward to each
Lender copies of any written notices, reports, certificates and other
information received by Agent from Borrower or any Guarantor (to the extent
Borrower or such Guarantor is not required to supply directly to Lenders) and
copies of the results of any field audits by Agent with respect to Borrower, any
Guarantor or any Borrower Subsidiary that is not a Guarantor. Agent shall
conduct field audits of Borrower or any Borrower Subsidiary at any time or times
reasonably requested by any Lender (but in no event shall Agent be obliged to
honor such requests more frequently than twice a calendar year unless a Default
or Event of Default exists).
11.2. COLLATERAL INTERESTS. Each Lender shall have a Pro Rata interest
in the security interests and Liens in and to the Borrower Collateral, all
Borrower Subsidiary Collateral, all Superior Canada Collateral and any other
Property granted and assigned to Agent under the Transaction Documents.
11.3. RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in so relying, upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram, telecopier
message or cable) believed by it to be genuine and correct and to have been
signed, sent or made by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
(xlii)
<PAGE>
experts selected by Agent. As to any matters not expressly provided for by this
Agreement or any of the other Transaction Documents, Agent shall in all cases be
fully protected in acting or refraining from acting hereunder and thereunder in
accordance with the instructions of the Required Lenders, and such instructions
of the Required Lenders and any action taken or failure to act pursuant thereto
shall be binding upon Lenders.
11.4. ACTION UPON DEFAULT. Agent shall not be deemed to have knowledge
of the occurrence of a Default or an Event of Default unless it has received
notice from a Lender or Borrower specifying the occurrence of such Default or
Event of Default. If Agent shall receive such a notice of the occurrence of a
Default or an Event of Default or shall otherwise acquire actual knowledge of
any Default or Event of Default, Agent shall promptly notify Lenders in writing
and Agent shall take such action and assert such rights under this Agreement and
the other Transaction Documents, or shall refrain from taking such action and
asserting such rights, as the Required Lenders shall direct from time to time.
As provided in Section 11.3 hereof, Agent shall not be subject to any liability
by reason of acting or refraining to act pursuant to any request of the Required
Lenders except for its own willful misconduct or gross negligence. Before
directing Agent to take or refrain from taking any action or asserting any
rights under this Agreement and the other Transaction Documents, the Required
Lenders shall consult with and seek the advice of (but without having to obtain
the consent of) each other Lender, and promptly after directing Agent to take or
refrain from taking any such action or asserting any such rights, the Required
Lenders will so advise each other Lender of the action taken or refrained from
being taken and, upon request of any Lender, will supply information concerning
actions taken or not taken. In no event shall the Required Lenders, without the
prior written consent of each Lender, direct Agent to accelerate and demand
payment of one Loan without accelerating and demanding payment of all other
Loans. Each Lender agrees that it will not take any legal action, nor will it
institute any action or proceeding, against Borrower or any other Obligor with
respect to any of the Loans or with respect to any Collateral, without the prior
written consent of the Required Lenders and, without limiting the generality of
the foregoing, no Lender may accelerate or otherwise enforce its portion of the
Obligations or unilaterally terminate its Commitment.
11.5. RATABLE SHARING. If any Lender shall obtain any payment or
reduction (including any amounts received as adequate protection of a deposit
treated as cash collateral under the Bankruptcy Code) of any Obligation of
Borrower hereunder (whether voluntary, involuntary, through the exercise of any
right of set-off or otherwise) in excess of its Pro Rata share of payments or
reductions on account of such Obligations obtained by all of the Lenders, such
Lender shall forthwith (i) notify the other Lenders and Agent of such receipt
and (ii) purchase from the other Lenders such participations in the affected
Obligations as shall be necessary to cause such purchasing Lender to share the
excess payment or reduction, net of costs incurred in connection therewith, on a
Pro Rata basis, provided that if all or any portion of such excess payment or
reduction is thereafter recovered from such purchasing Lender or additional
costs are incurred, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery or such additional costs, but without
interest. Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 11.5 may, to the fullest extent
permitted by Applicable Law, exercise all of its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
11.6. INDEMNIFICATION OF AGENT.
11.6.1. Each Lender agrees to indemnify Agent in its capacity as
agent hereunder (to the extent not reimbursed by Borrower under this Agreement,
but without limiting the indemnification obligation of Borrower under this
Agreement), on a Pro Rata basis, from and against any and all claims, demands,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever (including
reasonable attorneys' fees and expenses) which may be imposed on, incurred by
or asserted against Agent in any way related to or arising out of this Agreement
or any of the other Transaction Documents or any other document contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby (including the costs and expenses which Borrower is obligated to pay
under Section 13.2 hereof) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable
to Agent for any of the foregoing to the extent that they result solely from the
willful misconduct or gross negligence of Agent.
11.6.2. Without limiting the generality of the foregoing provisions
of this Section 11.6, if Agent should be sued by any receiver, trustee in
bankruptcy, debtor-in-possession or other Person on account of any alleged
preference or fraudulent transfer received or alleged to have been received from
Borrower or any other Obligor as the result of any transaction under the
Transaction Documents, then in such event any monies paid by Agent in settlement
or satisfaction of such suit, together with all Extraordinary Expenses incurred
by Agent in the defense of same, shall be promptly reimbursed to Agent by
Lenders to the extent of each Lender's Pro Rata share.
11.6.3. Without limiting the generality of the foregoing provisions
of this Section 11.6, if at any time (whether prior to or after the Commitment
Termination Date) any action or proceeding shall be brought against Agent by
Borrower or by any other Person claiming by, through or
(xliii)
<PAGE>
under Borrower or any other Obligor, to recover damages for any act taken or
omitted by Agent under any of the Transaction Documents or in the performance of
any rights, powers or remedies of Agent against Borrower, any Account Debtor,
the Collateral or with respect to any Revolver Loans, or to obtain any other
relief of any kind on account of any transaction between Agent and Borrower
under or in relation to any of the Transaction Documents, Lenders agree to
indemnify and hold Agent harmless with respect thereto and to pay to Agent their
respective Pro Rata shares of such amount as Agent shall be required to pay by
reason of a judgment, decree, or other order entered in such action or
proceeding or by reason of any compromise or settlement agreed to by Agent,
including all interest and costs assessed against Agent in defending or
compromising such action, together with attorneys' fees and other legal expenses
paid or incurred by Agent in connection therewith; PROVIDED, HOWEVER, that no
Lender shall be liable to Agent for any of the foregoing to the extent that they
arise solely from the willful misconduct or gross negligence of Agent. In
Agent's discretion, Agent may also reserve for or satisfy any such judgment,
decree or order from proceeds of Collateral prior to any distributions therefrom
to or for the account of Lenders.
11.7. LIMITATION ON RESPONSIBILITIES OF AGENT. Agent shall in all
cases be fully justified in failing or refusing to act hereunder unless it shall
have received further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 11.6 hereof against any and all
liability and expense which may be incurred by Agent by reason of taking or
continuing to take any such action. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders (or any Lender's
participants) for any action lawfully taken or omitted to be taken under or in
connection with this Agreement or the other Transaction Documents except as a
result of actual gross negligence or willful misconduct on the part of Agent.
Agent does not assume any responsibility for any failure or delay in performance
or breach by any Obligor or any Lender of its obligations under this Agreement
or any of the other Transaction Documents. Agent does not make to Lenders, and
no Lender makes to Agent or the other Lenders, any express or implied warranty,
representation or guarantee with respect to the Revolver Loans, the Collateral,
the Transaction Documents or any Obligor. Agent shall not be responsible to
Lenders, and no Lender shall be responsible to Agent or the other Lenders, for:
(i) any recitals, statements, information, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of, any of the Transaction Documents; (ii) the validity,
genuineness, enforceability, collectibility, value or sufficiency of the
Collateral, or the perfection of any Lien therein; or (iii) the assets,
liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor or any Account Debtor. Agent
shall be entitled to act, and shall be fully protected in acting upon, any
certification, notice or other communication in whatever form believed by Agent,
in good faith, to be genuine and correct and to have been signed or sent or made
by a proper Person. Agent shall have no obligation to any Lender to ascertain
or inquire as to the observance or performance by any Obligor of any of the
duties or agreements of such Obligor under any of the Transaction Documents.
Agent may consult with and employ legal counsel, accountants and other experts
and shall be entitled to act upon, and shall be fully protected in any action
taken in good faith reliance upon, any advice given by such experts. Agent may
employ agents and attorneys-in-fact and shall not be liable for the negligence,
default or misconduct of any such agents or attorney-in-fact selected by Agent
with reasonable care.
11.8. SUCCESSOR AGENT AND CO-AGENTS.
11.8.1. Subject to the appointment and acceptance of a successor
Agent as provided below, Agent may resign at any time by giving written notice
thereof to each Lender and Borrower. Upon any such resignation, the Required
Lenders, after prior consultation with (but without having to obtain consent of)
each Lender, shall have the right to appoint a successor Agent which shall be a
financial institution organized under the laws of the United States or of any
State thereof, shall have a combined capital surplus of at least $50,000,000 and
shall be reasonably acceptable to Borrower (and for purposes hereof, any
successor to Shawmut or any of the other existing Lenders shall be acceptable to
Borrower). Upon the acceptance of any appointment as an Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent. Notwithstanding anything to the contrary contained in this Agreement,
any successor by merger or acquisition of the stock or assets of Shawmut shall
continue to be Agent hereunder unless such successor shall resign in accordance
with the provisions hereof.
11.8.2. It is the purpose of this Agreement that there shall be no
violation of any Applicable Law denying or restricting the right of financial
institutions to transact business as agent in any jurisdiction. It is
recognized that, in case of litigation under any of the Transaction Documents,
or in case Agent deems that by reason of present or future laws of any
jurisdiction Agent might be prohibited from exercising any of the powers, rights
or remedies granted to Agent or Lenders hereunder or under any of the
Transaction Documents or from holding title to or a Lien upon any Collateral or
any Subsidiary Collateral or from taking any other action which may be necessary
hereunder or under any of the Transaction Documents, Agent may appoint an
additional individual or institution as a separate collateral agent or co-
collateral agent which is not so prohibited from taking any of such actions or
exercising any of such powers, rights or remedies. If Agent shall appoint an
additional individual or institution as a separate collateral agent or co-
collateral agent as provided above, each and every remedy, power, right, claim,
demand or cause of action intended by any of the Transaction Documents to be
exercised by or
(xliv)
<PAGE>
vested in or conveyed to Agent with respect thereto shall be exercisable by and
vested in such separate collateral agent or co-collateral agent, but only to the
extent necessary to enable such separate collateral agent or co-collateral agent
to exercise such powers, rights and remedies, and every covenant and obligation
necessary to the exercise thereof by such separate collateral agent or co-
collateral agent shall run to and be enforceable by either of them. Should any
instrument from Lenders be required by the separate collateral agent or co-
collateral agent so appointed by Agent in order more fully and certainly to vest
in and confirm to him or it such rights, powers, duties and obligations, any and
all of such instruments shall, on request, be executed, acknowledged and
delivered by Lenders. In case any separate collateral agent or co-collateral
agent, or a successor to either, shall die, become incapable of acting, resign
or be removed, all the estates, properties, rights, powers, duties and
obligations of such separate collateral agent or co-collateral agent, so far as
permitted by Applicable Law, shall vest in and be exercised by the Agent until
the appointment of a new collateral agent or successor to such separate
collateral agent or co-collateral agent.
11.9. CONSENTS, AMENDMENTS AND WAIVERS UNDER TRANSACTION DOCUMENTS.
11.9.1. Without the prior written consent of all Lenders, (i) Agent
shall not release any material portion of the Borrower Collateral or Subsidiary
Collateral from the Liens of the Security Documents, except as expressly
contemplated in the Transaction Documents, in connection with a sale that is
authorized by the Transaction Documents or upon final and indefeasible payment
in full of the Obligations and termination of the Commitments; and (ii) neither
Agent nor any Lender shall consent to any amendment that would (a) alter the
provisions of Section 2.6, 2.7, 2.8, 2.9, 4.1, this Section 11 or Section 13.2,
the definitions of "Availability Reserve," "Borrowing Base," "Pro Rata,"
"Required Lenders" or any provision of this Agreement obligating Agent to take
certain actions at the direction of the Required Lenders, or any provision of
this Agreement regarding the Pro Rata treatment or obligations of Lenders (b)
increase or otherwise modify the Commitments (other than to reduce
proportionately each Lender's Commitment in connection with any overall
reduction in the amount of the Commitments), (c) alter or amend the rate of
interest payable in respect of the Loans (except as may be expressly authorized
by the Transaction Documents or as may be necessary, in Agent's judgement, to
comply with Applicable Law), (d) waive or agree to defer collection of any fee,
termination charge or other charge provided for under any of the Transaction
Documents (except to the extent that the Required Lenders agree after and during
the continuance of any Event of Default to a waiver or deferral of any
termination charge provided for in Section 4.2.3 hereof) or the unused line fee
in Section 2.2.3 hereof, (e) subordinate the payment of any of the Obligations
to any other Indebtedness or the priority of any Liens granted to Agent under
any of the Transaction Documents to Liens granted to any other Person, except as
currently provided in or contemplated by the Transaction Documents, in
connection with Borrower's incurrence of Permitted Purchase Money Indebtedness,
and except for Liens granted by an Obligor to financial institutions with
respect to amounts on deposit with such financial institutions to cover returned
items, processing and analysis charges and other charges in the ordinary course
of business that relate to deposit accounts with such financial institutions,
(f) alter the time or amount of repayment of any of the Loans or waive any Event
of Default resulting from nonpayment of the Loans on the due date thereof (or
within any applicable period of grace), or (g) forgive any of the Obligations,
except any portion of the Obligations held by a Lender who consents in writing
to such forgiveness. Notwithstanding the foregoing or any other provision in
this Agreement, Agent shall have the exclusive right to determine whether any
Accounts or Inventory constitute Eligible Accounts or Eligible Inventory (basing
such determination in each case upon the meanings given to such terms in
Appendix A), or whether to impose or release any reserve (other than the
permanent $5,000,000 stated reserve in the definition of Availability Reserve,
the release or reduction of which shall require the consent of all Lenders), and
to exercise its own credit judgment in connection therewith, which judgment, if
exercised in good faith, shall exonerate Agent from any liability to Lenders or
any other Person for any errors in judgment.
11.9.2. Agent may with the consent, and shall at the direction, of
the Required Lenders (i) become a party with an Obligor and the Required Lenders
to any amendment to any of the Transaction Documents, except for amendments
concerning which the prior written consent of all Lenders is required under
Section 11.9.1 hereof; and (ii) except for Events of Default resulting from
nonpayment on the due date thereof (or within any applicable period of grace) of
any principal or interest on the Loans or any other Obligations (including those
payable on demand), join with the Required Lenders in waiving any Default or
Event of Default whether or not resulting from an Obligor's default in observing
or performing any covenant in the Transaction Documents that may not be amended
without the prior consent of all Lenders as provided in Section 11.9.1.
11.9.3. Unless otherwise directed by the Required Lenders, Agent may
require Lenders to honor requests by Borrower for Out-of-Formula Loans (in which
event, and notwithstanding anything to the contrary set forth in this Agreement,
Lenders shall continue to make Revolver Loans up to their Pro Rata share of the
Commitments) and to forbear from requiring Borrower to cure an Out-of-Formula
Condition, (1) when no Event of Default exists (or if an Event of Default
exists, when the existence of such Event of Default is not known), if and for so
long as (i) such Out-of-Formula Condition does not continue for a period of more
than 15 consecutive days, following which no Out-of-Formula Condition exists for
at least 15 consecutive days before another Out-of-Formula Condition exists,
(ii) the amount of the Revolver Loans outstanding at any time does not exceed
the aggregate of the Commitments at such time, and (iii) the Out-of-Formula
Condition is not known by Agent at the time in question to exceed $2,000,000;
and (2) regardless of whether or
(xlv)
<PAGE>
not an Event of Default exists, if Agent discovers the existence of an Out-of-
Formula Condition not previously known by it to exist, but Lenders shall be
obligated to continue making such Revolver Loans as directed by Agent only (A)
if the amount of the Out-of-Formula Condition is not increased by more than
$2,000,000 above the amount determined by Agent to exist on the date of
discovery thereof and (B) for a period not to exceed 5 Business Days.
11.9.4. No Lender shall be authorized to amend or modify any Note
held by it, or to give or withhold waivers with respect thereto (including any
waiver of an Event of Default thereunder), unless such amendment, modification
or waiver is consented to in writing by all Lenders.
11.9.5. Notwithstanding anything to the contrary contained in this
Agreement, the Required Lenders shall have the right to waive any Default or
Event of Default and the consequences hereunder of such Default or Event of
Default and shall have the right to enter into an agreement with Borrower or any
Guarantor providing for the forbearance from the exercise of any remedies
provided hereunder or under any of the other Transaction Documents without
waiving any such Default or Event of Default. The making of any Revolver Loans
hereunder by any Lender during the existence of a Default or Event of Default
shall not be deemed to constitute a waiver of such Default or Event of Default.
Any waiver or consent granted by the Required Lenders hereunder shall be
effective only if in writing and then only in the specific instance and for the
specific purpose for which it was given.
11.10. DUE DILIGENCE AND NON-RELIANCE. Each Lender hereby acknowledges
and represents that it has, independently and without reliance upon Agent or the
other Lenders, and based upon such documents and information as it has deemed
appropriate, made its own credit analysis of each Obligor and its own decision
to enter into this Agreement, to fund the Loans to be made by it hereunder and
to purchase participations in the Reimbursement Obligations pursuant to Section
1.2.2 hereof, and each Lender has made such inquiries concerning this Agreement,
the other Transaction Documents, any of the Collateral and each Obligor as such
Lender feels necessary and appropriate, and has taken such care on its own
behalf as would have been the case had it entered into this Agreement and the
other Transaction Documents without the intervention or participation of the
other Lenders or Agent. Each Lender hereby further acknowledges and represents
that the other Lenders and Agent have not made any representations or warranties
to it concerning any Obligor, any of the Collateral or with respect to the
legality, validity, sufficiency or enforceability of this Agreement or any of
the other Transaction Documents. Each Lender also hereby acknowledges that it
will, independently and without reliance upon the other Lenders or Agent, and
based upon such financial statements, documents and information as it deems
appropriate at the time, continue to make and rely upon its own credit decisions
in making Loans and in taking or refraining to take any other action under this
Agreement or any of the other Transaction Documents. Except for notices,
reports and other information expressly required to be furnished to Lenders by
Agent hereunder, Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition, business or Properties of any Obligor (or any of its affiliates)
which may come into possession of Agent or any of Agent's Affiliates.
11.11. REPRESENTATIONS AND WARRANTIES OF LENDERS. By its execution of
this Agreement, each Lender hereby represents and warrants to Borrower and the
other Lenders that it has the power to enter into and perform its obligations
under this Agreement and the other Transaction Documents, and that it has taken
all necessary and appropriate action to authorize its execution and performance
of this Agreement and the other Transaction Documents will be binding upon it
and the obligations imposed upon it herein or therein will be enforceable
against it in accordance with the respective terms of such documents.
11.12. THE REQUIRED LENDERS. As to any provisions of this Agreement or
the other Transaction Documents under which action may or is required to be
taken upon direction or approval of the Required Lenders, the direction or
approval of the Required Lenders shall be binding upon each Lender to the same
extent and with the same effect as if each Lender had joined therein.
11.13. SEVERAL OBLIGATIONS. The obligations and commitments of each
Lender under this Agreement and the other Transaction Documents are several and
neither Agent nor any Lender shall be responsible for the performance by the
other Lenders of its obligations or commitments hereunder or thereunder.
Notwithstanding any liability of Lenders stated to be joint and several to third
Persons under any of the Transaction Documents, such liability shall be shared,
as among Lenders, Pro Rata according to the respective Commitments of Lenders.
11.14. AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its obligation
to lend under this Agreement, the Loans made by it and the Notes issued to it,
Agent shall have the same rights and powers hereunder and under the other
Transaction Documents as any other Lender or holder of a Note and may exercise
the same as though it were not performing the duties specified herein; and the
terms "Lenders," "Required Lenders," or any similar term shall, unless the
context clearly otherwise indicates, include Agent in its capacity as a Lender.
(xlvi)
<PAGE>
11.15. THIRD PARTY BENEFICIARIES. This Section 11 is not intended to
confer any rights or benefits upon Borrower or any other Person except Lenders
and Agent, and no Person (including Borrower) other than Lenders and Agent shall
have any right to enforce any of the provisions of this Section 11 except as
expressly provided in Section 11.17 hereof. As between Borrower and Agent, any
action that Agent may take or purport to take on behalf of Lenders shall be
conclusively presumed to have been authorized and approved by Lenders as herein
provided.
11.16. NOTICE OF TRANSFER. Agent may deem and treat a Lender party to
this Agreement as the owner of such Lender's portion of the Revolver Loans for
all purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Lender has been received by Agent.
11.17. REPLACEMENT OF CERTAIN LENDERS. If a Lender ("Affected Lender")
shall have (i) failed to fund its Pro Rata share of any Revolver Loan requested
by Borrower which such Lender is obligated to fund under the terms of this
Agreement and which such failure has not been cured, (ii) requested compensation
from Borrower under Section 2.7 to recover increased costs incurred by such
Lender (or its parent or holding company) which are not being incurred generally
by the other Lenders (or their respective parents or holding companies), or
(iii) delivered a notice pursuant to Section 2.6 hereof claiming that such
Lender is unable to extend LIBOR Rate Advances to Borrower for reasons not
generally applicable to the other Lenders, then, in any such case and in
addition to any other rights and remedies that Agent, any other Lender or
Borrower may have against such Affected Lender, Borrower or Agent may make
written demand on such Affected Lender (with a copy to Agent in the case of a
demand by Borrower and a copy to Borrower in the case of a demand by Agent) for
the Affected Lender to assign, and such Affected Lender shall assign pursuant to
one or more duly executed Assignment and Acceptances within 5 Business Days
after the date of such demand, to one or more Lenders willing to accept such
assignment or assignments, or to one or more Eligible Assignees designated by
Agent, all of such Affected Lender's rights and obligations under this Agreement
(including its Commitments and all Revolver Loans owing to it) in accordance
with Section 12 hereof. Agent is hereby irrevocably authorized to execute one
or more Assignment and Acceptances as attorney-in-fact for any Affected Lender
which fails or refuses to execute and deliver the same within 5 Business Days
after the date of such demand. The Affected Lender shall be entitled to
receive, in cash and concurrently with execution and delivery of each such
Assignment and Acceptance, all amounts owed to the Affected Lender hereunder or
under any other Loan Document, including the aggregate outstanding principal
amount of the Revolver Loans owed to such Lender, together with accrued interest
thereon through the date of such assignment. Upon the replacement of any
Affected Lender pursuant to this Section 11.17, such Affected Lender shall cease
to have any participation in, entitlement to, or other right to share in the
Liens of Agent in any Collateral and such Affected Lender shall have no further
liability to Agent, any Lender or any other Person under any of the Transaction
Documents (except as provided in Section 11.6 hereof as to events or
transactions which occur prior to the replacement of such Affected Lender),
including any commitment to make loans or purchase participations in
Reimbursement Obligations.
11.18. REMITTANCE OF PAYMENTS AND COLLECTIONS.
11.18.1. All payments by any Lender to Agent shall be made not later
than the time set forth elsewhere in this Agreement on the Business Day such
payment is due; PROVIDED, HOWEVER, that if such payment is due on demand by
Agent and such demand is made on the paying Lender after 10:00 a.m. (Atlanta
time) on such Business Day, then payment shall be made by 2:00 p.m. (Atlanta
time) on the next Business Day. Payment by Agent to any Lender shall be made by
wire transfer, promptly following Agent's receipt of funds for the account of
such Lender and in the type of funds received by Agent; PROVIDED, HOWEVER, that
if Agent receives such funds at or prior to 1:00 p.m. (Atlanta time), Agent
shall pay such funds to such Lender by 2:00 p.m. (Atlanta time) on such Business
Day, but if Agent receives such funds after 1:00 p.m. (Atlanta time), Agent
shall pay such funds to such Lender by 2:00 p.m. (Atlanta time) on the next
Business Day.
11.18.2. If a Lender shall, at any time, fail to make any payment to
Agent required hereunder, Agent may, but shall not be required to, retain
payments that would otherwise be made to Lender hereunder and apply such
payments to such Lender's defaulted obligations hereunder, at such time or
times, and in such order, as Agent may elect in its sole discretion.
11.18.3. With respect to the payment of any funds under this Section
11.18, whether from Agent to a Lender or from a Lender to Agent, the party
failing to make full payment when due pursuant to the terms hereof shall, upon
demand by the other party, pay such amount together with interest thereon at the
Federal Funds Rate. In no event shall Borrower be entitled to receive any
credit for any interest paid by Agent to any Lender, or by any Lender to Agent,
at the Federal Funds Rate as provided herein.
SECTION 12. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
(xlvii)
<PAGE>
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of Borrower, Agent and
Lenders and their respective successors and assigns (which, in the case of
Agent, shall include any successor Agent appointed pursuant to Section 11.8
hereof), except that (i) Borrower shall not have the right to assign its rights
or obligations under this Agreement or any of the other Transaction Documents
and (ii) any assignment by any Lender must be made in compliance with Section
12.3 hereof. Notwithstanding clause (ii) of this Section 12.1, any Lender may
at any time, without the consent of Borrower or Agent, assign all or any portion
of its rights under this Agreement and its Notes to a Federal Reserve Bank;
PROVIDED, HOWEVER, that no such assignment shall release the transferor Lender
from its obligations hereunder. Agent may treat the payee of any Note as the
owner thereof for all purposes hereof unless and until such payee complies with
Section 12.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of this Agreement and all of the other Transaction Documents.
Any requests, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
12.2. PARTICIPATIONS.
12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the
ordinary course of its business and in accordance with Applicable Law, at any
time sell to one or more banks or other financial institutions (each a
"Participant") participating interest in any of the Obligations owing to such
Lender, any Commitment of such Lender or any other interest of such Lender under
any of the Transaction Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under the
Transaction Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Lender shall remain the holder of any Note for all purposes under the
Transaction Documents, all amounts payable by Borrower under this Agreement and
any of the Notes shall be determined as if such Lender had not sold such
participating interests, and Borrower and Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under the Transaction Documents. If a Lender sells a participation
to a Person other than an Affiliate of such Lender, then such Lender shall give
prompt written notice thereof to Borrower and the other Lenders.
12.2.2. VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Transaction Documents other than an amendment,
modification or waiver with respect to any Revolver Loan or Commitment in which
such Participant has an interest which forgives principal, interest or fees or
reduces the stated interest rate or the stated rates at which fees are payable
with respect to any such Loan or Commitment, postpones the Commitment
Termination Date, or any date fixed for any regularly scheduled payment of
interest or fees on such Revolver Loan or Commitment, or releases from liability
Borrower or any Guarantor or releases any substantial portion of any of the
Collateral.
12.2.3. BENEFIT OF SET-OFF. Borrower agrees that each Participant
shall be deemed to have the right of set-off provided in Section 10.4 hereof in
respect of its participating interest in amounts owing under the Transaction
Documents to the same extent and subject to the same requirements under this
Agreement (including Section 11.5) as if the amount of its participating
interest were owing directly to it as a Lender under the Transaction Documents,
provided that each Lender shall retain the right of set-off provided in Section
10.4 hereof with respect to the amount of participating interests sold to each
Participant. Lenders agree to share with each Participant, and each Participant
by exercising the right of set-off provided in Section 10.4 agrees to share with
each Lender, any amount received pursuant to the exercise of its right of set-
off, such amounts to be shared in accordance with Section 11.5 hereof as if each
Participant were a Lender.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary
course of its business and in accordance with Applicable Law, at any time assign
to any Eligible Assignee all or any part of its rights and obligations under the
Transaction Documents, so long as (i) each assignment is of a constant, and not
a varying, ratable percentage of all of the transferor Lender's rights and
obligations under the Transaction Documents with respect to the Revolver Loans
and the Reimbursement Obligations and, in the case of a partial assignment, is
in a minimum principal amount of $5,000,000 and integral multiples of $1,000,000
in excess of that amount; (ii) except in the case of an assignment in whole of a
Lender's rights and obligations under the Transaction Documents or an assignment
by one original signatory to this Agreement to another such signatory,
immediately after giving effect to any assignment, the aggregate amount of the
Commitments retained by the transferor Lender shall in no event be less than
$5,000,000; and (iii) the parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording, an Assignment and
Acceptance. The consent of Agent shall be required prior to an assignment
becoming effective with respect to an Eligible Assignee which is not a Lender or
an Affiliate of a Lender, and such assignment
(xlviii)
<PAGE>
shall not become effective until such time as notice thereof is given to
Borrower and Agent in substantially the form of EXHIBIT S attached hereto, but
nothing contained herein shall limit in any way the right of Lenders to assign
to any Eligible Assignee all of their rights and obligations under the
Transaction Documents.
12.3.2. EFFECT; EFFECTIVE DATE. Upon (i) delivery to Agent of a
notice of assignment substantially in the form attached as EXHIBIT R hereto,
together with any consents required by Section 12.3.1, and (ii) payment of a
$3,000 fee to the Agent for processing any assignment to an Eligible Assignee
that is not an Affiliate of the transferor Lender, such assignment shall become
effective on the effective date specified in such notice of assignment. On and
after the effective date of such assignment, such Eligible Assignee shall for
all purposes be a Lender party to the Agreement and any other Loan Document
executed by the Lenders and shall have all the rights and obligations of the
Lender under the Transaction Documents to the same extent as if it were an
original party thereto, and no further consent or action by Borrower, Lenders or
Agent shall be required to release the transferor Lender with respect to the
Commitment (or portion thereof) of such Lender and Obligations assigned to such
Eligible Assignee. Upon the consummation of any assignment to an Eligible
Assignee pursuant to this Section 12.3.2, the transferor Lender, Agent and
Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Eligible Assignee, in each case in principal amounts
reflecting their respective Commitments, as adjusted pursuant to such
assignment.
12.3.3. DISSEMINATION OF INFORMATION. Borrower authorizes each
Lender and Agent to disclose to any Participant, any Eligible Assignee or any
other Person acquiring an interest in the Transaction Documents by operation of
law (each a "Transferee"), and any prospective Transferee, any and all
information in Agent's or such Lender's possession concerning Borrower, the
Subsidiaries or the Collateral, subject to appropriate confidentiality
undertakings on the part of such Transferee.
12.4. CERTAIN RESTRICTIONS ON ASSIGNMENTS AND PARTICIPATIONS.
Notwithstanding anything to the contrary contained in Section 12.2 or 12.3
hereof, in no event shall Shawmut assign or sell participations in any of its
Commitment during the first 12 months following the date hereof if the effect of
any such assignment or participation would result in Shawmut owning and
controlling, both beneficially and legally, less than $35,000,000 of the total
Commitments; and in no event shall any Lender (including Shawmut) assign less
than all of its Commitment or sell participations in its Commitment if the
effect of any such assignment or participation would result in such Lender
owning and controlling, both beneficially and legally, less than $15,000,000 of
the total Commitments.
12.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee that is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 3.8 hereof.
SECTION 13. MISCELLANEOUS
13.1. POWER OF ATTORNEY. Borrower hereby irrevocably designates,
makes, constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's
designee, may, without notice to Borrower and in either Borrower's or Agent's
name, but at the cost and expense of Borrower:
13.1.1. At such time or times as Agent or said designee, in its
sole discretion, may determine, endorse Borrower's or a Borrower Subsidiary's
name on any Payment Item or proceeds of the Collateral which come into the
possession of Agent or under Agent's control.
13.1.2. At such time or times upon or after the occurrence of
an Event of Default as Agent or Agent's designee in its sole discretion may
determine: (i) demand payment of the Accounts from the Account Debtors, enforce
payment of the Accounts by legal proceedings or otherwise, and generally
exercise all of Borrower's rights and remedies with respect to the collection of
the Accounts; (ii) settle, adjust, compromise, discharge or release any of the
Accounts or other Collateral or any legal proceedings brought to collect any of
the Accounts or other Collateral; (iii) sell or assign any of the Accounts and
other Collateral upon such terms, for such amounts and at such time or times as
Agent deems advisable; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of Lien or similar
document in connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to Borrower and to notify postal authorities to
change the address for delivery thereof to such address as Agent may designate;
(vii) endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Agent on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice,
(xlix)
<PAGE>
freight bill, bill of lading or similar document or agreement relating to any
Accounts or Inventory of any Obligor and any other Collateral; (ix) use
Borrower's stationery and sign the name of Borrower to verifications of the
Accounts and notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and computer hardware
and software relating to the Accounts, Inventory, Equipment and any other
Collateral; (xi) make and adjust claims under policies of insurance; and (xii)
do all other acts and things necessary, in Agent's determination, to fulfill
Borrower's obligations under this Agreement.
13.2. GENERAL INDEMNITY. Borrower hereby agrees to indemnify Agent and
each Lender and hold Agent and each Lender harmless from and against any
liability, loss, damage, suit, action or proceeding ever suffered or incurred by
Agent or such Lender (including reasonable attorneys' fees and legal expenses)
as the result of Borrower's failure to observe, perform or discharge Borrower's
duties hereunder. In addition, Borrower shall defend Agent and each Lender
against and save Agent and each Lender harmless from all claims of any Person
with respect to the Collateral. Without limiting the generality of the
foregoing, these indemnities shall extend to any claims asserted against Agent
and each Lender by any Person under any Environmental Laws or similar laws by
reason of Borrower's or any other Person's failure to comply with laws
applicable to solid or hazardous waste materials or other toxic substances.
Additionally, if any Taxes (excluding Taxes imposed upon or measured solely by
the net income of Agent and Lenders, but including, any intangibles tax, stamp
tax, recording tax or franchise tax) shall be payable by Agent, any Lender,
Borrower or any Guarantor on account of the execution or delivery of this
Agreement, or the execution, delivery, issuance or recording of any of the other
Transaction Documents, or the creation of any of the Obligations hereunder, by
reason of any existing or hereafter enacted federal, state, foreign or local
statute, rule or regulation, Borrower will pay (or will promptly reimburse Agent
and Lenders for the payment of) all such taxes, including any interest and
penalties thereon, and will indemnify and hold Agent and Lenders harmless from
and against liability in connection therewith.
13.3. SURVIVAL OF ALL INDEMNITIES. Notwithstanding anything to the
contrary in this Agreement, the obligation of Borrower and each Lender with
respect to each indemnity given by it in this Agreement shall survive the
payment in full of the Obligations and the termination of the Commitments.
13.4. MODIFICATION OF AGREEMENT. This Agreement may not be modified,
altered or amended, except by an agreement in writing signed by Borrower, Agent
and Lenders (or, where otherwise allowed by Section 11 hereof, the Required
Lenders); PROVIDED, HOWEVER, that no consent, written or otherwise, of Borrower
shall be necessary or required in connection with any amendment of any of the
provisions of Section 11 or any other provision of this Agreement that affects
only the rights, duties and responsibilities of Lenders and Agent as among
themselves so long as no such amendment imposes any additional obligations on
Borrower.
13.5. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
13.6. CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the
Other Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2
hereof and except as otherwise provided in any of the other Transaction
Documents by specific reference to the applicable provision of this Agreement,
if any provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Transaction Documents, the
provision contained in this Agreement shall govern and control.
13.7. EXECUTION IN COUNTERPARTS. This Agreement and any amendments
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which counterparts taken together
shall constitute but one and the same instrument.
13.8. AGENT'S OR REQUIRED LENDERS' CONSENT. Whenever Agent's or
Required Lenders' consent is required to be obtained under this Agreement or any
of the other Transaction Documents as a condition to any action, inaction,
condition or event, Agent and each Lender shall be authorized to give or
withhold its consent in its sole and absolute discretion and to condition its
consent upon the giving of additional collateral security for the Obligations,
the payment of money or any other matter.
13.9. NOTICE. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, personal delivery against receipt or by telecopier or
other facsimile transmission and shall be deemed to have been validly served,
given or delivered when delivered against receipt or 3 Business Days after
deposit in the U.S. mail, postage prepaid, or, in the case of facsimile
transmission, when received (if on a Business Day and, if not received on a
Business Day, then on the next Business Day after receipt) at the office where
the noticed
(l)
<PAGE>
party's telecopier is located, addressed to the noticed party at the address
shown for such party on the signature page hereof or, in the case of a Person
who becomes a Lender after the date hereof, at the address shown on the
Assignment and Acceptance by which such Person became a Lender. Any written
notice or demand that is not sent in conformity with the provisions hereof shall
nevertheless be effective on the date that such notice is actually received by
the noticed party.
13.10. CREDIT INQUIRIES. Borrower hereby authorizes and permits Agent
and Lenders (but Agent and Lenders shall have no obligation) to respond to usual
and customary credit inquiries from third parties concerning Borrower or any
Subsidiaries.
13.11. TIME OF ESSENCE. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
13.12. ENTIRE AGREEMENT; APPENDIX A AND EXHIBITS. This Agreement and
the other Transaction Documents, together with all other instruments, agreements
and certificates executed by the parties in connection therewith or with
reference thereto, embody the entire understanding and agreement between the
parties hereto and thereto with respect to the subject matter hereof and thereof
and supersede all prior agreements, understandings and inducements, whether
express or implied, oral or written. Appendix A and each of the Exhibits
attached hereto are incorporated into this Agreement and by this reference made
a part hereof.
13.13. INTERPRETATION. No provision of this Agreement or any of the
other Transaction Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
13.14. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
ATLANTA, GEORGIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA; PROVIDED, HOWEVER, THAT IF ANY
OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN GEORGIA, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S
OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF THE STATE OF
GEORGIA. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER, ANY
LENDER OR AGENT, BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF
FULTON COUNTY, GEORGIA, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION, SHALL HAVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG BORROWER, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER
HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL
RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR
TO PRECLUDE THE ENFORCEMENT BY AGENT OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH
FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY
OTHER APPROPRIATE FORUM OR JURISDICTION.
13.15. WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
TRANSACTION DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT,
DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT ON WHICH BORROWER MAY IN ANY WAY
BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER AGENT MAY DO IN THIS REGARD;
(iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND
OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO
EXERCISE ANY OF AGENT'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND
LENDER'S ENTERING INTO THIS AGREEMENT AND THAT AGENT AND LENDERS ARE RELYING
UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS
LEGAL COUNSEL AND HAS KNOWINGLY AND
(li)
<PAGE>
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, this Agreement has been duly executed in Atlanta,
Georgia, on the day and year specified at the beginning of this Agreement.
BORROWER:
ATTEST: THE ALPINE GROUP, INC.
_________________________ By:____________________________________
Secretary Title:______________________________
[CORPORATE SEAL]
Address:
1790 Broadway
New York, New York 10019
Attention: President
TELECOPIER NO.: (212) 757-3423
LENDERS:
SHAWMUT CAPITAL CORPORATION
Commitment: $40,000,000 By:____________________________________
Title:______________________________
Address:
300 Galleria Parkway, N.W.
Suite 800
Atlanta, Georgia 30339
Attention: Office Head
TELECOPIER NO.: (404) 859-2483
[Signatures continued on following page]
(lii)
<PAGE>
NATIONSBANK OF GEORGIA, N.A.
Commitment: $30,000,000 By:____________________________________
Title:______________________________
Address:
Business Credit Division
600 Peachtree Street
13th Floor, NationsBank Plaza
Atlanta, Georgia 30339
Attention: Mr. John Getz
TELECOPIER NO.: (404) 607-6439
CREDITANSTALT CORPORATE FINANCE,
INC.
Commitment: $15,000,000 By:____________________________________
Title:______________________________
By:____________________________________
Title:______________________________
Address:
2 Greenwich Plaza
2nd Floor
Greenwich, Connecticut 06830
Attention: Ms. Lisa Bruno
TELECOPIER NO.: (203) 861-6594
WITH A COPY TO:
2 Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attention: Mr. Joseph P. Longosz
TELECOPIER NO.: (404) 390-1851
[Signatures continued on following page]
(liii)
<PAGE>
AGENT:
SHAWMUT CAPITAL CORPORATION,
as Agent
By:____________________________________
Title:______________________________
Address:
300 Galleria Parkway, N.W.
Suite 800
Atlanta, Georgia 30339
Attention: Office Head
TELECOPIER NO.: (404) 859-2483
(liv)
<PAGE>
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated July 21, 1995 (as at any
time amended, the "Loan Agreement"), by and among THE ALPINE GROUP, INC., a
Delaware corporation ("Borrower"), the various financial institutions listed on
the signature pages attached thereto as lenders ("Lenders"), and SHAWMUT CAPITAL
CORPORATION ("Agent"), in its capacity as Agent for itself and the Lenders, the
following terms shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
ACCOUNT - shall have the meaning given to "account" in the Code.
ACCOUNT DEBTOR - any Person who is or may become obligated under or on
account of an Account.
ADIENCE - Adience, Inc., a Delaware corporation.
ADIENCE CANADA - Adience Canada Inc., a corporation incorporated under
the laws of Canada and a wholly owned subsidiary of Adience.
ADIENCE DEBT EXCHANGE NOTE - the Promissory Note in the original
principal amount of $2,245,000 to be dated or on about the Closing Date and
to be made by Adience to the order of Borrower.
ADIENCE DEBT EXCHANGE NOTE PLEDGE - the Note Pledge Agreement to be
dated on or about the Closing Date and to be executed by Borrower in favor
of Agent and by which Borrower shall pledge to Agent, for the benefit of
Agent and the Pro Rata benefit of Lenders, all of Borrower's right, title
and interest in and to the Adience Debt Exchange Note.
ADIENCE FORMULA AMOUNT - at any date of determination thereof, an
amount equal to the lesser of (a) $15,000,000 or (b) sum of (i) 85% of the
net amount of Eligible Accounts that are owned by Adience, arose from the
sale of its Inventory in the ordinary course of business and are
outstanding on such date PLUS (ii) the lesser of (x) $5,000,000 or (y) the
sum of 25% of the value (at the lower of cost or market, with cost
calculated on a FIFO basis, all as determined by Agent in its customary
credit judgment) of Eligible Inventory of Adience consisting of raw
materials and 40% of the value (at the lower of cost or market, with cost
calculated on a FIFO basis, all as determined by Agent in its customary
credit judgment) of such Eligible Inventory consisting of finished goods.
ADIENCE MERGER DOCUMENTS - collectively, (i) that certain Agreement of
Merger dated or to be dated on or about the Closing Date, between Heat and
Adience, pursuant to which Heat shall be merged with and into Adience, with
Adience as the surviving corporation, and as a result of which, the holders
of the outstanding common stock of Adience other than Borrower shall
receive in the aggregate $1,596,000 in cash, and after giving effect to
which, Borrower shall own 100% of the Capital Stock of Adience outstanding
after such merger, and (ii) any and all other instruments, agreements and
documents executed in connection therewith.
ADIENCE MORTGAGES - any and all mortgages and deeds of trust to be
executed by Adience in favor of Superior after the Closing Date to evidence
the grant by Adience of a Lien upon the Adience Real Estate.
ADIENCE REAL ESTATE - all real estate of Adience and the improvements
located thereon.
ADIENCE SECURITY AGREEMENT - the security agreement to be executed by
Adience in favor of Superior after the Closing Date by which Adience shall
grant to Superior a security interest in all of the present and future
machinery, equipment and fixtures of Adience, and all substitutions or
replacements therefor, accessions thereto and proceeds thereof.
-54-
<PAGE>
ADIENCE SENIOR NOTE INDENTURE - the Indenture dated as of June 30,
1993, between Adience and the Adience Senior Note Trustee with respect to
the issuance of the Adience Senior Notes.
ADIENCE SENIOR NOTE SUBORDINATION AGREEMENT - the Intercreditor and
Subordination Agreement to be entered into among Agent, Borrower and the
Adience Senior Note Trustee under the Adience Senior Note Indenture, in
form and substance mutually agreeable to the parties, by which the parties
shall agree, among other things, that (i) irrespective of the order of
perfection of any Liens in any of the Subsidiary Collateral owned by
Adience at any time, the Liens therein held by Borrower to secure up to
$20,000,000 in principal amount of the Indebtedness of Adience to Borrower
shall be first priority Liens therein, the Liens held by the Adience Senior
Note Trustee shall be second priority Liens therein, the Liens held by
Borrower to secure all other Indebtedness to Borrower shall be third
priority Liens therein and the Liens held by Agent under the Subsidiary
Security Agreement executed by Adience shall be fourth priority Liens
therein; (ii) the Indebtedness owing on the Adience Senior Notes is and
shall be subordinate in right of payment to Indebtedness (not to exceed
$20,000,000 at any time) for Money Borrowed by Adience from Borrower
(including all Subsidiary Advances and the Allocated Note Proceeds Amount
of Adience); and (iii) containing such other provisions as are customarily
found in agreements of that type and that are requested by Agent.
ADIENCE SENIOR NOTES - the 11% senior secured notes of Adience in the
aggregate original principal amount of $49,078,625 due 2002, which shall be
reduced to the principal amount no greater than $5,000,000 upon
consummation of all of the transactions contemplated by the Transaction
Documents and the Senior Note Documents.
ADIENCE SENIOR NOTE TRUSTEE - IBJ Schroder Bank & Trust Company, in
its capacity as indenture trustee under the Adience Senior Note Indenture,
and any successor trustee under the Adience Senior Note Indenture.
ADIENCE/SUPERIOR DOCUMENTS - the Adience Note, the Adience Mortgages,
the Adience Security Agreement and any and all instruments evidencing at
any time or times any indebtedness of Adience to Superior for intercompany
loans and Payment Item Advances by Superior to Adience.
ADJUSTED LIBOR RATE - with respect to each Interest Period for a LIBOR
Rate Advance, an interest rate per annum (rounded upwards, to the next
1/16th of one percent) equal to the quotient of (a) the LIBOR Rate in
effect for such Interest Period divided by (b) a percentage (expressed as a
decimal) equal to 100% minus Statutory Reserves.
ADVANCE - any principal amount advanced and remaining outstanding at
any time with respect to any Revolver Loan, which advance shall be made or
outstanding as a Base Rate Advance or a LIBOR Rate Advance.
AFFILIATE - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with, a Person; (ii) which beneficially owns
or holds 10% or more of any class of the Voting Stock of a Person; or (iii)
10% or more of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the Equity Securities) of which is beneficially
owned or held by a Person or a Subsidiary of a Person.
AGENT - Shawmut Capital Corporation in its capacity as collateral and
administrative agent for the benefit of Lenders under the Transaction
Documents and any successor agent appointed pursuant to Section 11.8 of the
Agreement.
AGENT/SENIOR NOTEHOLDER TRUSTEE INTERCREDITOR AGREEMENT - the
Intercreditor Agreement to be entered into on or about the date hereof
between Agent and the Senior Noteholder Trustee and pursuant to which the
parties shall, among other things, agree upon a ratable sharing of certain
distributions received by them from the estate of a Borrower Subsidiary or
Subsidiary Guarantor that is not a Borrower Subsidiary.
AGREEMENT - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A.
ALCATEL CABLE - Alcatel NA Cable Systems, Inc., a Delaware
corporation.
-55-
<PAGE>
ALCATEL CANADA - Alcatel Canada Wire Inc., a corporation organized
under the laws of Ontario.
ALCATEL TRANSACTION DOCUMENTS - collectively, (i) that certain Asset
Purchase Agreement dated March 17, 1995, among Superior, Superior Canada,
Alcatel Cable and Alcatel Canada, pursuant to which Superior and Superior
Canada have purchased the assets associated with the Alcatel
telecommunications and cable divisions of Alcatel Cable and Alcatel Canada
and (ii) any all other instruments, agreements and documents executed in
connection therewith.
ALCATEL TRANSACTION DOCUMENTS ASSIGNMENT - the Collateral Assignment
of Rights Under Alcatel Transaction Documents to be dated the date hereof
among Superior, Superior Canada and Agent, pursuant to which Superior and
Superior Canada shall collaterally assign to Agent, for its benefit as such
Agent and for the Pro Rata benefit of Lenders, all of Superior's and
Superior Canada's rights, title and interest in, to and under the Alcatel
Transaction Documents.
ALLOCATED NOTE PROCEEDS AMOUNT - on any date of determination thereof,
for each of Adience, Superior and DNE, a sum equal to the aggregate amount
of the proceeds of the Senior Notes used by Borrower (or loaned by Borrower
to such Subsidiary) to pay, redeem or retire any Indebtedness of such
Subsidiary or otherwise to use in the ordinary course of such Subsidiary's
business, PLUS interest accrued thereon from time to time under the
Allocated Proceeds Note executed by such Subsidiary, MINUS amounts paid by
such Subsidiary to Borrower in respect of such Allocated Proceeds Note.
ALLOCATED PROCEEDS NOTE - with respect to each Borrower Subsidiary, a
promissory note (or, in the case of Adience, to such notes) to be executed
by such Borrower Subsidiary to the order of Borrower, which shall be in an
amount equal to the Allocated Notes Proceeds Amount of such Borrower
Subsidiary after giving effect to the funding and disposition of proceeds
of the Senior Notes as specified in the Sources and Uses Agreement; shall
bear interest at 14% per annum; shall be secured by the Subsidiary
Collateral of such Borrower Subsidiary (other than DNE absent the consent
of CDA); shall provide for such Borrower Subsidiary to make payments of
accrued interest thereon to Borrower on each date that a payment of
interest is due in respect of the Senior Notes; and shall require such
Borrower Subsidiary to pay the entire unpaid principal balance thereof on
the date that the entire principal amount of the Senior Notes is due and
payable in full and to make earlier payments of principal on each date that
Borrower funds a Permitted Subsidiary Advance to such Borrower Subsidiary
for the purpose of enabling such Borrower Subsidiary to make a payment in
respect of its Allocated Note Proceeds Amount.
ALLOCATED PROCEEDS NOTES PLEDGE - the Note Pledge Agreement to be
executed by Borrower on or about the Closing Date in favor of Agent, for
its own benefit and the Pro Rata benefit of Lenders, and by which Borrower
shall pledge each of the Allocated Proceeds Notes, as and when such
Allocated Proceeds Notes are executed and delivered to Borrower, as
security for the Obligations.
APPLICABLE LAW - all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant or Transaction Documents in
question, including all applicable common law and equitable principles; all
provisions of all applicable state and federal constitutions, statutes,
rules, regulations and orders of governmental bodies; and orders, judgments
and decrees of all courts and arbitrators.
ASBESTOS CLAIM - a claim heretofore or hereafter asserted against
Adience for recovery of damages allegedly suffered by an individual on
account of alleged product defects that caused such individual to contract
or suffer from asbestosis related diseases or silica related diseases,
including each claim asserted in pending litigation against Adience as
described in the Offering Memorandum and the Environmental Certificate.
ASSIGNMENT AND ACCEPTANCE - an assignment and acceptance entered into
by a Lender and an Eligible Assignee and accepted by Agent, in the form of
EXHIBIT R.
AVAILABILITY - the amount that Borrower is entitled to borrow from
time to time as Revolver Loans, such amount being the difference derived
when the sum of the principal amount of Revolver Loans then outstanding
(including any amounts which Agent and Lenders may have paid for the
account of Borrower pursuant to any of the Transaction Documents and which
have not been reimbursed by Borrower) is subtracted from the Borrowing
Base. If the amount outstanding is equal to or greater than the Borrowing
Base, Availability is 0.
-56-
<PAGE>
AVAILABILITY RESERVE - on any date of determination thereof, an amount
equal to the sum of (i) all amounts of past due rent or other charges owing
at such time by any Obligor to any landlord of any premises where any of
the Collateral is located; (ii) the aggregate amount of all Borrower
Reimbursement Obligations outstanding on such date; (iii) 110% of the
amount, if any, by which the Dollar Equivalent of all Canadian
Reimbursement Obligations of a Canadian Subsidiary on such date exceeds the
Canadian Borrowing Base of such Canadian Subsidiary on such date; (iv) any
amounts which any Obligor is obligated to pay pursuant to the provisions of
any of the Transaction Documents that Agent or any Lender elects to pay for
the account of such Obligor in accordance with authority contained in any
of the Transaction Documents; (v) for so long as any Event of Default
exists, such additional reserves as Agent in its sole and absolute
discretion may elect to impose from time to time, without waiving any such
Event of Default or Agent's entitlement to accelerate the maturity of the
Obligations as a consequence thereof; and (vi) $5,000,000.
AVERAGE AVAILABILITY - for any period, an amount equal to the actual
amount of Availability on each day during such period, as determined by
Agent, divided by the number of days in such period.
AVERAGE REVOLVER LOAN BALANCE - for any month, the amount obtained by
adding the aggregate of the unpaid balance of Revolver Loans and
Reimbursement Obligations outstanding at the end of each day for the month
in question and by dividing such sum by the number of days in such month.
BANK - Shawmut Bank Connecticut, National Association, and its
successors and assigns.
BANKRUPTCY CODE - title 11 of the United States Code.
BASE RATE - the rate of interest announced or quoted by Bank from time
to time as its prime rate for commercial loans, whether or not such rate is
the lowest rate charged by Bank to its most preferred borrowers; and, if
such prime rate for commercial loans is discontinued by Bank as a standard,
a comparable reference rate designated by Bank as a substitute therefor
shall be the Base Rate.
BASE RATE ADVANCE - an Advance or portion thereof made or outstanding
as a Revolver Loan with interest based on the Base Rate as provided in
Section 2.1.1 of the Agreement.
BOARD OF GOVERNORS - the Board of Governors of the Federal Reserve
Board.
BORROWER COLLATERAL - all of the Property of Borrower described in
Section 5.1 and Section 5.2 of the Agreement.
BORROWER LC CONDITIONS - the following conditions, the satisfaction of
each of which is required before Shawmut shall be obligated to join in the
execution of an LC Application in connection with a request for the
issuance of a Borrower Letter of Credit: (i) no Default or Event of Default
exists and each of the conditions set forth in Section 9.1 of the Agreement
has been and continues to be satisfied; (ii) after giving effect to the
issuance of the requested Borrower Letter of Credit and each Borrower
Letter of Credit to be issued and for which an LC Application has been
signed by Shawmut, the Borrower Reimbursement Obligations would not exceed
$5,000,000 and no Out-of-Formula Condition or Subsidiary Out-of-Formula
Condition would exist; (iii) the expiry date of the Borrower Letter of
Credit does not extend beyond the earlier to occur of 365 days from the
date of issuance or the Business Day prior to the last Business Day of the
Term; and (iv) the currency in which payment is to be made under the
Borrower Letter of Credit is Dollars.
BORROWER LC GUARANTY - a guaranty executed by Shawmut in favor of Bank
pursuant to which Shawmut shall guaranty the payment or performance by the
parties (other than Shawmut) to an LC Application for a Borrower Letter of
Credit of such parties' reimbursement obligations with respect to such
Borrower Letter of Credit.
BORROWER LETTER OF CREDIT - any documentary or standby letter of
credit issued by Bank pursuant to the terms of Section 1.2 of the Agreement
for use by a Borrower Subsidiary in the ordinary course of its business and
not for the account of any Canadian Subsidiary.
-57-
<PAGE>
BORROWER REIMBURSEMENT OBLIGATIONS - on any date of determination
thereof, an amount (in Dollars) equal to the sum of (i) all amounts then
due and payable by any Obligor on such date by reason of any payment made
on or before such date by Shawmut under each Borrower LC Guaranty PLUS (ii)
the aggregate undrawn amount of all Borrower Letters of Credit then
outstanding or to be issued by Bank under an LC Application therefor.
BORROWER SUBSIDIARY - any of Adience, Superior or (on any date that
the DNE Loan Conditions are satisfied) each member of the DNE Group.
BORROWER SUBSIDIARY COLLATERAL - with respect to each Borrower
Subsidiary, all of the Property of such Borrower Subsidiary described in
the Subsidiary Loan Agreement signed by such Borrower Subsidiary.
BORROWING - the incurrence of Loans of a single Type made by all
Lenders on a single date and having, in the case of LIBOR Rate Advances, a
single Interest Period or the continuation or conversion of an existing
Borrowing or Borrowings in whole or in part.
BORROWING BASE - on any date of determination thereof, an amount equal
to the lesser of: (a) $85,000,000 MINUS the aggregate amount of
Reimbursement Obligations at such date, or (b) an amount equal to (i) the
sum of the Adience Formula Amount PLUS the Superior Formula Amount on such
date MINUS (ii) the Availability Reserve on such date.
BUSINESS DAY - any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of Georgia or is a day on which
banking institutions located in such state are closed; PROVIDED, HOWEVER,
that when used with reference to a LIBOR Rate Advance (including the
making, continuing, prepaying or repaying of any LIBOR Rate Advance), the
term "Business Day" shall also exclude any day on which banks are not open
for dealings in U.S. Dollar deposits on the London interbank market.
CANADIAN BORROWING BASE - for each Canadian Subsidiary, an amount on
any date of determination thereof equal to the aggregate of the value on
such date of such Canadian Subsidiary's Eligible Accounts and the value on
such date (at the lower of cost or market) of its Eligible Inventory,
multiplied by, with respect to the Eligible Accounts and Eligible Inventory
of Adience Canada, the applicable percentage rates of advance set forth in
the Adience Formula Amount, and, with respect to the Eligible Accounts and
Eligible Inventory of Superior Canada, the applicable percentage rates of
advance set forth in the Superior Formula Amount.
CANADIAN DOLLARS AND THE SIGN CDN$ - freely transferable Canadian
Dollars.
CANADIAN FINANCING AGREEMENTS - any and all financing agreements
hereafter executed by Superior Canada or Adience Canada in favor of the
Canadian Lender in connection with the extension by the Canadian Lender of
certain revolving credit facilities to Adience Canada and Superior Canada.
CANADIAN FINANCING DOCUMENTS - all instruments executed by or in favor
of a Canadian Subsidiary, the Canadian Lender, Bank or Shawmut in
connection with the extension of credit by the Canadian Lender, Bank or
Shawmut to or for the benefit of either of the Canadian Subsidiaries,
including the Canadian Financing Agreements, the Canadian Letters of
Credit, the LC Documents executed by a Canadian Subsidiary, the Canadian
Reimbursement Security Agreements, and the Canadian Intercreditor
Agreements.
CANADIAN INTERCREDITOR AGREEMENTS - the 2 Intercreditor Agreements to
be entered into between Shawmut and the Canadian Lender, in form and
substance mutually satisfactory to the parties and pursuant to which
Shawmut and the Canadian Lender shall, among other things, set forth their
respective Lien priorities in the Canadian Subsidiary Collateral of each
Canadian Subsidiary.
CANADIAN LC CONDITIONS - the following conditions, the satisfaction of
each of which is required before Shawmut shall be obligated to join in the
execution of any LC Application in connection with a request for the
issuance of either or both of the Canadian Letters of Credit: (i) no
Default or Event of Default exists and each of the conditions set forth in
Section 9.1 of the Agreement has been and continues to be satisfied; (ii)
after giving effect to the issuance of the requested Canadian Letter of
Credit and each Canadian Letter of Credit to be issued for which an
-58-
<PAGE>
LC Application has been signed by Shawmut, the Canadian Reimbursement
Obligations would not exceed Cdn$10,000,000 in the case of Superior Canada
or Cdn$3,000,000 in the case of Adience Canada, no Out-of-Formula Condition
or Subsidiary Out-of-Formula Condition would exist, and the amount of such
Canadian Letter of Credit does not exceed the Canadian Borrowing Base of
the Canadian Subsidiary for whose account such Canadian Letter of Credit is
issued; (iii) the expiry date of the Canadian Letter of Credit does not
extend beyond the earlier to occur of 365 days from the date of issuance or
the Business Day prior to the last Business Day of the Term; and (iv) the
currency in which payment is to be made under the Canadian Letter of Credit
is Canadian Dollars.
CANADIAN LC GUARANTY - a guaranty executed by Shawmut in favor of Bank
pursuant to which Shawmut shall guarantee the payment or performance by the
parties (other than Shawmut) to an LC Application for a Canadian Letter of
Credit of such parties' reimbursement obligations with respect to a
Canadian Letter of Credit.
CANADIAN LENDER - The Bank of Nova Scotia or such other financial
institution domiciled in Canada as shall be mutually acceptable to Agent
and Borrower.
CANADIAN LETTERS OF CREDIT - the 2 irrevocable standby letters of
credit to be issued by Bank in form and content mutually satisfactory to
Borrower, Bank, Agent and Lenders and subject to satisfaction of the
Canadian LC Conditions, one each for the respective accounts of Superior
Canada and Adience Canada and both for the benefit of the Canadian Lender,
and each in an amount equal to the maximum revolving credit facility of the
Canadian Subsidiary (but not to exceed in the aggregate Cdn$10,000,000 in
the case of Superior Canada and $3,000,000 in the case of Adience Canada)
for whose account such Canadian Letter of Credit is issued and payable in
Canadian Dollars, and all continuations, renewals and replacements thereof,
and any other letter of credit issued by Bank for the account of either
Canadian Subsidiary to the extent an LC Application therefor is signed by
Shawmut with the consent of all Lenders.
CANADIAN REIMBURSEMENT OBLIGATIONS - on any date of determination
thereof, an amount (in Canadian Dollars) equal to the sum of (i) all
amounts then due and payable by Borrower and any other Obligor on such date
by reason of any payment made on or before such date by Shawmut under each
Canadian LC Guaranty, (ii) the aggregate undrawn amount of all Canadian
Letters of Credit then outstanding or to be issued by Bank under an LC
Application therefor, and (iii) all sums paid by Shawmut to the Canadian
Lender under a Canadian Intercreditor Agreement to the extent that such
sums are required to be reimbursed to Shawmut under a Canadian
Reimbursement Agreement.
CANADIAN REIMBURSEMENT SECURITY AGREEMENTS - collectively (i) the
General Security Agreement to be executed by Adience Canada in favor of
Shawmut pursuant to which Adience Canada shall grant to Shawmut a security
interest in all Canadian Subsidiary Collateral that is owned by Adience
Canada as security for the payment and performance of its obligations under
its Reimbursement Agreement with Shawmut and (ii) the General Security
Agreement to be executed by Superior Canada in favor of Shawmut pursuant to
which Superior Canada shall grant to Shawmut a security interest in all
Canadian Subsidiary Collateral that is owned by Superior Canada as security
for the payment and performance of its obligations under its Reimbursement
Agreement with Shawmut.
CANADIAN SUBSIDIARIES - Superior Canada and Adience Canada.
CANADIAN SUBSIDIARY COLLATERAL - with respect to each Canadian
Subsidiary, all Accounts, Inventory, General Intangibles, Documents,
Instruments and Chattel Paper, and the proceeds of the foregoing, that are
owned by such Canadian Subsidiary.
CAPITAL EXPENDITURES - expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than
one year, including the total principal portion of Capitalized Lease
Obligations.
CAPITAL STOCK - any and all shares, interests, participations, rights
in, or other equivalents of (however designated and whether voting or non-
voting) capital stock, including 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.
-59-
<PAGE>
CAPITALIZED LEASE OBLIGATION - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
CASH COLLATERAL - cash or Cash Equivalents held, and interest earned
thereon, by Agent in the Cash Collateral Account for the Pro Rata benefit
of Lenders as security for the Reimbursement Obligations and other
Obligations to the extent provided in the Agreement.
CASH COLLATERAL ACCOUNT - the account designated by Agent from time to
time and containing all Cash Collateral held by Agent and subject to
Agent's Lien for the Pro Rata benefit of Lenders.
CASH EQUIVALENTS - (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by
the full faith and credit of the United States government having maturities
of not more than 12 months from the date of acquisition; (ii) domestic
certificates of deposit and time deposits having maturities of not more
than 12 months from the date of acquisition, bankers' acceptances having
maturities of not more than 12 months from the date of acquisition and
overnight bank deposits, in each case issued by any commercial bank
organized under the laws of the United States, any state thereof or the
District of Columbia, which at the time of acquisition are rated A-1 (or
better) by Standard & Poor's Corporation or P-1 (or better) by Moody's
Investors Services, Inc., and (unless issued by a Lender) not subject to
offset rights in favor of such bank arising from any banking relationship
with such bank; (iii) repurchase obligations with a term of not more than
30 days for underlying securities of the types described in clauses (i) and
(ii) entered into with any financial institution meeting the qualifications
specified in clause (ii) above; and (iv) commercial paper having at the
time of investment therein or a contractual commitment to invest therein a
rating of A-1 (or better) by Standard & Poor's Corporation or P-1 (or
better) by Moody's Investors Services, Inc., and having a maturity within 9
months after the date of acquisition thereof.
CDA - the Connecticut Development Authority.
CDE - the Connecticut Department of Economic Development.
CERCLA - the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq. and its implementing
regulations.
CHATTEL PAPER - shall have the meaning ascribed to the term "chattel
paper" in the Code.
CLOSING DATE - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Revolver Loan is
made under the Agreement.
CODE - the Uniform Commercial Code as adopted and in force in the
State of Georgia.
COLLATERAL - all of the Borrower Collateral, Borrower Subsidiary
Collateral and Canadian Subsidiary Collateral.
COMMITMENT - at any date for any Lender, the obligation of such Lender
to make Revolver Loans and to participate in Reimbursement Obligations
pursuant to the terms and conditions of the Agreement, which shall not
exceed the principal amount set forth opposite such Lender's name under the
heading "Commitment" on the signature pages hereof or the signature page of
any Assignment and Acceptance by which it became a Lender, as modified from
time to time pursuant to the terms of the Agreement or to give effect to
any applicable Assignment and Acceptance.
COMMITMENT TERMINATION DATE - the date that is the soonest to occur of
(i) the last day of the Term, (ii) the date on which any petition for an
order for relief under any chapter of the Bankruptcy Code is filed by or
against Borrower or any Obligor, (iii) the date on which Agent elects to
terminate the Commitments pursuant to Section 4.2.1 of the Agreement as a
consequence of the occurrence of any Event of Default, or (iv) the date on
which Borrower elects to terminate the Commitments pursuant to Section
4.2.2 of the Agreement.
-60-
<PAGE>
CONCENTRATION ACCOUNT - an account maintained by Borrower for the
benefit of Agent and into which all proceeds of the Borrower Collateral and
Borrower Subsidiary Collateral shall be deposited for application to the
Subsidiary Advances and the Revolver Loans then outstanding.
CONSOLIDATED - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
CONSOLIDATED ADJUSTED TANGIBLE ASSETS - on a Consolidated basis, all
assets except: (i) any surplus resulting from any write-up of assets
subsequent to April 30, 1995; (ii) deferred assets, other than prepaid
insurance and prepaid taxes; (iii) patents, copyrights, trademarks, trade
names, non-compete agreements, franchises and other similar intangibles;
(iv) goodwill, including any amounts, however designated on a Consolidated
balance sheet of a Person or its Subsidiaries, representing the excess of
the purchase price paid for assets or stock over the value assigned thereto
on the books of such Person; (v) Restricted Investments; (vi) unamortized
debt discount and expense; (vii) assets located and notes and Accounts due
from obligors outside of the United States of America and Canada, unless
such Accounts constitute Eligible Accounts; and (viii) Accounts, notes and
other receivables due from Affiliates or employees.
CONSOLIDATED ADJUSTED TANGIBLE NET WORTH - at any date means, on a
Consolidated basis, a sum equal to:
(i) the net book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other proper
reserves) at which the Consolidated Adjusted Tangible Assets of a
Person would be shown on a balance sheet at such date in accordance
with GAAP, MINUS
(ii) the amount at which such Person's liabilities (other
than capital stock and surplus) would be shown on such balance sheet
in accordance with GAAP, and including as liabilities all reserves for
contingencies and other potential liabilities required to be accrued
in accordance with GAAP.
CONSOLIDATED CASH INTEREST COVERAGE RATIO - for any period,
Consolidated EBITDA for such period divided by Consolidated Interest
Expense due by Borrower or its Restricted Subsidiaries for such period.
CONSOLIDATED EBITDA - for any fiscal period of Borrower and its
Subsidiaries, an amount equal to the Consolidated Net Income for such
fiscal period, PLUS: (a) to the extent deducted in computing such net
income (without duplication) the sum of, Consolidated Interest Expense paid
all Indebtedness of Borrower or its Subsidiaries and fees paid to Agent
under the terms of this Agreement, (b) to the extent deducted in computing
such Consolidated Net Income (without duplication) the sum of, all income
Taxes, (c) to the extent deducted in computing such Consolidated Net Income
(without duplication) the sum of, depreciation and amortization expense and
(d) to the extent excluded from or deducted in computing such Consolidated
Net Income (without duplication) the sum of, any extraordinary, unusual or
non-recurring gains or losses or charges or losses or charges or gains or
losses from asset sales, all as determined in accordance with GAAP.
CONSOLIDATED FIXED CHARGE COVERAGE RATIO - for any period, on a
Consolidated basis, (i) Consolidated EBITDA for such period MINUS Capital
Expenditures made or incurred during such period (ii) DIVIDED BY total
Consolidated Interest Expense for such period PLUS any required principal
repayments on Indebtedness during such period.
CONSOLIDATED INTEREST EXPENSE - with respect to any period, the cash
component of interest expense incurred for such period as determined in
accordance with GAAP PLUS all Letter of Credit and LC Guaranty fees accrued
during such period.
CONSOLIDATED NET INCOME - for any period, the aggregate of the net
income (loss) of Borrower and its Subsidiaries, and before any reduction in
respect of preferred stock dividends, for such period, on a Consolidated
basis, determined in accordance with GAAP, provided that (i) any gain or
loss, together with any related provisions for Taxes on such gain or loss,
realized in connection with (a) any asset sale (including dispositions
pursuant to any sale and leaseback transaction) or (b) dispositions of any
Securities or the extinguishment of any Indebtedness of Borrower or any of
its Subsidiaries will be excluded; (ii) any extraordinary gain (but not
loss) together with any related provision for Taxes on such extraordinary
gain (but not loss) will be excluded; (iii) the net income (loss) of a
Person that is not a Restricted Subsidiary or that is
-61-
<PAGE>
accounted for by the equity method of accounting will be included only to
the extent of the amount of Distributions paid in cash to Borrower or a
Restricted Subsidiary; (iv) the net income or net loss of any Restricted
Subsidiary to the extent that the payment of Distributions to such Persons
is restricted, directly or indirectly, except to the extent that such net
income could be paid to Borrower or a Restricted Subsidiary by loans,
advances, intercompany transfers, principal repayments or otherwise; (v)
the net income of any Person acquired in a pooling of interest transaction
for any period prior to the date of such acquisition but will be excluded;
and (vi) the cumulative effect of a change in accounting principles will be
excluded.
CONSOLIDATED NET WORTH - at any date, the Consolidated shareholders'
equity of Borrower on such date, as set forth or reflected on the most
recent Consolidated balance sheet of Borrower and its Subsidiaries prepared
in accordance with GAAP, but excluding any redeemable preferred stock of
Borrower or any of its Subsidiaries.
CONTRIBUTION AGREEMENT - the Contribution and Indemnity Agreement to
be entered into among Borrower, the Subsidiary Guarantors (other than
Superior Canada), and Agent pursuant to which Borrower and each Guarantor
shall establish their rights of contribution and shall agree that their
rights of reimbursement, contribution, subrogation and indemnity shall be
subordinate to any right Agent or any Lender may have against any one or
more of them.
CREDIT FACILITIES - the Revolver Facility and the LC Facility.
CURRENT ASSETS - at any date, the amount at which all of the current
assets of a Person would be properly classified as current assets shown on
a balance sheet at such date in accordance with GAAP except that amounts
due from Affiliates and investments in Affiliates shall be excluded
therefrom.
DEBT EXCHANGE AGREEMENT - the Amended and Restated Debt Exchange
Agreement dated as of October 11, 1994, between those persons whose names
are listed on Exhibit A thereto and Borrower, as amended on or about the
date hereof, which provides for the redemption of a portion of the Adience
Senior Notes for the consideration described therein.
DEFAULT - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
DEFAULT RATE - as defined in Section 2.1.4 of the Agreement.
DEPOSIT ACCOUNTS - all of a Person's demand, time, savings, passbook,
money market or other depository accounts, and all certificates of deposit,
maintained by such Person with any bank, savings and loan association,
credit union or other depository institution.
DEPOSIT ACCOUNTS ASSIGNMENTS - the Collateral Assignment of Deposit
Accounts to be executed by Borrower and each Restricted Subsidiary on or
about the Closing Date in favor of Agent, for its benefit as such Agent and
for the Pro Rata benefit of Lenders, by which Borrower and each Restricted
Subsidiary shall collaterally assign as security for the Obligations all of
their respective Deposit Accounts.
DISTRIBUTION - in respect of any corporation, (i) the payment of any
dividends or other distributions on Capital Stock of the corporation
(except distributions in such Capital Stock) and (ii) the purchase,
redemption or other acquisition or retirement for value of any Securities
of the corporation or any Affiliate of the Corporation unless made
contemporaneously from the net proceeds of the sale of Securities.
DNE - DNE Technologies, Inc., a Delaware corporation.
DNE GROUP - collectively, DNE, DNE Systems and DNE Manufacturing.
DNE LOAN CONDITIONS - each of the following conditions, the
satisfaction of which shall be required before Borrower may make any
Subsidiary Advance to any or all members of the DNE Group: (i) each member
of the DNE Group shall have joined with Borrower in the
-62-
<PAGE>
execution of a loan and security agreement, in form and substance
substantially the same as the Subsidiary Loan Agreements executed by
Adience and Superior and otherwise satisfactory in all respects to Agent
and Lenders, providing for Borrower to make revolving credit loans from
time to time to the DNE Group, in an aggregate amount at any time
outstanding not to exceed $3,000,000; (ii) CDA (and any other Person whose
consent may be required) shall have consented to the execution and delivery
of the aforesaid loan and security agreement and the grant by each member
of the DNE Group to Borrower of a Lien upon all of the Borrower Subsidiary
Collateral of such member of the DNE Group; (iii) any Person holding a Lien
upon any of the Borrower Subsidiary Collateral of any member of the DNE
Group shall have subordinated the priority of such Lien to and in favor of
the Liens granted by such member of the DNE Group to Borrower pursuant to
an intercreditor agreement in form and content satisfactory to Agent and
Lenders, except for CDE with respect to its Lien securing an Indebtedness
not to exceed the principal amount outstanding on the date of the Agreement
(approximately $600,000) so long as Borrower diligently and in good faith
endeavors to procure from CDE in favor of Agent and Borrower an estoppel
agreement in the form requested by Agent; and (iv) the Subsidiary Loan
Documents executed by the members of the DNE Group shall have been
delivered, pledged and assigned by Borrower to Agent in accordance with the
Subsidiary Loan Documents Assignment.
DNE MANUFACTURING - DNE Manufacturing and Service Company, a Delaware
corporation.
DNE SYSTEMS - DNE Systems, Inc., a Delaware corporation, which on the
Closing Date will be owned by Borrower and after the Closing Date may own
all of the Capital Stock of DNE and DNE Manufacturing.
DOCUMENT - shall have the meaning ascribed to the term "document" in
the Code.
DOLLAR EQUIVALENT - with respect to any monetary amount in any foreign
currency at any date for the determination thereof, the amount of Dollars
obtained by converting such foreign currency into Dollars at the spot rate
for the purchase of Dollars with such foreign currency as quoted by Bank at
approximately 11:00 a.m. (Atlanta, Georgia time) on the date of
determination thereof.
DOLLARS AND THE SIGN $ - lawful money of the United States of America.
DOMINION ACCOUNT - a special account of Agent established by a
Borrower Subsidiary pursuant to the Agreement at a bank selected by such
Borrower Subsidiary, but acceptable to Agent and Borrower in their
reasonable discretion, and over which Agent shall have sole and exclusive
access and control for withdrawal purposes.
ELIGIBLE ACCOUNT - an Account which arises in the ordinary course of
Superior's, Adience's or a Canadian Subsidiary's business from the sale of
goods, which is payable in Dollars (or, in the case of an Account owed by a
Canadian Subsidiary, in either Dollars or Canadian Dollars) and which
Agent, in its customary credit judgment, deems to be an Eligible Account.
Without limiting the generality of the foregoing, no Account shall be an
Eligible Account if: (i) it arises out of a sale made by Superior, Adience
or a Canadian Subsidiary to a Subsidiary or an Affiliate of Superior,
Adience or a Canadian Subsidiary or to a Person controlled by an Affiliate
of Superior, Adience or a Canadian Subsidiary; (ii) it is unpaid for more
than 60 days after the original due date shown on the invoice; (iii) it is
due or unpaid more than 90 days after the original invoice date; (iv) 20%
or more of the Accounts from the Account Debtor are not deemed Eligible
Accounts hereunder; (v) the total unpaid Accounts of the Account Debtor to
Superior exceed 30% of the net amount of all Eligible Accounts of Superior,
to Superior Canada exceed 30% of the net amount of all Eligible Accounts of
Superior Canada, to Adience exceed 25% of the net amount of all Eligible
Accounts of Adience, or to Adience Canada exceed 25% of the net amount of
all Eligible Accounts of Adience Canada, as the case may be, to the extent
of such excess; (vi) any covenant, representation or warranty contained in
the Agreement with respect to such Account has been breached in any
material respect; (vii) the Account Debtor on such Account is also a
creditor or supplier of the Person to which payment is due on such Account,
or the Account Debtor has disputed liability with respect to such Account,
or the Account Debtor has made any claim with respect to any other Account
due from such Account Debtor, or the Account otherwise is or may become
subject to any right of setoff, counterclaim, reserve or chargeback,
PROVIDED that, in any event, the Accounts of such Account Debtor shall be
ineligible only to the extent of such offset, counterclaim, disputed
amount, reserve or chargeback; (viii) the Account Debtor has commenced a
voluntary case under the federal bankruptcy laws or made an assignment for
the benefit of creditors, or a decree or order for relief has been entered
by a court having jurisdiction in the premises in respect of the Account
Debtor in an involuntary case under the federal bankruptcy laws or any
other petition or other
-63-
<PAGE>
application for relief under the federal bankruptcy laws has been filed
against the Account Debtor, or if the Account Debtor has failed, suspended
business, ceased to be Solvent, or consented to or suffered a receiver,
trustee, liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs; (ix) it arises from a sale to
an Account Debtor with its principal office, assets or place of business
outside the United States (or, in the case of a sale made by a Canadian
Subsidiary, outside the United States or Canada), unless the sale is (A)
backed by an irrevocable letter of credit issued or confirmed by a bank to
Agent and is in form and substance acceptable to Agent or (B) insured under
a policy of credit insurance acceptable to Agent and in respect of which
Agent is loss payee and collateral assignee, in each case payable in the
full amount of the Account at a place of payment within the United States
(or, in the case of a sale by a Canadian Subsidiary, within the United
States or Canada); (x) it arises from a sale to the Account Debtor on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; (xi) the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof, unless Obligor assigns its right to payment of
such Account to Agent, in a manner satisfactory to Agent, so as to comply
with the Assignment of Claims Act of 1940 (31 U.S.C. Section 203 ET SEQ.),
or is Canada, a province of Canada or a state, county or municipality, or a
political subdivision or agency thereof, which is subject to any Applicable
Law that would disallow an assignment of Accounts on which it is the
Account Debtor; (xii) the Account Debtor is located in New Jersey,
Minnesota or any other state imposing similar conditions on the right of a
creditor to collect Accounts receivable unless the owner of the Account has
either qualified to transact business in such state as a foreign
corporation or filed a Notice of Business Activities Report or other
required report with the appropriate officials in those states for the then
current year; (xiii) the Account Debtor is located in a state in which the
owner of the Account as the case may be, is deemed to be doing business
under the laws of such state and which denies creditors access to its
courts in the absence of qualification to transact business in such state
or of the filing of any reports with such state, unless the owner of the
Account has qualified as a foreign corporation authorized to transact
business in such state or has filed all required reports; (xiv) the Account
is subject to a Lien other than a Permitted Lien; (xv) the goods giving
rise to such Account have not been delivered to and accepted by the Account
Debtor or the Account otherwise does not represent a final sale; (xvi) the
Account is evidenced by Chattel Paper or an Instrument of any kind, or has
been reduced to judgment; or (xvii) the owner of the Account has made any
agreement with the Account Debtor for any deduction therefrom (except for
discounts or allowances which are made in the ordinary course of business
for prompt payment and which discounts or allowances are reflected in the
calculation of the face value of each invoice related to such Account), to
the extent of such deductions.
ELIGIBLE ASSIGNEE - a Lender or an Affiliate of a Lender; a commercial
bank organized under the laws of the United States or any state and having
total assets in excess of $5,000,000,000 or an asset based lending
affiliate of any such bank; or a finance company, insurance company, other
financial institution or fund, that is acceptable to Agent and Lenders and
that in the ordinary course of business extends credit of the type
evidenced by the Notes and has total assets in excess of $200,000,000.
ELIGIBLE INVENTORY - such Inventory of Superior, Adience or a Canadian
Subsidiary (other than packaging materials and supplies) which Agent, in
its customary credit judgment, deems to be Eligible Inventory. Without
limiting the generality of the foregoing, no Inventory shall be Eligible
Inventory unless: (i) it is raw materials or finished goods, or
work-in-process that is, in Agent's reasonable credit judgment, readily
marketable in its current form; (ii) it is in good and saleable condition;
(iii) it is not slow-moving, obsolete or unmerchantable; (iv) it meets all
standards imposed by any governmental agency or authority; (v) it conforms
in all material respects to the warranties and representations set forth in
the Agreement; (vi) it is at all times subject to Agent's duly perfected
security interest and no other Lien except a Permitted Lien; (vii) it is
situated at a location in compliance with the Agreement and is not in
transit or outside the continental United States (or, in the case of
Inventory owned by a Canadian Subsidiary, Ontario Canada), and, if located
at premises leased by the owner of such Inventory (or leased by any other
Person on behalf of either of them), the lease of such premises is in full
force and effect and each landlord and sublessor of such premises has
executed a landlord waiver in the form customarily required by or otherwise
acceptable to Agent (unless such a waiver is not at the time required by
Agent); (viii) it is not subject to any license or other agreement that
limits, conditions or restricts the owner's or Agent's right to sell or
otherwise dispose of such Inventory; and (ix) it is not on consignment to
another Person or from another Person.
ENVIRONMENTAL CERTIFICATE - the Certificate Regarding Environmental
Matters to be executed by a Senior Officer and containing representations
and warranties concerning Borrower's and its Subsidiary's compliance with
Environmental Laws.
-64-
<PAGE>
ENVIRONMENTAL LAWS - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidance documents promulgated
by regulatory agencies, orders and consent decrees relating to human health
and safety or the prosection or pollution of the environment, including the
CERCLA.
ENVIRONMENTAL RELEASES - releases as defined in CERCLA or under any
applicable state or local Environmental Law.
EQUITY SECURITY - (i) a share in a corporation, whether or not
transferrable or denominated "stock," or a similar Security; (ii) interest
of a limited partner in a limited partnership; (iii) interest of a member
in a limited liability company; or (iv) a warrant or right, other than a
right to convert, to purchase, sell or subscribe to a share, security or
interest of a kind specified in clauses (i), (ii) or (iii) hereof.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
EVENT OF DEFAULT - as defined in Section 10.1 of the Agreement.
EXTRAORDINARY EXPENSES - all costs, expenses, fees, and advances which
Agent may suffer or incur, whether prior to or after the occurrence of an
Event of Default, on account of or in connection with (i) the repossession,
storage, repair, appraisal, insuring, completion of the manufacture of,
preparing for sale, advertising for sale, selling, collecting or otherwise
preserving or realizing upon any Collateral; (ii) the defense of Agent's
Lien upon any Collateral or the priority thereof or any adverse claim with
respect to the Loans, the Transaction Documents or the Collateral asserted
by any Obligor, any receiver or trustee for any Obligor or any creditor or
representative of creditors of any Obligor; (iii) the settlement or
satisfaction of any Liens upon any Collateral (whether or not such Liens
are Permitted Liens); (iv) the collection of any of the Obligations; (v)
the negotiation, documentation, and closing of any restructuring or
forbearance agreement with respect to the Transaction Documents or
Obligations; (vi) amounts advanced by Agent pursuant to Section 6.1.3 of
the Agreement; (vii) the enforcement of any of the provisions of any of the
Transaction Documents; or (viii) any payment under indemnity or other
payment agreement provided by Agent to any financial institution in
connection with any Dominion Account or the Concentration Account. Such
costs, expenses and advances may include transfer fees, taxes, storage
fees, insurance costs, permit fees, utility reservation and standby fees,
legal fees, appraisal fees, brokers' fees and commissions, auctioneers'
fees and commissions, accountants' fees, environmental study fees, wages
and salaries paid to employees of Borrower or independent contractors in
liquidating any Collateral, travel expenses, all other fees and expenses
payable or reimbursable by Borrower or any other Obligor under any of the
Transaction Documents, and all other fees and expenses associated with the
enforcement of rights or remedies under any of the Transaction Documents,
but excluding compensation paid to employees (including inside legal
counsel who are employees) of Agent.
FEDERAL FUNDS RATE - for any period, a fluctuating interest rate per
annum equal for each date during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business
Day) in Atlanta, Georgia by the Federal Reserve Bank of Atlanta, or if such
rate is not so published for any day which is a Business Day, the average
of the quotations for such day on such transactions received by Agent from
3 federal funds brokers of recognized standing selected by Agent.
FEE LETTER - the Fee Letter dated the date hereof between Borrower and
Shawmut, pursuant to which Borrower has agreed to pay certain fees to
Shawmut.
FISCAL YEAR - the fiscal year of Borrower and its Subsidiaries for
accounting and tax purposes, which shall be the 12-month period ending on
April 30 of each calendar year.
GAAP - generally accepted account principles in the United States of
America in effect from time to time.
GENERAL INTANGIBLES - all general intangibles of an Obligor, whether
now owned or hereafter created or acquired by such Obligor, including all
choses in action, causes of action, corporate or other business records,
inventions, blueprints, designs, patents, patent applications, trademarks,
trademark applications, trade names, trade secrets, service marks,
goodwill, brand names, copyrights, registrations, licenses, franchises,
-65-
<PAGE>
customer lists, tax refund claims, computer programs, operational manuals,
all claims under guaranties, security interests or other security held by
or granted to such Obligor to secure payment of any of any of such
Obligor's Accounts by an Account Debtor, all rights to indemnification and
all other intangible property of such Obligor of every kind and nature
(other than Accounts).
GUARANTORS - the Subsidiary Guarantors and each other Person that may
hereafter guarantee payment or performance of the whole or any part of the
Obligations.
HEAT - Heat Technology, Inc., a Delaware corporation that is a
wholly owned subsidiary of Borrower.
IDT - Information Display Technology, Inc., a New York corporation.
IDT MERGER DOCUMENTS - the Agreement and Plan of Merger dated as of
December 21, 1994, among Borrower, Alpine PolyVision, Inc., a Delaware
corporation, Posterloid Corporation, IDT, IDT Posterloid Acquisition Corp.
and IDT Polyvision Acquisition Corp., as amended, and any and all other
agreements, instruments and documents executed in connection therewith.
INCLUDING - including, without limitation.
INDEBTEDNESS - as applied to a Person means, without duplication: (i)
all items which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person as of the date as of which Indebtedness is to be determined,
including Capitalized Lease Obligations; (ii) all obligations of other
Persons which such Person has guaranteed; (iii) all reimbursement
obligations in connection with letters of credit or letter of credit
guaranties issued for the account of such Person; (iv) in the case of
Borrower, Indebtedness outstanding from time to time under the Senior Note
Documents; and (v) in the case of Borrower (without duplication), the
Obligations.
INDEMNIFIED AMOUNT - the amount of any loss, cost, expenses or damages
suffered or incurred by Agent and against which Lenders or Borrower have
agreed to indemnify Agent pursuant to the terms of this Agreement or any of
the other Transaction Documents.
INDENTURE FIXED CHARGE COVERAGE RATIO - shall have the meaning given
in the Senior Noteholder Indenture, as in effect on the date of the
Agreement, to the term "Fixed Charge Coverage Ratio."
INSOLVENCY PROCEEDING - any action, case or proceeding commenced by or
against a Person, or any agreement of such Person, for (a) the entry of an
order for relief under any chapter of the Bankruptcy Code or other
insolvency or debt adjustment law (whether state, federal or foreign), (b)
the appointment of a receiver, trustee, liquidator or other custodian for
such Person or any part of its Property, (c) an assignment or trust
mortgage for the benefit of creditors of such Person, or (d) the
liquidation, dissolution or winding up of the affairs of such Person.
INSTRUMENT - shall have the meaning ascribed to the term "instrument"
in the Code; PROVIDED, HOWEVER, that if the Capital Stock owned by Borrower
in any Subsidiary shall constitute an "instrument" within the meaning of
the Code, such Capital Stock shall not be deemed to be an Instrument for
purposes hereof.
INTELLECTUAL PROPERTY CLAIM - the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise)
that an Obligor's ownership, use, marketing, sale or distribution of any
Inventory or other Property is violative of any ownership, patent,
copyright, trademark or other rights of such Person.
INTEREST AND CHARGES AGREEMENT - the Agreement Regarding Interest and
Charges between Borrower and Lender to be dated on or about the Closing
Date.
-66-
<PAGE>
INTEREST PERIOD - in connection with the making or continuation of, or
conversion into, a LIBOR Rate Advance, an interest period selected by
Borrower to be applicable to such LIBOR Rate Advance, which interest period
shall commence on the date such LIBOR Rate Advance is made and shall end on
a numerically corresponding day in the first, third or sixth month
thereafter.
INVENTORY - all of an Obligor's inventory, whether now owned or
hereafter acquired, including all goods intended for sale or lease by such
Obligor, or for display or demonstration; all work in process; all raw
materials and other materials and supplies of every nature and description
used or which might be used in connection with the manufacture, printing,
packing, shipping, advertising, selling, leasing or furnishing of such
goods or otherwise used or consumed in such Obligor's business; and all
documents evidencing and General Intangibles relating to any of the
foregoing, whether now owned or hereafter acquired by such Obligor.
INVESTMENT ACCOUNTS - the following investment accounts currently
maintained by Borrower and through which Borrower invests in various
Securities and similar Investments, and in which Borrower currently has
Investments totalling approximately $6,000,000: ownership of units in
Everglades Partners, L.P., and 3 accounts maintained at Paine Webber,
designated The Alpine Group, Inc., account number X900631, AGI/Hermes,
account IJ4095 (managed funds), and Alpine Group 2, account number X900633.
INVESTMENTS - all investments of Borrower or any of its Restricted
Subsidiaries in other Persons (including Affiliates) in the form of loans
(including guaranties), advances (excluding commissions, travel and similar
advances to offices and employees in the ordinary course of business) or
capital contributions, purchases or other acquisitions for consideration of
Indebtedness, Equity Securities or other Securities and all other items
that are or would be classified as investments in other Persons on a
balance sheet prepared in accordance with GAAP.
KNOWLEDGE - the actual knowledge of any Senior Officer of Borrower.
LC APPLICATION - an application to Bank for the issuance of a Letter
of Credit that is duly executed by, in the case of an application for a
Borrower Letter of Credit, Borrower and the applicable Borrower Subsidiary,
and, in the case of an application for a Canadian Letter of Credit,
Borrower, a Canadian Subsidiary and such Canadian Subsidiary's parent
company (either Adience or Superior), in each case with Shawmut as a co-
applicant for the issuance of the relevant Letter of Credit subject to the
satisfaction of the applicable LC Conditions.
LC CONDITIONS - collectively, the Borrower LC Conditions and the
Canadian LC Conditions.
LC DOCUMENTS - LC Applications, LC Guaranties, Reimbursement
Agreements and other instruments or agreements executed in connection with
any LC Guaranty.
LC FACILITY - the credit facility established in favor of Borrower
pursuant to Section 1.2 of the Agreement.
LC GUARANTY - a Borrower LC Guaranty or a Canadian LC Guaranty.
LC REQUEST - a written request from Borrower to Shawmut for Shawmut to
join in the execution of an LC Application for the issuance of a Letter of
Credit, which request shall specify the identity and address of the
intended beneficiary of the requested Letter of Credit, the purpose for
issuance of the requested Letter of Credit, the proposed amount and expiry
date of the requested Letter of Credit, the conditions to payment under the
requested Letter of Credit, and whether the requested Letter of Credit may
be drawn upon in a single or multiple draws.
LENDERS - Shawmut and any other Person who may from time to time
become a lender under the Loan Agreement, and their respective successors
and permitted assigns.
LETTER OF CREDIT - a Borrower Letter of Credit or a Canadian Letter of
Credit.
LIBOR RATE - with respect to an Interest Period, the rate per annum
determined by Agent on the basis of the offered rate for deposits in
Dollars in the London Interbank Market of amounts equal to or comparable to
the amount of the LIBOR Rate Advance to which such
-67-
<PAGE>
Interest Period relates offered for a term comparable to such Interest
Period, which rate appears on the Telerate Screen LIBOR Page (or as
published by a comparable service selected by Agent) as of 11:00 a.m.,
London time, 2 Business Days prior to the first day of such Interest
Period.
LIBOR RATE ADVANCE - an Advance made or outstanding as a Revolver
Loan, bearing interest based on the applicable Adjusted LIBOR Rate as
provided in Section 2.1 of the Agreement.
LIEN - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien"
shall also include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of the
Agreement, Borrower shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
LOAN ACCOUNT - the loan account established by each Lender on its
books pursuant to Section 3.7.1 of the Agreement.
LOAN DOCUMENTS - the Agreement, the Other Agreements and the Security
Documents.
LOANS - all loans and advances of any kind made by Agent and Lenders
pursuant to the Agreement, including all Revolver Loans.
MARGIN STOCK - as such term is defined in Regulation U and Regulation
G of the Board of Governors.
MATERIAL ADVERSE EFFECT - the effect of any event or condition which,
alone or when taken together with other events or conditions occurring or
existing concurrently therewith, (i) has a material adverse effect upon the
business, operations, Properties or condition (financial or otherwise) of
Borrower or any Borrower Subsidiary; (ii) has or may be reasonably expected
to have any material adverse effect whatsoever upon the validity or
enforceability of the Agreement or any of the other Transaction Documents;
(iii) has any material adverse effect upon the value of the whole or any
material part of the Collateral, the Liens of Agent with respect to the
Collateral or the priority of any such Liens; (iv) materially impairs the
ability of any Obligor to perform its obligations under this Agreement or
any of the other Transaction Documents, including repayment of any of the
Obligations when due; or (v) materially impairs the ability of Agent to
enforce or collect the Obligations or realize upon any of the Collateral in
accordance with the Transaction Documents and Applicable Law.
MAXIMUM RATE - the maximum non-usurious rate of interest permitted by
Applicable Law that at any time, or from time to time, may be contracted
for, taken, reserved, charged or received on the Indebtedness in question
or, to the extent that at any time Applicable Law may thereafter permit a
higher maximum non-usurious rate of interest, then such higher rate.
Notwithstanding any other provision hereof, the Maximum Rate shall be
calculated on a daily basis (computed on the actual number of days elapsed
over a year of 365 or 366 days, as the case may be).
MONEY BORROWED - means, as applied to any Person, (i) Indebtedness
arising from the lending of money by any other Person to such Person; (ii)
Indebtedness, whether or not in any such case arising from the lending of
money by another Person to such Person, (A) which is represented by notes
payable or drafts accepted that evidence extensions of credit, (B) which
constitutes obligations evidenced by bonds, debentures, notes or similar
instruments, or (C) upon which interest charges are customarily paid (other
than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a Capitalized
Lease Obligation; (iv) reimbursement obligations with respect to letters of
credit or guaranties of letters of credit and (v) Indebtedness of such
Person under any guaranty of obligations that would constitute Indebtedness
for Money Borrowed under clauses (i) through (iii) hereof, if owed directly
by such Person.
MULTIEMPLOYER PLAN - has the meaning set forth in Section 4001(a)(3)
of ERISA.
-68-
<PAGE>
NON-SUBORDINATED SUBSIDIARY GUARANTY - the Continuing Subsidiary
Guaranty Agreement to be executed on or about the Closing Date by each
Restricted Subsidiary (other than Adience and Superior Canada) in favor of
Agent, for Agent's benefit and for the Pro Rata benefit of Lenders, by
which such Restricted Subsidiaries shall jointly and severally guarantee
payment of the Obligations.
NOTES - each Revolver Note.
NOTICE OF BORROWING - as defined in Section 3.1.1(i) of the Agreement.
NOTICE OF CONVERSION/CONTINUATION - as defined in Section 3.1.1(iii)
of the Agreement.
OBLIGATIONS - all Loans, the Reimbursement Obligations, and all other
advances, debts, liabilities, obligations, covenants and duties (together
with all interest, fees and other charges thereon) that are at any time or
times due or payable under any of the Transaction Documents by any or all
of Obligors to Agent or any Lender of any kind or nature, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter
arising and however acquired.
OBLIGOR - Borrower, each Restricted Subsidiary and any other Person
that is at any time liable for the payment of the whole or any part of the
Obligations.
OFFERING MEMORANDUM - the Offering Memorandum dated July 14, 1995, for
Borrower's issuance of the Senior Notes.
OTHER AGREEMENTS - the Notes, the Contribution Agreement, the Fee
Letter, each Borrower LC Guaranty, the Interest and Charges Agreement, the
Environmental Certificate, the Adience Senior Note Subordination Agreement,
the Subsidiary Collateral Intercreditor Agreement, the Superior
Intercreditor Agreement, the Agent/Senior Noteholder Trustee Intercreditor
Agreement, the Reimbursement Agreements signed by Adience and Superior with
respect to a Borrower LC Guaranty, the Superior Canada Guaranty, and any
and all agreements, instruments and documents (other than the Agreement and
the Security Documents), heretofore, now or hereafter executed by Borrower,
any Obligor or any other third party and delivered to Agent or any Lender
in respect of the transactions contemplated by the Agreement.
OUT-OF-FORMULA CONDITION - at any date of determination thereof, a
condition such that the outstanding principal amount of Revolver Loans on
such date exceeds the Borrowing Base on such date.
OUT-OF-FORMULA LOAN - a Revolver Loan made when an Out-of-Formula
Condition exists or the amount of any Revolver Loan which results in an
Out-of-Formula Condition.
PARTICIPANT - as defined in Section 12.2.1.
PARTICIPATING LENDER - as defined in Section 1.2.2(i).
PATENT ASSIGNMENT - each Patent Collateral Assignment and Security
Agreement dated the date hereof, executed by a Restricted Subsidiary in
favor of Agent and by which such Restricted Subsidiary has assigned to
Agent, for its benefit as Agent and for the Pro Rata benefit of Lenders, as
security for the Obligations, all of such Restricted Subsidiary's right,
title and interest in and to the patents described therein.
PAYMENT ACCOUNT - an account maintained by Agent (currently at Harris
Bank & Trust in Chicago, Illinois) to which all monies from time to time
deposited to a Dominion Account shall be transferred and all other payments
shall be sent in immediately available federal funds.
PAYMENT ITEM ADVANCE - an advance that is deemed to have been made by
one Borrower Subsidiary to any other Borrower Subsidiary when the proceeds
of Payment Items belonging to the first Borrower Subsidiary are applied to
the Obligations at a time when the first Borrower Subsidiary does not have
any Subsidiary Advances outstanding, and the amount of such advance to each
other Borrower Subsidiary shall be
-69-
<PAGE>
deemed equal to the amount of Payment Items so applied to the Obligations
multiplied by a fraction, the denominator of which shall equal the
aggregate of all Subsidiary Advances outstanding at the time of such
application and the numerator of which shall be the Subsidiary Advances
outstanding of such other Borrower Subsidiary at the time of such
application.
PAYMENT ITEMS - all checks, drafts, or other items of payment payable
to an Obligor, including proceeds of any of the Collateral.
PERMITTED LIEN - a Lien of a kind specified in Section 8.2.6 of the
Agreement.
PERMITTED PURCHASE MONEY INDEBTEDNESS - Purchase Money Indebtedness of
Borrower and its Restricted Subsidiaries which is incurred after the date
of the Agreement, which is secured by a Purchase Money Lien and which does
not exceed at any time an aggregate amount of $5,000,000. For the purposes
of this definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized Lease
Obligation.
PERMITTED SUBSIDIARY ADVANCE - a Subsidiary Advance by Borrower to a
Borrower Subsidiary that is made solely from the proceeds of Revolver Loans
pursuant to a Subsidiary Loan Agreement secured by a duly perfected Lien in
favor of Borrower upon all of the Borrower Subsidiary Collateral of such
Borrower Subsidiary, which Lien is senior to all other Liens; is made at a
time when no Default or Event of Default exists or would result therefrom;
is evidenced by and repayable in accordance with Subsidiary Loan Documents
duly executed by such Borrower Subsidiary and collaterally assigned by
Borrower to Agent pursuant to the Subsidiary Loan Documents Assignment; is
not made when a Subsidiary Out-of-Formula Condition exists or would result
from such Subsidiary Advance; if made to the DNE Group, is made after each
of the DNE Loan Conditions is satisfied and does not result in the
aggregate of all Subsidiary Advances outstanding to the DNE Group to exceed
(or exceed by a greater amount) $3,000,000; and is used by such Borrower
Subsidiary for a Permitted Use of Proceeds.
PERMITTED SUPERIOR/ADIENCE LOAN - a loan or other extension of credit
by Superior to Adience, whether in the form of direct loans or Payment Item
Advances, provided that the aggregate amount of all such loans and Payment
Item Advances in the aggregate at any time do not exceed $5,000,000; no
Default or Event of Default exists at the time of the funding of such loan
or Payment Item Advance; payment of each loan and Payment Item Advance is
evidenced and secured by the Adience/Superior Documents that are in form
and content acceptable to Agent and Lenders; the Indebtedness resulting
from such loan or Payment Item Advance is not incurred by Adience in
violation of the Adience Senior Note Indenture and, to the extent required
by the Adience Senior Note Indenture to be permitted Indebtedness of
Adience that is not "senior debt" (as defined therein), is expressly
subordinate in right of payment to the Adience Senior Notes; and at the
time Superior proposes to make any such loan, Adience is not authorized to
receive a Permitted Subsidiary Advance from Borrower.
PERMITTED USE OF PROCEEDS - in the case of a use of proceeds of
Subsidiary Advances by a Borrower Subsidiary, a use of such proceeds for
one of the following purposes: (i) to pay at the Closing Date a portion of
the Indebtedness owing to the Superior/Alcatel Noteholders (approximately
$140 million); (ii) to pay after the Closing Date any Indebtedness incurred
in the ordinary course of a Borrower Subsidiary's business; (iii) to
finance capital expenditures of such Borrower Subsidiary to the extent
permitted by the Transaction Documents; (iv) to repay to Borrower any
Subsidiary Advances made to such Borrower Subsidiary; (v) to repay other
Indebtedness owing by such Borrower Subsidiary to Borrower, including such
Borrower Subsidiary's Allocated Note Proceeds Amount as the same becomes
due and payable; (vi) to pay subsequent to the Closing Date the deferred
purchase price in the amount of approximately $10,000,000 under the Alcatel
Transaction Documents; or (vii) to pay other expenses and claims of such
Borrower Subsidiary in the ordinary course of business.
PERSON - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
PLAN - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
POLYVISION - PolyVision Corporation, a New York corporation.
POLYVISION FRANCE - PolyVision France, S.A., a corporation organized
under the laws of the Country of France.
-70-
<PAGE>
POLYVISION LOANS - the loans to be made by Borrower from to time after
the Closing Date pursuant to two credit facilities, one of which provides
for loans to be made in an aggregate amount not to exceed $5,000,000 and
the other of which provides for the making of revolving loans not to exceed
$2,500,000 outstanding at any time for a period less than one year.
POLYVISION LOAN DOCUMENTS - all instruments and agreements at any time
or times evidencing or securing the repayment of any of the PolyVision
Loans.
POLYVISION STOCK - any shares of Capital Stock of PolyVision that is
at any time owned by Borrower.
PRO RATA - a share of or in all Loans, participations in Reimbursement
Obligations, payments, proceeds, collections, Collateral and Extraordinary
Expenses, which share for any Lender on any date shall be a percentage
arrived at by dividing the amount of the Commitment of such Lender on such
date by the aggregate amount of the Commitments of all Lenders on such
date.
PROJECTIONS - Borrower's forecasted Consolidated and consolidating (a)
balance sheets, (b) profit and loss statements, (c) cash flow statements,
and (d) capitalization statements, all prepared on a consistent basis with
Borrower's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
PROPERLY CONTESTED - in the case of any Indebtedness of an Obligor
(including any Taxes) that is not paid as and when due or payable by reason
of such Obligor's bona fide dispute concerning its liability to pay same or
concerning the amount thereof, that (i) such Indebtedness and any Liens
securing same are being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (ii) such Obligor
has established appropriate reserves as shall be required in conformity
with GAAP, (iii) the non-payment of such Indebtedness will not have a
Material Adverse Effect and will not result in a forfeiture of any assets
of such Obligor; (iv) no Lien is imposed upon any of such Obligor's assets
with respect to such Indebtedness unless such Lien is at all times junior
and subordinate in priority to the Liens in favor of Agent (except only
with respect to property taxes that have priority as a matter of applicable
state law); (v) if the Indebtedness results from the entry, rendition or
issuance against a Obligor or any of its assets of a judgment, writ, order
or decree, such judgment, writ, order or decree is stayed or bonded pending
a timely appeal or other judicial review; and (vi) if such contest is
abandoned, settled or determined adversely to such Obligor, such Obligor
forthwith pays such Indebtedness and all penalties and interest in
connection therewith.
PROPERTY - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
PURCHASE MONEY INDEBTEDNESS - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within 10 days prior to or after
the acquisition of any fixed assets for the purpose of financing all or any
part of the purchase price thereof, and (iii) any renewals, extensions or
refinancings thereof, but not any increases in the principal amounts
thereof outstanding at the time.
PURCHASE MONEY LIEN - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined
solely to the fixed assets the purchase price of which was financed through
the incurrence of the Purchase Money Indebtedness secured by such Lien.
REGULATION D - Regulation D of the Board of Governors.
REIMBURSEMENT AGREEMENTS - collectively, (i) the Reimbursement and
Indemnity Agreements to be executed on or about the Closing Date in favor
of Shawmut by Borrower and Adience and by Borrower and Superior, and (ii)
the Reimbursement and Indemnity Agreements to be executed after the Closing
Date in favor of Shawmut by Borrower, Adience and Adience Canada and by
Borrower, Superior and Superior Canada, pursuant to which Borrower and the
applicable Subsidiaries shall agree to reimburse Shawmut for all amounts
paid by Shawmut under any Borrower LC Guaranty or Canadian LC Guaranty.
-71-
<PAGE>
REIMBURSEMENT DATE - the date on which Borrower is required pursuant
to the applicable Reimbursement Agreement to reimburse Shawmut for any
payment made by Shawmut under a LC Guaranty.
REIMBURSEMENT OBLIGATIONS - on any date of determination thereof, an
amount equal to the sum of (i) the Borrower Reimbursement Obligations on
such date and (ii) the Canadian Reimbursement Obligations on such date.
REGISTER - the register maintained by Agent in accordance with Section
3.7 of the Agreement.
RENTALS - as defined in Section 8.2.13 of the Agreement.
REPORTABLE EVENT - any of the events set forth in Section 4043(b) of
ERISA.
REQUIRED LENDERS - at any date of determination thereof, Lenders
having Commitments representing at least 66-2/3% of the aggregate
Commitments at such time; PROVIDED, HOWEVER, that if any Lender shall have
failed to fund its Pro Rata share of any Borrowing of Revolver Loans in
accordance with the terms of this Agreement, then, for so long as such
failure continues, the term "Required Lenders" shall mean Lenders
(excluding such Lender whose failure to fund its Pro Rata share of any
Borrowing of Revolver Loans has not been cured) having Commitments
representing at least 66-2/3% of the aggregate Commitments at such time;
PROVIDED, FURTHER, HOWEVER, that if the Commitments have been terminated,
the term "Required Lenders" shall mean Lenders (excluding each Lender whose
failure to fund its Pro Rata share of any Borrowing of Revolver Loans has
not been cured) holding Loans representing at least 66-2/3% of the
aggregate principal amount of Loans outstanding at such time.
RESTRICTED INVESTMENT - any Investment except the following:
(i) Investments in one or more Subsidiaries of Borrower to
the extent existing on the Closing Date;
(ii) Investments in Cash Equivalents, but only if and to the
extent that such Cash Equivalents are at all times subject to Agent's
Liens hereunder and under the Security Documents, and such Investments
in Cash Equivalents are not made, directly or indirectly, from any
proceeds of any Collateral (excluding Deposit Accounts into which
Borrower may deposit proceeds of Loans);
(iii) Investments consisting of the PolyVision Loans,
provided that the PolyVision Loan Documents contain a covenant
requiring the PolyVision Loans to be repaid permanently with the net
proceeds of any subsequent financing by PolyVision, and in any
Securities into which the PolyVision Loans may be converted or for
which the PolyVision Loan may be exchanged;
(iv) Investments by Borrower in the Investment Accounts in
existence on the date of the Agreement, so long as Borrower does not
increase the amount of such Investments by contribution to any
Investment Accounts after the date of the Agreement; and
(v) Investments by Borrower in a Person, if as a result of
such Investment (a) such Person becomes a Restricted Subsidiary of
Borrower that is engaged in the same or a similar line of business to
that which any existing Restricted Subsidiary was engaged in on the
date of the Investment or (b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of
its assets to, or is liquidated into, Borrower if such Person was
engaged in the same or a similar line of business to that which a
Restricted Subsidiary was engaged in on the date of the Investment,
but only if on the date that any such Investment is made each of the
Restricted Payment Conditions is satisfied.
RESTRICTED PAYMENT - any monies paid by Borrower or a Restricted
Subsidiary in connection with (i) the declaration, payment or making of any
Distribution (excluding payments by Borrower or a Subsidiary Guarantor
under the Senior Note Guaranty in respect of the Senior
-72-
<PAGE>
Notes); (ii) the making of any principal payment on, or the purchase,
redemption, defeasance or other acquisition or retirement for value, prior
to any scheduled principal payment or scheduled maturity, of any
Subordinated Debt; (iii) the making of any Restricted Investment; or (iv)
purchase of all or substantially all of the assets of a Person as part of
such Person's sale of its business to Borrower or a Restricted Subsidiary.
RESTRICTED PAYMENT CONDITIONS - on any date, the following conditions:
(i) no Default or Event of Default exists or would result from the making
of a Restricted Payment proposed to be made on such date; (ii) no Out-of-
Formula Condition or Subsidiary Out-of-Formula Condition exists or would
result from the making of the Restricted Payment proposed to be made on
such date; (iii) the amount of the Restricted Payment in question would not
cause the total of all such Restricted Payments to exceed the Restricted
Payment Limit; (iv) any use of Revolver Loan proceeds to effect the
Restricted Payment proposed to be made on such date is not violative of any
Applicable Law; and (v) in connection with any acquisition of assets by
Borrower or a Restricted Subsidiary from a Person, such Person was engaged
in the same or a similar line of business to that which a Restricted
Subsidiary was engaged in on the date of the asset acquisition from such
Person.
RESTRICTED PAYMENT LIMIT - on any date, for purposes of determining
the aggregate amount of Restricted Payments that Borrower and its
Restricted Subsidiaries may make from Revolver Loan proceeds on such date,
an amount equal to the sum of the following on such date MINUS the
aggregate amount of Restricted Payments made directly or indirectly from
Revolver Loan proceeds on or before such date: (i) $4,000,000, MINUS an
amount equal to the total all of PolyVision Loans made by Borrower on or
before such date in excess of $5,000,000 PLUS an amount equal to (but not
to exceed $2,500,000) the proceeds in excess of $6,100,000 that are turned
over to Agent from any diposition of PolyVision Stock for application to
the Obligations in accordance with Section 8.2.9 hereof, (ii) amounts paid
on or before such date from Revolver Loan proceeds as scheduled dividend
payments on Borrower's convertible senior preferred stock currently
outstanding, and (iii) 50% of the amount by which Consolidated Net Income
on a cumulative basis exceeds $8,000,000 during the period (taken as one
accounting period) from May 1, 1995 to the date of determination (which
shall be the end of Borrower's most recently ended fiscal quarter for which
internal financial statements are available at the time of the proposed
Restricted Payment), but the additional amount allowed under clause (iii)
above shall be available only if the Indenture Fixed Charge Coverage Ratio
for Borrower's most recently ended four fiscal quarters for which internal
financial statements are available immediately preceding the date on which
the proposed Restricted Payment is to be made, taken as a whole, would have
been at least 2.0 to 1 through July 21, 1997 and 2.25 to 1 thereafter.
RESTRICTED SUBSIDIARY - Adience, Superior, the DNE Group (at such time
as it becomes a Borrower Subsidiary or Subsidiary Guarantor), Adience
Canada and Superior Canada, and each of their respective present and future
Subsidiaries (excluding PolyVision and PolyVision France) and any other
Person that is or hereafter becomes a "Restricted Subsidiary" within the
meaning of the Senior Noteholder Indenture.
REVOLVER FACILITY - the revolving credit facility established by
Lenders in favor of Borrower pursuant to Section 1.1 of the Agreement.
REVOLVER LOAN - a loan made by Lenders as provided in Section 1.1 of
the Agreement.
REVOLVER NOTE - a Revolver Note to be executed by Borrower in favor of
each Lender in the form of EXHIBIT A attached hereto, which shall be in the
face amount of such Lender's Commitment and which shall evidence all
Revolver Loans made by such Lender to Borrower pursuant to the Agreement.
SCHEDULE OF ACCOUNTS - as defined in Section 6.2.2 of the Agreement.
SECURITY - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933.
SECURITY DOCUMENTS - the Alcatel Transaction Documents Assignment, the
Patent Assignments, the Subsidiary Guaranties, each Subsidiary Security
Agreement, the Trademark Security Agreements, the Subsidiary Loan Documents
Assignment, the Deposit Accounts Assignments, the Allocated Proceeds Notes
Pledge, the Superior Canada Security Agreement, the Adience Debt Exchange
Note Pledge, and all other instruments and agreements now or at any time
hereafter securing the whole or any part of the Obligations.
-73-
<PAGE>
SENIOR NOTE DOCUMENTS - the Senior Noteholder Indenture, the Senior
Notes, each Senior Note Guaranty, each Senior Note Stock Pledge, the
Offering Memorandum and any other instrument or agreement now or hereafter
from time to time evidencing the payment of any of the Senior Notes.
SENIOR NOTE GUARANTY - the guaranty of payment of the Senior Notes
executed by Subsidiary Guarantors in favor of the Senior Noteholder
Trustee, which in the case of the guaranty executed by Adience, shall be
subordinate in right of payment to the Adience Senior Notes.
SENIOR NOTEHOLDER INDENTURE - the Senior Noteholder Indenture dated as
of July 15, 1995, among Borrower, as issuer; the Restricted Subsidiaries,
as subsidiary guarantors; and the Senior Noteholder Trustee.
SENIOR NOTEHOLDER TRUSTEE - Marine Midland Bank, in its capacity as
trustee under the Senior Noteholder Indenture for the holders of the Senior
Notes, and any successor trustee under the Senior Noteholder Indenture.
SENIOR NOTES - the $153,000,000 aggregate principal amount of 12 1/4%
Senior Secured Notes due 2003, payable interest only in semi-annual
installments for 8 years at a rate to be determined and to be guaranteed by
each Subsidiary Guarantor.
SENIOR NOTE STOCK PLEDGE - each pledge executed by Borrower in favor
of the indenture trustee under the Senior Noteholder Indenture by which
Borrower shall pledge any of the Capital Stock of any Restricted Subsidiary
as security for the payment of the Senior Notes.
SENIOR OFFICER - any of the chairman of the board of directors,
president, any senior or executive vice president or chief financial
officer of, or in-house legal counsel to, Borrower.
SETTLEMENT DATE - as defined in Section 3.1.2(ii).
SETTLEMENT REPORT - a report delivered by Agent to Lenders summarizing
the amount of the outstanding Revolver Loans as of the Settlement Date and
the calculation of the Adience Formula Amount and the Superior Formula
Amount as of such Settlement Date.
SHAWMUT - Shawmut Capital Corporation, a Connecticut corporation, and
its successors and assigns.
SOLVENT - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) is able to pay all
of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
SOURCES AND USES AGREEMENT - the Summary of Sources and Uses of Funds
and Proceeds among Borrower, the Borrower Subsidiaries and Agent, dated the
date hereof and setting forth the disposition by Borrower and the Borrower
Subsidiaries of cash on hand at closing and the proceeds of the Senior
Notes and the initial Revolver Loans.
STATUTORY RESERVES - on any date, the percentage (expressed as a
decimal) established by the Board of Governors which is the then stated
maximum rate for all reserves (including, but not limited to, any
emergency, supplemental or other marginal reserve requirements) applicable
to any member bank of the Federal Reserve System in respect to Eurocurrency
Liabilities (or any successor category of liabilities under Regulation D).
Such reserve percentage shall include, without limitation, those imposed
pursuant to said Regulation D. The Statutory Reserve shall be adjusted
automatically on and as of the effective date of any change in such
percentage.
SUBORDINATED DEBT - Indebtedness of Borrower that is fully and
absolutely subordinated in right of payment to the Obligations in a manner
satisfactory to Lender.
SUBORDINATED SUBSIDIARY GUARANTY - the Continuing Subsidiary Guaranty
Agreement to be executed on or about the Closing Date by Adience in favor
of Agent, for Agent's benefit and for the Pro Rata benefit of Lenders, by
which Adience shall guarantee payment of the
-74-
<PAGE>
Obligations, but with Agent's and Lender's rights to payment thereunder
being subordinate to the Indebtedness evidenced by the Adience Senior Notes
in the manner and to the extent provided therein.
SUBSIDIARY - any Person a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by Borrower or
by one or more other Subsidiaries or by Borrower and one or more other
Subsidiaries.
SUBSIDIARY ADVANCE - a loan or other extension of credit from time to
time made by Borrower to a Borrower Subsidiary.
SUBSIDIARY COLLATERAL - with respect to each Borrower Subsidiary, and
each Subsidiary Guarantor whether or not a Borrower Subsidiary, all
existing and future Accounts, Inventory, General Intangibles, Documents,
Instruments and Chattel Paper of such Subsidiary, but excluding, in the
case of Superior, any rights of Superior under the Adience/Superior
Documents.
SUBSIDIARY COLLATERAL INTERCREDITOR AGREEMENT - the Intercreditor
Agreement to be entered into between Agent and Borrower, in form and
substance mutually agreeable to the parties, by which the parties shall
agree, among other things, that irrespective of the order of perfection of
any Liens in any of the Subsidiary Collateral, the Liens therein held by
Borrower shall be first priority Liens therein and the Liens held by Agent
shall be second priority Liens therein, and containing such other
provisions as are customarily found in agreements of that type and that are
requested by Agent.
SUBSIDIARY GUARANTIES - the Subordinated Subsidiary Guaranty, the Non-
Subordinated Subsidiary Guaranty and the Superior Canada Guaranty.
SUBSIDIARY GUARANTORS - Adience, Superior, Superior Canada, the DNE
Group (if and to the extent consented to by the CDA) and each other Person
that becomes a Restricted Subsidiary after the date hereof.
SUBSIDIARY LOAN AGREEMENT - a Loan and Security Agreement entered into
between Borrower and a Borrower Subsidiary and pursuant to which Borrower
shall make Subsidiary Advances to such Borrower Subsidiary.
SUBSIDIARY LOAN DOCUMENTS - with respect to each Borrower Subsidiary,
its Subsidiary Loan Agreement and all notes, security agreements and other
instruments and documents at any time or times executed by such Borrower
Subsidiary to or in favor of Borrower to evidence and secure the repayment
of Subsidiary Advances outstanding from time to time from Borrower to such
Borrower Subsidiary.
SUBSIDIARY LOAN DOCUMENTS ASSIGNMENT - the Collateral Assignment of
Subsidiary Loan Documents and Note Pledge Agreement to be dated the date
hereof between Borrower and Agent pursuant to which Borrower shall
collaterally assign to Agent, for its benefit as Agent and for the Pro Rata
benefit of Lenders, all of Borrower's rights, title and interest in, to and
under the Subsidiary Loan Documents.
SUBSIDIARY OUT-OF-FORMULA CONDITION - for either Adience or Superior,
a condition such that the total Subsidiary Advances outstanding to Adience
or Superior, as the case may be, shall exceed the Adience Formula Amount or
the Superior Formula Amount, as the case may be, on such date.
SUBSIDIARY SECURITY AGREEMENT - a security agreement to be executed by
each Subsidiary Guarantor in favor of Agent and by which such Subsidiary
Guarantor shall grant a security interest to Agent, for its benefit as
Agent and for the Pro Rata benefit of Lenders, in all of the Subsidiary
Collateral or Canadian Subsidiary Collateral, as the case may be, of such
Subsidiary Guarantor as security for the Obligations.
SUPERIOR - Superior Telecommunications Inc., a Georgia corporation,
formerly known as Superior TeleTec Inc.
SUPERIOR/ALCATEL NOTEHOLDERS - Creditanstalt Corporate Finance, Inc.,
Nomura Holding America Inc., and Orix USA Corporation.
-75-
<PAGE>
SUPERIOR CANADA - Superior Cable Corporation, a corporation
incorporated under the laws of Ontario and a wholly owned subsidiary of
Superior.
SUPERIOR CANADA COLLATERAL - on any date, the Subsidiary Collateral
owned by Superior Canada on such date.
SUPERIOR CANADA GUARANTY - the Limited Subsidiary Guaranty Agreement
to be executed by Superior Canada in favor of Agent and Lenders and by
which Superior Canada shall unconditionally guarantee the payment and
performance of all Indebtedness of Superior to Agent or any Lender,
including all Indebtedness of Superior under the Non-Subordinated
Subsidiary Guaranty, but limited in liability thereunder to the principal
amount of $15,000,000.
SUPERIOR CANADA SECURITY AGREEMENT - the General Security Agreement to
be executed by Superior Canada in favor of Agent pursuant to which Superior
Canada shall grant to Agent, for its benefit in such capacity and for the
Pro Rata benefit of Lenders, a security interest in all Superior Canada
Collateral as security for the Indebtedness at any time or times
outstanding under the Superior Canada Guaranty.
SUPERIOR FORMULA AMOUNT - at any date of determination thereof, an
amount equal to the sum of (a) 90% of the net amount of Eligible Accounts
that are owned by Superior, arose from the sale of its Inventory in the
ordinary course of business and are outstanding at such time; PLUS (b) the
lesser of (1) $37,500,000 or (2) the sum of 60% of the value (at the lower
of cost or market, with cost calculated on a FIFO basis, all as determined
by Agent in its customary credit judgment) of Eligible Inventory consisting
of raw materials or finished goods (including in the value of raw
materials, the value of any copper content of work-in-process) PLUS (c) 35%
of the value (at the lower of cost or market, with cost calculated on a
FIFO basis, all as determined by Agent in its customary credit judgment) of
Eligible Inventory consisting of work-in-process (excluding from the value
of such work-in-process any copper content).
SUPERIOR INTERCREDITOR AGREEMENT - the Estoppel Letter and Certificate
to be entered into between Agent and Superior, in form and substance
mutually agreeable to the parties, and by which Superior shall agree, among
other things, that it will give notice of any Event of Default under the
Adience/Superior Documents prior to exercising any right or remedy
thereunder, including any foreclosure upon any Lien granted thereunder, and
certifies that the copies of the Adience/Superior Documents annexed thereto
are true and correct copies of such documents.
TAXES - any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including income, receipts, excise, property, sales, use, transfer,
license, payroll, withholding, social security and franchise taxes now or
hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political
subdivision or taxing authority thereof or therein and all interest,
penalties, additions to tax and similar liabilities with respect thereto,
but excluding, in the case of each Lender, taxes imposed on or measured by
the net income or overall gross receipts of such Lender.
TERM - as defined in Section 4.1 of the Agreement.
TRADEMARK SECURITY AGREEMENT - each Trademark Security Agreement
executed by a Restricted Subsidiary (including DNE upon its receipt of the
requisite consent of CDA) in favor of Agent and by which such Restricted
Subsidiary has assigned to Agent, for its benefit as Agent and for the Pro
Rata benefit of Lenders, as security for the Obligations, all of such
Restricted Subsidiary's right, title and interest in and to all of its
trademarks.
TRANSACTION DOCUMENTS - the Loan Documents, the Subsidiary Loan
Documents and the Canadian Financing Documents.
TRANSFEREE - as defined in Section 12.3.3 of the Agreement.
TYPE - a LIBOR Rate Advance or a Base Rate Advance.
VOTING STOCK - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing
similar functions).
-76-
<PAGE>
ACCOUNTING TERMS. Unless otherwise specified herein, all terms of an
accounting character used in the Agreement shall be interpreted, all accounting
determinations under the Agreement shall be made, and all financial statements
required to be delivered under the Agreement shall be prepared, in accordance
with GAAP, applied on a basis consistent with the most recent audited
consolidated financial statements of Borrower and its Subsidiaries delivered to
Agent or any Lender, except for any change in which Borrower's independent
public accountants concur or as required by GAAP unless (i) Borrower shall have
objected to determining such compliance on such basis at the time of delivery of
such financial statements or (ii) Agent or the Required Lenders shall so object
in writing within 30 days after the delivery of such financial statements, in
either of which events 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.
OTHER TERMS. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time
from a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any of the
Transaction Documents
-77-
<PAGE>
shall include any and all modifications thereto and any and all extensions or
renewals thereof. All references to any Person shall mean and include
successors and permitted assigns of such Person.
IN WITNESS WHEREOF, this Appendix has been duly executed in Atlanta,
Georgia on July __, 1995.
BORROWER:
ATTEST: THE ALPINE GROUP, INC.
_________________________ By:____________________________________
Secretary Title:______________________________
[CORPORATE SEAL]
LENDERS:
SHAWMUT CAPITAL CORPORATION
By:____________________________________
Title:________________________________
NATIONSBANK OF GEORGIA, N.A.
By:____________________________________
Title:______________________________
CREDITANSTALT CORPORATE FINANCE,
INC.
By:____________________________________
Title:______________________________
By:____________________________________
Title:______________________________
AGENT:
SHAWMUT CAPITAL CORPORATION,
-78-
<PAGE>
as Agent
By:____________________________________
Title:________________________________
-79-
<PAGE>
Exhibit 10(z)
AMENDMENT TO EMPLOYMENT AGREEMENT
(Justin F. Deedy, Jr.)
AGREEMENT dated as of November 10, 1993 by and between The Alpine Group,
Inc., a Delaware corporation (the "Company"), and Justin F. Deedy (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated as of the date hereof (the "Employment Agreement); and
WHEREAS, Section 4 of the Employment Agreement contains certain provisions
included in error, which the parties hereto desire to correct and amend.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 4(e) of the Employment Agreement is hereby amended to read in
full as follows:
"(e) FURTHER RESTRICTED STOCK GRANT. The Company will make a further
grant to the Executive of 12,367 shares of Company Stock pursuant to the
Restricted Stock Plan, as amended, or other plan, which restricted shares
shall be set aside in the custody, control and possession of the Company
and released to the Executive at the rate of 2,474 shares on November 10,
1994 and 1995 and 2,473 shares on November 10, 1996, 1997 and 1998,
provided that, in the event the Executive's employment is terminated under
Sections 6(a) or (b) prior to the second anniversary of the Commencement
Date or under Section 6(c) or by Executive without Good Reason prior to the
fifth anniversary of the Commencement Date, the total number of restricted
shares to be released to the Executive shall be 12,367 multiplied by a
fraction the numerator of which is the number of months the Executive is
employed by the Company from and after the Commencement Date and the
denominator of which is 60. Any and all unreleased shares shall be
forfeited by the Executive and cancelled and retired by the Company."
2. The first sentence of Section 4(f) of the Employment Agreement is
hereby amended by deleting the parenthetical clause "(to the extent of the
credited exercise price)" in the fifth and twelfth lines thereof.
3. Except as expressly amended hereby, the Employment Agreement shall not
be altered, amended or modified and shall continue in full force and effect.
Any future documents
<PAGE>
confirming or otherwise relating to the stock option or restricted stock grants
under Sections 4(c), 4(d) or 4(e) of the Employment Agreement, as amended, shall
be subject and pursuant to the Employment Agreement, as amended, and, in the
event of any conflict between related provisions, the Employment Agreement, as
amended, shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE ALPINE GROUP, INC.
by
--------------------------------------------------
Name:
Title:
THE EXECUTIVE
--------------------------------------------------
Justin F. Deedy, Jr.
2
<PAGE>
Exhibit 10(aa)
AMENDMENT TO EMPLOYMENT AGREEMENT
(David S. Aldridge)
AGREEMENT dated as of November 10, 1993 by and between The Alpine Group,
Inc., a Delaware corporation (the "Company"), and David S. Aldridge (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated as of the date hereof (the "Employment Agreement"); and
WHEREAS, Section 4 of the Employment Agreement contains certain provisions
included in error, which the parties hereto desire to correct and amend.
NOW, THEREFORE, the patties hereto agree as follows:
1. Section 4(e) of the Employment Agreement is hereby amended to read in
full as follows:
"(e) FURTHER RESTRICTED STOCK GRANT. The Company will make a further
grant to the Executive of 16,786 shares of Company Stock pursuant to
the Restricted Stock Plan, as amended, or other plan, which restricted
shares shall be set aside in the custody, control and possession of
the Company and released to the Executive at the rate of 3,358 shares
on November 10, 1994 and 3,357 shares on November 10, 1995, 1996, 1997
and 1998, provided that, in the event the Executive's employment is
terminated under Sections 6(a) or (b) prior to the second anniversary
of the Commencement Date or under Section 6(c) or by Executive without
Good Reason prior to the fifth anniversary of the Commencement Date,
the total number of restricted shares to be released to the Executive
shall be 16,786 multiplied by a fraction the numerator of which is the
number of months the Executive is employed by the Company from and
after the Commencement Date and the denominator of which is 60. Any
and all unreleased shares shall be forfeited by the Executive and
cancelled and retired by the Company."
2. The first sentence of Section 4(f) of the Employment Agreement is
hereby amended by deleting the parenthetical clause "(to the extent of the
credited exercise price)" in the fifth and twelfth lines thereof.
3. Except as expressly amended hereby, the Employment Agreement shall not
be altered, amended or modified and shall
<PAGE>
continue in full force and effect. Any future documents confirming or otherwise
relating to the stock option or restricted stock grants under Sections 4(c),
4(d) or 4(e) of the Employment Agreement, as amended, shall be subject and
pursuant to the Employment Agreement, as amended, and, in the event of any
conflict between related provisions, the Employment Agreement, as amended, shall
prevail.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE ALPINE GROUP, INC.
by
-------------------------------------------------
Name:
Title:
THE EXECUTIVE
-------------------------------------------------
David S. Aldridge
2
<PAGE>
Exhibit 10(bb)
AMENDMENT TO AMENDED AND RESTATED DEBT EXCHANGE AGREEMENT
AMENDMENT, dated as of June 30, 1995, between those persons whose
names are listed on Exhibit A hereto and who have executed a signature page to
this Amendment (the "NOTEHOLDERS") and The Alpine Group, Inc., a Delaware
corporation with offices at 1790 Broadway, New York, New York 10019 ("ALPINE").
WHEREAS, the Noteholders and Alpine are parties to an Amended and
Restated Debt Exchange Agreement, dated as of October 11, 1994 (as amended to
date, the "AGREEMENT"). Terms defined in the Agreement and used but not
otherwise defined herein shall have the meanings given to them in the Agreement;
and
WHEREAS, the Noteholders and Alpine wish to amend the Agreement as
provided herein.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Section 1.02(a) of the Agreement is amended by deleting "June 30,
1995" and inserting in its place "August 15, 1995".
2. Section 1.04(c) of the Agreement is amended to read in its
entirety as follows:
"(c) at the Closing, a certificate registered in the name of
such Noteholder representing the number, set forth on
Exhibit A, of shares of common stock, par value $.001 per
share ("POLYVISION COMMON STOCK"), of PolyVision
Corporation, a New York corporation ("PolyVision", formerly
Information Display Technology, Inc. or "IDT").
3. Section 1.05 of the Agreement is amended to read in its entirety
as follows:
"1.05 NO FRACTIONAL SHARES. Neither certificates nor scrip
for fractional shares of Alpine 8% Preferred Stock or
PolyVision Common Stock will be issued in connection with
the transactions contemplated hereby,
<PAGE>
but in lieu thereof each Seller otherwise entitled to a
fraction of a share of Alpine 8% Preferred Stock or
PolyVision Common Stock under Section 1.04 shall be paid in
cash an amount equal to such fraction multiplied by (a)
$50.00 (in the case of a fractional share of Alpine 8%
Preferred Stock) or (b) (in the case of a fractional share
of PolyVision Common Stock) the market price per share of
PolyVision Common Stock computed on the basis of the last
sales price per share of PolyVision Common Stock on the date
immediately preceding the Closing Date (or if there is no
such sale on such date, the last sales price prior to such
date)."
4. Section 1.06 is amended to read in its entirety as follows:
"1.06 CONSIDERATION RESET. (a) Subject to the terms and
conditions of this Section 1.06, if the average of the
closing prices for PolyVision Common Stock on each of the 20
trading days immediately preceding December 15, 1995 (the
"Average Market Value") is less than $33.60 per share,
adjusted as appropriate for stock splits, dividends payable
in cash or property, and similar events or transactions with
respect to PolyVision between the date hereof and December
15, 1995 (such amount, as so adjusted, is hereinafter
referred to as the "Target Value"), then Alpine will deliver
to each Noteholder an amount of consideration (the "Reset
Consideration") equal to the number of shares of PolyVision
Common Stock acquired by such Noteholder pursuant to this
Agreement and still held by such Noteholder as of December
15, 1995, multiplied by the difference between the Target
Value and the greater of the Average Market Value and
$11.25, subject to adjustment as above.
(b) Alpine shall deliver the Reset Consideration in Alpine
8% Preferred Stock (valued at its liquidation preference) or
PolyVision Common Stock (valued at the Average Market
Value), or a combination thereof, as Alpine may determine in
its sole discretion. Alpine shall deliver the Reset
Consideration no later than December 30, 1995, without
interest.
2
<PAGE>
(c) The provisions of this Section 1.06 shall be terminated
and shall be of no force or effect if the closing price of
PolyVision Common Stock is greater than or equal to the
Target Value for at least 10 consecutive trading days
between June 23, 1995 (i.e., the thirtieth day after the
date of the merger of Alpine Polyvision, Inc., a Delaware
corporation and a subsidiary of Alpine and Posterloid
Corporation, a Delaware corporation and a subsidiary of
Alpine into wholly-owned subsidiaries of IDT was
consummated) and November 15, 1995, provided that during
such period there is in effect a registration statement
under the Securities Act of 1933 (the "SECURITIES ACT")
permitting the sale of PolyVision Common Stock by the
Noteholders.
(d) If the provisions of this Section 1.06 have not been
terminated as provided in Section 1.06(c), then between
November 15, 1995 and December 15, 1995, (i) no Noteholder
who owns any PolyVision Common Stock acquired pursuant to
this Agreement as of November 15, 1995, shall, with respect
to any PolyVision Common Stock, sell, sell short, sell a put
option or enter into any agreement with respect to the
foregoing and (ii) Alpine shall not with respect to any
PolyVision Common Stock, purchase, purchase an option to
purchase or enter into any agreement with respect to the
foregoing. In the event of a breach of this provision by a
Noteholder, such Noteholder shall forfeit its right to
receive the Reset Consideration."
5. Section 5.01 is amended to read in its entirety as follows:
"REGISTRATION OF POLYVISION COMMON STOCK. Alpine will cause
PolyVision to file a registration statement with the SEC
with respect to the PolyVision Common Stock and to use its
best efforts to cause such registration statement to become
effective.
6. References in the Agreement to IDT and IDT Common Stock are
deemed to refer to PolyVision and PolyVision Common Stock, respectively, where
appropriate.
3
<PAGE>
7. A revised and updated Exhibit A is attached hereto which adds
information with respect to the PolyVision Common Stock.
8. All other terms and conditions of the Agreement shall remain in
full force and effect without modification.
[SIGNATURE PAGES FOLLOW]
4
<PAGE>
This Amendment has been duly executed on the date hereinabove set
forth.
THE ALPINE GROUP, INC.
By
------------------------------------------
Name:
Title:
THE NOTEHOLDERS:
REFERENCE IS MADE TO THE COUNTERPART
NOTEHOLDERS' SIGNATURE PAGE, EXECUTED BY EACH
NOTEHOLDER AND MADE A PART HEREOF
S-1
<PAGE>
AMENDMENT TO AMENDED AND RESTATED DEBT EXCHANGE AGREEMENT
COUNTERPART SIGNATURE PAGE
NOTEHOLDER:
Name of Noteholder:
------------------------------
By:
-----------------------------------------
(signature)
Name:
----------------------------------------
Title:
---------------------------------------
S-2
<PAGE>
Exhibit 10(cc)
ADIENCE, INC.,
as Obligor
and
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
_____________________________________________
Supplemental Indenture
Dated as of July 21, 1995
____________________________________________
Supplementing and Amending Indenture
Dated as of June 30, 1993
with respect to $49,078,625
11% Senior Secured Notes due 2002
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of July 21, 1995 (the "Supplemental
Indenture"), made by and between Adience, Inc., a Delaware corporation
("Adience"), and IBJ Schroder Bank & Trust Company, a New York banking
corporation (the "Trustee"), to the Original Indenture (as such term is
hereinafter defined).
WHEREAS, Adience and the Trustee have heretofore entered into the
Original Indenture, pursuant to the provisions of which Adience has heretofore
issued $49,078,625 in aggregate principal amount of the Securities;
WHEREAS, Adience desires to supplement and amend the Original
Indenture in accordance with its terms;
WHEREAS, Section 9.02 of the Original Indenture provides that Adience
and the Trustee may amend the Original Indenture with the written consent of the
Holders of at least 66 2/3% of the aggregate principal amount of the outstanding
Securities;
WHEREAS, Holders of at least 66 2/3% of the aggregate principal amount
of the outstanding Securities have provided such written consent to the Trustee;
and
WHEREAS, all the requirements of law and the Certificate of
Incorporation and By-laws of Adience have been fully complied with, all
conditions and requirements necessary to authorize the execution and delivery of
this Supplemental Indenture have been duly complied with or done and performed
by Adience, and all actions necessary to make this Supplemental Indenture and
the Original Indenture, as supplemented by this Supplemental Indenture, valid,
binding and legal instruments according to their terms (and, with respect to
this Supplemental Indenture, in accordance with the terms of the Original
Indenture) have been complied with or done and performed;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that, for and
consideration of the premises and of the mutual covenants herein contained and
for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Adience covenants and agrees with the Trustee, for the
benefit of all present and future Holders of the Securities, as follows:
Section 1. The definitions set forth or incorporated by reference
in the Original Indenture shall be applicable to this Supplemental Indenture as
fully and to the same extent and effect as if set forth herein, except as
otherwise expressly provided herein. As used in this Supplemental Indenture,
the term "Original Indenture" shall mean the Indenture, dated as of June 30,
1993, between Adience and the Trustee, with respect to the Securities.
<PAGE>
Section 2. Section 1.01 shall be, and hereby is, amended by
deleting in its entirety the definition of "INTERCREDITOR AGREEMENT" set forth
therein and replacing it with the following definition:
"INTERCREDITOR AGREEMENT" means the Intercreditor and Subordination
Agreement of even date herewith between Congress Financial Corporation, a
California corporation, and the Trustee, as such Intercreditor Agreement and
Subordination Agreement may hereafter be amended, supplemented, restated, or
otherwise modified from time to time, or any other similar agreement between the
Trustee and Congress Financial Corporation or any other holder of Senior Debt,
as the case may be."
Section 3. Sections 4.03, 4.04, 4.07, 4.08, 4.09, 4.10, 4.12, 4.13
and 4.24 shall be, and hereby are, deleted in their entirety.
Section 4. Section 4.16 shall be, and hereby is, amended by adding
the following Section 4.16(d):
"(d) Notwithstanding anything herein to the contrary, the Company or
any of its Subsidiaries may incur any Indebtedness which is expressly
subordinate in right of payment to the Securities; provided, however, that any
such Indebtedness incurred pursuant to this Section 4.16(d) shall be expressly
excluded from the definition of "Senior Debt" as defined herein."
Section 5. Section 5.01 shall be, and hereby is, amended as
follows: Section 5.01(4) shall be deleted and replaced with the following
Section 5.01(4):
"(4) any corporation formed by or surviving any such consolidation or
merger, or to which such transfer, lease or other disposition shall have been
made, shall have a positive Net Worth immediately after the transaction, but
prior to any purchase accounting adjustments resulting from the transaction."
Section 6. Section 6.01 shall be, and hereby is, amended as
follows:
a. Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6), and 6.01(8)
shall be deleted in their entirety.
b. The paragraph of Section 6.01 which commences with "Any
Event of Default shall not be deemed . . ." shall be deleted in its entirety.
Section 7. The reference to "4.05" in the paragraph of Section
8.01 commencing with "Notwithstanding the discharge of this Indenture as
aforesaid . . ." shall be deleted.
2
<PAGE>
Section 8. The Company, as the entity surviving the merger of Heat
Technology, Inc., a Delaware corporation and a wholly-owned subsidiary of The
Alpine Group, Inc., with and into the Company, reaffirms all of its obligations
under the Securities and the Indenture.
Section 9. This Supplemental Indenture is a supplemental indenture
pursuant to Section 9.02 (and with respect to Section 8 hereof, pursuant to
Sections 5.01 and 9.01) of the Original Indenture. Upon execution and delivery
of this Supplemental Indenture, the terms and conditions of this Supplemental
Indenture shall be part of the terms and conditions of the Indenture for any and
all purposes, and all the terms and conditions of both shall be read together as
though they constitute one instrument, except that in case of conflict, the
provisions of this Supplemental Indenture will control.
Section 10. This Supplemental Indenture shall become effective on
the Closing Date, as such term is defined in the Debt Exchange Agreement, dated
as of October 11, 1994, among The Alpine Group, Inc., a Delaware corporation,
and the parties listed on Exhibit A thereto. Should such Closing Date fail to
occur within 90 days from the date hereof, the provisions of this Supplemental
Indenture shall have no effect, and the terms, conditions, and provisions of the
Original Indenture shall continue unchanged and in full force and effect.
Section 11. Except as they have been modified in this Supplemental
Indenture, each and every term and provision of the Original Indenture shall
continue in full force and effect, and all references to the Indenture in the
Original Indenture shall hereafter be deemed to mean the Original Indenture as
supplemented and amended pursuant hereto.
Section 12. This Supplemental Indenture may be executed in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original, but which counterparts shall together constitute but
one and the same instrument.
Section 13. This Supplemental Indenture shall be governed by and
construed in accordance with the laws of the State of New York as applied to
agreements among New York residents entered into and to be performed entirely
within New York.
[SIGNATURE PAGE FOLLOWS]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first written above.
ADIENCE, INC.
By:
-------------------------
Bragi F. Schut
Senior Vice President
IBJ SCHRODER BANK & TRUST
COMPANY, as Trustee
By:
-------------------------
Name:
Title:
S-1
<PAGE>
Exhibit 10(dd)
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
(James R. Kanely)
AGREEMENT dated as of November 10, 1993 by and between The Alpine Group,
Inc., a Delaware corporation (the "Company"), and James R. Kanely (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated as of the date hereof (the "Employment Agreement"); and
WHEREAS, Section 4 of the Employment Agreement contains certain provisions
included in error, which the parties hereto desire to correct and amend.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 4(e) of the Employment Agreement is hereby amended to read in
full as follows:
"(e) ANNUITY PAYMENTS. The Company shall pay $520,500 to the
Executive in fifteen annual installments of $34,700 each starting on the
date the Executive reaches age 60 and ending on the date the Executive
reaches age 74, provided that, in the event the Executive's employment is
terminated under Sections 6(a) or (b) prior to the second anniversary of
the Commencement Date or under Section 6(c) or by the Executive without
Good Reason prior to the fifth anniversary of the Commencement Date, the
amount of each such annual installment shall be multiplied by a fraction
the numerator of which is the number of months the Executive is employed by
the Company from and after the Commencement Date and the denominator of
which is 60."
2. The first sentence of Section 4(f) of the Employment Agreement is
hereby amended by deleting the words "or 4(e) (to the extent of the credited
exercise price)" in the fourth and fifth lines thereof and in the eleventh and
twelfth lines thereof.
3. Except as expressly amended hereby, the Employment Agreement shall not
be altered, amended or modified and shall continue in full force and effect.
Any future documents confirming or otherwise relating to the stock option or
restricted stock grants under Section 4(c) or Section 4(d) of the Employment
Agreement shall be subject and pursuant to the Employment Agreement, as amended,
and, in the event of any
<PAGE>
conflict between related provisions, the Employment Agreement, as amended, shall
prevail.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE ALPINE GROUP, INC.
By:--------------------
Name:
Title:
THE EXECUTIVE
James R. Kanely
2
<PAGE>
Exhibit 10(ee)
--------------------------------------------------------------------------------
THE ALPINE GROUP, INC.,
Issuer,
SUPERIOR TELECOMMUNICATIONS INC.,
ADIENCE, INC.
and
SUPERIOR CABLE CORPORATION,
Subsidiary Guarantors
and
MARINE MIDLAND BANK,
Trustee
------------
Indenture
Dated as of July 15, 1995
------------
12 1/4% Senior Secured Notes due 2003
12 1/4% Series B Senior Secured Notes due 2003
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
Section 102. Other Definitions . . . . . . . . . . . . . . . . . . . . 18
Section 103. Compliance Certificates and Opinions. . . . . . . . . . . 19
Section 104. Form of Documents Delivered to Trustee. . . . . . . . . . 20
Section 105. Acts of Holders . . . . . . . . . . . . . . . . . . . . . 20
Section 106. Notices, etc., to Trustee, Company and Subsidiary
Guarantors . . . . . . . . . . . . . . . . . . . . . . . 22
Section 107. Notice to Holders; Waiver . . . . . . . . . . . . . . . . 22
Section 108. Effect of Headings and Table of Contents. . . . . . . . . 23
Section 109. Successors and Assigns. . . . . . . . . . . . . . . . . . 23
Section 110. Separability Clause . . . . . . . . . . . . . . . . . . . 23
Section 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . 23
Section 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . 23
Section 113. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . 23
Section 114. Execution of Ancillary Documents. . . . . . . . . . . . . 24
ARTICLE TWO
NOTE FORMS
Section 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . 24
Section 202. Restrictive Legends . . . . . . . . . . . . . . . . . . . 25
Section 203. Form of Certificate to Be Delivered upon Termination
of Restricted Period.. . . . . . . . . . . . . . . . . . 28
Section 204. Form of Face of Note. . . . . . . . . . . . . . . . . . . 29
Section 205. Form of Reverse of Note . . . . . . . . . . . . . . . . . 32
Section 206. Form of Trustee's Certificate of Authentication . . . . . 36
ARTICLE THREE
THE NOTES
Section 301. Title and Terms . . . . . . . . . . . . . . . . . . . . . 37
Section 302. Denominations . . . . . . . . . . . . . . . . . . . . . . 37
<PAGE>
Section 303. Execution, Authentication, Delivery and Dating. . . . . . 37
Section 304. Temporary Notes . . . . . . . . . . . . . . . . . . . . . 38
Section 305. Registration, Registration of Transfer and Exchange . . . 39
Section 306. Book-Entry Provisions for U.S. Global Note. . . . . . . . 40
Section 307. Special Transfer Provisions . . . . . . . . . . . . . . . 41
Section 308. Form of Certificate to Be Delivered in Connection
with Transfers to Non-QIB Institutional Accredited
Investors. . . . . . . . . . . . . . . . . . . . . . . . 45
Section 309. Form of Certificate to Be Delivered in Connection
with Transfers Pursuant to Regulation S. . . . . . . . . 48
Section 310. Mutilated, Destroyed, Lost and Stolen Notes . . . . . . . 50
Section 311. Payment of Interest; Interest Rights Preserved. . . . . . 50
Section 312. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 52
Section 313. Cancellation. . . . . . . . . . . . . . . . . . . . . . . 52
Section 314. Computation of Interest . . . . . . . . . . . . . . . . . 52
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture . . . . . . . . . 52
Section 402. Application of Trust Money. . . . . . . . . . . . . . . . 54
ARTICLE FIVE
REMEDIES
Section 501. Events of Default . . . . . . . . . . . . . . . . . . . . 54
Section 502. Acceleration of Maturity; Rescission and Annulment. . . . 56
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . . . 57
Section 504. Trustee May File Proofs of Claim. . . . . . . . . . . . . 58
Section 505. Trustee May Enforce Claims Without Possession of Notes. . 58
Section 506. Application of Money Collected. . . . . . . . . . . . . . 59
Section 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . 59
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . 60
Section 509. Restoration of Rights and Remedies. . . . . . . . . . . . 60
Section 510. Rights and Remedies Cumulative. . . . . . . . . . . . . . 60
Section 511. Delay or Omission Not Waiver. . . . . . . . . . . . . . . 61
Section 512. Control by Holders. . . . . . . . . . . . . . . . . . . . 61
Section 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 61
Section 514. Waiver of Stay, Extension or Usury Laws . . . . . . . . . 62
ii
<PAGE>
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults. . . . . . . . . . . . . . . . . . . . 62
Section 602. Certain Rights of Trustee . . . . . . . . . . . . . . . . 62
Section 603. Not Responsible for Recitals or Issuance of Notes . . . . 64
Section 604. May Hold Notes. . . . . . . . . . . . . . . . . . . . . . 64
Section 605. Money Held in Trust . . . . . . . . . . . . . . . . . . . 64
Section 606. Compensation and Reimbursement. . . . . . . . . . . . . . 64
Section 607. Corporate Trustee Required; Eligibility . . . . . . . . . 65
Section 608. Resignation and Removal; Appointment of Successor . . . . 66
Section 609. Acceptance of Appointment by Successor. . . . . . . . . . 67
Section 610. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 611. Preferential Collection of Claims Against Company . . . . 68
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE,
COMPANY AND SUBSIDIARY GUARANTORS
Section 701. Disclosure of Names and Addresses of Holders. . . . . . . 68
Section 702. Reports by Trustee. . . . . . . . . . . . . . . . . . . . 68
Section 703. Reports by Company and the Subsidiary Guarantors. . . . . 68
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 801. Company May Consolidate, etc., Only on Certain Terms. . . 69
Section 802. Successor Substituted . . . . . . . . . . . . . . . . . . 70
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE,
SUBSIDIARY GUARANTEES, PLEDGE AGREEMENT
Section 901. Without Consent of Holders of Notes . . . . . . . . . . . 71
Section 902. With Consent of Holders of Notes. . . . . . . . . . . . . 71
Section 903. Compliance with Trust Indenture Act . . . . . . . . . . . 73
Section 904. Revocation and Effect of Consents . . . . . . . . . . . . 73
Section 905. Notation on or Exchange of Notes. . . . . . . . . . . . . 73
Section 906. Trustee to Sign Amendments, Etc.. . . . . . . . . . . . . 74
iii
<PAGE>
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest . . . . . . . 74
Section 1002. Maintenance of Office or Agency. . . . . . . . . . . . . 74
Section 1003. Money for Note Payments to Be Held in Trust. . . . . . . 75
Section 1004. Corporate Existence. . . . . . . . . . . . . . . . . . . 76
Section 1005. Payment of Taxes and Other Claims. . . . . . . . . . . . 76
Section 1006. Maintenance of Properties. . . . . . . . . . . . . . . . 77
Section 1007. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 77
Section 1008. Statement as to Compliance . . . . . . . . . . . . . . . 77
Section 1009. Limitation on Debt . . . . . . . . . . . . . . . . . . . 78
Section 1010. Limitation on Debt of Restricted Subsidiaries. . . . . . 80
Section 1011. Limitation on Restricted Payments. . . . . . . . . . . . 81
Section 1012. Disposition of Proceeds of Asset Sales . . . . . . . . . 84
Section 1013. Purchase of Notes upon Change of Control . . . . . . . . 87
Section 1014. Limitation on Unrestricted Subsidiaries. . . . . . . . . 89
Section 1015. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. . . . . . . . . . . . 90
Section 1016. Transactions with Affiliates . . . . . . . . . . . . . . 91
Section 1017. Limitation on Liens. . . . . . . . . . . . . . . . . . . 91
Section 1018. Limitations on Sale and Leaseback Transactions . . . . . 93
Section 1019. Reports. . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 1020. Waiver of Certain Covenants. . . . . . . . . . . . . . . 94
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 1101. Right of Redemption. . . . . . . . . . . . . . . . . . . 95
Section 1102. Applicability of Article . . . . . . . . . . . . . . . . 95
Section 1103. Election to Redeem; Notice to Trustee. . . . . . . . . . 95
Section 1104. Selection by Trustee of Securities to Be Redeemed. . . . 95
Section 1105. Notice of Redemption . . . . . . . . . . . . . . . . . . 96
Section 1106. Deposit of Redemption Price. . . . . . . . . . . . . . . 97
Section 1107. Notes Payable on Redemption Date . . . . . . . . . . . . 97
Section 1108. Notes Purchased in Part. . . . . . . . . . . . . . . . . 97
ARTICLE 12
DEFEASANCE AND COVENANT DEFEASANCE
Section 1201. Option to Effect Legal Defeasance or Covenant
Defeasance. . . . . . . . . . . . . . . . . . . . . . . 98
Section 1202. Legal Defeasance and Discharge . . . . . . . . . . . . . 98
iv
<PAGE>
Section 1203. Covenant Defeasance. . . . . . . . . . . . . . . . . . . 98
Section 1204. Conditions to Legal or Covenant Defeasance . . . . . . . 99
Section 1205. Deposited Money and Government Securities to Be Held
in Trust; Other Miscellaneous Provisions. . . . . . . . 100
Section 1206. Repayment to Company . . . . . . . . . . . . . . . . . . 101
Section 1207. Reinstatement. . . . . . . . . . . . . . . . . . . . . . 101
ARTICLE THIRTEEN
SUBSIDIARY GUARANTEES
Section 1301. Subsidiary Guarantees. . . . . . . . . . . . . . . . . . 102
Section 1302. Severability . . . . . . . . . . . . . . . . . . . . . . 103
Section 1303. Seniority of Guarantees. . . . . . . . . . . . . . . . . 103
Section 1304. Limitation of Subsidiary Guarantor's Liability . . . . . 103
Section 1305. Contribution . . . . . . . . . . . . . . . . . . . . . . 104
Section 1306. Release of a Subsidiary Guarantor. . . . . . . . . . . . 104
Section 1307. Subsidiary Guarantors May Consolidate, etc. on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 1308. Benefits Acknowledged. . . . . . . . . . . . . . . . . . 105
Section 1309. Additional Subsidiary Guarantors . . . . . . . . . . . . 106
Section 1310. Guarantee by Superior Canada . . . . . . . . . . . . . . 106
ARTICLE FOURTEEN
SECURITY
Section 1401. Pledge Agreement . . . . . . . . . . . . . . . . . . . . 107
Section 1402. Recording, etc.. . . . . . . . . . . . . . . . . . . . . 107
Section 1403. Release of Collateral. . . . . . . . . . . . . . . . . . 108
Section 1404. Certificates of the Company. . . . . . . . . . . . . . . 109
Section 1405. Suits to Protect the Collateral. . . . . . . . . . . . . 109
Section 1406. Authorization of Receipt of Funds by the Trustee Under
the Pledge Agreement. . . . . . . . . . . . . . . . . . 109
Section 1407. Additional Pledges.. . . . . . . . . . . . . . . . . . . 109
ARTICLE FIFTEEN
SUBORDINATION OF ADIENCE SUBSIDIARY GUARANTEE
Section 1501. Agreement to Subordinate . . . . . . . . . . . . . . . . 110
Section 1502. General Matters. . . . . . . . . . . . . . . . . . . . . 110
Section 1503. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . 110
Section 1504. Default on Adience Debt. . . . . . . . . . . . . . . . . 111
Section 1505. Acceleration of the Notes. . . . . . . . . . . . . . . . 112
Section 1506. When Distribution Must Be Paid Over. . . . . . . . . . . 112
v
<PAGE>
Section 1507. Notice by Guarantor. . . . . . . . . . . . . . . . . . . 113
Section 1508. Subrogation. . . . . . . . . . . . . . . . . . . . . . . 113
Section 1509. Relative Rights. . . . . . . . . . . . . . . . . . . . . 113
Section 1510. Subordination May Not Be Impaired. . . . . . . . . . . . 114
Section 1511. Distribution or Notice to Beneficiaries of Adience
Debt. . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 1512. Rights of Trustee and Paying Agent . . . . . . . . . . . 114
Section 1513. Authorization to Effect Subordination. . . . . . . . . . 114
EXHIBIT A Form of Pledge Agreement
EXHIBIT B Form of Superior Cable Subsidiary Guarantee
EXHIBIT C Form of Intercreditor Agreement
Schedule I Referred to in Section 106
Schedule II Referred to in Section 1015
vi
<PAGE>
INDENTURE dated as of July 15, 1995 among The Alpine Group, Inc., a
corporation organized under the laws of the State of Delaware (the "Company"),
Superior Telecommunications Inc., a corporation organized under the laws of the
State of Georgia ("Superior"), Adience, Inc., a corporation organized under the
laws of the State of Delaware ("Adience") and Superior Cable Corporation, a
corporation organized under the laws of Ontario, Canada ("Superior Canada") and
Marine Midland Bank, a New York banking corporation and trust company, trustee
(the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of and issue of its 12
1/4% Senior Secured Notes due 2003 (the "Initial Notes"), and 12 1/4% Series B
Senior Secured Notes due 2003 (the "Exchange Notes" and, together with the
Initial Notes, the "Notes") of substantially the tenor and amount hereinafter
set forth, and to provide therefor the Company has duly authorized the execution
and delivery of this Indenture.
Each of Superior and Adience has duly authorized its guarantee of the
Notes, and to provide therefor each of them has duly authorized the execution
and delivery of this Indenture. Superior Canada has guaranteed Superior's
guarantee of the Notes, and to provide therefor has duly authorized the
execution and delivery of this Indenture and its Subsidiary Guarantee (as
defined herein).
The obligations under this Indenture and the Notes are secured by,
among other things, a pledge of the capital stock of Superior and Adience that
is owned by the Company as provided in this Indenture and the Pledge Agreement
(as defined herein).
Upon the issuance of the Exchange Notes, if any, or the effectiveness
of the Shelf Registration Statement (as defined herein), this Indenture will be
subject to, and shall be governed by, the provisions of the Trust Indenture Act
(as defined herein) that are required or deemed to be part of and to govern
indentures qualified under the Trust Indenture Act.
All things necessary have been done to make the Notes, when executed
by the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and to make this Indenture a valid
agreement of the Company, Superior, Adience and Superior Canada, each in
accordance with their respective terms, and to secure the Notes as contemplated
in the Pledge Agreement.
<PAGE>
2
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Articles Two and Ten, are defined
in those Articles.
"Accreted Value" means, for any particular date of determination (any
such date being herein referred to as a "Specified Date"), the amount provided
below for each $1,000 principal amount at maturity of Notes outstanding:
A. If the Specified Date occurs on one of the following Interest
Payment Dates, the Accreted Value will equal the amount set forth below:
<PAGE>
3
Accreted
Interest Payment Date Value
--------------------- -----
January 15, 1996 . . . . . . . . . . . . . . . . . . . . . . . $920.31
July 15, 1996. . . . . . . . . . . . . . . . . . . . . . . . . .923.48
January 15, 1997 . . . . . . . . . . . . . . . . . . . . . . . .926.87
July 15, 1997. . . . . . . . . . . . . . . . . . . . . . . . . .930.50
January 15, 1998 . . . . . . . . . . . . . . . . . . . . . . . .934.39
July 15, 1998. . . . . . . . . . . . . . . . . . . . . . . . . .938.54
January 15, 1999 . . . . . . . . . . . . . . . . . . . . . . . .942.99
July 15, 1999. . . . . . . . . . . . . . . . . . . . . . . . . .947.75
January 15, 2000 . . . . . . . . . . . . . . . . . . . . . . . .952.84
July 15, 2000. . . . . . . . . . . . . . . . . . . . . . . . . .958.29
January 15, 2001 . . . . . . . . . . . . . . . . . . . . . . . .964.12
July 15, 2001. . . . . . . . . . . . . . . . . . . . . . . . . .970.36
January 15, 2002 . . . . . . . . . . . . . . . . . . . . . . . .977.04
July 15, 2002. . . . . . . . . . . . . . . . . . . . . . . . . .984.18
January 15, 2003 . . . . . . . . . . . . . . . . . . . . . . . .991.82
July 15, 2003. . . . . . . . . . . . . . . . . . . . . . . . .1,000.00
B. If the Specified Date occurs before the first Interest Payment
Date, the Accreted Value will equal the sum of (1) the original issue price
and (2) an amount equal to the product of (i) the Accreted Value for the
first Interest Payment Date less the original issue price multiplied by
(ii) a fraction, the numerator of which is the number of days from the
issue date of the Notes to the Specified Date, using a 360-day year of
twelve 30-day months, and the denominator of which is the number of days
elapsed from the issue date of the Notes to the first Interest Payment
Date, using a 360-day year of twelve 30-day months.
C. If the Specified Date occurs between two Interest Payment Dates,
the Accreted Value will equal the sum of (1) the Accreted Value for the
Interest Payment Date immediately preceding such Specified Date and (2) an
amount equal to the product of (i) the Accreted Value for the immediately
following Interest Payment Date less the Accreted Value for the immediately
preceding Interest Payment Date multiplied by (ii) a fraction, the
numerator of which is the number of days from the immediately preceding
Interest Payment Date to the Specified Date, using a 360-day year of twelve
30-day months, and the denominator of which is 180.
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a Subsidiary or (ii) assumed in connection with the acquisition
of assets from such Person.
<PAGE>
4
"Adience" means the Person named as such in the first paragraph of
this Indenture, a wholly owned Subsidiary of the Company, and its successors.
"Adience Acquisition Consideration" means the shares of the Company's
8% Cumulative Convertible Senior Preferred Stock and/or PolyVision common stock
to be delivered pursuant to the debt exchange agreement, dated October 11, 1994,
as amended, and the stock purchase agreement, dated October 11, 1994, as
amended, relating to the acquisition of Adience by the Company.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER,
that beneficial ownership of 10% or more of the voting securities of a Person
will be deemed to be control.
"Alcatel Business" means the U.S. and Canadian copper wire and cable
business of Alcatel NA Cable Systems, Inc. and Alcatel Canada Wire, Inc. that
was acquired by the Company in May 1995.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition by the Company or any Restricted Subsidiary (including,
without limitation, by way of merger, consolidation or sale and leaseback
transaction) (collectively, a "transfer"), directly or indirectly, in one or a
series of related transactions, to any Person other than the Company or a
Restricted Subsidiary of: (i) any Capital Stock of any Restricted Subsidiary;
(ii) substantially all of the properties and assets of the Company or any
Restricted Subsidiary representing a division or line of business; or (iii) any
other properties or assets of the Company or any Restricted Subsidiary, other
than in the ordinary course of business. For the purposes of this definition,
the term "Asset Sale" shall not include any transfer of properties or assets
(A) that is governed by the provisions of this Indenture described under Article
Eight of this Indenture, (B) to an Unrestricted Subsidiary, if permitted under
Section 1011, the "Limitation on Restricted Payments" covenant, (C) by or on
behalf of a creditor pursuant to a pledge agreement, security agreement,
mortgage or other similar agreement or instrument, (D) consisting of Adience's
former corporate headquarters located in Pittsburgh, Pennsylvania, (E)
consisting of Adience Acquisition Consideration, (F) consisting of shares of
PolyVision Capital Stock issued or issuable to officers, directors or employees
of the Company or its Subsidiaries upon exercise of stock options or pursuant to
grants or awards under employee benefit plans, PROVIDED that the fair market
value of such Capital Stock at the respective dates of such grant or award, as
determined by the Board of Directors of the Company whose good faith
determination shall be conclusive and evidenced by one or more Board
Resolutions, shall be less
<PAGE>
5
than $3,000,000 in the aggregate or (G) that have a fair market value of less
than $1,000,000 or that are sold for net proceeds of less than $1,000,000. A
transfer of assets by the Company to a Restricted Subsidiary or by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary will not be deemed
to be an Asset Sale, and a transfer of assets that constitutes a Restricted
Payment and that is permitted by Section 1011, the "Limitation on Restricted
Payments" covenant, will not be deemed to be an Asset Sale.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the actual
rate of interest implicit in such transaction) of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction (including any period for which such lease has
been extended or may, at the option of the lessor, be extended).
"Board of Directors" means the board of directors of the Company or
any Subsidiary Guarantor (as the case may be) or any duly authorized committee
of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or any Subsidiary Guarantor
(as the case may be) to have been duly adopted by the Board of Directors and to
be in full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet
prepared in accordance with GAAP.
"Capital Stock" of any Person means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock of such Person.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than 12 months from the
date of acquisition, (ii) certificates of deposit and eurodollar time deposits
with maturities of 12 months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding 12 months and overnight bank deposits,
in each case with any commercial or chartered bank having capital and surplus in
excess of $250,000,000, (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clauses (i) and
(ii) entered into with any financial institution meeting the qualifications
specified in clause (ii) above, and (iv) commercial paper having at the
<PAGE>
6
time of investment therein or a contractual commitment to invest therein a
rating of A-1 by S&P or the equivalent thereof by Moody's, and in each case
maturing within nine months after the date of the acquisition.
"Change of Control" means the occurrence of any of the following
events:
(a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Steven S. Elbaum or Bragi F.
Schut and their respective Affiliates (the "Management Investors"), is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person will be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 33 1/3% of the outstanding
Voting Stock of the Company;
(b) the Company consolidates with, or merges with or into, another
Person or conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person, or any Person consolidates
with, or merges with or into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is
converted into or exchanged for cash, securities or other property, other
than any such transaction where (i) the outstanding Voting Stock of the
Company is not converted or exchanged at all (except to the extent
necessary to reflect a change in the jurisdiction of incorporation of the
Company) or is converted into or exchanged for (A) Voting Stock (other than
Disqualified Stock) of the surviving or transferee corporation or (B) cash,
securities and other property (other than Capital Stock of the entity
surviving such transaction) in an amount that could be paid by the Company
as a Restricted Payment as described under Section 1011, the "Limitation on
Restricted Payments" covenant, and (ii) immediately after such transaction,
clause (a) above is not violated with respect to the outstanding Voting
Stock of the surviving or transferee corporation;
(c) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of Directors,
or whose nomination for election by the stockholders of the Company, was
approved by a vote of 66 2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in
office; or
(d) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution other than in a transaction that complies with
the provisions described under Article Eight.
<PAGE>
7
"Collateral" means (i) the Pledged Stock and (ii) any other current or
future assets of the Company or its Subsidiaries defined as "Collateral" in the
Pledge Agreement.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act on the
date of execution hereof, then the body performing such duties at such time.
"Common Stock" means, with respect to any Person, any and all shares,
interests and participations (however designated and whether voting or
non-voting) in such Person's common stock, whether now outstanding or issued
after the date of this Indenture, and includes, without limitation, all series
and classes of such common stock.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any two of the following officers: its
Chairman, its President, or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Consolidated Cash Flow" means, for any period, Consolidated Net
Income for such period (exclusive of amounts attributable to discontinued
operations, as determined in accordance with GAAP) plus, without duplication,
(i) Consolidated Income Tax Expense for such period (other than income tax
expense (either positive or negative) excluded in computing Consolidated Net
Income, plus (ii) Consolidated Interest Expense for such period, plus
(iii) depreciation, amortization (including amortization of goodwill and other
intangibles) and other non-cash charges (excluding any such non-cash charge that
results in an accrual or a reserve for cash charges in any future period) for
such period to the extent such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income, less (iv) all
non-cash items (excluding any non-cash charge which represents an accrual or
reserve for cash charges for any future period) to the extent included in
computing such Consolidated Net Income, in each case, on a consolidated basis
and determined in accordance with GAAP.
"Consolidated Income Tax Expense" means, for any period, the income
tax expense of the Company and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.
<PAGE>
8
"Consolidated Interest Expense" means, for any period, without
duplication, the sum of (a) the consolidated interest expense included in a
consolidated income statement (without deduction of interest income) of the
Company and its Restricted Subsidiaries for such period determined in accordance
with GAAP, including without limitation (i) imputed interest on Capital Lease
Obligations, (ii) commissions, discounts and other fees and charges owed with
respect to letters of credit securing financial obligations and bankers'
acceptance financings, (iii) the net costs associated with Hedging Obligations,
(iv) amortization of other financing fees and expenses, (v) the interest portion
of any deferred payment obligations, (vi) amortization of debt discount or
premium, if any, (vii) all other non-cash interest expense, (viii) capitalized
interest and (ix) all interest payable with respect to discontinued operations,
plus (b) all interest on any Debt of any other Person guaranteed by the Company
or any of its Restricted Subsidiaries, plus (c) imputed interest on Attributable
Debt of the Company and its Restricted Subsidiaries.
"Consolidated Net Income" means, for any period, the aggregate of the
net income (loss) of the Company and its Restricted Subsidiaries, and before any
reduction in respect of preferred stock dividends, for such period, on a
consolidated basis, determined in accordance with GAAP, PROVIDED that (i) any
gain or loss, together with any related provisions for taxes on such gain or
loss, realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or
(b) the disposition of any securities or the extinguishment of any Debt of the
Company or any of its Restricted Subsidiaries will be excluded; (ii) any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss, will be excluded; (iii) the net income (loss)
of a Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting will be included only to the extent of the amount of
dividends or distributions paid in cash to the Company or a Restricted
Subsidiary thereof; (iv) the net income of any Restricted Subsidiary to the
extent that the payment of dividends or distributions by such Restricted
Subsidiary is restricted, directly or indirectly, except to the extent that such
net income could be paid to the Company or a Restricted Subsidiary thereof by
way of loans, advances, intercompany transfers, principal repayments or
otherwise, will be excluded; (v) the net income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition will be excluded; and (vi) the cumulative effect of a change in
accounting principles will be excluded.
"Consolidated Net Worth" means the common and preferred stockholders'
equity of the Company and its Restricted Subsidiaries (excluding any
Disqualified Stock and any accumulated foreign currency translation adjustment),
as determined on a consolidated basis and in accordance with GAAP.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee, at which at any particular time its corporate trust business shall
be administered, which office at the date of execution of this Indenture is
located at 140 Broadway, New York, New York 10005, except that with respect to
presentation of Notes for payment or for registration of
<PAGE>
9
transfer or exchange, such term shall mean the office or agency of the Trustee
at which, at any particular time, its corporate agency business shall be
conducted.
"Debt" means (without duplication), with respect to any Person,
(i) any indebtedness (including Acquired Debt and Attributable Debt), whether or
not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing Capital Lease Obligations or the
balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any such indebtedness
(other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
(ii) all indebtedness of others secured by a Lien on any asset of such Person
whether or not such indebtedness is assumed by such Person, and (iii) to the
extent not otherwise included, the guarantee of any Debt of any other Person by
such Person.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Disqualified Stock" means any class or series of Capital Stock that,
by its terms, by the terms of any security into which it is convertible or
exchangeable or by contract or otherwise, is, or upon the happening of an event
or passage of time would be, required to be redeemed prior to the final Stated
Maturity of the Notes or is redeemable at the option of the holder thereof at
any time prior to such final Stated Maturity, or is convertible into or
exchangeable for, at any time prior to such final Stated Maturity, debt
securities that are PARI PASSU with the Notes or are due and payable, or
redeemable at the option of the holder thereof at any time, prior to such final
Stated Maturity.
"DNE" means DNE Technologies, Inc., a Delaware corporation, and its
successors.
"DNE Group" means DNE, DNE Systems, Inc., a Delaware corporation, and
DNE Manufacturing and Service Company, a Delaware corporation, and their
respective successors.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into or exchangeable for Capital Stock).
<PAGE>
10
"Event of Default" has the meaning specified in Article Five.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" has the meaning stated in the first recital of this
Indenture and refers to any Exchange Notes containing terms substantially
identical to the Initial Notes (except that (i) such Exchange Notes shall not
contain terms with respect to transfer restrictions and shall be registered
under the Securities Act, and (ii) certain provisions relating to an increase in
the stated rate of interest thereon shall be eliminated) that are issued and
exchanged for the Initial Notes in accordance with the Exchange Offer, as
provided for in the Registration Rights Agreement and this Indenture.
"Exchange Offer" means the offer by the Company to the Holders of the
Initial Notes to exchange all of the Initial Notes for Exchange Notes, as
provided for in the Registration Rights Agreement.
"Exchange Offer Registration Statement" means the Exchange Offer
Registration Statement as defined in the Registration Rights Agreement.
"Federal Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended and as codified in Title 11 of the United States Code, as amended from
time to time hereafter, or any successor federal bankruptcy law.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of the
Consolidated Cash Flow for such period to the Fixed Charges for such period
(exclusive of amounts attributable to discontinued operations, as determined in
accordance with GAAP).
"Fixed Charges" means, for any period, the sum of (a) the Consolidated
Interest Expense for such period and (b) preferred stock dividends paid in cash
by the Company or its Restricted Subsidiaries to any Person other than the
Company or a Restricted Subsidiary.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Government Securities" means direct obligations of, or obligations
guaranteed by the United States of America for the payment of which guarantee or
obligations the full faith and credit of the United States of America is
pledged.
<PAGE>
11
"Hedging Obligations" means the obligations of a Person under
(i) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements and (ii) other agreements or arrangements designed to
protect such Person against fluctuations in interest rates or the value of
foreign currencies.
"Holder" means a Person in whose name a Note is registered in the
Register.
"Indenture" means this instrument as originally executed (including
all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Indenture Obligations" means the obligations of the Company and any
other obligor hereunder or under the Notes, including the Subsidiary Guarantors
to pay principal of (and premium, if any) and interest on the Notes when due and
payable at Maturity, and all other amounts due or to become due under or in
connection with this Indenture, the Notes and the performance of all other
obligations to the Trustee (including all amounts due to the Trustee under
Section 606 hereof) and the Holders under this Indenture and the Notes,
according to the terms hereof and thereof.
"Initial Notes" has the meaning stated in the first recital of this
Indenture.
"Intercreditor Agreement" means the intercreditor agreement dated July
21, 1995 between the Trustee and the Agent under the New Credit Agreement, in
the form attached hereto as Exhibit C, as amended from time to time.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Investments" means all investments by the Company or its Restricted
Subsidiaries in other Persons (including Affiliates) in the form of loans
(including guarantees), advances (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business) or
capital contributions, purchases or other acquisitions for consideration of
Debt, Equity Interests or other securities and all other items that are or would
be classified as investments in other Persons on a balance sheet prepared in
accordance with GAAP.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
<PAGE>
12
"Maturity" when used with respect to any Note means the date on which
the principal of, premium, if any, and interest on such Note becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale, net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions), taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Debt (other than Debt that is by its terms
subordinated to Notes) upon sale of the asset or assets that are the subject of
such Asset Sale, and any reserve for adjustment in respect of the sale price of
such asset or assets.
"New Credit Agreement" means the credit agreement dated July 21, 1995,
between Shawmut Capital Corporation, as Agent, and the other lenders parties
thereto (including, without limitation, any guarantees, security documents and
other documents related thereto, and reimbursement and indemnity agreements
pertaining to letter of credit facilities entered into thereunder), as amended,
restated, supplemented or otherwise modified from time to time; PROVIDED that
with respect to any agreement providing for the refinancing of Debt under the
New Credit Agreement, such agreement shall be the New Credit Agreement under
this Indenture only if a notice to that effect is delivered by the Company to
the Trustee and there shall be at any time only one instrument that is the New
Credit Agreement under this Indenture.
"Non-Recourse Debt" means Debt or that portion of Debt (other than a
Subsidiary Guarantee) of an Unrestricted Subsidiary of the Company, (i) as to
which neither the Company nor any of its Restricted Subsidiaries (a) provide
credit support (including any undertaking, agreement or instrument that would
constitute Debt), or (b) is directly or indirectly liable; and (ii) no default
with respect to which (including any rights that the holders thereof may have to
take enforcement action against such Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Debt (other than the
Notes) of the Company or any of its Restricted Subsidiaries to declare a default
on such other Debt or cause the payment thereof to be accelerated or payable
prior to its stated maturity.
"Non-U.S. Person" means a Person that is not a "U.S. person", as
defined in Regulation S.
"Non-U.S. Restricted Subsidiary" means a Restricted Subsidiary that is
not a U.S. Restricted Subsidiary.
<PAGE>
13
"Note" and "Notes" have the meaning set forth in the first recital of
this Indenture and more particularly means any Notes authenticated and delivered
under this Indenture. For all purposes of this Indenture, the term "Notes"
shall include any Exchange Notes to be issued and exchanged for any Initial
Notes in accordance with the Exchange Offer as provided for in the Registration
Rights Agreement and this Indenture and, for purposes of this Indenture, all
Initial Notes and Exchange Notes shall vote together as one series of Notes
under this Indenture.
"Officers' Certificate" means a certificate signed by any two of the
following officers of the Company: its Chairman, its President or a Vice
President and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee. Each such certificate shall
include the statements provided for in Trust Indenture Act Section 314(e) to the
extent applicable.
"OID" means original issue discount.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or the Subsidiary Guarantors, and who shall be
acceptable to the Trustee. Each such opinion shall include the statements
provided for in Trust Indenture Act Section 314(e) to the extent applicable.
"Outstanding" when used with respect to Notes means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(a) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, for whose payment or redemption in
the necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Notes; PROVIDED that if such Notes are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(c) Notes, except to the extent provided in Sections 1202 and 1203,
with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Four; and
(d) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, other than any such
Notes in respect of which there shall have been presented to the Trustee
proof satisfactory to it
<PAGE>
14
that such Notes are held by a bona fide purchaser in whose hands the Notes
are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, consent or waiver hereunder, and for the purpose of
making the calculations required by TIA Section 313, Notes owned by the Company,
any Subsidiary Guarantor, or any other obligor upon the Notes or any Affiliate
of the Company, any Subsidiary Guarantor, or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, consent or waiver, only Notes which the Trustee knows
to be so owned shall be so disregarded. Notes so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company, any Subsidiary Guarantor or any
other obligor upon the Notes or any Affiliate of the Company, any Subsidiary
Guarantor or such other obligor.
"pari passu", when used with respect to the ranking of any Debt of any
Person in relation to other Debt of such Person, means that such Debt being so
ranked (a) either (i) is not subordinated in right of payment to such other Debt
of such Person or (ii) is subordinated in right of payment to other Debt of such
Person as is the other and is so subordinated to the same extent and (b) is not
subordinated in right of payment to the other or to any Debt of such Person as
to which the other is not so subordinated.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (or premium, if any) or interest on any Notes on behalf of the
Company.
"Permitted Investments" means
(i) any Investments in the Company or in a Restricted
Subsidiary;
(ii) any Investments in Cash Equivalents;
(iii) Investments by the Company or any Restricted Subsidiary in a
Person, if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary that is engaged in the same or a similar line of
business to that which the Company and its Restricted Subsidiaries were
engaged in on the date of the Investment or (b) such Person is merged or
consolidated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary
that is engaged in the same or a similar line of business to that which the
Company and its Restricted Subsidiaries were engaged in on the date of the
Investment;
<PAGE>
15
(iv) securities and other non-cash consideration received by the
Company or a Restricted Subsidiary in an Asset Sale permitted by Section
1012, the "Disposition of Proceeds of Asset Sales" covenant;
(v) Investments in PolyVision on the date of the initial
issuance of the Notes and Investments in indebtedness of PolyVision in an
aggregate amount not to exceed $7,500,000 pursuant to agreements in effect
on the date of the original issuance of the Notes; PROVIDED, HOWEVER, that
(A) all or any portion of such Investments may be converted into (or
exchanged for) equity securities of PolyVision so long as such conversion
or exchange is approved by the Board of Directors of the Company (including
a majority of the disinterested directors of the Company) as in the best
interest of the Company, and (B) the Company may receive equity securities
of PolyVision in payment of interest accrued on up to $7,500,000 of such
indebtedness; and
(vi) delivery of Adience Acquisition Consideration.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pledge Agreement" means the Pledge Agreement entered into by the
Company in favor of the Trustee for its benefit and for the ratable benefit of
the Holders, in the form attached hereto as Exhibit A, as amended from time to
time.
"Pledged Stock" means the Capital Stock of a Subsidiary of the Company
that is pledged from time to time to the Trustee pursuant to the Pledge
Agreement.
"Pledgor" means the Company and any Subsidiary that is a "Pledgor"
under the Pledge Agreement.
"PolyVision" means PolyVision Corporation, a Delaware corporation.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 310 in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock, whether now outstanding or issued
after the date of this Indenture, and includes, without limitation, all classes
and series of preferred or preference stock.
<PAGE>
16
"Qualified Capital Stock" means any Capital Stock or Equity Interest
other than Disqualified Stock.
"Qualified Equity Interest" means any Qualified Capital Stock and all
warrants, options or other rights to acquire Qualified Capital Stock (but
excluding any debt security that is convertible into or exchangeable for Capital
Stock).
"QIB" means a "Qualified Institutional Buyer" under Rule 144A.
"Redemption Date", when used with respect to any Note to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price", when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of July 21, 1995, among the Company, the Subsidiary
Guarantors and the Initial Purchasers.
"Registration Statement" means the Registration Statement as defined
in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the July 1 or January 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer", when used with respect to the Trustee, means
the officer or officers of the Trustee with direct responsibility for the
administration of this Indenture.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" means any Subsidiary that is not an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"S&P means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc., and its successors.
<PAGE>
17
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Special Record Date" means a date fixed by the Trustee for the
payment of any Defaulted Interest pursuant to Section 311.
"Stated Maturity" when used with respect to any Debt or any
installment of principal thereof or interest thereon means the date specified in
the instrument evidencing or governing such Debt as the fixed date on which the
principal amount of such Debt or such installment of principal or interest is
due and payable.
"Subsidiary" means any Person a majority of the equity ownership or
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries or by the Company and one or more
other Subsidiaries.
"Subsidiary Guarantee" means, (i) with respect to each Subsidiary
Guarantor other than Superior Canada, the unconditional guarantee of the
Company's Indenture Obligations by such Subsidiary Guarantor, pursuant to
Article Thirteen and (ii) with respect to Superior Canada, the unconditional
guarantee of Superior's obligations under its Subsidiary Guarantee by Superior
Canada pursuant to the Guarantee Agreement referred to in Section 1310.
"Subsidiary Guarantor" means the Restricted Subsidiaries that, from
time to time, provide a Subsidiary Guarantee.
"Superior" means the Person named as such in the first paragraph of
this Indenture, a wholly owned Subsidiary of the Company, and its successors.
"Superior Canada" means the Person named as such in the first
paragraph of this Indenture, an indirectly owned Subsidiary of the Company, and
its successors.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and as in force at the date as of which this instrument was
executed, except as provided in Section 903.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
<PAGE>
18
"Unrestricted Subsidiary" means (i) PolyVision France, S.A., (ii) any
Subsidiary that is designated by the Board of Directors as an Unrestricted
Subsidiary in accordance with Section 1014, the "Limitation on Unrestricted
Subsidiaries" covenant and (iii) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Restricted Subsidiary" means a Restricted Subsidiary organized
under the laws of the United States of America or any State thereof or the
District of Columbia.
"Weighted Average Life to Maturity" means, when applied to any Debt at
any date, the number of years obtained by dividing (i) the sum of the products
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required payment of principal, including
payment at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (ii) the then outstanding principal amount of
such Debt.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
SECTION 102. OTHER DEFINITIONS.
DEFINED
TERM IN SECTION
---- ----------
"Act". . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
"Adience Debt" . . . . . . . . . . . . . . . . . . . . . . . 1502
"Adience Obligations". . . . . . . . . . . . . . . . . . . . 1502
"Adience Payment Default". . . . . . . . . . . . . . . . . . 1504
"Adjusted Net Assets . . . . . . . . . . . . . . . . . . . . 1305
"Affiliate Transaction". . . . . . . . . . . . . . . . . . . 1016
"Agent Members". . . . . . . . . . . . . . . . . . . . . . . 306
"Asset Sale Purchase Date" . . . . . . . . . . . . . . . . . 1012
"Change of Control Payment". . . . . . . . . . . . . . . . . 1013
"Change of Control Offer". . . . . . . . . . . . . . . . . . 1013
"Change of Control Purchase Date". . . . . . . . . . . . . . 1013
"Covenant Defeasance". . . . . . . . . . . . . . . . . . . . 1203
"Defaulted Interest" . . . . . . . . . . . . . . . . . . . . 311
"Excess Proceeds". . . . . . . . . . . . . . . . . . . . . . 1012
"Excess Proceeds Offer". . . . . . . . . . . . . . . . . . . 1012
"Funding Guarantor . . . . . . . . . . . . . . . . . . . . . 1305
"incur". . . . . . . . . . . . . . . . . . . . . . . . . . . 1009
<PAGE>
19
"Legal Defeasance. . . . . . . . . . . . . . . . . . . . . . 1202
"Offered Price". . . . . . . . . . . . . . . . . . . . . . . 1012
"Offshore Notes Exchange Date" . . . . . . . . . . . . . . . 201
"Payment Default". . . . . . . . . . . . . . . . . . . . . . 501
"Permanent Offshore Physical Notes . . . . . . . . . . . . . 201
"Permitted Debt" . . . . . . . . . . . . . . . . . . . . . . 1009
"Permitted Liens". . . . . . . . . . . . . . . . . . . . . . 1017
"Permitted Subsidiary Debt". . . . . . . . . . . . . . . . . 1010
"Physical Notes" . . . . . . . . . . . . . . . . . . . . . . 201
"Private Placement Legend" . . . . . . . . . . . . . . . . . 202
"Register" . . . . . . . . . . . . . . . . . . . . . . . . . 305
"Registrar". . . . . . . . . . . . . . . . . . . . . . . . . 305
"Restricted Payments". . . . . . . . . . . . . . . . . . . . 1011
"Specified Date" . . . . . . . . . . . . . . . . . . . . . . 101
"Temporary Offshore Global Notes". . . . . . . . . . . . . . 201
"U.S. Global Note" . . . . . . . . . . . . . . . . . . . . . 201
"U.S. Physical Notes". . . . . . . . . . . . . . . . . . . . 201
SECTION 103. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Pledge Agreement or the
Subsidiary Guarantee of Superior Canada, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture, the Pledge Agreement or the Subsidiary Guarantee
of Superior Canada, (including any covenant compliance which constitutes a
condition precedent) relating to the proposed action have been complied with and
an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture, the Pledge
Agreement or the Subsidiary Guarantee of Superior Canada, relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion (other than the certificates required by
Section 1008(a) with respect to compliance with a condition or covenant provided
for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
<PAGE>
20
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 104. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 105. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient
<PAGE>
21
for any purpose of this Indenture and (subject to Trust Indenture Act Section
315) conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. When such
execution is signed by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Register.
(d) If the Company or any Subsidiary Guarantor shall solicit from the
Holders any request, demand, authorization, direction, notice, consent, waiver
or other Act, the Company or any such Subsidiary Guarantor (as the case may be)
may, at its option, by or pursuant to a Board Resolution, fix in advance a
record date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company or any such Subsidiary Guarantor (as the case may be) shall have no
obligation to do so. Notwithstanding Trust Indenture Act Section 316(c), any
such record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not more than 30 days prior to the first
solicitation of Holders generally in connection therewith and no later than the
date such solicitation is completed. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of Notes
then Outstanding have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for this
purpose the Notes then Outstanding shall be computed as of such record date;
PROVIDED that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than eleven months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Note shall bind every future Holder of
the same Note or the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent,
the Company or any Subsidiary Guarantor in reliance thereon, whether or not
notation of such action is made upon such Note.
<PAGE>
22
SECTION 106. NOTICES, ETC., TO TRUSTEE, COMPANY AND SUBSIDIARY GUARANTORS.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder, the Company or any Subsidiary
Guarantor shall be sufficient for every purpose hereunder if made, given,
furnished or delivered, in writing, to or with the Trustee at its Corporate
Trust Office, Attention: Corporate Trust Administration; or
(b) the Company by the Trustee, any Holder or any Subsidiary
Guarantor shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at 1790 Broadway - 15th Floor,
New York, NY 10019, or at any other address previously furnished in writing
to the Trustee or such Subsidiary Guarantor (as the case may be) by the
Company; or
(c) any Subsidiary Guarantor by the Company, any other Subsidiary
Guarantor, the Trustee or any Holder shall be sufficient for any purpose
hereunder (unless otherwise herein or in the Subsidiary Guarantee of
Superior Canada expressly provided) if in writing, and mailed, first-class
postage prepaid, to such Subsidiary Guarantor addressed to it at the
address set forth for such Subsidiary Guarantor in Schedule I hereto, or at
any other address furnished in writing to the Company, such other
Subsidiary Guarantor or the Trustee (as the case may be) by such Subsidiary
Guarantor.
SECTION 107. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the aforesaid manner shall be
conclusively deemed to have been received by such Holder when mailed whether or
not actually received by such Holder. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such
<PAGE>
23
waiver.
In case by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice required to be given pursuant to
any provision of this Indenture, then any method of giving such notice as shall
be satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice for every purpose hereunder.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction or interpretation
hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company and the
Subsidiary Guarantors shall bind their respective successors and assigns,
whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person (other than the parties hereto and their successors
hereunder, any Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York. Upon the issuance of the
Exchange Notes or the effectiveness of the Shelf Registration Statement, this
Indenture shall be subject to the provisions of the Trust Indenture Act that are
required to be part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date, date
established
<PAGE>
24
for payment of Defaulted Interest pursuant to Section 311, Stated Maturity,
Change in Control Purchase Date or Asset Sale Purchase Date with respect to any
Note shall not be a Business Day, then (notwithstanding any other provision of
this Indenture or of the Notes) payment of principal (and premium, if any) or
interest need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date, date established for payment of Defaulted Interest
pursuant to Section 311, Stated Maturity, Change in Control Purchase Date or
Asset Sale Purchase Date and no interest shall accrue with respect to such
payment for the period from and after such Interest Payment Date, Redemption
Date, date established for payment of Defaulted Interest pursuant to Section
311, Stated Maturity, Change in Control Purchase Date or Asset Sale Purchase
Date, as the case may be, to the next succeeding Business Day.
SECTION 114. EXECUTION OF ANCILLARY DOCUMENTS.
The Trustee is hereby authorized and directed to execute and deliver
each of the Pledge Agreement, the Intercreditor Agreement and the Subsidiary
Guarantee of Superior Canada and to perform the duties and obligations of the
Trustee thereunder.
ARTICLE TWO
NOTE FORMS
SECTION 201. FORMS GENERALLY.
The Initial Notes shall be known as the "12 1/4% Senior Secured Notes
due 2003" and the Exchange Notes shall be known as the "12 1/4% Series B Senior
Secured Notes due 2003", in each case, of the Company. The Notes and the
Trustee's certificate of authentication shall be in substantially the forms set
forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Notes, as evidenced by their execution
of the Notes. Any portion of the text of any Note may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the Note.
The definitive Notes shall be printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Notes may
be listed, all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
Initial Notes offered and sold in reliance on Rule 144A shall be
issued initially
<PAGE>
25
in the form of one or more permanent global Notes substantially in the form set
forth in this Article (the "U.S. Global Note") deposited with, or on behalf of,
the Depositary or with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the U.S. Global Note may from time
to time be increased or decreased by adjustments made on the records of the
Depositary or its nominee, or of the Trustee, as custodian for the Depositary or
its nominee, as hereinafter provided.
Initial Notes offered and sold in reliance on Regulation S shall be
issued initially in the form of temporary certificated Notes in registered form
substantially in the form set forth in this Article (the "Temporary Offshore
Global Notes"). The Temporary Offshore Global Notes will be registered in the
name of, and held by, a common depositary for Euroclear and Cedel until the
later of the completion of the distribution of the Initial Notes and the
termination of the "restricted period" (as defined in Regulation S) with respect
to the offer and sale of the Initial Notes (the "Offshore Notes Exchange Date").
At any time following the Offshore Notes Exchange Date, upon receipt by the
Trustee and the Company of a certificate substantially in the form set forth in
Section 203 in this Article, the Company shall execute, and the Trustee shall
authenticate and deliver, one or more permanent certificated Notes in registered
form substantially in the form set forth in this Article (the "Permanent
Offshore Physical Notes"), in exchange for the surrender of Temporary Offshore
Global Notes of like tenor and amount.
Initial Notes offered and sold other than as described in the
preceding two paragraphs shall be issued in the form of permanent certificated
Notes in registered form in substantially the form set forth in this Article
(the "U.S. Physical Notes").
The Temporary Offshore Global Notes, Permanent Offshore Physical Notes
and U.S. Physical Notes are sometimes collectively herein referred to as the
"Physical Notes".
SECTION 202. RESTRICTIVE LEGENDS.
Unless and until (i) an Initial Note is sold under an effective
Registration Statement or (ii) an Initial Note is exchanged for an Exchange Note
in connection with an effective Registration Statement, in each case as provided
for in the Registration Rights Agreement, each such U.S. Global Note, Temporary
Offshore Global Note, any Physical Security issued pursuant to Section 307 in
exchange for interests in the U.S. Global Note and each U.S. Physical Note shall
bear the following legend (the "Private Placement Legend") on the face thereof:
THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS.
NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED,
<PAGE>
26
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE PRIOR TO THE DATE WHICH IS
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALE TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPHS (A)(1), (A)(2),
(A)(3) OR (A)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR", FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I)
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
Each U.S. Global Note, whether or not an Initial Note, shall also bear
the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW
<PAGE>
27
YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE INDENTURE.
<PAGE>
28
SECTION 203. FORM OF CERTIFICATE TO BE DELIVERED UPON TERMINATION
OF RESTRICTED PERIOD.
On or after August 30, 1995
Marine Midland Bank, as Trustee
140 Broadway, 12th Floor
New York, New York 10005
Re: The Alpine Group, Inc.
(the "Company") 12 1/4% Senior Secured Notes
due 2003 (the "Notes")
---------------------------------------------
Ladies and Gentlemen:
This letter relates to $_________________ principal amount of Notes
represented by the Temporary Offshore Global Note (the "Temporary Note").
Pursuant to Section 201 of the Indenture dated as of July 15, 1995 relating to
the Notes (the "Indenture"), we hereby certify that (1) we are the beneficial
owner of such principal amount of Notes represented by the Temporary Note and
(2) we are a person outside the United States to whom the Notes could be
transferred in accordance with Rule 904 of Regulation S promulgated under the
Securities Act of 1933, as amended. Accordingly, you are hereby requested to
issue a certificated Note representing the undersigned's interest in the
principal amount of Notes represented by the Temporary Note, all in the manner
provided by the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
-------------------------------------
Authorized Signature
<PAGE>
29
SECTION 204. FORM OF FACE OF NOTE.
THE ALPINE GROUP, INC.
12 1/4% [Series B]* Senior Secured Note due 2003
Cusip No. 02085AC9
NO. $
------------------- -----------------
The Note is issued with original issue discount and the following
information is supplied for purposes of Sections 1273 and 1275 of the Internal
Revenue Code:
Issue Date: July 21, 1995 Original issue discount under Section 1273
of the Internal Revenue Code (for each
$1,000 principal amount): $82.63
Issue Price (for each $1,000 Yield to Maturity: 14% compounded semi-
principal amount): $917.37 annually on each January 15 and July 15
commencing January 15, 1996 (computed
without giving effect to any additional
payments of interest in the event the
issuer fails to consummate an exchange
offer or cause a registration statement
to be declared effective, in each case
as described on the reverse hereof)
The Alpine Group, Inc., a corporation organized under the laws of
Delaware (the "Company", which term includes any successor entity under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to _________________ or registered assigns, the principal sum of ______________
Dollars on July 15, 2003, at the office or agency of Alpine referred to below,
and to pay interest thereon on January 15, 1996 and semiannually thereafter, on
January 15 and July 15 in each year, from July 21, 1995 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, at
the rate of 12 1/4% per annum until the principal hereof is paid or duly
provided for, and (to the extent lawful) to pay on demand interest on any
overdue interest at the rate borne by the Notes from the date of the Interest
Payment Date on which such overdue interest becomes payable to the date payment
of such interest has been made or duly provided for. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the
---------------
* Include only for Exchange Notes.
<PAGE>
30
close of business on the Regular Record Date for such interest, which shall be
the January 1 or July 1 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for, and interest on such defaulted interest at the
interest rate borne by the Notes, to the extent lawful, shall forthwith cease to
be payable to the Holder on such Regular Record Date, and may be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Notes not less than 10 days prior to such Special Record Date, or may
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.
[The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated as of July 21, 1995, among the Company, the
Subsidiary Guarantors and the Initial Purchasers named therein (the
"Registration Rights Agreement"). In the event that either (a) an Exchange
Offer Registration Statement (as such term is defined in the Registration Rights
Agreement) is not filed with the Securities and Exchange Commission on or prior
to the 30th day following the date of original issue of the Notes, (b) such
Exchange Offer Registration Statement has not been declared effective on or
prior to the 90th day following the date of original issue of the Notes or
(c) the Exchange Offer (as such term is defined in the Registration Rights
Agreement) is not consummated or a Shelf Registration Statement (as such term is
defined in the Registration Rights Agreement) is not declared effective on or
prior to the 120th day following the date of original issue of the Notes, the
interest rate borne by this Note shall be increased by 0.25% per annum, which
rate will be increased by an additional one-quarter of one percent per annum for
each 90-day period that any such additional interest continues to accrue;
PROVIDED that the aggregate increase in such interest rate will in no event
exceed 1.00%. Upon (x) the filing of the Exchange Offer Registration Statement
after the 30-day period described in clause (a) above, (y) the effectiveness of
the Exchange Offer Registration Statement after the 90-day period described in
clause (b) above or (z) the day before the date of the consummation of the
Exchange Offer or the effectiveness of a Shelf Registration Statement, as the
case may be, after the 120-day period described in clause (c) above, the
interest rate borne by the Note from the date of such filing, effectiveness or
the day before the date of consummation, as the case may be, will be reduced to
the original interest rate set forth above; PROVIDED, HOWEVER, that, if after
such reduction in interest rate, a different event specified in clauses (a), (b)
or (c) above occurs, the interest rate may again be increased pursuant to the
foregoing provisions.]*
Payment of the principal of (and premium, if any) and interest on the
Notes will be made at the office or agency of the Company maintained for that
purpose in The City of New York (which shall be the Corporate Trust Office of
the Trustee, unless the Company shall designate and maintain some other office
or agency for such purpose), or at such other office or agency of the Company as
may be maintained for such purpose, in lawful money of the United States of
America; PROVIDED, HOWEVER, that payment of interest may be made at the
---------------
* Include only for Initial Notes.
<PAGE>
31
option of the Company by (i) check mailed to the address of the Person entitled
thereto as such address shall appear on the Register or (ii) by transfer to an
account maintained by the payee located in the United States.
Reference is hereby made to the further provisions of the Notes set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: THE ALPINE GROUP, INC.
By
------------------------------------
Attest:
------------------------------
Authorized Signature
<PAGE>
32
SECTION 205. FORM OF REVERSE OF NOTE.
This Note is one of a duly authorized issue of securities of the
Company designated as its 12 1/4% [Series B]* Senior Secured Notes due 2003
(herein called the "Notes"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $153,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of July 15, 1995, among the Company, Superior Telecommunications, Inc., a
corporation organized under the laws of the State of Georgia ("Superior"),
Adience, Inc., a corporation organized under the laws of the State of Delaware
("Adience") and Superior Cable Corporation, a corporation organized under the
laws of Ontario, Canada ("Superior Canada" and together with Superior and
Adience, the "Subsidiary Guarantors", which term will include all successor
guarantors under the Indenture) and Marine Midland Bank, trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Subsidiary Guarantors,
the Trustee and the Holders of the Notes, and of the terms upon which the Notes
are, and are to be, authenticated and delivered.
As provided in the Indenture, the Notes are secured by the pledge to
the Trustee pursuant to the Pledge Agreement. Each Holder by accepting a Note
shall be bound by and be entitled to the benefits of the Pledge Agreement, as
the same may be amended from time to time pursuant to the respective provisions
thereof and of the Indenture.
On or before each payment date, the Company shall deliver or cause to
be delivered to the Trustee or the Paying Agent an amount in dollars sufficient
to pay the amount due on such payment date.
The Notes will be redeemable at the option of the Company, as a whole
or from time to time in part, at any time on or after July 15, 1999, on not less
than 30 nor more than 60 days' prior notice at the Redemption Prices (expressed
as percentages of principal amount at maturity) set forth below, together with
accrued interest, if any, to the Redemption Date, if redeemed during the 12-
month period beginning on July 15 of the years indicated below (subject to the
right of holders of record on relevant record dates to receive interest due on
an Interest Payment Date):
Redemption
Year Price
---- ----------
1999 . . . . . . . . . . . . . . . . . . . . . . . 103%
2000 . . . . . . . . . . . . . . . . . . . . . . . 102
---------------
* Include only for Exchange Notes
<PAGE>
33
2001 . . . . . . . . . . . . . . . . . . . . . . . 101
and thereafter at 100% of the principal amount at maturity, together with
accrued interest, if any, to the Redemption Date.
In addition to the optional redemption of the Notes in accordance with
the provisions of the preceding paragraph, during the two years after the
original issue date of the Initial Notes, the Company may, with the net proceeds
of one or more public offerings of its Common Stock, redeem up to 33 1/3% of the
original aggregate principal amount at maturity of the Notes at 104 1/2% of the
principal amount at maturity thereof for any such redemption, together with
accrued interest, if any, to the Redemption Date (subject to the right of
holders of record on relevant record dates to receive interest due on an
Interest Payment Date); PROVIDED, HOWEVER, that at least 66 2/3% of the original
aggregate principal amount at maturity of the Notes remains outstanding
thereafter.
If less than all of the Notes are to be redeemed, the particular Notes
to be redeemed will be selected not more than 60 days prior to the Redemption
Date by the Trustee PRO RATA, by lot or by such method as the Trustee deems fair
and appropriate.
In the case of any redemption of Notes, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Notes, or one or more Predecessor Notes, of record at the close
of business on the relevant record date referred to on the face hereof. Notes
for whose redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest from and after the Redemption Date.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related Defaults and Events of Default, upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, the Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Notes at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Note shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu
<PAGE>
34
hereof whether or not notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company or the
Subsidiary Guarantors (in the event the Subsidiary Guarantors are obligated to
make payments in respect of the Notes), which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this Note at the
times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Register of
the Company, upon surrender of this Note for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
replacement Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to pay all documentary, stamp or similar issue or transfer taxes or
other governmental charges payable in connection with any registration of
transfer or exchange.
The Notes are entitled to the benefit of a Subsidiary Guarantee by
each Subsidiary Guarantor to the extent provided in each such Subsidiary
Guarantee.
Prior to the time of due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
<PAGE>
35
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
INSERT TAXPAYER IDENTIFICATION NO.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
please print or typewrite name and address including zip code of assignee
--------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
--------------------------------------------------------------------------------
attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE PHYSICAL
CERTIFICATES]
In connection with any transfer of this Note occurring prior to the
date that is the earlier of the date of an effective Registration Statement or
July 21, 1998, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[CHECK ONE]
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
OR
[ ] (b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished that comply with the conditions of
transfer set forth in this Note and the Indenture.
<PAGE>
36
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 307 of the Indenture shall have
been satisfied.
Date:
-------------------- --------------------------------------------------
NOTICE: The signature must correspond with
the name as written upon the face of the within-
mentioned instrument in every particular, without
alteration or any change whatsoever.
Signature Guarantee:
---------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
-------------------- --------------------------------------------------
NOTICE: To be executed by an executive officer.
SECTION 206. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
MARINE MIDLAND BANK, as Trustee
By
-----------------------------------
Authorized Signatory
<PAGE>
37
ARTICLE THREE
THE NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Notes that may be authenticated and
delivered under this Indenture is limited to $153,000,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 303, 304, 305, 306, 307,
310, 905, 1012, 1013 or 1108 or pursuant to an Exchange Offer.
The Initial Notes shall be known and designated as the "12 1/4% Senior
Secured Notes due 2003" and the Exchange Notes shall be known and designated as
the "12 1/4% Series B Senior Secured Notes due 2003". The Stated Maturity of
the Notes shall be July 15, 2003, and, subject to any adjustment set forth
therein, they shall bear interest at the rate of 12 1/4% per annum from July 21,
1995, or the most recent Interest Payment Date to which interest has been paid
or duly provided for, payable on January 15, 1996 and semiannually thereafter on
January 15 and July 15 in each year and at said Stated Maturity, until the
principal thereof is paid or duly provided for.
The principal of (and premium, if any) and interest on the Notes shall
be payable at the office or agency of the Company maintained for such purpose in
The City of New York, and at such other office or agency of the Company as may
be maintained for such purpose; PROVIDED, HOWEVER, that, at the option of the
Company, interest may be paid by check mailed to addresses of the Persons
entitled thereto as such addresses shall appear on the Register.
The Notes shall not be redeemable, other than as provided in Article
Eleven.
SECTION 302. DENOMINATIONS.
The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by any one of the
following: its Chairman, any Vice Chairman, its President, its Vice Presidents
or its Treasurer, under its corporate seal reproduced thereon and attested by
its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such
<PAGE>
38
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Notes or did not hold such offices at the
date of such Notes.
The Trustee shall (upon Company Order) authenticate and deliver Notes
for original issue in an aggregate principal amount of up to $153,000,000.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
In case the Company, pursuant to Article Eight, shall be consolidated
or merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to
any Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Company shall have been merged, or the
successor Person which shall have received a conveyance, transfer, lease or
other disposition as aforesaid, shall have executed an indenture supplemental
hereto with the Trustee pursuant to Article Eight, any of the Notes
authenticated or delivered prior to such consolidation, merger, conveyance,
transfer, lease or other disposition may, from time to time, at the request of
the successor Person, be exchanged for other Notes executed in the name of the
successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Notes surrendered
for such exchange and of like principal amount; and the Trustee, upon Company
Order of the successor Person, shall authenticate and deliver replacement Notes
as specified in such request for the purpose of such exchange. If replacement
Notes shall at any time be authenticated and delivered in any new name of a
successor Person pursuant to this Section in exchange or substitution for or
upon registration of transfer of any Notes, such successor Person, at the option
of any Holder but without expense to such Holder, shall provide for the exchange
of all Notes at the time Outstanding held by such Holder for Notes authenticated
and delivered in such new name.
SECTION 304. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Notes which are printed, lithographed, typewritten or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Notes in
lieu of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as conclusively evidenced by their execution of such Notes.
<PAGE>
39
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 1002, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at one of its offices or agencies
maintained pursuant to Section 1002 a register (the register maintained in such
office and in any other office or agency designated pursuant to Section 1002
being herein sometimes referred to as the "Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. Such office or agency is
hereby initially appointed "Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided.
Upon surrender for registration of transfer of any Note at the office
or agency of the Company designated pursuant to Section 1002, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more replacement Notes of any
authorized denomination or denominations of a like aggregate principal amount.
Furthermore, any Holder of the U.S. Global Note shall, by acceptance
of such Global Note, agree that transfers of beneficial interests in such Global
Note may be effected only through a book-entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Note shall be required to be reflected in a book entry.
At the option of the Holder, Notes may be exchanged for other Notes of
any authorized denomination or denominations of a like aggregate principal
amount upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange (including an exchange of
Initial Notes for Exchange Notes), the Company shall execute, and the Trustee
shall authenticate and deliver, the replacement Notes which the Holder making
the exchange is entitled to receive; PROVIDED that no exchange of Initial Notes
for Exchange Notes shall occur until an Exchange Offer Registration Statement
shall have been declared effective by the Commission and the Initial Notes to be
exchanged for the Exchange Notes shall be cancelled by the Trustee.
<PAGE>
40
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer, or
for exchange or redemption, shall (if so required by the Company or the
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to pay all documentary, stamp or similar issue or transfer taxes or
other governmental charges that may be imposed in connection with any
registration of transfer or exchange of Notes, other than exchanges pursuant to
Section 303, 304, 905, 1012, 1013 or 1108 not involving any transfer or pursuant
to an Exchange Offer.
The Company shall not be required to issue replacement Notes or
register the transfer of or exchange any Note during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of the
Notes under Section 1105 and ending at the close of business on the day of such
mailing.
SECTION 306. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL NOTE.
(a) The U.S. Global Note initially shall (i) be registered in the
name of the Depositary for such global Note or the nominee of such Depositary,
(ii) be deposited with, or on behalf of, the Depositary or with the Trustee, as
custodian for such Depositary, and (iii) bear legends as set forth in
Section 202.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any U.S. Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
U.S. Global Note, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of such U.S.
Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or shall impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Note.
(b) Transfers of the U.S. Global Note shall be limited to transfers
of such U.S. Global Note in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in the
U.S. Global Note may be transferred in
<PAGE>
41
accordance with the rules and procedures of the Depositary and the provisions of
Section 307. Beneficial owners may obtain U.S. Physical Notes in exchange for
their beneficial interests in the U.S. Global Note upon request in accordance
with the Depositary's and the Registrar's procedures. In addition, U.S.
Physical Notes shall be issued to all beneficial owners in exchange for their
beneficial interests in the U.S. Global Note if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for the U.S.
Global Note and a successor depositary is not appointed by the Company within
90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a request from the Depositary.
(c) In connection with any transfer of a portion of the beneficial
interest in the U.S. Global Note to beneficial owners pursuant to
Section 306(b), the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Note in an amount
equal to the principal amount of the beneficial interest in the U.S. Global Note
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Physical Notes of like tenor and
amount.
(d) In connection with the transfer of the entire U.S. Global Note to
beneficial owners pursuant to Section 306(b), the U.S. Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depositary in exchange for its beneficial interest in
the U.S. Global Note, an equal aggregate principal amount of U.S. Physical Notes
of authorized denominations.
(e) Any U.S. Physical Note delivered in exchange for an interest in
the U.S. Global Note pursuant to subsection (c) or subsection (d) of this
Section shall, except as otherwise provided by paragraph (a)(i)(x) and
paragraph (f) of Section 307, bear the applicable legend regarding transfer
restrictions applicable to the U.S. Physical Note set forth in Section 202.
(f) The Holder of the U.S. Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
SECTION 307. SPECIAL TRANSFER PROVISIONS.
Unless and until (i) an Initial Note is sold under an effective
Registration Statement, or (ii) an Initial Note is exchanged for an Exchange
Note in connection with the Exchange Offer, in each case pursuant to the
Registration Rights Agreement, the following provisions shall apply:
<PAGE>
42
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The
following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Note to any institutional "accredited investor"
(as defined in subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act) that is not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Initial
Note, whether or not such Initial Note bears the Private Placement Legend,
if (x) the requested transfer is at least three years after the original
issue date of the Initial Notes or (y) the proposed transferee has
delivered to the Registrar a certificate substantially in the form set
forth in Section 308.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Note, upon receipt by the Registrar
of (x) the documents, if any, required by paragraph (i) and
(y) instructions given in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date and a decrease in the principal amount of the U.S.
Global Note in an amount equal to the principal amount of the beneficial
interest in the U.S. Global Note to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more U.S.
Physical Notes of like tenor and amount.
(b) TRANSFERS TO QIBS. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Note to a QIB
(excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of U.S. Physical
Notes, Temporary Offshore Global Notes or Permanent Offshore Physical
Notes, the Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box provided for on the
form of Initial Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Initial Note stating, or has otherwise advised
the Company and the Registrar in writing, that it is purchasing the Initial
Note for its own account or an account with respect to which it exercises
sole investment discretion and that it, or the person on whose behalf it is
acting with respect to any such account, is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company as it has requested pursuant to Rule 144A or has determined not
to request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, and the
Initial Note to be transferred consists of U.S. Physical Notes, Temporary
Offshore Global Notes or
<PAGE>
43
Permanent Offshore Physical Notes, upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its books and records
the date and an increase in the principal amount of the U.S. Global Note in
an amount equal to the principal amount of the U.S. Physical Notes,
Temporary Offshore Global Notes or Permanent Offshore Physical Notes, as
the case may be, to be transferred, and the Trustee shall cancel the
Physical Note so transferred.
(c) TRANSFERS BY NON-U.S. PERSONS PRIOR TO AUGUST 30, 1995. The
following provisions shall apply with respect to registration of any proposed
transfer of an Initial Note by a Non-U.S. Person prior to August 30, 1995:
(i) The Registrar shall register the transfer of any Initial
Note (x) if the proposed transferee is a Non-U.S. Person and the proposed
transferor has delivered to the Registrar a certificate substantially in
the form set forth in Section 309 or (y) if the proposed transferee is a
QIB and the proposed transferor has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has advised the Company and the
Registrar in writing, that it is purchasing the Initial Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it, or the person on whose behalf it is acting with
respect to any such account, is a QIB within the meaning of Rule 144A, and
is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as
it has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, upon receipt
by the Registrar of instructions given in accordance with the Depositary's
and the Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of the
U.S. Global Note in an amount equal to the principal amount of the
Temporary Offshore Global Note to be transferred, and the Trustee shall
cancel the Temporary Offshore Global Note so transferred.
(d) TRANSFERS BY NON-U.S. PERSONS ON OR AFTER AUGUST 30, 1995. The
following provisions shall apply with respect to any registration of transfer of
an Initial Note by a Non-U.S. Person on or after August 30, 1995:
(i) (x) If the Initial Note to be transferred is a Permanent
Offshore Physical Note, the Registrar shall register such transfer, (y) if
the Initial Note to be transferred is a Temporary Offshore Global Note,
upon receipt of a certificate substantially in the form set forth in
Section 309 from the proposed transferor, the Registrar shall register such
<PAGE>
44
transfer and (z) in the case either of clause (x) or (y), unless
clause (ii) below is applicable, the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Permanent Offshore Physical
Notes of like tenor and amount.
(ii) If the proposed transferee is an Agent Member, upon receipt
by the Registrar of instructions given in accordance with the Depositary's
and the Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of the
U.S. Global Note in an amount equal to the principal amount of the
Temporary Offshore Global Note or Permanent Offshore Physical Note to be
transferred, and the Trustee shall cancel the Physical Note so transferred.
(e) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following
provisions shall apply with respect to any registration of transfer of an
Initial Note to a Non-U.S. Person:
(i) Prior to August 30, 1995, the Registrar shall register any
proposed transfer of an Initial Note to a Non-U.S. Person upon receipt of a
certificate substantially in the form set forth in Section 309 from the
proposed transferor and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Temporary Offshore Global Notes of
like tenor and amount.
(ii) On and after August 30, 1995, the Registrar shall register
any proposed transfer to any Non-U.S. Person (w) if the Initial Note to be
transferred is a Permanent Offshore Physical Note, (x) if the Initial Note
to be transferred is a Temporary Offshore Global Note, upon receipt of a
certificate substantially in the form set forth in Section 309 from the
proposed transferor, (y) if the Initial Note to be transferred is a U.S.
Physical Note or an interest in the U.S. Global Note, upon receipt of a
certificate substantially in the form set forth in Section 309 from the
proposed transferor and (z) in the case of any of clause (w), (x) or (y),
the Company shall execute, and the Trustee shall authenticate and deliver,
one or more Permanent Offshore Physical Notes of like tenor and amount.
(iii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Note, upon receipt by the Registrar
of (x) the document, if any, required by paragraph (i) or paragraph (ii),
as the case may be, and (y) instructions in accordance with the
Depositary's and the Registrar's procedures therefor, the Registrar shall
reflect on its books and records the date and a decrease in the principal
amount of the U.S. Global Note in an amount equal to the principal amount
of the beneficial interest in the U.S. Global Note to be transferred, and
if the transfer is made on or after August 30, 1995, the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Permanent Offshore Physical Notes of like tenor and amount.
<PAGE>
45
(f) PRIVATE PLACEMENT LEGEND. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless either (i) the circumstances contemplated by the
fourth paragraph of Section 201 or paragraphs (a)(i)(x), (d)(i) or (e)(ii) of
this Section 307 exist or (ii) there is delivered to the Registrar an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.
(g) GENERAL. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain until such time as no Notes remain
Outstanding copies of all letters, notices and other written communications
received pursuant to Section 306 or this Section 307. The Company shall have
the right to inspect and make copies of all such letters, notices or other
written communications at any reasonable time upon the giving of reasonable
written notice to the Registrar.
SECTION 308. FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS.
[date]
The Alpine Group, Inc.
1790 Broadway
15th Floor
New York, New York 10019-1412
Dear Sirs:
In connection with our proposed purchase of $____________ aggregate
principal amount of the 12 1/4% Senior Secured Notes due 2003 (the "Notes") of
The Alpine Group, Inc., a Delaware corporation (the "Company"), we confirm that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of
1933, as amended (the
<PAGE>
46
"Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor", and we are acquiring the Notes
for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act or any
other applicable securities laws and we have such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of our investment in the Notes, and we and any accounts for which
we are acting are each able to bear the economic risk of our or its
investment.
2. We understand and acknowledge that the Notes have not been
registered under the Securities Act or any other applicable securities law
and may not be offered sold or otherwise transferred except in compliance
with the registration requirements of the Securities Act or any other
applicable securities law, or pursuant to an exemption therefrom, and in
each case in compliance with the conditions for transfer set forth below.
We agree on our own behalf and on behalf of any investor account for which
we are purchasing the Notes to offer, sell or otherwise transfer such Notes
prior to the date that is three years after the later of the date of
original issue and the last date on which the Company or any affiliate of
the Company was the owner of such Notes (or any predecessor thereto) (the
"Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement that has been declared effective
under the Securities Act, (c) for so long as the Notes are eligible for
resale pursuant to Rule 144A under the Securities Act, to a Person we
reasonably believe is a "Qualified Institutional Buyer" under Rule 144A (a
"QIB") that purchases for its own account or for the account of a QIB to
whom notice is given that the transfer is being made in reliance on
Rule 144A, (d) pursuant to offers and sales to non-U.S. persons that occur
outside the United States within the meaning of Regulations S under the
Securities Act, (e) to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501 under
the Securities Act that is acquiring the Notes for its own account or for
the account of such an institutional "accredited investor" for investment
purposes and not with a view to, or for offer or sale in connection with,
any distribution thereof in violation of the Securities Act or (f) pursuant
to any other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement
of law that the disposition of our property and the property of such
investor account or accounts be at all times within our or their control
and to compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed
to be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver to Marine Midland Bank, as
trustee (the "Trustee"), a letter from the transferee substantially in the
form of this letter, which shall provide, among other things, that the
transferee is a person or entity as defined in paragraph 1 of this letter
that is acquiring such Notes for investment purposes and not for
distribution in violation of the Securities Act. We acknowledge that the
Company and the Trustee reserve the right prior to any offer, sale
<PAGE>
47
or other transfer of the Notes pursuant to clauses (d), (e) and (f) above
prior to the Resale Restriction Termination Sale to require the delivery of
an opinion of counsel, certifications and/or other information satisfactory
to the Company and the Trustee.
3. We are acquiring the Notes purchased by us for our own account or
for one or more accounts as to each of which we exercise sole investment
discretion.
4. You and the Trustee are entitled to rely upon this letter and you
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
Date:
--------------------
By:
------------------------------------
(NAME OF PURCHASER)
Upon registration of transfer, the Notes should be registered in the
name of the transferee as follows:
Name:
--------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Taxpayer ID Number:
------------------------------------------------------------
<PAGE>
48
SECTION 309. FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S.
[date]
Marine Midland Bank, as Trustee
140 Broadway, 12th Floor
New York, New York 10005
Re: The Alpine Group, Inc.
(the "Company") 12 1/4% Senior Secured Notes
due 2003 (the "Notes")
--------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the facilities
of a designated off-shore securities market and neither we nor any person
acting on our behalf knows that the transaction has been pre-arranged with
a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such
<PAGE>
49
sale has been made in accordance with the applicable provisions of
Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------
Authorized Signature
<PAGE>
50
SECTION 310. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If (a) any mutilated Note is surrendered to the Trustee, or (b) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and there is delivered to the Company
and the Trustee such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser, the Company
shall execute and upon Company Order the Trustee shall authenticate and deliver,
in exchange for any such mutilated Note or in lieu of any such destroyed, lost
or stolen Note, a replacement Note of like tenor and principal amount, bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a replacement Note, pay such Note.
Upon the issuance of any replacement Notes under this Section, the
Company may require the payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental charges that may
be imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute a contractual obligation of the
Company, whether or not the destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture
equally and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 311. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest at the office or agency of
the Company maintained for such purpose pursuant to Section 1002; PROVIDED,
HOWEVER, that payment of interest may be made at the option of the Company by
(i) check mailed to the address of the Person entitled thereto as such address
shall appear on the Register or (ii) by transfer to an account maintained by the
payee located in the United States.
<PAGE>
51
Any interest on any Note that is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the interest rate borne by the Notes, to the extent lawful
(such defaulted interest and interest thereon herein collectively called
"Defaulted Interest"), shall forthwith cease to be payable to the Holder on the
Regular Record Date by virtue of having been such Holder; and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Note and the date
of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Subsection provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date. In the name and at the expense of the Company,
the Trustee shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the
Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered on such Special Record Date and shall no longer be
payable pursuant to the following Subsection (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this Subsection, such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
<PAGE>
52
SECTION 312. PERSONS DEEMED OWNERS.
Prior to the time of due presentment for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name any Note is registered as the owner of such Note for the
purpose of receiving payment of principal of (and premium, if any) and (subject
to Section 311) interest on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 313. CANCELLATION.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
shall deliver to the Trustee for cancellation any Notes previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Trustee. No Notes shall be authenticated in lieu of or in exchange for any
Notes cancelled as provided in this Section, except as expressly permitted by
this Indenture. All cancelled Notes held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company unless by a Company
Order the Company shall direct that cancelled Notes be returned to it.
SECTION 314. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360 day year
of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Notes expressly provided for herein or pursuant hereto) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when
(1) either
(a) all Notes theretofore authenticated and delivered (other
than
<PAGE>
53
(i) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 310 and (ii) Notes for
whose payment money has theretofore been deposited in trust with the
Trustee or any Paying Agent or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to the Trustee
for cancellation; or
(b) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest to the date of such deposit (in the case of Notes
which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Company and the Trustee under Sections 402
and 1002 and the last paragraph of Section 1003 shall survive.
<PAGE>
54
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default for 30 days in the payment when due of interest on
the Notes;
(ii) default in payment when due of the principal of or premium,
if any, on the Notes;
(iii) failure to make a Change of Control Offer or an Excess
Proceeds Offer, in each case, within the time periods specified in this
Indenture or default in the performance, or breach, any covenant described
in Section 801, "Company May Consolidate, etc., Only On Certain Terms";
(iv) failure by the Company, a Subsidiary Guarantor or a Pledgor
for 60 days after notice from the Trustee or from holders of at least 25%
of the aggregate principal amount of the Notes Outstanding to comply with
any of its other agreements in this Indenture, the Notes, the Pledge
Agreement or the Subsidiary Guarantee of Superior Canada;
(v) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Debt for money borrowed by the Company or any Significant Subsidiary (or
the payment of which is guaranteed by the Company or any Significant
Subsidiary), whether such Debt or
<PAGE>
55
guarantee now exists or is created after the date of original issuance of
the Notes, which default (x) is caused by a failure to pay principal of,
premium, if any, or interest on such Debt prior to the expiration of the
grace period provided in such Debt on the date of such default (a "Payment
Default") or (y) results in the acceleration of such Debt prior to its
express maturity and, in each case, the principal amount of any such Debt,
together with the principal amount of any other such Debt under which there
has been a Payment Default or the maturity of which has been so
accelerated, aggregates $5,000,000 or more;
(vi) failure by the Company or any Significant Subsidiary to pay
final judgments aggregating in excess of $5,000,000, which judgments are
not paid, discharged or stayed for a period of 60 days;
(vii) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee;
(viii) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company or any Significant
Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any
Significant Subsidiary or any such group under the Federal Bankruptcy Code
or any other applicable federal or state law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company or any Significant Subsidiary or any such group or of any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days; or
(ix) the institution by the Company or any Significant Subsidiary
or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other applicable federal or state law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any Significant Subsidiary or any such group or
of any substantial part of its property, or the making by it of an
assignment of the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due.
<PAGE>
56
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If any Event of Default (other than an Event of Default specified in
Section 501(viii) or 501(ix)) occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes Outstanding may declare
the Accreted Value as of the date on which the Notes first become due and
payable, plus accrued and unpaid interest on all the Notes to such date, to
become immediately due and payable, by a notice in writing to the Company (and
to the Trustee if given by Holders), and upon any such declaration such Accreted
Value and interest shall become immediately due and payable. If an Event of
Default specified in Section 501(viii) or 501(ix) occurs and is continuing, then
the Accreted Value as of the date of such Event of Default, plus accrued and
unpaid interest to such date on all Outstanding Notes shall IPSO FACTO become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder; PROVIDED, HOWEVER, that, in the event of the
bankruptcy or insolvency of Adience, the Notes will not be subject to such
automatic acceleration (but the Trustee or the Holders of at least 25% in
principal amount of the then Outstanding Notes may declare the Notes immediately
due and payable), unless the holder or holders of in excess of $5,000,000
principal amount of Debt have accelerated their obligations, in which event the
Outstanding Notes will become due and payable without further action or notice.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article, the Holders of a majority
in principal amount of the Notes Outstanding, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if
(a) the Company or any Subsidiary Guarantor has paid or deposited, or
caused to be paid or deposited, with the Trustee a sum sufficient to pay
(1) all overdue interest on all Outstanding Notes,
(2) all other amounts under the Outstanding Notes that have
become due otherwise than by such declaration of acceleration, and
interest on any unpaid principal at the rate borne by the Notes,
(3) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Notes, and
(4) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due the Trustee
under this Indenture; and
<PAGE>
57
(b) all Events of Default, other than the non-payment of principal of
(or premium, if any, on) Notes that have become due solely by such
declaration of acceleration, have been cured or waived as provided in this
Indenture.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company and each of the Subsidiary Guarantors covenants that if
(a) default is made in the payment of any interest on any Note when
such interest becomes due and payable and such default continues for a
period of 30 days, or
(b) default is made in the payment of the principal of (or premium,
if any, on) any Note at the Maturity thereof,
the Company and the Subsidiary Guarantors will, upon demand of the Trustee, pay
to the Trustee for the benefit of the Holders of such Notes, the whole amount
then due and payable on such Notes for principal (and premium, if any) and
interest, with interest upon the overdue principal (and premium, if any) and, to
the extent that payment of such interest shall be legally enforceable, upon
overdue installments of interest, at the rate borne by the Notes; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and all other
amounts due to the Trustee under Section 606.
If the Company or any Subsidiary Guarantor, as the case may be, fails
to pay such amounts forthwith upon such demand, the Trustee, in its own name and
as trustee of an express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such proceeding to
judgment or final decree, and may enforce the same against the Company, such
Subsidiary Guarantor or any other obligor upon the Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company, such Subsidiary Guarantor or any other obligor upon the
Notes, wherever situated, including Collateral under the Pledge Agreement.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
<PAGE>
58
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
(including the Subsidiary Guarantors) or the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal, premium, if any,
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(a) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due to the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any proposal,
plan of reorganization, arrangement, adjustment or composition or other similar
arrangement affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name and as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and all other amounts due
<PAGE>
59
the Trustee under Section 606, be for the ratable benefit of the Holders of the
Notes in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Notes and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
606;
SECOND: To the payment of the amounts then due and unpaid upon the
Notes for principal (and premium, if any) and interest, in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal (and premium, if any) and interest,
respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, the Pledge
Agreement, the Subsidiary Guarantee of Superior Canada or the Notes, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the
<PAGE>
60
Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, the Pledge Agreement, the Subsidiary Guarantee of Superior
Canada or the Notes, to affect, disturb or prejudice the rights of any other
Holders, or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, the Pledge Agreement, the
Subsidiary Guarantee of Superior Canada or the Notes, except in the manner
herein provided and for the equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture or the Pledge
Agreement, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Section 311) interest on such Note on the respective due dates
expressed in such Note (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment, and such rights
shall not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Subsidiary Guarantors, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in Section 310, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
<PAGE>
61
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee, as the case may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding Notes
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, including, without limitation, powers conferred
on it by the Pledge Agreement, PROVIDED that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(c) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not
consenting.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of a majority in principal amount of the Outstanding Notes
may on behalf of the Holders of all the Notes waive any past default hereunder
or under the Pledge Agreement and its consequences, except a default
(a) in the payment of the principal of (or premium, if any) or
interest on any Note, or
(b) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
<PAGE>
62
SECTION 514. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company and each Subsidiary Guarantor covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Indenture; and the
Company and each Subsidiary Guarantor (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any Default, the Trustee shall
transmit in the manner and to the extent provided in TIA Section 313(c), notice
of such Default hereunder known to the Trustee, unless such Default shall have
been cured or waived; PROVIDED, HOWEVER, that, except in the case of a Default
in the payment of the principal of (or premium, if any) or interest on any Note,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders; and PROVIDED
FURTHER that, in the case of any default or breach of the character specified in
Section 501(iv), no such notice to Holders shall be given until at least 30 days
after the occurrence thereof.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Trust Indenture Act Sections 315(a)
through (d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of
<PAGE>
63
the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture; and
(i) the Trustee shall not be charged with knowledge of any Default or
Event of Default with respect to the Notes unless either (1) a Responsible
Officer of the Trustee shall have actual knowledge of such Default or Event
of Default or (2) written notice of such Default or Event of Default shall
have been given to the Trustee by the Company or any other obligor on the
Notes or by any Holder of Notes.
<PAGE>
64
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
and the Subsidiary Guarantors, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture, the Notes, the Pledge Agreement, any Collateral,
the Intercreditor Agreement or any Subsidiary Guarantee. The Trustee shall not
be accountable for the use or application by the Company of Notes or the
proceeds thereof.
SECTION 604. MAY HOLD NOTES.
The Trustee, any Paying Agent, any Registrar or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Notes, and, subject to Trust Indenture Act Sections 310(b) and 311,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Paying Agent, Registrar or such other agent.
SECTION 605. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company or any Subsidiary Guarantor, as the
case may be.
SECTION 606. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it pursuant to the Pledge Agreement, the
Intercreditor Agreement, Superior Canada's Subsidiary Guarantee or
hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided in the Pledge Agreement,
the Intercreditor Agreement, Superior Canada's Subsidiary Guarantee and
herein, to
<PAGE>
65
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture, the Pledge Agreement, the
Intercreditor Agreement or Superior Canada's Subsidiary Guarantee
(including the reasonable compensation and the expenses and disbursements
of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this trust, the Pledge Agreement, the Intercreditor
Agreement or Superior Canada's Subsidiary Guarantee, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder or under the Pledge Agreement, the Intercreditor Agreement or
Superior Canada's Subsidiary Guarantee.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the resignation or removal
of the Trustee and the satisfaction and discharge of this Indenture. As
security for the performance of such obligations of the Company, the Trustee
shall have a claim prior to the Notes upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the payment of
principal of (and premium, if any) or interest on particular Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(viii) or (ix), the expenses
(including the reasonable charges and expenses of its counsel) of and the
compensation for such services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Trust Indenture Act Section 310(a)(1) and which
shall have a combined capital and surplus of at least $50,000,000 and have its
Corporate Trust Office in any state of the United States of America. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of federal, State, territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease
<PAGE>
66
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 609.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders
of a majority in principal amount of the Outstanding Notes, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of Trust
Indenture Act Section 310(b) after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Note for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 607 and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Note for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), the Holder of any Note who has
been a bona fide Holder of a Note for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such
<PAGE>
67
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Notes delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with Section 609, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders of the Notes and so accepted appointment, the Holder of any Note who has
been a bona fide Holder for at least six months may on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders of Notes in the manner provided for in Section 107. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of all amounts due
it under Section 606, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee, and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder subject to the claim and lien
provided for in Section 606. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the
<PAGE>
68
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the Notes
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.
SECTION 611. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company,
the Subsidiary Guarantors or any other obligor under the Notes, the Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE,
COMPANY AND SUBSIDIARY GUARANTORS
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Notes, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee shall be
held accountable by reason of the disclosure of any information as to the names
and addresses of the Holders in accordance with Trust Indenture Act Section 312,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under Trust Indenture Act Section 312.
SECTION 702. REPORTS BY TRUSTEE.
Within 60 days after July 15 of each year commencing with the first
July 15 after the first issuance of Notes, the Trustee shall transmit by mail to
all Holders, as their names and addresses appear in the Register, as provided in
Trust Indenture Act Section 313(c), a brief report dated as of such July 15 if
required by Trust Indenture Act Section 313(a).
SECTION 703. REPORTS BY COMPANY AND THE SUBSIDIARY GUARANTORS.
The Company and each Subsidiary Guarantor shall:
(a) file with the Trustee, within 15 days after the Company or such
Subsidiary Guarantor, as the case may be, is required to file the same with
the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company or such Subsidiary Guarantor may be
<PAGE>
69
required to file with the Commission pursuant to Section 13 or Section
15(d) of the Exchange Act; or, if the Company or such Subsidiary Guarantor,
as the case may be, is not required to file information, documents or
reports pursuant to either of said Sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary
and periodic information, documents and reports which may be required
pursuant to Section 13 of the Exchange Act in respect of a security listed
and registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company, or such Subsidiary Guarantor, as the case may be, with the
conditions and covenants of this Indenture as may be required from time to
time by such rules and regulations; and
(c) transmit by mail to all Holders, as their names and addresses
appear in the Register, within 30 days after the filing thereof with the
Trustee, in the manner and to the extent provided in Trust Indenture Act
Section 313(c), such summaries of any information, documents and reports
required to be filed by the Company, or such Subsidiary Guarantor, as the
case may be, pursuant to Subsections (a) and (b) of this Section as may be
required by rules and regulations prescribed from time to time by the
Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to any Person or Persons unless:
(i) the Company is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
<PAGE>
70
(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Notes and this Indenture pursuant to a supplemental indenture in
a form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of
Default exists;
(iv) the Company or the Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (a) will have
Consolidated Net Worth (immediately after the transaction) equal to or
greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (b) would, after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the most
recently ended four full fiscal quarter period for which internal financial
statements are available, have been permitted to incur at least $1.00 of
additional Debt pursuant to the Fixed Charge Coverage Ratio test set forth
in Section 1009, the "Limitation on Debt" covenant; and
(v) the Company delivers, or causes to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee, an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, conveyance, assignment, transfer, lease or
other disposition comply with the requirements of this Indenture.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with or merger of the Company
with or into any other corporation or any conveyance, transfer, lease or other
disposition of the properties and assets of the Company substantially as an
entirety in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer, lease or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor had been named as the
Company herein; and thereafter, except in the case of a lease, the Company shall
be discharged from all obligations and covenants under this Indenture and the
Notes.
<PAGE>
71
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE,
SUBSIDIARY GUARANTEES, PLEDGE AGREEMENT
SECTION 901. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 902 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture, the Notes, any Subsidiary
Guarantee or the Pledge Agreement without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes in the case of a merger or consolidation pursuant to
Article Eight hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder or under the Pledge Agreement of any Holder of the
Notes;
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA;
(f) to evidence or to provide for a replacement Trustee under Section
608 hereof; or
(g) to add a Subsidiary Guarantor pursuant to Section 1309 hereof.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, Note,
Subsidiary Guarantee or Pledge Agreement, and upon receipt by the Trustee of the
documents described in Section 602 hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental Indenture, Pledge
Agreement or Subsidiary Guarantee authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture, Pledge Agreement or Subsidiary Guarantee
that affects its own rights, duties or immunities under this Indenture or
otherwise.
SECTION 902. WITH CONSENT OF HOLDERS OF NOTES.
<PAGE>
72
Except as provided below in this Section 902, the Company and the
Trustee may amend or supplement this Indenture, the Notes, any Subsidiary
Guarantee and the Pledge Agreement with the consent of the Holders of at least a
majority in principal amount of the Notes then Outstanding (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
However, without the consent of each Holder affected, an amendment or
waiver may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default
that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past defaults or in the provisions of the Pledge Agreement
relating to waivers of past defaults or the rights of Holders of Notes to
receive payments of principal of or premium, if any, or interest on the
Notes;
(g) waive a redemption payment with respect to any Note; or
(h) make any change in Section 508 or 513 hereof or in the foregoing
amendment and waiver provisions.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, Note,
Subsidiary Guarantee or Pledge Agreement, and upon the filing with the Trustee
of evidence satisfactory to the Trustee of the consent of the Holders of Notes
as aforesaid, and upon receipt by the Trustee of the documents described in
Section 602 hereof, the Trustee shall join with the Company in the execution of
such amended or supplemental Indenture, Note, Subsidiary Guarantee or
Pledge Agreement, unless such amended or supplemental Indenture, Note,
Subsidiary Guarantee or
<PAGE>
73
Pledge Agreement affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture, Note, Subsidiary Guarantee, or Pledge
Agreement.
It shall not be necessary for the consent of the Holders of Notes
under this Section 902 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 902
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture, Note, Subsidiary Guarantee or Pledge Agreement or
waiver. Subject to Sections 508 and 513 hereof, the Holders of a majority in
aggregate principal amount of the Notes then outstanding may waive compliance in
a particular instance by the Company with any provision of this Indenture, the
Notes, any Subsidiary Guarantee or the Pledge Agreement.
SECTION 903. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 904. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 905. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may require the Holders to deliver the Notes to the
Trustee and the Trustee may place an appropriate notation about an amendment,
supplement or waiver on such Notes. The Trustee may also place such a notation
on any Note thereafter authenticated. The Company in exchange for all Notes may
issue and the Trustee shall authenticate new Notes that reflect the amendment,
supplement or waiver.
<PAGE>
74
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 906. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture,
Subsidiary Guarantee or Pledge Agreement authorized pursuant to this Article
Nine or any amendment to the Intercreditor Agreement allowed by the terms
thereof, in each case if the amendment or supplement does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. The Company may
not sign an amendment or supplemental Indenture, Subsidiary Guarantee,
Intercreditor Agreement or Pledge Agreement until the Board of Directors
approves it. In executing any amended or supplemental indenture or amended or
supplement to a Subsidiary Guarantee or the Pledge Agreement, the Trustee shall
be entitled to receive and (subject to Section 601) shall be fully protected in
relying upon, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture, Subsidiary Guarantee,
Intercreditor Agreement or Pledge Agreement, as the case may be, is authorized
or permitted by this Indenture or the Intercreditor Agreement, as the case may
be.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of the Holders that
it will duly and punctually pay the principal of (and premium, if any) and
interest on the Notes in accordance with the terms of the Notes and this
Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in The City of New York, an office or
agency where Notes may be presented or surrendered for payment, where Notes may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Corporate Trust Office of the Trustee shall be such office or
agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The Company will give
prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and
<PAGE>
75
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Notes may be
presented or surrendered for any or all such purposes, and may from time to time
rescind such designation; PROVIDED, HOWEVER, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such office or agency.
SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of (and premium, if any) or interest
on any of the Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Notes, it will, on or before each due date of the principal of (and premium, if
any) or interest on any Notes, deposit with a Paying Agent a sum sufficient to
pay the principal (and premium, if any) or interest so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium or interest and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal
(and premium, if any) or interest; and
<PAGE>
76
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Note and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money than remaining
will be repaid to the Company.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory) and franchises of the Company and each
Restricted Subsidiary; PROVIDED, HOWEVER, that the Company shall not be required
to preserve any such right or franchise if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries taken as a whole and that the
loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or
<PAGE>
77
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary and (b) all lawful claims for labor,
materials and supplies, which, if unpaid, might by law become a Lien upon the
property of the Company or any Subsidiary PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will cause all properties owned by the Company or any
Subsidiary or used or held for use in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; PROVIDED, HOWEVER, that nothing in this Section shall
prevent the Company from discontinuing the maintenance of any of such properties
if such discontinuance is, in the judgment of the Company, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 1007. INSURANCE.
The Company will at all times keep all of its and its Subsidiaries'
properties which are of an insurable nature insured with insurers, believed by
the Company to be responsible, against loss or damage to the extent that
property of a similar character is usually so insured by corporations, similarly
situated and owning like properties.
SECTION 1008. STATEMENT AS TO COMPLIANCE.
(a) The Company and each Subsidiary Guarantor will each deliver to
the Trustee, within 120 days after the end of each fiscal year ending after the
date hereof, a brief certificate of its principal executive officer, principal
financial officer or principal accounting officer stating whether, to such
officer's knowledge, the Company or such Subsidiary Guarantor (as the case may
be) is in compliance with all covenants and conditions to be complied with by it
under this Indenture and the Pledge Agreement. For purposes of this Section
1008(a), such compliance shall be determined without regard to any period of
grace or requirement of notice under this Indenture, the Pledge Agreement or the
Subsidiary Guarantee of Superior Canada.
(b) When any Default or Event of Default has occurred and is
continuing under this Indenture, or the trustee for or the holder of any other
evidence of Debt of the Company or any Subsidiary gives any notice or takes any
other action with respect to a claimed default (other than with respect to Debt
in the principal amount of less than $1,000,000), the
<PAGE>
78
Company shall deliver to the Trustee by registered or certified mail or by
facsimile transmission or telex an Officers' Certificate specifying such event,
notice or other action within 10 Business Days of its occurrence.
SECTION 1009. LIMITATION ON DEBT.
The Company will not, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to (collectively, "incur") any Debt (including Acquired Debt) and will not issue
any Disqualified Stock, unless the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such additional
Debt is incurred or such Disqualified Stock is issued, taken as one period,
would have been at least 2.0 to 1 through July 15, 1997 and 2.25 to 1
thereafter.
In making the foregoing calculation, PRO FORMA effect will be given
to: (i) the incurrence of such Debt and (if applicable) the application of the
net proceeds therefrom, including to refinance other Debt, as if such Debt was
incurred and the application of such proceeds occurred at the beginning of such
four-quarter period; (ii) the incurrence, repayment or retirement of any other
Debt by the Company or its Restricted Subsidiaries since the first day of such
four-quarter period as if such Debt was incurred, repaid or retired at the
beginning of such four-quarter period (except that, in making such computation,
the amount of Debt under any revolving credit facility will be computed based
upon the average daily balance of such Debt during such four-quarter period);
and (iii) the acquisition (whether by purchase, merger or otherwise) or
disposition (whether by sale, merger or otherwise) of any company, entity or
business acquired or disposed of by the Company or a Restricted Subsidiary, as
the case may be, since the first day of such four-quarter period (including, as
appropriate, the acquisition of Adience and the Alcatel Business), as if such
acquisition or disposition occurred at the beginning of such four-quarter
period.
Notwithstanding the foregoing, the Company may incur the following
Debt ("Permitted Debt"):
(i) Debt under the New Credit Agreement or one or more other
credit facilities; PROVIDED that the aggregate amount of Debt outstanding
at any time pursuant to this clause (i), when added to the aggregate amount
of Debt of Restricted Subsidiaries outstanding at such time pursuant to
clause (vii) of the definition of Permitted Subsidiary Debt, may not exceed
$85,000,000, less any amounts applied to the permanent reduction of such
credit facilities pursuant to Section 1012, the "Disposition of Proceeds of
Asset Sales" covenant;
(ii) Debt represented by the Notes;
<PAGE>
79
(iii) Debt in respect of (w) sale and leaseback transactions
constituting Attributable Debt, (x) Capital Lease Obligations, (y) purchase
money obligations and (z) industrial revenue bonds or similar securities,
PROVIDED that the net proceeds of such industrial revenue bonds or similar
securities are applied to construct new facilities and that the aggregate
principal amount thereof does not exceed 75% of the fair market value of
the facilities financed thereby; PROVIDED that the aggregate amount of the
Debt referred to in the foregoing clauses (w), (x), (y) and (z) outstanding
at any time, when added to the aggregate amount of similar Debt issued by
Restricted Subsidiaries pursuant to clause (iii) of the definition of
Permitted Subsidiary Debt outstanding at such time, may not exceed
$25,000,000;
(iv) Hedging Obligations incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate Debt that is
permitted by the terms of this Indenture to be outstanding or for the
purpose of fixing or hedging foreign currency risks;
(v) intercompany Debt between or among the Company and any of
its Restricted Subsidiaries;
(vi) subordinated Debt issued pursuant to paragraph (b)(vi) of
Section 1011, the "Limitation on Restricted Payments" covenant, PROVIDED
that such Debt has a Weighted Average Life to Maturity longer than the
Weighted Average Life to Maturity of the Notes and has a final Stated
Maturity of principal later than the final Stated Maturity of the Notes;
(vii) Debt (other than Debt described in clauses (i) through (vi)
above), PROVIDED that the aggregate amount of such Debt outstanding at any
time, when added to the aggregate amount of Debt issued by Restricted
Subsidiaries pursuant to clause (v) of the definition of Permitted
Subsidiary Debt outstanding at such time, may not exceed $5,000,000; and
(viii) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company of any of its Debt, including any successive refinancings by the
Company, so long as (a) any such new Debt is in a principal amount that
does not exceed the principal amount (or, if such Debt being refinanced
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration thereof, such lesser amount as
of the date of determination) so refinanced, plus the amount of any premium
required to be paid in connection with such refinancing pursuant to the
terms of the Debt refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing, plus
the amount of expenses of the Company incurred in connection with such
refinancing, (b) any such new Debt has a final maturity date later
<PAGE>
80
than the final maturity date of, and has a Weighted Average Life to
Maturity longer than the Weighted Average Life to Maturity of, the Debt
being refinanced and (c) in the case of any refinancing of subordinated
Debt, such new Debt is made subordinate to the Notes at least to the same
extent as the Debt being refinanced, has a Weighted Average Life to
Maturity longer than the Weighted Average Life to Maturity of the Notes and
has a final Stated Maturity of principal later than the final Stated
Maturity of the Notes.
SECTION 1010. LIMITATION ON DEBT OF RESTRICTED SUBSIDIARIES.
The Company will not permit any Restricted Subsidiary to incur,
directly or indirectly, any Debt (including Acquired Debt), except that a
Restricted Subsidiary may incur any of the following Debt ("Permitted Subsidiary
Debt"):
(i) a Subsidiary Guarantee;
(ii) guarantees by any Restricted Subsidiary of senior Debt of
the Company, including guarantees by any Restricted Subsidiary of Debt
under the New Credit Agreement, PROVIDED that (a) such Debt is incurred in
accordance with Section 1009, the "Limitation on Debt" covenant, and
(b) such guarantees rank PARI PASSU with the Subsidiary Guarantee issued by
such Restricted Subsidiary with respect to the Notes;
(iii) Debt in respect of (w) sale and leaseback transactions
constituting Attributable Debt, (x) Capital Lease Obligations, (y) purchase
money obligations and (z) industrial revenue bonds or similar securities,
PROVIDED that the net proceeds of such industrial revenue bonds or similar
securities are applied to construct new facilities and that the aggregate
principal amount thereof does not exceed 75% of the fair market value of
the facilities financed thereby; PROVIDED that the aggregate amount of the
Debt referred to in the foregoing clauses (w), (x), (y) and (z) outstanding
at any time, when added to the aggregate amount of similar Debt issued by
the Company pursuant to clause (iii) of the definition of Permitted Debt
outstanding at such time, may not exceed $25,000,000;
(iv) Acquired Debt of a Person, other than Debt incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary or the acquisition of assets from such Person, as the case may
be, PROVIDED that the Company on a PRO FORMA basis could incur at least
$1.00 of additional Debt pursuant to the Fixed Charge Coverage Ratio test
set forth in Section 1009, the "Limitation on Debt" covenant;
(v) Debt (other than Debt described in clauses (i) through (iv)
above or clauses (vii) through (ix) below), PROVIDED that the aggregate
amount of such Debt outstanding at any time, when added to the aggregate
amount of Debt issued by the Company pursuant to clause (vii) of the
definition of Permitted Debt outstanding at such time, may not exceed
$5,000,000;
<PAGE>
81
(vi) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by any
Restricted Subsidiary of any of its Debt, including any successive
refinancings by such Restricted Subsidiary, so long as (a) any such new
Debt is in a principal amount that does not exceed the principal amount
(or, if such Debt being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination)
so refinanced, plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the Debt
refinanced or the amount of any premium reasonably determined by such
Restricted Subsidiary as necessary to accomplish such refinancing, plus the
amount of expenses of such Restricted Subsidiary incurred in connection
with such refinancing, (b) any such new Debt has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity longer than the Weighted Average Life to Maturity of, the Debt
being refinanced and (c) in the case of any refinancing of subordinated
Debt, such new Debt is made subordinate to the Subsidiary Guarantee (if
any) of such Restricted Subsidiary at least to the same extent as the Debt
being refinanced, has a Weighted Average Life to Maturity longer than the
Weighted Average Life to Maturity of the Notes and has a final Stated
Maturity of principal later than the final Stated Maturity of the Notes;
(vii) Debt under the New Credit Agreement or one or more other
credit facilities; PROVIDED that the aggregate amount of Debt outstanding
at any time pursuant to this clause (vii), when added to the aggregate
amount of Debt of the Company outstanding at such time pursuant to clause
(i) of the definition of Permitted Debt, may not exceed $85,000,000, less
any amounts applied to the permanent reduction of such credit facilities
pursuant to Section 1012, the "Disposition of Proceeds of Asset Sales"
covenant;
(viii) intercompany Debt between or among the Company and any of
its Restricted Subsidiaries; and
(ix) Hedging Obligations incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate Debt that is
permitted by the terms of this Indenture to be outstanding or for the
purpose of fixing or hedging foreign currency risks.
SECTION 1011. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
<PAGE>
82
(i) declare or pay any dividend or make any distribution on
account of the Capital Stock of the Company or any of its Restricted
Subsidiaries (other than dividends or distributions payable in Qualified
Equity Interests or dividends or distributions payable to the Company or
any of its Restricted Subsidiaries);
(ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company or any Affiliate of the Company (other
than any such Equity Interests owned by the Company or any of its
Restricted Subsidiaries);
(iii) make any principal payment on, or purchase, redeem, defease
or otherwise acquire or retire for value, prior to any scheduled principal
payment or scheduled maturity, any Debt of the Company or a Subsidiary
Guarantor that is subordinated to the Notes or any Subsidiary Guarantee, as
the case may be; or
(iv) make any Restricted Investment,
(all such payments and other actions describe in (but not excluded from)
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of such Restricted Payment:
(1) no Default or Event of Default has occurred and is continuing or
would occur as a consequence thereof;
(2) the Company would, at the time of such Restricted Payment and
after giving PRO FORMA effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Debt pursuant to the Fixed
Charge Coverage Ratio test set forth in Section 1009, the "Limitation on
Debt" covenant; and
(3) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of the initial issuance of the Notes, is less than the sum
of
(A) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from May 1, 1995 to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, 100% of such deficit), plus
(B) the aggregate net cash proceeds received after the date of
the initial issuance of the Notes by the Company from the issuance or
sale (other than to any Restricted Subsidiary) of Qualified Equity
Interests of the Company, plus
<PAGE>
83
(C) the aggregate net cash proceeds received after the date of
the initial issuance of the Notes by the Company from the issuance or
sale (other than to any Restricted Subsidiary) of debt securities or
Disqualified Stock that have been converted into or exchanged for
Qualified Capital Stock of the Company, together with the aggregate
net cash proceeds received by the Company at the time of such
conversion or exchange, plus
(D) to the extent that any Restricted Investment that was made
after the date of the initial issuance of the Notes by the Company is
sold for cash or otherwise liquidated or repaid for cash, the lesser
of (A) the cash proceeds with respect to such Restricted Investment
(less the cost of disposition, if any) and (B) the initial amount of
such Restricted Investment.
(b) Notwithstanding paragraph (a) above, the Company and any
Restricted Subsidiary may take the following actions so long as (with respect to
clauses (v), (vi) and (vii) below) no Default or Event of Default shall have
occurred and be continuing:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of this Indenture;
(ii) the redemption, repurchase, retirement or other acquisition
of any Equity Interests of the Company in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Subsidiary)
of Qualified Equity Interests of the Company;
(iii) the purchase, redemption, defeasance or other acquisition or
retirement for value of Debt of the Company or a Subsidiary Guarantor that
is subordinated to the Notes or the applicable Subsidiary Guarantee, as the
case may be, in exchange for, or out of the net cash proceeds of a
substantially concurrent incurrence or sale (other than to a Subsidiary)
of, Debt of the Company or a Subsidiary Guarantor that is subordinated to
the Notes or the applicable Subsidiary Guarantee, as the case may be, so
long as (A) the principal amount of such new Debt does not exceed the
principal amount (or, if such subordinated Debt being refinanced provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration thereof, such lesser amount as of the
date of determination) of the subordinated Debt being so purchased,
redeemed, acquired or retired, (B) such new subordinated Debt is
subordinated to the Notes or the applicable Subsidiary Guarantee, as the
case may be, to the same extent as such subordinated Debt so purchased,
redeemed, acquired or retired and (C) such new subordinated Debt has a
Weighted Average Life to Maturity longer than the Weighted Average Life to
Maturity of the Notes and a final Stated Maturity of principal later than
the final Stated Maturity of the Notes;
<PAGE>
84
(iv) the defeasance, redemption, repurchase or other retirement
of Debt of the Company or a Subsidiary Guarantor that is subordinated to
the Notes or the applicable Subsidiary Guarantee, as the case may be, in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary) of Qualified Equity Interests of the Company;
(v) scheduled dividend payments on outstanding Preferred Stock
of the Company, whether outstanding on the date of the initial issuance of
the Notes or thereafter issued; PROVIDED that the aggregate amount of such
dividends paid after the date of the initial issuance of the Notes in
reliance on this clause (v) may not exceed $1,700,000 per year, less the
amount of interest paid or accrued during such period on any Debt of the
Company issued in exchange for shares of the Company's Preferred Stock;
(vi) the redemption, repurchase, retirement or other acquisition
of any Preferred Stock of the Company in exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Subsidiary)
of Debt of the Company that is subordinated to the Notes; PROVIDED that,
after giving effect to any such transaction, the sum of the scheduled
dividend payments on Preferred Stock of the Company that remains
outstanding plus the amount of interest due on outstanding subordinated
Debt issued pursuant to this clause (vi), may not exceed $1,700,000 per
year; and
(vii) other Restricted Payments in an aggregate amount not to
exceed $4,000,000.
The actions described in clauses (ii), (iv), (v), (vi) and (vii) of
paragraph (b) above will reduce the amount that would otherwise be available for
Restricted Payments under clause (3) of paragraph (a) above. The actions
described in clauses (i) and (iii) of pharagraph (b) above will not reduce the
amount otherwise available for Restricted Payments under clause (3) of
paragraph (a) above.
Not later than the date of making any Restricted Payment, the Company
will deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 1011 were computed, which calculations may
be based upon the Company's latest available quarterly financial statements.
SECTION 1012. DISPOSITION OF PROCEEDS OF ASSET SALES.
The Company will not, and will not permit any Restricted Subsidiary
to, engage in any Asset Sale, unless:
<PAGE>
85
(i) the consideration received by the Company or such Restricted
Subsidiary for such Asset Sale is not less than the fair market value of
the assets sold (as determined by the Board of Directors of the Company,
whose good faith determination will be conclusive and evidenced by a Board
Resolution); and
(ii) the consideration received by the Company or such Restricted
Subsidiary in respect of such Asset Sale consists of at least 85% cash or
cash equivalents, PROVIDED that the amount of (A) any Debt of the Company
or any Restricted Subsidiary (as shown on its most recent balance sheet or
in the notes thereto), other than liabilities that are by their terms
subordinated to the Notes or a Subsidiary Guarantee, that is assumed by the
transferee of any such assets and (B) any notes or other obligations
received by the Company or such Restricted Subsidiary from such transferee
that are immediately converted by the Company or such Restricted Subsidiary
into cash (to the extent of the cash received) will be deemed to be cash
for purposes of this provision.
If the Company or any Restricted Subsidiary engages in an Asset Sale,
the Company may use the Net Cash Proceeds thereof, within 270 days after such
Asset Sale, to (i) permanently repay any Debt then outstanding under the New
Credit Agreement or any other then outstanding Debt of the Company or of any
Subsidiary Guarantor that is PARI PASSU with (or senior to) the Notes or the
applicable Subsidiary Guarantee, as the case may be, or in the case where such
Restricted Subsidiary has not provided a Subsidiary Guarantee, any Debt of such
Restricted Subsidiary or (ii) invest (or enter into a legally binding agreement
to invest) in properties and assets to replace the properties and assets that
were the subject of the Asset Sale or in properties and assets that will be used
in businesses of the Company or its Restricted Subsidiaries, as the case may be,
existing on the date of the original issuance of the Notes. If any such legally
binding agreement to invest such Net Cash Proceeds is terminated, then the
Company may, within 90 days of such termination or within 270 days of such Asset
Sale, whichever is later, apply such Net Cash Proceeds as provided in clause (i)
or (ii) of this paragraph (without regard to the parenthetical contained in such
clause (ii)). Pending the final application of any such Net Cash Proceeds, the
Company may temporarily reduce borrowings under any revolving credit facility or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Indenture. The amount of such Net Cash Proceeds not so used as set forth above
in this paragraph constitutes "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $7,500,000, the
Company will make an offer to purchase (an "Excess Proceeds Offer") from all
Holders, in accordance with the procedures set forth in this Section 1012, the
maximum principal amount of Notes that may be purchased with the Excess
Proceeds. The offer price as to each Note (the "Offered Price") will be payable
in cash in an amount equal to 100% of the Accreted Value of such Note as of the
Asset Sale Purchase Date, plus accrued and unpaid interest to such date.
<PAGE>
86
Within 15 Business Days after the date on which the aggregate amount
of Excess Proceeds exceeds $7,500,000, the Company shall deliver to the Trustee
and mail to each Holder a notice stating:
(i) that the Holder has the right to require the Company to
repurchase such Holder's Notes at the Offered Price, subject to proration
in the event the Excess Proceeds are less than the aggregate Offered Price
of all Notes tendered;
(ii) the date of purchase of Notes pursuant to the Excess
Proceeds Offer (the "Asset Sale Purchase Date"), which shall be no earlier
than 20 days nor later than 40 days from the date such notice is mailed;
(iii) that the Offered Price will be paid to Holders electing to
have Notes purchased as promptly as practicable after the termination of
the Excess Proceeds Offer and in any event not later than five Business
Days thereafter, PROVIDED that a Holder must surrender its Note to the
Paying Agent at the address specified in the notice prior to the close of
business at least five Business Days prior to the Asset Sale Purchase Date;
(iv) that any Note not tendered will continue to accrue interest
and accrete OID pursuant to its terms;
(v) that, unless the Company defaults in the payment of the
Offered Price, any Note accepted for payment pursuant to the Excess
Proceeds Offer shall cease to accrue interest and accrete OID on and after
the Asset Sale Purchase Date;
(vi) that the Holders will be entitled to withdraw their election
if the Company receives, not later than three Business Days prior to the
Asset Sale Purchase Date, a facsimile transmission, telex or letter setting
forth the name of such Holder, the principal amount of the Notes delivered
for purchase and a statement that such Holder is withdrawing its election
to have such Notes purchased;
(vii) the Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; PROVIDED that such Note purchased and
each new Note issued shall be in a principal amount of $1,000 or an
integral multiple thereof; and
(viii) the instructions a Holder must follow in order to have his
Notes purchased in accordance with this Section 1012.
To the extent that the Accreted Value of Notes tendered pursuant to an
Excess Proceeds Offer is less than the Excess Proceeds, the Company may use such
remaining Excess Proceeds for general corporate purposes. If the aggregate
Accreted Value of Notes validly
<PAGE>
87
tendered and not withdrawn by Holders thereof exceeds the amount of Excess
Proceeds that are required to be used to purchase Notes, the Trustee shall
select the Notes to be purchased on a PRO RATA basis, with such adjustments as
may be deemed appropriate by the Trustee, so that only Notes in denominations of
$1,000, or integral multiples thereof, shall be purchased. Holders of Notes
whose Notes are purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered. Upon
completion of such offer to purchase, the amount of Excess Proceeds will be
reset to zero.
Notwithstanding the foregoing, to the extent that the Company or any
of its Restricted Subsidiaries receives securities or other non-cash property or
assets as proceeds of an Asset Sale in compliance with the provisions of this
Section 1012, the Company will not be required to make any application of such
non-cash proceeds required by this Section 1012 until it receives cash or cash
equivalent proceeds from a sale, repayment, exchange, redemption or retirement
of or an extraordinary dividend or return of capital on such non-cash property.
The Company will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that such Excess Proceeds are received
by the Company under this Section 1012 and the Company is required to repurchase
Notes as described in this Section 1012.
SECTION 1013. PURCHASE OF NOTES UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder shall have the
right to require the repurchase of its Notes by the Company, in whole or in
part, in cash pursuant to the offer described below (the "Change of Control
Offer") at a purchase price equal to 101% of the Accreted Value thereof as of
the Change of Control Purchase Date, plus accrued and unpaid interest to such
date (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company shall
deliver to the Trustee and to each Holder a notice stating:
(i) that a Change of Control has occurred, that the Change of
Control Offer is being made pursuant to this Section 1013 and that all
Notes validly tendered will be accepted for payment;
(ii) the purchase price and the purchase date, which will be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed, or such later date as is necessary to comply with
requirements under the Exchange Act) (the "Change of Control Purchase
Date");
(iii) that any Note not tendered will continue to accrue interest
and accrete OID;
<PAGE>
88
(iv) that, unless the Company defaults in the payment of the
Change of Control Payment, any Note accepted for payment pursuant to the
Change of Control Offer will cease to accrue interest and accrete OID
after the Change of Control Purchase Date;
(v) that a Holder electing to have any Note or a portion thereof
purchased pursuant to the Change of Control Offer will be required to
surrender such Note to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day immediately
preceding the Change of Control Purchase Date;
(vi) that the Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the close of business on the
third Business Day immediately preceding the Change in Control Purchase
Date, facsimile transmission, telex or letter setting forth the name of
such Holder, the principal amount of Notes delivered for purchase and a
statement that such Holder is withdrawing its election to have such Notes
purchased;
(vii) the Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; PROVIDED that each Note purchased and
each new Note issued shall be in a principal amount of $1,000 or an
integral multiple thereof; and
(viii) certain other procedures that a Holder must follow to accept
a Change of Control Offer or to withdraw such acceptance.
On the Change of Control Purchase Date, the Company shall: (i) accept
for payment Notes or portions thereof tendered pursuant to the Change of Control
Offer; (ii) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so accepted; and (iii) deliver, or cause
to be delivered, to the Trustee, all Notes or portions thereof so accepted
together with an Officers' Certificate specifying the Notes or portions thereof
accepted for payment by the Company. The Paying Agent shall promptly mail to
the Holders of Notes so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail to such Holders a
new Note equal in principal amount to any unpurchased portion of the Notes
surrendered; PROVIDED that each Note purchased and each new Note issued shall be
in a principal amount of $1,000 or an integral multiple thereof. The Company
will publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Purchase Date.
The Company will comply with applicable tender offer rules, including
Rule 14e-1 under the Exchange Act and any other applicable securities laws and
regulations to the extent such laws and regulations are applicable in the event
that a Change of Control occurs and the Company is required to repurchase the
Notes under this Section 1013.
<PAGE>
89
The Company will not, and will not permit any Restricted Subsidiary
to, create or permit to exist or become effective any restriction (other than
restrictions existing under Debt as in effect on the date of the original
issuance of the Notes or any renewals, extensions, substitutions, refinancings
or replacements of such Debt, PROVIDED that the restrictions contained in the
agreements governing such Debt are no more restrictive than those contained in
the agreements governing the Debt being refinanced) that would materially impair
the ability of the Company to make a Change of Control Offer to purchase the
Notes or, if such Change of Control Offer is made, to pay for the Notes tendered
for purchase.
SECTION 1014. LIMITATION ON UNRESTRICTED SUBSIDIARIES.
The Company will not make, and will not permit any of its Restricted
Subsidiaries to make, any Investment in Unrestricted Subsidiaries if, at the
time thereof, the amount of such Investment would exceed the amount of
Restricted Payments then permitted to be made pursuant to Section 1011, the
"Limitation on Restricted Payments" covenant.
The Board of Directors of the Company may designate any Restricted
Subsidiary (other than Superior, Adience and their subsidiaries) as an
Unrestricted Subsidiary or any Person about to become a Subsidiary as an
Unrestricted Subsidiary if, in either case, such designation complies with the
next paragraph of this Section, and at the time of designation (and, if
applicable, after giving effect to such acquisition), such Subsidiary: (a) has
no Debt other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; and (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any obligation
(x) to subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results.
The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default; PROVIDED that in no event shall the business currently operated by
Superior, Adience and their subsidiaries be transferred to or held by an
Unrestricted Subsidiary. For purposes of making such determination, all
outstanding Investments by the Company and its Restricted Subsidiaries in the
Subsidiary so designated will be deemed to be Restricted Payments at the time of
such designation (valued as set forth below) and will reduce the amount
available for Restricted Payments under clause (3) of paragraph (a) of Section
1011, the "Limitation on Restricted Payments" covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (x) the net book value of such Investments at the time of such
designation, (y) the fair market value of such Investments at the time of such
designation and (z) the original fair market value of such Investments at the
time they were made less any
<PAGE>
90
capital returned in cash. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that such
designation will be deemed to be an incurrence of Debt by a Restricted
Subsidiary of the Company of any outstanding Debt of such Unrestricted
Subsidiary and such designation will only be permitted if (i) such Debt is
permitted under Section 1010, the "Limitation Debt of Restricted Subsidiaries"
covenant and (ii) no Default or Event of Default would be in existence following
such designation.
SECTION 1015. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions to
the Company or any other Restricted Subsidiary on its Capital Stock, (ii) pay
any Debt owed to the Company or any other Restricted Subsidiary, (iii) make
loans or advances to the Company or any other Restricted Subsidiary or
(iv) transfer any of its properties or assets to the Company or any other
Restricted Subsidiary, except for such encumbrances or restrictions existing
under or by reason of (a) any agreement listed on Schedule II attached to this
Indenture, in effect on the date of the initial issuance of the Notes,
(b) applicable law, (c) customary non-assignment provisions in leases or other
contracts entered into in the ordinary course of business and consistent with
past practices, (d) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature described in
clauses (iv) (b) and (c) on the property so acquired, (e) customary restrictions
imposed on the transfer of copyrighted or patented materials, (f) the entering
into of a contract for the sale or other disposition of assets, directly or
indirectly, so long as such restrictions do not extend to assets that are not
subject to such sale or other disposition, (g) provisions in Debt of Restricted
Subsidiaries that is permitted by this Indenture to be incurred that only
restrict the transfer of the assets purchased with the proceeds of such Debt,
(h) any agreement or other instrument of a Person acquired by the Company or any
Restricted Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, or
(i) pursuant to an agreement effecting a renewal, refunding, refinancing or
extension of Debt incurred pursuant to an agreement referred to in clause (a) or
(h) above; PROVIDED that the restrictions contained in the agreements governing
such Debt are no more restrictive than those contained in the agreements
governing the Debt being refinanced.
<PAGE>
91
SECTION 1016. TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing including any series or
combination of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction, an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above, (b) with respect to any
Affiliate Transaction involving aggregate payments in excess of $1,000,000, a
majority of the disinterested members of the Board of Directors of the Company
determines in its reasonable good faith judgment, which shall be conclusive and
evidenced by a Board Resolution, that such Affiliate Transaction complies with
clause (i) above and (c) with respect to any Affiliate Transaction involving
aggregate payments in excess of $5,000,000, an opinion as to the fairness to the
Company or such Restricted Subsidiary from a financial point of view issued by
an investment banking firm of national standing; PROVIDED that (x) any
employment agreement or compensation plan or arrangement entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of business
of the Company or such Restricted Subsidiary, (y) transactions between or among
the Company and/or its Restricted Subsidiaries (other than partially-owned
Restricted Subsidiaries any of the other equity holders of which are Affiliates
of the Company) and (z) transactions permitted by the provisions of Section
1011, the "Limitation on Restricted Payments" covenant, will not be deemed
Affiliate Transactions.
SECTION 1017. LIMITATION ON LIENS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien, other than a Permitted Lien, on any property or asset now owned
or hereafter acquired, or any income or profits therefrom, unless (x) in the
case of any Lien securing Debt that is subordinated to the Notes, the Notes are
secured by a Lien on such property, asset, income or profit that is senior in
priority to such Lien and (y) in the case of any other Lien, the Notes are
equally and ratably secured with the obligation or liability secured by such
Lien, in either case until such time as such Debt, obligation or liability is no
longer secured by a Lien.
Notwithstanding the foregoing, the Company or its Restricted
Subsidiaries may incur the following Liens ("Permitted Liens"):
(i) Liens in favor of the Company;
<PAGE>
92
(ii) Liens on property or assets of the Company or any Restricted
Subsidiary securing Debt (and related interest, fees and other charges)
under the New Credit Agreement or under one or more credit facilities
permitted to be incurred by clause (i) of the definition of Permitted Debt
or clause (vii) of the definition of Permitted Subsidiary Debt, including
Liens securing intercompany Debt (and related interest, fees and other
charges) representing loans of the proceeds of borrowings under the New
Credit Agreement or such other credit facilities by the Company or a
Restricted Subsidiary to a Restricted Subsidiary; PROVIDED, HOWEVER, that
(A) such Liens cover only the types of property and assets covered by the
Liens contemplated by the New Credit Agreement on the date of original
issuance of the Notes and (B) such Debt is in a principal amount not to
exceed the principal amount of the outstanding Debt permitted by clause (i)
of the definition of Permitted Debt or clause (vii) of the definition of
Permitted Subsidiary Debt;
(iii) Liens on property or assets that were existing at the time
of acquisition thereof by the Company or any Restricted Subsidiary of the
Company; PROVIDED that such Liens do not extend to any property or assets
of the Company or any Restricted Subsidiary other than the property or
assets acquired in connection with the incurrence of such Acquired Debt;
(iv) Liens on property or assets of the Company and its
Restricted Subsidiaries to secure Debt permitted by clause (iii) of the
definition of Permitted Debt or clause (iii) of the definition of Permitted
Subsidiary Debt, PROVIDED such Liens cover only the property or assets
acquired with the proceeds of such Debt;
(v) Liens existing on the date of the initial issuance of the
Notes;
(vi) Liens incurred in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company with respect to
obligations that do not exceed $5,000,000 at any one time outstanding and
that (a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary
course of business) and (b) do not in the aggregate materially detract from
the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary;
(vii) Liens securing Acquired Debt created prior to (and not in
connection with or in contemplation of) the incurrence of such Debt by the
Company or any Restricted Subsidiary; PROVIDED that such Liens do not
extend to any property or assets of the Company or any Restricted
Subsidiary other than the property or assets acquired in connection with
the incurrence of such Acquired Debt;
<PAGE>
93
(viii) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like
nature incurred in the ordinary course of business;
(ix) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded; PROVIDED that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor;
(x) Liens incurred or pledges and deposits in connection with
workers' compensation, unemployment insurance and other social security
benefits incurred by the Company or any Restricted Subsidiary of the
Company;
(xi) Liens imposed by law, including, without limitation,
mechanics', carriers', warehousemen's, materialmen's, suppliers' and
vendors' Liens, incurred by the Company or any Restricted Subsidiary in the
ordinary course of business;
(xii) zoning restrictions, easements, licenses, covenants,
reservations, restrictions on the use of real property or minor
irregularities of title incident thereto, which do not, in the aggregate,
have a material adverse effect on the operation of the business of the
Company and its Restricted Subsidiaries taken as a whole;
(xiii) Liens securing Debt permitted to be incurred by clause
(viii) of the definition of Permitted Debt or clause (vi) of the definition
of Permitted Subsidiary Debt, so long as such Liens are limited to the
collateral securing the Debt being refinanced and the proceeds of such
collateral; and
(xiv) any extension, renewal or replacement, in whole or in part,
of any Lien described in the foregoing clauses (i) through (xiii); PROVIDED
that any such extension, renewal or replacement shall be no more
restrictive in any material respect than the Lien so extended, renewed or
replaced and shall not extend to any additional property or assets.
SECTION 1018. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; PROVIDED that
the Company or its Restricted Subsidiaries may enter into such sale and
leaseback transaction if (i) the Company or such Restricted Subsidiary could
have (a) incurred Debt in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction pursuant to Section 1009, the "Limitation on
Debt" covenant, and Section 1010, the "Limitation on Debt of Restricted
Subsidiaries" covenant,
<PAGE>
94
and (b) incurred a Lien to secure such Debt pursuant to Section 1017, the
"Limitation on Liens" covenant, (ii) the proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors of the Company or such Restricted Subsidiary and
set forth in an Officers' Certificate delivered to the Trustee) of the property
that is the subject of such sale and leaseback transaction and (iii) the Company
will apply or cause to be applied the proceeds of such transaction in compliance
with Section 1012, the "Disposition of Proceeds of Asset Sales" covenant.
SECTION 1019. REPORTS.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company shall furnish to
the Trustee and to all Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results of
operations of the Company and its Restricted Subsidiaries and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all reports that would be filed with the
Commission on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, the Company shall file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to all investors who
request it in writing.
(b) For so long as any Notes bearing the Private Placement Legend
remain outstanding, the Company and the Subsidiary Guarantors shall furnish to
all Holders and beneficial owners and prospective purchasers of the Notes
designated by the Holders or beneficial owners of Notes bearing the Private
Placement Legend and to broker-dealers, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 1020. WAIVER OF CERTAIN COVENANTS.
The Company or any Subsidiary Guarantor may omit in any particular
instance to comply with any covenant or condition set forth in Sections 1004
through 1019 or any covenant or condition set forth in the Pledge Agreement if,
before or after the time for such compliance, the Holders of a majority in
aggregate principal amount of the Notes at the time outstanding shall, by Act of
such Holders, waive such compliance in such instance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the obligations of each
Subsidiary Guarantor and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.
<PAGE>
95
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. RIGHT OF REDEMPTION.
The Notes may be redeemed at the election of the Company, as a whole
or from time to time in part, at any time on or after July 15, 1999, subject to
the conditions and at the Redemption Prices specified in the form of Note,
together with accrued interest, if any, to the Redemption Date. Additionally,
during the first two years after the original issue date of the Initial Notes,
the Company may, with the net proceeds of one or more public offerings of its
Common Stock, redeem up to 33 1/3% of the original aggregate principal amount at
maturity of the Notes, subject to the conditions and at the Redemption Price
specified in the form of Note, together with accrued interest, if any, to the
Redemption Date.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem the Notes pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by it (unless a shorter notice period shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount at maturity of Notes to be redeemed and shall deliver to
the Trustee such documentation and records as shall enable the Trustee to select
the Notes to be redeemed pursuant to Section 1104.
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee, from the Outstanding Notes not previously called for redemption,
PRO RATA, by lot or by such other method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
of the principal of Notes; PROVIDED, HOWEVER, that no such partial redemption
shall reduce the portion of the principal amount at maturity of a Note not
redeemed to less than $1,000.
<PAGE>
96
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount at maturity thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided for in
Section 107 not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Notes to be redeemed.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any;
(c) if less than all Outstanding Notes are to be redeemed, the
identification (and, in the case of a partial redemption, the principal
amounts) of the particular Notes to be redeemed;
(d) in case any Note is to be redeemed in part only, the notice which
relates to such Note shall state that on and after the Redemption Date,
upon surrender of such Note, the Holder will receive, without charge, a new
Note or Notes of authorized denominations for the principal amount thereof
remaining unredeemed;
(e) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Note, and that interest
thereon shall cease to accrue and OID thereon shall cease to accrete, on
and after said date; and
(f) the place or places where such Notes are to be surrendered for
payment of the Redemption Price and accrued interest, if any.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at its request, by the Trustee in the
name and at the expense of the Company.
<PAGE>
97
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
At least one Business Day prior to any Redemption Date, the Company
shall deposit or cause to be deposited with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 1003) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Notes which are to be redeemed on
that date.
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest and accrete OID. Upon surrender of any such Note
for redemption in accordance with said notice, such Note shall be paid by the
Company at the Redemption Price together with accrued interest to the Redemption
Date; PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Notes, or one or more Predecessor Notes, registered as such on the relevant
Regular Record Dates according to the terms and the provisions of Section 311.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal thereof (and premium, if any) shall, until
paid, bear interest from the Redemption Date at the rate borne by such Note.
SECTION 1108. NOTES PURCHASED IN PART.
Any Note that is to be purchased only in part shall be surrendered to
the Paying Agent at the office of the Paying Agent or to the office or agency
referred to in Section 1002 (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing) and the Company shall execute and
the Trustee shall authenticate and deliver to the Holder of such Note, without
service charge, a new Note or Notes, of any authorized denomination as requested
by such Holder in an aggregate principal amount equal to, and in exchange for,
the unredeemed portion of the principal of the Note so surrendered.
<PAGE>
98
ARTICLE 12
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a Board Resolution, at any time, elect to have either Section 1202 or 1203
hereof be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article Twelve.
SECTION 1202. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 1201 hereof of the option
applicable to this Section 1202, the Company shall, subject to the satisfaction
of the conditions set forth in Section 1204 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 1205 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders
of outstanding Notes to receive solely from the trust fund described in Section
1204 hereof, and as more fully set forth in such Section, payments in respect of
the principal of and premium if any, and interest, on such Notes when such
payments are due, (b) the Company's obligations with respect to such Notes under
Article Three and Section 1002 hereof, (c) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article Twelve. Subject to compliance with
this Article Twelve, the Company may exercise its option under this Section 1202
notwithstanding the prior exercise of its option under Section 1203 hereof.
SECTION 1203. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 1201 hereof of the option
applicable to this Section 1203, the Company shall, subject to the satisfaction
of the conditions set forth in Section 1204 hereof, be released from its
obligations under the covenants contained in Article Ten (except the obligations
contained in Sections 1001 and 1002 thereof) and Sections 801(iv), 501(iv),
501(v) and 501(vi) hereof with respect to the outstanding Notes on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such
<PAGE>
99
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 501
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby.
SECTION 1204. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 1202 or 1203 hereof to the Outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Notes, cash in United States
dollars, non-callable Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of
and premium, if any, and interest on the Outstanding Notes on the Stated
Maturity or on the applicable Redemption Date, as the case may be, of such
principal or installment of principal of, premium if any, or interest on
the Outstanding Notes;
(ii) in the case of an election under Section 1202 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service
a ruling or (B) since the date of this Indenture, there has been a change
in the applicable federal income tax law, in either case to the effect
that, and based thereon, such Opinion of Counsel shall confirm that the
Holders of the Outstanding Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(iii) in the case of an election under Section 1203 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that the Holders of the
Outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
<PAGE>
100
(iv) no Default or Event of Default will have occurred and be
continuing on the date of such deposit (except as the result of the
incurrence of Indebtedness the proceeds of which will be used to defease
the Notes pursuant to this Article Twelve concurrently with such
incurrence) or insofar as Section 501(viii) or 501(ix) are concerned, at
any time in the period ending on the 123rd day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance will not result
in a breach or violation of, or constitute a default under any material
agreement or instrument (other than this Indenture) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(vi) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 123rd day following the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 1205. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 1206 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee pursuant
to Section 1204 hereof in respect of the Outstanding Notes shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest but such money
need not be segregated from other funds except to the extent required by law.
Anything in this Article Twelve to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or non-callable Government Securities held by it as provided
in Section 1204 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
<PAGE>
101
1204(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 1206. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company in trust for the payment of the principal of, premium, if any, or
interest on any Note and remaining unclaimed for two years after such principal,
or premium, if any, or interest has become due and payable shall be paid to the
Company on Company Request or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as an unsecured
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; PROVIDED that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in The New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 1207. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 1202 or
1203 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and each Subsidiary Guarantor's obligations
under this Indenture, the Notes, the Pledge Agreement and the Subsidiary
Guarantees shall be revived and reinstated as though no deposit had occurred
pursuant to Section 1202 or 1203 hereof until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 1202 or
1203 hereof, as the case may be; PROVIDED that, if the Company or any Subsidiary
Guarantor makes any payment of principal of, premium, if any, or interest on any
Note following the reinstatement of its obligations, the Company or such
Subsidiary Guarantor, as the case may be, shall be subrogated to the rights of
the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
<PAGE>
102
ARTICLE THIRTEEN
SUBSIDIARY GUARANTEES
SECTION 1301. SUBSIDIARY GUARANTEES.
Each Subsidiary Guarantor hereby jointly and severally, absolutely,
unconditionally and irrevocably guarantees the Notes and obligations of the
Company hereunder and thereunder, and guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee on behalf of such
Holder, that: (a) the principal of (and premium, if any) and interest on the
Notes will be paid in full when due, whether at Stated Maturity, by
acceleration, call for redemption or otherwise (including, without limitation,
the amount that would become due but for the operation of the automatic stay
under Section 362(a) of the Federal Bankruptcy Code), together with interest on
the overdue principal, if any, and interest on any overdue interest, to the
extent lawful, and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or of any such other obligations, the
same will be paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at Stated Maturity, by acceleration or
otherwise, subject, however, in the case of clauses (a) and (b) above, to the
limitations set forth in Section 1304 hereof.
Each Subsidiary Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Subsidiary Guarantor hereby waives the benefits of diligence,
presentment, demand for payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company or any other Person, protest, notice and all demands
whatsoever and covenants that the Subsidiary Guarantee of such Subsidiary
Guarantor will not be discharged as to any Note except by complete performance
of the obligations contained in such Note and such Subsidiary Guarantee. Each
of the Subsidiary Guarantors hereby agrees that, in the event of a default in
payment of principal (or premium, if any) or interest on such Note, whether at
its Stated Maturity, by acceleration, call for redemption, purchase or
otherwise, legal proceedings may be instituted by the Trustee on behalf of, or
by, the Holder of such Note, subject to the terms and conditions set forth in
this Indenture, directly against each of the Subsidiary Guarantors to enforce
such Subsidiary Guarantor's Subsidiary Guarantee without first proceeding
against the Company or any other Subsidiary Guarantor. Each Subsidiary
Guarantor agrees that if, after the occurrence and during
<PAGE>
103
the continuance of an Event of Default, the Trustee or any of the Holders are
prevented by applicable law from exercising their respective rights to
accelerate the maturity of the Notes, to collect interest on the Notes, or to
enforce or exercise any other right or remedy with respect to the Notes, such
Subsidiary Guarantor will pay to the Trustee for the account of the Holders,
upon demand therefor, the amount that would otherwise have been due and payable
had such rights and remedies been permitted to be exercised by the Trustee or
any of the Holders.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company or any Subsidiary Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
any Subsidiary Guarantor, any amount paid by any of them to the Trustee or such
Holder, the Subsidiary Guarantee of each of the Subsidiary Guarantors, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor further agrees that, as between each Subsidiary
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article Five hereof for the purposes of the Subsidiary Guarantee of
such Subsidiary Guarantor, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article Five hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by each Subsidiary Guarantor for
the purpose of the Subsidiary Guarantee of such Subsidiary Guarantor.
SECTION 1302. SEVERABILITY.
In case any provision of any Subsidiary Guarantee shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1303. SENIORITY OF GUARANTEES.
Except as set forth in Article Fifteen, the obligations of each
Subsidiary Guarantor to the Holders of Notes and to the Trustee pursuant to such
Subsidiary Guarantor's Subsidiary Guarantee and this Indenture are senior
unsecured obligations of such Subsidiary Guarantor.
SECTION 1304. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY.
Each Subsidiary Guarantor and by its acceptance hereof each Holder
confirms that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Federal Bankruptcy Code,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law or, in the case of a Subsidiary Guarantor that
is a Non-U.S. Restricted Subsidiary, the provisions of its local law relating to
fraudulent transfer
<PAGE>
104
or conveyance. To effectuate the foregoing intention, the Holders and such
Subsidiary Guarantor hereby irrevocably agree that the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee shall be limited to the
maximum amount that will not, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to Section 1305 hereof, result in the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee
constituting such fraudulent transfer or conveyance.
SECTION 1305. CONTRIBUTION.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, INTER SE, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under a Subsidiary Guarantee, such Funding Guarantor shall
be entitled to a contribution from all other Subsidiary Guarantors in a pro rata
amount based on the Adjusted Net Assets of each Subsidiary Guarantor (including
the Funding Guarantor) for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Company's obligations with respect to the
Notes or any other Subsidiary Guarantor's obligations with respect to the
Subsidiary Guarantee of such Subsidiary Guarantor. "Adjusted Net Assets" of
such Subsidiary Guarantor at any date shall mean the lesser of (x) the amount by
which the fair value of the property of such Subsidiary Guarantor exceeds the
total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), but excluding liabilities under the
Subsidiary Guarantee of such Subsidiary Guarantor at such date and (y) the
amount by which the present fair salable value of the assets of such Subsidiary
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Subsidiary Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date), excluding debt in respect of the Subsidiary Guarantee of such Subsidiary
Guarantor, as they become absolute and matured.
SECTION 1306. RELEASE OF A SUBSIDIARY GUARANTOR.
(a) Upon the sale or other disposition of all of the assets of any
Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the Capital Stock of any Subsidiary Guarantor, to an
entity that is not a Subsidiary and which sale or disposition is otherwise in
compliance with this Section 1306 and Section 1012 hereof, then such Subsidiary
Guarantor (or Person acquiring such assets in the event of a sale or other
disposition of all of the assets of such Subsidiary Guarantor) shall be released
from and relieved of any obligations under this Article Thirteen and its
Subsidiary Guarantee without any further action required on the part of the
Trustee or any Holder; PROVIDED that, in the event such transaction constitutes
an Asset Sale, the Net Proceeds of such sale or other disposition are applied in
accordance with Section 1012 hereof.
<PAGE>
105
(b) Any Subsidiary Guarantor that is designated by the Board of
Directors of the Company as an Unrestricted Subsidiary in accordance with the
terms of this Indenture may, at such time, at the option of the Board of
Directors, be released and relieved of its obligations under its Subsidiary
Guarantee. The Trustee shall deliver an appropriate instrument evidencing such
release upon receipt of a Company Request accompanied by an Officers'
Certificate certifying as to the compliance with this Section 1306. Any
Subsidiary Guarantor not so released shall remain liable for the full amount of
principal of and interest on the Notes as provided in its Subsidiary Guarantee.
(c) Any Non-U.S. Restricted Subsidiary that is or becomes a
Subsidiary Guarantor shall be released and relieved of its obligations under its
Subsidiary Guarantee at the time such Subsidiary no longer guarantees any Debt
(other than the Notes) of Alpine or any U.S. Restricted Subsidiary (other than
as a result of payment thereof). The Trustee shall deliver an appropriate
instrument evidencing such release upon receipt of a Company Request accompanied
by an Officers' Certificate certifying as to the compliance with this Section
1306.
(d) Concurrently with the defeasance of the Notes under Section 1202
hereof, or the covenant defeasance of the Notes under Section 1203 hereof, the
Subsidiary Guarantors shall be released from all their obligations under their
Subsidiary Guarantees under this Article Thirteen.
SECTION 1307. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN
TERMS.
No Subsidiary Guarantor may consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person) another
Person whether or not affiliated with such Subsidiary Guarantor (other than
another Subsidiary Guarantor) unless (i) the Person formed by or surviving any
such consolidation or merger (if other than such Subsidiary Guarantor) assumes
all of the obligations of such Subsidiary Guarantor pursuant to a supplemental
indenture, in form and substance satisfactory to the Trustee; (ii) immediately
after giving effect to such transaction, no Default or Event of Default exists;
and (iii) immediately after giving effect to such transaction as if the same had
occurred at the beginning of the most recently ended four full fiscal quarter
period for which internal financial statements are available, the Company would
have been permitted to incur at least $1.00 of additional Debt pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 1009.
SECTION 1308. BENEFITS ACKNOWLEDGED.
Each Subsidiary Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that its guarantee and waivers pursuant to its Subsidiary Guarantee are
knowingly made in contemplation of such benefits.
<PAGE>
106
SECTION 1309. ADDITIONAL SUBSIDIARY GUARANTORS.
(a) The Company will cause each Person that becomes a Restricted
Subsidiary after the date of this Indenture to become a Subsidiary Guarantor
with respect to the Indenture Obligations by executing and delivering a
supplemental indenture to this Indenture providing for a Subsidiary Guarantee by
such Restricted Subsidiary under this Article Thirteen (or under a separate
guarantee agreement consistent in all material respects with this Article
Thirteen); PROVIDED that any such Restricted Subsidiary that is a Non-U.S.
Restricted Subsidiary will not be required to provide a Subsidiary Guarantee so
long as such Restricted Subsidiary has not guaranteed any other Debt (other than
the Notes) of the Company or any U.S. Restricted Subsidiary. The Company shall
deliver to the Trustee, together with the supplemental indenture referred to
above, an Opinion of Counsel that such Subsidiary Guarantee is a legal, valid,
binding and enforceable obligation of such Subsidiary Guarantor, subject to
customary local law exceptions and customary exceptions for bankruptcy and
equitable principles.
(b) If (i) any member of the DNE Group or (ii) any other Restricted
Subsidiary existing on the date of the original issuance of the Notes that is
not a Subsidiary Guarantor at such date guarantees any Debt (other than the
Notes) of the Company or any other U.S. Restricted Subsidiary, the Company will
cause each such guaranteeing Subsidiary to become a Subsidiary Guarantor by
executing and delivering a supplemental indenture to this Indenture providing
for a Subsidiary Guarantee by such Subsidiary. The Company shall deliver to the
Trustee, together with the supplemental indenture referred to above, an Opinion
of Counsel that such Subsidiary Guarantee is a legal, valid, binding and
enforceable obligation of such Subsidiary Guarantor, subject to customary, local
law exceptions and customary exceptions for bankruptcy and equitable principles.
SECTION 1310. GUARANTEE BY SUPERIOR CANADA.
Superior's obligations under its Subsidiary Guarantee will be
guaranteed on a full, unconditional and senior unsecured basis by Superior
Canada, pursuant to the Guarantee Agreement in the form attached hereto as
Exhibit B. For all purposes of this Indenture, so long as such guarantee shall
not have been released pursuant to provision hereof, Superior Canada shall be
deemed a "Subsidiary Guarantor" and such Guarantee Agreement shall be deemed a
"Subsidiary Guarantee", except that Sections 1301, 1302, 1304 and 1305 hereof
shall not apply to Superior Canada or such Guarantee Agreement.
<PAGE>
107
ARTICLE FOURTEEN
SECURITY
SECTION 1401. PLEDGE AGREEMENT.
In order to secure the due and punctual payment of the principal of
(premium, if any) and interest on the Notes when and as the same shall be due
and payable, whether on an interest payment date, at maturity, by acceleration,
call for redemption, or otherwise, and interest on the overdue principal,
premium and interest, if any, of the Notes and performance of all other
obligations of the Company to the Holders or the Trustee under this Indenture
and the Notes, according to the terms hereunder or thereunder, the Company will
make an assignment of its right, title and interest in and to the Collateral to
the Trustee pursuant to the Pledge Agreement and to the extent therein provided,
no later than the date of the first issuance of the Notes hereunder. Each
Holder, by its acceptance of a Note, consents and agrees to the terms of the
Pledge Agreement (including, without limitation, the provisions providing for
foreclosure and release of Collateral) as the same may be in effect or may be
amended from time to time in accordance with the terms thereof and hereof. The
Company (a) will forever warrant and defend the title to the Collateral against
the claims of all persons whatsoever, (b) will execute, acknowledge and deliver
to the Trustee such further assignments, transfers, assurances or other
instruments as the Trustee may reasonably require or request, and (c) will do or
cause to be done all such acts and things as may be necessary or proper, or as
may be required by the Trustee, to assure and confirm to the Trustee the
security interest in the Collateral contemplated hereby and by the Pledge
Agreement or any part thereof, as from time to time constituted, so as to render
the same available for the security and benefit of this Indenture and of the
Notes secured hereby, according to the intent and purposes herein expressed.
The Company shall take, or cause its Subsidiaries to take, upon request of the
Trustee, any and all actions reasonably required to cause the Pledge Agreement
to create and maintain, as security for the Indenture Obligations of the
Company, a valid and enforceable first priority Lien in and on the Collateral,
in favor of the Trustee, superior to and prior to the rights of all third
Persons, and subject to no other Liens.
SECTION 1402. RECORDING, ETC.
(a) The Company will cause, at its own expense, the Pledge Agreement,
this Indenture and any Subsidiary Guarantee and all amendments or supplements
thereto to be registered, recorded and filed or re-recorded, re-filed and
renewed in such manner and in such place or places, if any, as may be required
by law in order fully to preserve and protect the security interests created
under the Pledge Agreement and to effectuate and preserve the security therein
of the Holders and all rights of the Trustee.
(b) The Company shall furnish to the Trustee, within 30 days after
July 1 in
<PAGE>
108
each year beginning with July 1, 1996, an Opinion of Counsel, dated as of such
date, either (i) stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, registering, filing, re-recording, re-
registering and refiling of all supplemental indentures, financing statements,
continuation statements or other instruments of further assurance as is
necessary to maintain the Lien of the Pledge Agreement and reciting with respect
to the security interests in the Collateral the details of such action or
referring to prior Opinions of Counsel in which such details are given, and
stating that all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the rights
of the Holders and the Trustee hereunder and under the Pledge Agreement with
respect to the security interests in the Collateral or (ii) stating that, in the
opinion of such counsel, no such action is necessary to maintain such Lien and
assignment.
SECTION 1403. RELEASE OF COLLATERAL.
(a) As long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the Collateral may be released from the Lien
and security interest created by the Pledge Agreement, at the sole cost and
expense of the Company at any time and from time to time upon Company Request
and the Trustee shall release such portion of the Collateral, as follows (i)
all of the Collateral shall be released upon the payment in full of the Notes in
accordance with the terms thereof and this Indenture and the satisfaction of all
other Indenture Obligations and the satisfaction of all obligations under the
Notes and the Pledge Agreement; and (ii) a portion of the Collateral shall be
released upon the sale or other disposition of such Collateral to a Person other
than a Subsidiary if such sale or other disposition is not prohibited under this
Indenture and the Company complies with Section 1012, the "Disposition of
Proceeds of Asset Sales" covenant, to the extent applicable; PROVIDED that the
Trustee shall not release any Lien on any Collateral unless and until it shall
have received from the Company an Officers' Certificate certifying that such
conditions have been satisfied.
(b) The release of any Collateral from the terms of this Indenture
and the Pledge Agreement shall not be deemed to impair the security under this
Indenture in contravention of the provisions hereof and thereof, if and to the
extent the Collateral is released pursuant to this Indenture and the Pledge
Agreement. To the extent applicable, the Company shall cause TIA Section
313(b), relating to reports, and TIA Section 314(d), relating to the release of
property or securities from the Lien and security interest of the Pledge
Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Pledge
Agreement, to be complied with. Any certificate or opinion required by TIA
Section 314(d) may be made by an Officer of the Company except in cases where
TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser, or
other expert selected or approved by the Trustee in the exercise of reasonable
care.
<PAGE>
109
SECTION 1404. CERTIFICATES OF THE COMPANY.
In addition to all certificates and documents required to be furnished
by the Company under Section 1403 and the Pledge Agreement, the Company shall
furnish to the Trustee, prior to each proposed release of Collateral pursuant to
this Indenture and the Pledge Agreement, (i) all documents required by TIA
Section 314(d) and (ii) an Opinion of Counsel to the effect that such
accompanying documents constitute all documents required by TIA Section 314(d).
SECTION 1405. SUITS TO PROTECT THE COLLATERAL.
The Trustee shall have power to institute and to maintain such suits
and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any acts which may be unlawful or in violation of the Pledge
Agreement or this Indenture, and such suits and proceedings as the Trustee may
deem expedient to preserve or protect its interests and the interests of the
Holders in the Collateral (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security hereunder or be prejudicial to the
interests of the Holders or the Trustee).
SECTION 1406. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER
THE PLEDGE AGREEMENT.
The Trustee is authorized to receive any funds for the benefit of the
Holders distributed under the Pledge Agreement, and to make further
distributions of such funds to the Holders according to the provisions of this
Indenture.
SECTION 1407. ADDITIONAL PLEDGES.
(a) Within five Business Days after the First Amended and Restated
Revolving Credit Agreement dated September 13, 1994 among Bank of Boston -
Connecticut, DNE and Posterloid Corporation, as amended, is terminated and all
borrowings thereunder have been paid in full, the Company will, by execution and
delivery of an amendment to the Pledge Agreement as provided thereby, assign all
of its right title and interest in and to the Capital Stock of each member of
the DNE Group that it directly owns.
(b) The Company will not transfer or otherwise dispose of, to any
Subsidiary, any Pledged Stock or any property or assets (other than transfers or
dispositions in the ordinary course of business) of any Subsidiary, any Capital
Stock of which is Pledged Stock, unless such transferee Subsidiary is a
Restricted Subsidiary and the Company pledges all of the issued and outstanding
Capital Stock of such transferee Subsidiary owned by the Company to the Trustee
<PAGE>
110
pursuant to the Pledge Agreement.
ARTICLE FIFTEEN
SUBORDINATION OF ADIENCE SUBSIDIARY GUARANTEE
SECTION 1501. AGREEMENT TO SUBORDINATE.
Adience agrees, and the Trustee on behalf of itself and all Holders agrees, (a)
that its obligations under its Subsidiary Guarantee are subordinated in right of
payment, to the extent and in the manner provided in this Article Fifteen, until
all Adience Debt shall have been paid in full, and (b) that such subordination
is for the benefit of the holders of Adience Debt.
SECTION 1502. GENERAL MATTERS.
"Adience Debt" means all Debt of Adience with respect to its 11% Senior Secured
Notes due 2002 under the Indenture dated as of June 30, 1993 between Adience and
IBJ Schroder Bank & Trust Company, as Trustee (the "Adience Debt Trustee").
A "distribution" may consist of cash, securities or other property of Adience or
by way of cancellation, forgiveness, or setoff of Debt owed in respect of its
Subsidiary Guarantee against any Debt owed by the Trustee or any Holder to
Adience.
"Adience Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing the Adience Debt.
SECTION 1503. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of Adience in a total or partial liquidation
or dissolution of Adience or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to Adience or its property or in an
assignment for the benefit of creditors or any marshalling of the assets and
liabilities of Adience:
(1)Holders of Adience Debt shall be entitled to have all Adience Obligations
(including interest after the commencement of any such proceeding at the rate
specified in such Adience Debt instrument(s)) paid in full before any Holder or
the Trustee on behalf of the Holders shall be entitled to receive pursuant to
Adience's Subsidiary Guarantee any payment on account of the Notes; and
(2)until all Adience Obligations (as provided in subsection (1) above) are paid
in full, any distribution by Adience to which the Trustee or any Holder would be
entitled but for this Article Fifteen shall be made to holders of Adience Debt,
as their interests may appear.
The consolidation of Adience with, or the merger of Adience into, another
corporation or the
<PAGE>
111
liquidation or dissolution of Adience following the conveyance or transfer of
its properties and assets substantially as an entirety to another Person upon
the terms and conditions set forth in Section 801 hereof shall not be deemed a
dissolution, winding up, liquidation or reorganization for the purposes of this
Section if the corporation formed by such consolidation or into which Adience is
merged or the Person which acquires by conveyance or transfer such properties
and assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
set forth in Section 801 hereof.
SECTION 1504. DEFAULT ON ADIENCE DEBT.
(a) Upon (i) the final maturity of Adience Debt by lapse of time,
acceleration or otherwise, or (ii) a default by Adience in the payment of
principal of or interest on the Adience Debt, whether at maturity or otherwise
(an "Adience Payment Default"), and such default shall not have been cured or
waived or the holders of Adience Debt shall not have delivered to the Trustee on
behalf of the Holders a notice of waiver of the benefits of this sentence and
consent to the making of payments by Adience with respect to its Subsidiary
Guarantee on account of scheduled payments on the Notes until further notice
from such holders, the Adience Debt shall first be paid in full, or such payment
duly provided for in a manner satisfactory to the holders of the Adience Debt,
before any payment is made by Adience under its Subsidiary Guarantee on account
of the principal of or interest on the Notes.
(b) Adience may not make any payment or distribution under its
Subsidiary Guarantee on the Notes or acquire any Notes in exchange for cash or
property if:
(i) a default (other than an Adience Payment Default) on the
Adience Debt occurs and is continuing that permits the holders of the
Adience Debt to accelerate its maturity; and
(ii) Adience receives a notice of such default from a holder of
Adience Debt. If Adience receives any such notice, a subsequent notice
given within 360 days from the date of the giving of the first notice
relating to the same default on Adience Debt shall not be effective for
purposes of this Section 1504, unless such event of default shall have been
cured or waived for a period of not less than 180 consecutive days (and, in
the case of any such waiver, no payment shall be made by Adience to the
holders of the Adience Debt in connection with such waiver other than
amounts due pursuant to the terms of the Adience Debt as in effect at the
time of such default).
Adience may resume under its Subsidiary Guarantee payments on and
distributions in respect of the Notes and may acquire them when:
(1) the default (other than an Adience Payment Default) is cured or
waived, or
<PAGE>
112
(2) 179 days pass after the aforementioned notice is given,
if this Article Fifteen otherwise permits the payment or acquisition at the time
of such payment or acquisition.
SECTION 1505. ACCELERATION OF THE NOTES.
If payment of the Notes is accelerated because of an Event of Default,
Adience shall promptly notify holders of Adience Debt of the acceleration.
Adience shall make any payment required by the terms of its Subsidiary Guarantee
with respect to the Notes when 179 days pass after the acceleration occurs if
this Article Fifteen permits the payment at that time; PROVIDED that, if the
Adience Debt is outstanding at the time of such acceleration, Adience shall make
such payment in accordance with the provisions of Section 1301. Immediately
following the expiration of such 179-day period, all Indenture Obligations of
Adience under its Subsidiary Guarantee which, but for the suspension, would have
become due and payable shall become immediately due and payable. Adience shall
not be prohibited by Section 1504 or 1505 from making payments pursuant to its
Subsidiary Guarantee on account of interest and/or principal due on the Notes on
more than one consecutive payment date when a payment of principal and/or
interest is due with respect to the Notes.
SECTION 1506. WHEN DISTRIBUTION MUST BE PAID OVER.
If a payment or distribution by Adience under its Subsidiary Guarantee
is made to the Trustee or any Holder that because of this Article Fifteen should
not have been made to it, the Trustee or such Holder who receives such payment
or distribution shall hold it in trust for the benefit of, and, upon written
request, pay it over to, the holders of Adience Debt, as their interests may
appear, for application to the payment of all Adience Obligations remaining
unpaid to the extent necessary until such time as such Adience Obligations are
paid in full, after giving effect to any concurrent payment or distribution to
or for the holders of the Adience Debt.
With respect to the holders of Adience Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article Fifteen, and no implied covenants or obligations with
respect to the holders of Adience Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Adience Debt, and shall not be liable to any such holder if the
Trustee shall pay over or distribute to or on behalf of the Holders or Adience
or any other Person money or assets to which any holders of Adience Debt shall
be entitled by virtue of this Article Fifteen, except if such payment is made as
a result of the willful misconduct or gross negligence of the Trustee.
<PAGE>
113
SECTION 1507. NOTICE BY GUARANTOR.
Adience shall promptly notify the Trustee and the Paying Agent of the
facts known to it that would cause a payment of any Indenture Obligations with
respect to its Subsidiary Guarantee to violate this Article Fifteen, but failure
to give such notice shall not affect the subordination of the obligations under
its Subsidiary Guarantee to the Adience Debt provided in this Article Fifteen.
SECTION 1508. SUBROGATION.
After the Adience Debt is paid in full, the Holders shall be
subrogated to the rights of holders of Adience Debt, to receive distributions
applicable to Adience Debt to the extent that distributions otherwise payable to
the Holders on account of Adience's Subsidiary Guarantee have been applied to
the payment of Adience Debt. A distribution made under this Article Fifteen to
holders of the Adience Debt which otherwise would have been made to the Holders
is not, as between Adience, its creditors other than the holders of the Adience
Debt and the Holders, a payment by Adience on the Adience Debt. If any payment
or distribution to which the Holders would otherwise have been entitled but for
the provisions of this Article shall have been applied, pursuant to the
provisions of this Article, to the payment of amounts payable under the Adience
Debt then, and in such case, the Holders shall be entitled to receive from
holders of Adience Debt at the time outstanding any payments or distributions
received by holders of Adience Debt after the Adience Debt has been paid in
full.
SECTION 1509. RELATIVE RIGHTS.
This Article Fifteen defines the relative rights of the Holders and
the holders of Adience Debt. Nothing in this Indenture shall:
(1) impair, as between Adience and the Holders, the obligation of
Adience, which is absolute and unconditional, to make payments pursuant to
its Subsidiary Guarantee in accordance with its terms;
(2) affect the relative rights of the Holders and creditors of
Adience other than their rights in relation to the holders of Adience Debt;
or
(3) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of the
holders of the Adience Debt to receive distributions and payments otherwise
payable to the Holders.
If Adience fails because of this Article Fifteen to make any payment
with respect to its Subsidiary Guarantee on the due date, the failure shall be a
Default or Event of Default.
<PAGE>
114
SECTION 1510. SUBORDINATION MAY NOT BE IMPAIRED.
No right of any holder of the Adience Debt to enforce the
subordination of the Debt evidenced by its Subsidiary Guarantee shall be
impaired by any act or failure to act by Adience or by its failure to comply
with its Subsidiary Guarantee.
SECTION 1511. DISTRIBUTION OR NOTICE TO BENEFICIARIES OF ADIENCE DEBT.
Whenever a distribution is to be made or a notice given to the holders
of the Adience Debt, the distribution may be made and the notice given to the
other holders of the Adience Debt in accordance with any applicable instruments
evidencing the Adience Debt.
Upon any payment or distribution of assets of Adience referred to in
this Article Fifteen, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of such holders or of the liquidating trustee or agent or other
person making any distribution to the Trustee or to the Holders for the purpose
of ascertaining the persons entitled to participate in such distribution, the
holders of the Adience Debt and other Debt of Adience, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Fifteen.
SECTION 1512. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article Fifteen or any other
provisions of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment or
distribution by the Trustee, or the taking of any action by the Trustee pursuant
to this Article Fifteen, and the Trustee or Paying Agent may continue to make
payments on the Notes unless it shall have received at its Corporate Trust
Office at least two Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Indenture Obligations with
respect to the Subsidiary Guarantee of Adience to violate this Article Fifteen.
Nothing in this Article Fifteen shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 606 hereof. Only Adience or any holder of
Adience Debt may give notice referred to in the second preceding sentence.
The Trustee in its individual or any other capacity may hold Adience
Debt with the same rights it would have if it were not Trustee. Any Paying
Agent may do the same with like rights.
SECTION 1513. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder by its acceptance thereof authorizes and directs the
Trustee on such Holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in Article Fifteen, and
appoints the Trustee its attorney-in-fact for any and all such purposes.
<PAGE>
115
This Indenture may be signed in any number of counterparts with the
same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original of
this Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
THE ALPINE GROUP, INC.
By
--------------------------------
Title: Executive Vice President
Attest:
---------------------------
Title: Assistant Secretary
SUPERIOR TELECOMMUNICATIONS INC.
By
--------------------------------
Title: Senior Vice President
Attest:
---------------------------
Title: Assistant Secretary
ADIENCE, INC.
By
--------------------------------
Title: Senior Vice President
Attest:
---------------------------
Title: Assistant Secretary
<PAGE>
116
SUPERIOR CABLE CORPORATION
By
--------------------------------
Title: Senior Vice President
Attest:
---------------------------
Title: Assistant Secretary
MARINE MIDLAND BANK
By
--------------------------------
Title: Assistant Vice President
Attest:
---------------------------
Title: Assistant Vice President
<PAGE>
SCHEDULE I
NOTICE ADDRESSES FOR SUBSIDIARY GUARANTORS
Superior Cable Corporation
c/o The Alpine Group, Inc.
1790 Broadway, 15th Floor
New York, New York 10019
Attention: Bragi F. Schut
Telecopier: 212-757-3423
Adience, Inc.
c/o The Alpine Group, Inc.
1790 Broadway, 15th Floor
New York, New York 10019
Attention: Bragi F. Schut
Telecopier: 212-757-3423
Superior Telecommunications Inc.
c/o The Alpine Group, Inc.
1790 Broadway, 15th Floor
New York, New York 10019
Attention: Bragi F. Schut
Telecopier: 212-757-3423
<PAGE>
Exhibit 10(ff)
PLEDGE AGREEMENT
This PLEDGE AGREEMENT, dated as of July 21, 1995, is made by THE
ALPINE GROUP, INC., a Delaware corporation (the "Pledgor"), in favor of MARINE
MIDLAND BANK, a New York banking corporation and trust company, trustee (the
"Trustee") for the holders (the "Holders") of the Notes (as defined herein).
R E C I T A L S
The Pledgor and the Trustee have entered into an indenture dated as of
July 15, 1995 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Indenture"), pursuant to which the Pledgor is
issuing on the date hereof $153,000,000 in aggregate principal amount of its 12
1/4% Senior Secured Notes due 2003 (the "Notes"). Capitalized terms used herein
and not otherwise defined herein shall have the meanings given to such terms in
the Indenture.
The Pledgor is the legal and beneficial owner of the outstanding
shares of Capital Stock set forth on Schedule I hereto (such Capital Stock,
together with other shares of Capital Stock pledged hereunder, the "Pledged
Stock") issued by the subsidiaries of the Pledgor named therein (such
subsidiaries, together with any present or future direct subsidiaries of the
Pledgor whose Capital Stock is pledged to the Trustee pursuant to the Indenture
or this Agreement, the "Issuers").
To secure its Indenture Obligations and in order to induce the Holders
to purchase the Notes (together with its obligations hereunder, the
"Obligations"), the Pledgor has agreed to (i) pledge to the Trustee for its
benefit and the ratable benefit of the Holders, and grant to the Trustee for its
benefit and the ratable benefit of the Holders, a security interest in the
Collateral (as defined herein) and (ii) execute and deliver this Agreement in
order to secure the payment and performance by the Pledgor of all the
Obligations.
NOW THEREFORE, in consideration of the premises, and in order to
induce the Holders to purchase the Notes, the Pledgor hereby agrees with the
Trustee for its benefit and the ratable benefit of the Holders as follows:
<PAGE>
2
SECTION 1. PLEDGE.
The Pledgor hereby assigns and pledges to the Trustee for its benefit
and for the ratable benefit of the Holders, and hereby grants to the Trustee for
its benefit and for the ratable benefit of the Holders, a continuing first
priority security interest in all of its right, title and interest in the
following (collectively, the "Collateral"):
(a) the Pledged Stock and the certificates representing the Pledged
Stock and all income and profits there on, and all proceeds, dividends,
cash, options, warrants, rights, subscriptions, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange or substitution for any or all of the Pledged
Stock; and
(b) all additional shares of Capital Stock of, and all securities
convertible into, and all warrants, options or other rights to purchase,
Capital Stock of, any Issuer from time to time acquired by the Pledgor in
any manner, and the certificates representing any such additional shares
(any such additional securities shall constitute part of the Pledged Stock
under and as defined in this Agreement), and all income and profits
thereon, and all proceeds, dividends, cash, options, warrants, rights,
subscriptions, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange
or substitution for any or all of such shares.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures the
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations. Without limiting the generality of the
foregoing, this Agreement secures the payment of all amounts that constitute
part of the Indenture Obligations and would be owed by the Pledgor to the
Holders under the Indenture 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 Pledgor.
SECTION 3. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing any and all of the Collateral shall be delivered to
and held by or on behalf of the Trustee 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 Trustee. The Trustee shall have the right, at any time in
its discretion and without notice to the Pledgor, to transfer to or to register
in the name of the Trustee or any of its nominees any or all of the Collateral,
subject only to the revocable rights specified in Section 6(a). In addition,
the Trustee shall have the right at any time to exchange certificates or
instruments representing or evidencing Collateral for any of the certificate or
instruments of smaller or larger denominations.
<PAGE>
3
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents
and warrants as follows:
(a) The execution, delivery and performance by the Pledgor of this
Agreement are within the Pledgor's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation
or of the certificate of incorporation or by-laws of the Pledgor or of any
agreement, judgment, injunction, order, decree or other instrument, binding
upon the Pledgor or result in the creation or imposition of any Lien on any
assets of the Pledgor, except for the security interests granted under this
Agreement.
(b) The Pledgor is, and at the time of delivery of any Collateral to
the Trustee pursuant to Section 3 of this Agreement will be, the legal and
beneficial owner of the Collateral, free and clear of any Lien or claims of
any Person except for the lien and security interest created by this
Agreement. No effective financing statement or other instrument 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
Trustee relating to this Agreement. The Pledgor has no trade names.
(c) The Pledged Stock has been duly authorized and validly issued and
is fully paid and non-assessable.
(d) The Pledged Stock, consisting of Capital Stock of the respective
Issuers identified in Schedule I annexed hereto, constitutes the percentage
of the issued and outstanding shares of stock of such Issuers as set forth
on such schedule.
(e) This Agreement has been duly executed and delivered by the
Pledgor and constitutes a legal, valid and binding obligation of the
Pledgor, enforceable against the Pledgor in accordance with its terms,
except as such enforceability may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or general principles of
equity.
(f) Upon the delivery to the Trustee of the Collateral and (as to
certain proceeds thereof) the filing of Uniform Commercial Code (the "UCC")
financing statements, the pledge of the Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment of the Obligations for the benefit of
the Trustee and the Holders, and enforceable as such against all creditors
of the Pledgor and any persons purporting to purchase any of the Collateral
from the Pledgor other than as permitted by the Indenture.
<PAGE>
4
(g) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor with respect to this
Agreement or the transactions contemplated hereby.
(h) No consent of any other Person and no consent, authorization,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other Person is required
either (i) for the pledge by the Pledgor of the Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement
by the Pledgor, (ii) the perfection or maintenance of the pledge created
hereby (including the first priority nature of such pledge) or (iii) for
the exercise by the Trustee of the voting or other rights provided for in
this Agreement or the remedies in respect of the Collateral pursuant to
this Agreement.
(i) The Pledgor does not directly own any other shares of Capital
Stock of any Subsidiary of the Pledgor set forth on Schedule I annexed
hereto other than the shares of Capital Stock described in such schedule.
(j) Except with respect to this Agreement, the Pledged Stock is not
subject to any stockholder agreement, voting trust agreement or other
agreement that affects the voting or other rights of a holder of Pledged
Stock, including the ability to transfer any of the Pledged Stock.
(k) The chief place of business and chief executive office of the
Pledgor and the office where the Pledgor keeps its records concerning the
Collateral are located at 1790 Broadway, New York, New York 10019.
(l) As of the date hereof, all information set forth herein relating
to the Collateral is accurate and complete in all respects.
SECTION 5. FURTHER ASSURANCES. (a) The Pledgor agrees that at any
time and from time to time, at the expense of the Pledgor, the Pledgor will
promptly execute and deliver or cause to be executed and delivered all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Trustee may request, in order to perfect and protect the
first priority of the Trustee's security interest in the Collateral, any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Trustee to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
foregoing, the Pledgor will 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 Trustee may request, in order to perfect
and preserve the pledge, assignment and security interest granted or purported
to be granted hereby.
<PAGE>
5
(b) The Pledgor hereby authorizes the Trustee 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 Pledgor 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 Pledgor will furnish to the Trustee from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail.
SECTION 6. VOTING RIGHTS; DIVIDENDS; ETC.. (a) So long as no
Default or Event of Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Stock or any part
thereof for any purpose not inconsistent with the terms of this Agreement,
the Indenture or the Notes; PROVIDED, HOWEVER, that the Pledgor shall not
exercise or shall refrain from exercising any such right if such action
would be inconsistent with or violate any provisions of this Agreement or
the Indenture.
(ii) The Pledgor shall be entitled to receive and retain any and
all dividends paid in respect of the Collateral; PROVIDED, HOWEVER, 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 Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any 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 Collateral
shall be, and shall be forthwith delivered to the Trustee to hold as,
Collateral and shall, if received by the Pledgor, be received in trust for
the benefit of the Trustee, be segregated from the other property or funds
of the Pledgor and be forthwith delivered to the Trustee as Collateral in
the same form as so received (with any necessary endorsement).
<PAGE>
6
(iii) In order to permit the Pledgor to exercise the voting and
other rights which it is entitled to exercise pursuant to Section 6(a)(i)
above and to receive the dividends, distributions or principal payments
which it is authorized to receive and retain pursuant to section 6(a)(ii)
above, the Trustee shall, if necessary, upon written request of the
Pledgor, from time to time execute and deliver (or cause to be executed and
delivered) to the Pledgor all such proxies, dividend payment orders and
other instruments as the Pledgor may reasonably request.
(b) Upon the occurrence and during the continuance of a Default or an
Event of Default;
(i) Upon written notice from the Trustee to the Pledgor, all
rights of the Pledgor 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) above shall cease, and all such rights shall
thereupon become vested in the Trustee which shall thereupon have the sole
right to exercise such voting and other consensual rights; PROVIDED that,
so long as the New Credit Agreement is in force and effect, with respect to
the Pledged Stock of any Restricted Subsidiary, the Trustee will not have
the right to vote such Pledged Stock (unless and until it acquires
ownership of such Pledged Stock by lawful foreclosure of the lien created
thereon under this Agreement) for the purpose of causing any Restricted
Subsidiary's directors to place such Restricted Subsidiary into bankruptcy
or causing new members of the board of directors of such Restricted
Subsidiary to be elected specifically for such purpose.
(ii) All rights of the Pledgor to receive the dividends and
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 6(a)(ii) above shall cease and all such rights shall
thereupon become vested in the Trustee who shall thereupon have the sole
right to receive and hold as Collateral such dividends and distributions.
(iii) All dividends, distributions and interest payments that are
received by the Pledgor contrary to the provisions of this Section 6 above
shall be received in trust for the benefit of the Trustee and the Holders,
shall be segregated from other property or funds of the Pledgor and shall
be forthwith delivered to the Trustee as Collateral in the same form as so
received (with any necessary endorsement).
(c) In order to permit the Trustee to receive all dividends and other
distributions to which it may be entitled under Section 6(a)(ii) or 6(b)(ii)
above, or to exercise the voting and other consensual rights which it may be
entitled to exercise pursuant to Section 6(b)(i) above, the Pledgor shall, if
necessary, upon written notice from the Trustee, from time to time execute and
deliver (or cause to be executed and delivered) to the
<PAGE>
7
Trustee appropriate proxies, dividend payment orders and other instruments as
the Trustee may reasonably request.
SECTION 7. COVENANTS. The Pledgor covenants and agrees with the
Trustee and the Holders from and after the date of this Agreement until the
Obligations have been paid in full:
(a) Except as permitted by the Indenture, the Pledgor will not (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option or warrant with respect to, any of the Collateral, (ii)
create or permit to exist any Lien upon or with respect to any of the
Collateral, except for the pledge and security interest under this
Agreement, or (iii) transfer or otherwise dispose of any Pledged Stock or
any property or assets (other than transfers or dispositions in the
ordinary course of business) of an Issuer to a Subsidiary, unless such
Subsidiary is a Restricted Subsidiary and the Pledgor promptly (and in any
event within five Business Days after such transfer or disposition)
delivers to the Trustee a duly executed pledge amendment, in substantially
the form of Exhibit A hereto (a "Pledge Amendment"), with respect to the
Capital Stock of such Subsidiary owned by the Pledgor or a Subsidiary of
the Pledgor. Each such Subsidiary shall, upon execution of such Pledge
Amendment, be an "Issuer" hereunder. If a Subsidiary of the Pledgor owns
any such pledged Capital Stock, such Subsidiary shall be a "Pledgor"
hereunder.
(b) The Pledgor agrees that it will not enter into any agreement or
understanding that purports to or may restrict or inhibit the Trustee's
rights or remedies hereunder, including, without limitation, the Trustee's
right to sell or otherwise dispose of the Collateral.
(c) The Pledgor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Collateral at the location specified in Section 4(k) or, upon 30 days'
prior written notice to the Trustee, at such other location in a
jurisdiction where all actions required by Section 5 shall have been taken
with respect to the Collateral. The Pledgor will hold and preserve such
records and will permit representatives of the Trustee at any time during
normal business hours to inspect and make copies or abstracts from such
records and chattel paper.
(d) The Pledgor agrees that immediately upon becoming the beneficial
owner of any additional shares of Capital Stock of any of the Issuers, it
will pledge and deliver to the Trustee for its benefit and the ratable
benefit of the Holders, a continuing first priority security interest in
such shares (as well as duly executed instruments of transfer or
assignments in blank, all in form and substance satisfactory to the
Trustee). The Pledgor further agrees that it will promptly (and in any
event
<PAGE>
8
within five Business Days after such acquisition) deliver to the Trustee,
duly executed by the Pledgor, a Pledge Amendment with respect to the
additional Collateral that is to be pledged pursuant to this Agreement.
(e) The Pledgor will at all times be the sole beneficial owner of the
Collateral.
The Pledgor hereby authorizes the Trustee to attach each Pledge
Amendment to this Agreement and agrees that any Capital Stock listed on the
Pledge Amendment delivered to the Trustee shall for all purposes hereunder be
considered "Pledged Stock" and "Collateral".
SECTION 8. TRUSTEE APPOINTED ATTORNEY-IN-FACT. In addition to all of
the powers granted to the Trustee pursuant to Article 6 of the Indenture, the
Pledgor hereby irrevocably appoints the Trustee the Pledgor's attorney-in-fact,
with full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in the Trustee's discretion to take any
action and to execute any instrument which the Trustee may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:
(a) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
(b) to receive, indorse and collect any drafts or other instruments
and documents, in connection with clause (a) above, and
(c) to file any claims or take any action or institute any
proceedings that the Trustee may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Trustee with respect to any of the Collateral.
SECTION 9. TRUSTEE MAY PERFORM. If the Pledgor fails to perform any
agreement contained herein, the Trustee may itself perform, or cause performance
of, such agreement, and the expenses of the Trustee, including the fees and
expenses of its counsel, incurred in connection therewith shall be payable by
the Pledgor under Section 14 hereof.
SECTION 10. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Pledgor
represents to the Trustee and the Holders that the Pledgor has made its own
arrangements for keeping informed of changes or potential changes affecting the
Collateral (including, but not limited to, rights to convert, rights to
subscribe, payment of dividends, reorganization or other exchanges, tender
offers and voting rights), and the Pledgor agrees that the Trustee and
<PAGE>
9
the Holders shall have no responsibility or liability for informing the Pledgor
of any such changes or potential changes or for taking any action or omitting to
take any action with respect thereto. Except as not prohibited by the
Indenture, the Pledgor covenants that it will not, without the prior written
consent of the Trustee, vote to enable, or take any other action to permit, any
Issuer to issue any Capital Stock or other securities or to sell or otherwise
dispose of, or grant any option with respect to, any of the Collateral or create
or permit to exist any Lien upon or with respect to any of the Collateral. The
Pledgor will defend the right, title and interest of the Trustee and the Holders
in and to the Collateral against the claims and demands of all Persons.
SECTION 11. REMEDIES UPON DEFAULT. If any Event of Default shall
have occurred and be continuing:
(a) (i) The Trustee and the Holders 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
upon default under the Uniform Commercial Code in effect in the State of
New York at that time (the "Code"), and the Trustee may also in its sole
discretion, 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 Trustee's offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as
the Trustee may deem commercially reasonable, irrespective of the impact of
any such sales on the market price of the Collateral. Each purchaser at
any such sale shall hold the property sold absolutely free from any claim,
encumbrance or right on the part of the Pledgor, and the Pledgor hereby
waives (to the extent permitted by law) all rights of redemption, stay and
or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. The Pledgor
agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to the Pledgor 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 Trustee shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
The Trustee 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. The Pledgor hereby waives any claims against the Trustee
arising by reason of the fact that the price at which any Collateral may
have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if the Trustee accepts the first
offer received and does not offer such Collateral to more than one offeree.
(ii) The Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and
<PAGE>
10
applicable state securities laws, the Trustee may be compelled, with
respect to any sale of all or any part of the Collateral, to limit
purchasers to those who will agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that any such
private sales may be at prices and on terms less favorable to the Trustee
than those obtainable through a public sale without such restrictions
(including, without limitation, a public offering made pursuant to a
registration statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any private sale shall be deemed to have been
made in a commercially reasonable manner and that the Trustee shall have no
obligation to engage in public sales and no obligation to delay the sale of
any Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities laws, even if
the Pledgor would agree to do so.
(b) If the Trustee determines to exercise its right to sell any or
all of the Collateral, upon written request, the Pledgor shall and shall
cause each issuer of any Pledged Stock to be sold hereunder from time to
time to furnish to the Trustee all such information as the Trustee may
request in order to determine the number of shares and other instruments
included in the Collateral which may be sold by the Trustee as exempt
transactions under the Securities Act and the rules of Securities and
Exchange Commission thereunder, as the same are from time to time in
effect.
(c) The Trustee may exercise any and all rights and remedies of the
Pledgor in respect of the Collateral, including, without limitation, any
and all of the rights of the Pledgor to demand or otherwise require payment
of any amount under, or performance of any provision of, the Indenture.
(d) All payments received by the Pledgor in respect of the Collateral
shall be received in trust for the benefit of the Trustee, shall be
segregated from other funds of the Pledgor and shall be forthwith paid over
to the Trustee in the same form as so received (with any necessary
endorsement).
SECTION 12. REGISTRATION RIGHTS. If the Trustee shall determine to
exercise its rights to sell all or any of the Pledged Stock pursuant to Section
11, the Pledgor agrees that, upon request of the Trustee, the Pledgor will, at
its own expense, cause the applicable Issuer to:
(i) Execute and deliver, and cause its directors and officers 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 Trustee, advisable to register such Pledged Stock under the
provisions of the Securities Act, to cause the
<PAGE>
11
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 that, in the opinion of the Trustee, 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:
(ii) Use its best efforts to cause the applicable Issuer to
qualify the Pledged Stock under the state securities or "Blue Sky" laws and
to obtain all necessary governmental approvals for the sale of the
Collateral, as requested by the Trustee.
(iii) Cause each such Issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act.
(iv) Provide the Trustee with such other information and
projections as may be necessary or, in the opinion of the Trustee,
advisable to enable the Trustee to effect the sale of such Collateral.
(v) Do or cause to be done all such other acts and things as may
be necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
The Trustee is authorized, in connection with any sale of the Collateral
pursuant to Section 11, to deliver or otherwise disclose to any prospective
purchaser of the Collateral (i) any registration statement or prospectus, and
all supplements and amendments thereto, prepared pursuant to clause (a) above,
(ii) any information provided to it pursuant to clause (d) above and (iii) any
other information in its possession relating to the Collateral.
SECTION 13. APPLICATION OF PROCEEDS. After and during the
continuance of an Event of Default, any cash held by the Trustee as Collateral
and all cash proceeds received by the Trustee (all such cash being "Proceeds")
in respect of any sale of, collection from, or other realization upon all or any
part of the Collateral pursuant to the exercise by the Trustee of its remedies
as a secured creditor as provided in Section 11 of this Agreement shall be
applied promptly from time to time by the Trustee as follows:
FIRST, to the payment of the costs and expenses of such sale,
collection or other realization, including reasonable compensation to the
Trustee and its agents and counsel, and all expenses, liabilities and
advances made or incurred by the Trustee in connection therewith;
<PAGE>
12
SECOND, to the payment of the Indenture Obligations in accordance with
Section 506 of the Indenture;
THIRD, to the payment of any other Obligations; and
FOURTH, after payment in full of all Obligations, to the Pledgor, or
its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct, of any
surplus then remaining from such Proceeds.
SECTION 14. EXPENSES. The Pledgor will upon demand pay to the
Trustee the amount of any and all reasonable expenses, including the reasonable
fees, expenses and disbursements of its counsel and of any experts and agents,
which the Trustee 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 Collateral, (iii) the exercise or
enforcement of any of the rights of the Trustee or the Holders hereunder or (iv)
the failure by the Pledgor to perform or observe any of the provisions hereof.
SECTION 15. SECURITY INTEREST ABSOLUTE. All rights of the Trustee
and the Holders and security interests hereunder, and all obligations of the
Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other 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 any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of any Liens
on any other collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, for all or any of the Obligations;
or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the Obligations
or of this Pledge Agreement.
SECTION 16. AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or
waiver of any provision of this Agreement and any consent to any departure by
the Pledgor from any provision of this Agreement shall be effective only if made
or given in compliance with all of the terms and provisions of the Indenture and
neither the Trustee nor any Holder shall be deemed, by any act, delay,
indulgence, omission or otherwise, to have waived any
<PAGE>
13
right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. Failure of
the Trustee or any Holder to exercise, or delay in exercising, any right, power
or privilege hereunder shall not operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Trustee or any Holder of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy that the Trustee or such Holder would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
SECTION 17. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in the form and manner, and
delivered to each of the parties hereto at their respective addresses, as set
forth or provided for in Section 106 of the Indenture.
SECTION 18. CONCERNING THE TRUSTEE.
(a) Pursuant to Section 512 of the Indenture, the Holders shall have
the right, by one or more instruments in writing executed and delivered to the
Trustee, to direct the time, method and place of conducting any proceeding for
any right or remedy available to the Trustee, or of exercising any trust or
power conferred on the Trustee, or for the appointment of a receiver, or to
direct the taking or the refraining from taking of any action authorized by this
Agreement; PROVIDED that (i) such direction shall not conflict with the
provisions of any law or of this Agreement or the Indenture, (ii) the Trustee
shall be adequately secured and indemnified as provided in the Indenture and
(iii) such direction does not involve the Trustee in personal liability and is
not unjustly prejudicial to the Holders not consenting. Nothing in this Section
18(a) shall impair the right of the Trustee in its discretion to take any action
or omit to take any action which it deems proper and which is not inconsistent
with such direction. The Trustee in its capacity as such or as Trustee shall
have no duty to take or refrain from taking any action unless explicitly
required herein.
(b) The Trustee shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equivalent to that which the
Trustee, in its individual capacity, accords its own similar property in similar
situations, it being understood that neither the Trustee nor any Holder shall
have responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Trustee has or is deemed to have knowledge of
such matters, or (b) taking any necessary steps (other than steps taken in
accordance with the standard of care set forth above to maintain possession of
the Pledged Stock) to preserve rights against any Person with respect to any
Collateral.
<PAGE>
14
(c) The Trustee shall not be responsible in any manner whatsoever for
the correctness of any recitals, statements, representations or warranties
herein, all of which are made solely by the Pledgor. The Trustee makes no
representations as to the value or condition of the Collateral or any part
thereof, or as to the title of the Pledgor thereto or as to the security
afforded by this Agreement, or as to the validity, execution (except the
Trustee's own execution), enforceability, legality or sufficiency of this
Agreement, and the Trustee shall incur no liability or responsibility in respect
of any such matters.
(d) Notwithstanding any other provision of this Agreement, the
Trustee shall not, in its individual capacity, be personally liable for any
action taken or omitted to be taken by it in accordance with this Agreement
except for its own gross negligence or willful misconduct.
(e) The Trustee shall have the same rights with respect to any
obligation secured hereunder held by it as any other secured party and may
exercise such rights as though it were not the Trustee hereunder, and may accept
deposits from, lend money to, and generally engage in any kind of banking or
trust business with the Pledgor as if it were not the Trustee.
(f) For purposes of this Agreement, in the performance of the duties
and obligations hereunder the Trustee shall be entitled to the benefits of the
terms and provisions of Article Six of the Indenture.
SECTION 19. TERMINATION. Subject to Section 23, when all the
Obligations have been indefeasibly paid in full, this Agreement shall terminate,
and the Trustee shall, upon the written request and at the expense of the
Pledgor, forthwith assign, transfer and deliver, against receipt and without
recourse to the Trustee, such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof to or on the order of the
Pledgor.
SECTION 20. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This
Agreement shall create a continuing security interest in the Collateral and
shall, unless otherwise provided in the Indenture or this Agreement, (a) remain
in full force and effect until indefeasible payment in full of all Obligations,
(b) be binding upon the Pledgor, its successors and assigns, and (c) inure,
together with the rights and remedies of the Trustee hereunder, to the benefit
of the Trustee, the Holders and each of their respective successors, transferees
and assigns.
SECTION 21. RELEASE. Upon any sale, lease, transfer or other
disposition of any item of Collateral in accordance with the terms of the
Indenture, the Trustee will, at the Pledgor's expense, execute and deliver to
the Pledgor such documents as the Pledgor shall reasonably request to evidence
the release of such item of Collateral from the assignment and
<PAGE>
15
security interest granted hereby; PROVIDED, HOWEVER, that (a) at the time of
such request and such release no Default or Event of Default shall have occurred
and be continuing, (b) the Pledgor shall have delivered to the Trustee, at least
ten Business Days prior to the date of the proposed release, a written request
for release describing the item of Collateral and the terms of the sale, lease,
transfer or other disposition in reasonable detail, including the price thereof
and any expenses in connection therewith, together with a form of release for
execution by the Trustee and a certification by the Pledgor to the effect that
the transaction is in compliance with the Indenture and as to such other matters
as the Trustee may request and (c) the proceeds of any such sale, lease,
transfer or other disposition required to be applied in accordance with Section
1012 of the Indenture shall be paid to, or in accordance with the instructions
of, the Trustee at the closing of such sale, lease, transfer or other
disposition.
SECTION 22. SEPARABILITY CLAUSE. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 23. REINSTATEMENT. This Agreement shall continue to be
effective or be reinstated if at any time any amount received by the Trustee or
any Holder in respect of the Obligations is rescinded or must otherwise be
restored or returned by the Trustee or any Holder upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Pledgor or upon
the appointment of any receiver, intervenor, conservator, trustee or similar
official for the Pledgor or any substantial part of its assets, or otherwise,
all as though such payments had not been made.
SECTION 24. 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 Indenture, terms defined in Articles 8 and 9
of the Uniform Commercial Code as in effect in the State of New York are used
herein as therein defined.
SECTION 25. COUNTERPARTS. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures thereto and hereto
were upon the same instrument.
<PAGE>
16
IN WITNESS WHEREOF, the Pledgor and the Trustee have each caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
PLEDGOR:
THE ALPINE GROUP, INC.
By:
-------------------------------
Title:
Notice Address:
The Alpine Group, Inc.
1790 Broadway
New York, New York 10019
TRUSTEE:
MARINE MIDLAND BANK,
as Trustee
By:
-------------------------------
Title:
Notice Address:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
<PAGE>
SCHEDULE I
PLEDGED STOCK
<TABLE>
<CAPTION>
Stock Number Percentage of
Class of Certificate of Outstanding
Stock Issuer Stock Par Value No(s) Shares Shares
------------ -------- --------- ----------- ------ -------------
<S> <C> <C> <C> <C> <C>
Superior Telecommunications Inc. Common $.01 per share No.2 1,000 100%
(f/k/a Superior Telec Inc.)
Adience, Inc. Common $1.00 per share No. 1 10 100%
</TABLE>
<PAGE>
EXHIBIT A
PLEDGE AMENDMENT
This Pledge Amendment, dated ________________, 19__, is delivered
pursuant to Section 7 of the Pledge Agreement referred to below. The
undersigned hereby pledges to the Trustee for its benefit and the ratable
benefit of the Holders, and grants to the Trustee for its benefit and the
ratable benefit of the Holders, a continuing first priority security interest in
all of its right, title and interest in the Capital Stock listed below.
The undersigned hereby agrees that this Pledge Amendment may be
attached to the Pledge Agreement dated as of July 21, 1995 (the "Pledge
Agreement"), between the undersigned and Marine Midland Bank, a New York banking
corporation and trust company, Trustee, capitalized terms used herein and not
otherwise defined herein shall have the meanings given to such terms in the
Pledge Agreement; and the Collateral listed on this Pledge Amendment shall be
deemed to be part of the Collateral, and shall become part of the Collateral and
shall secure all Obligations.
THE ALPINE GROUP, INC.
By:
-----------------------------------------------
Name:
Title:
PLEDGED SHARES
Number of Share
Pledged Certificate Percentage of
Issuer Shares Numbers Outstanding
------ --------- ----------- -------------
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES (DIRECT AND INDIRECT)
Name Jurisdiction
DNE Systems, Inc. Delaware
DNE Technologies, Inc. Delaware
DNE Manufacturing and Service Company Delaware
Adience, Inc. Delaware
Adience Canada, Inc. Ontario, Canada
Superior Telecommunications, Inc. Georgia
Superior Cable Corporation Ontario, Canada
Polyvision France, S.A. France
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K into The Alpine Group, Inc.'s previously filed
Registration Statements on Forms S-8 (File Nos. 2-70015 and 33-62544) and on
Forms S-3 (File Nos. 33-30246 and 33-53434).
ARTHUR ANDERSEN LLP
New York, New York
July 27, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-START> MAY-01-1994
<PERIOD-END> APR-30-1995
<CASH> 15,546
<SECURITIES> 1,495
<RECEIVABLES> 42,211
<ALLOWANCES> 956
<INVENTORY> 35,242
<CURRENT-ASSETS> 98,885
<PP&E> 59,174
<DEPRECIATION> 6,934
<TOTAL-ASSETS> 233,778
<CURRENT-LIABILITIES> 91,805
<BONDS> 84,684
<COMMON> 1,743
0
17,250
<OTHER-SE> (25,665)
<TOTAL-LIABILITY-AND-EQUITY> 233,778
<SALES> 198,135
<TOTAL-REVENUES> 198,135
<CGS> 169,125
<TOTAL-COSTS> 169,125
<OTHER-EXPENSES> 28
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,197
<INCOME-PRETAX> (828)
<INCOME-TAX> 348
<INCOME-CONTINUING> (1,176)
<DISCONTINUED> (4,868)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,044)
<EPS-PRIMARY> (0.38)
<EPS-DILUTED> (0.38)
</TABLE>
