- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file Number 0-8287
LINDBERG CORPORATION
DELAWARE 36-1391480
- ----------------------------- -------------------------------
State of Incorporation IRS Employer Identification No.
6133 North River Road, Suite 700
Rosemont, Illinois 60018
(708) 823-2021
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
----- -----
The number of shares of the Registrant's Common Stock outstanding as of November
13, 1995 was: 4,727,391.
<PAGE> -2-
LINDBERG CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Part I Financial Information: Page No.
--------
Item 1. Consolidated Statements of Earnings - Three Months
and Nine Months Ended September 30, 1995 and 1994........ 3
Consolidated Balance Sheets - As of September 30, 1995
and December 31, 1994 ................................... 4
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1995 and 1994........................ 5
Notes to the Consolidated Financial Statements ............ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 7
Part II Other Information:
Item 6. Exhibits and Reports on Form 8-K........................... 10
Signatures ................................................ 11
Exhibit Index ............................................. 12
<PAGE> -3-
LINDBERG CORPORATION AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1995 1994 1995 1994
------------------ -----------------
<S> <C> <C> <C> <C>
Net Sales $27,371,067 $26,918,761 $92,327,527 $72,247,075
Cost of Sales 22,060,583 21,272,943 73,484,090 55,966,152
---------- ---------- ---------- ----------
Gross Profit 5,310,484 5,645,818 18,843,437 16,280,923
Selling and
Administrative Expenses 3,444,395 3,393,711 11,128,544 9,825,234
---------- ---------- ---------- ----------
Earnings From
Operations 1,866,089 2,252,107 7,714,893 6,455,689
Interest Expense - Net 420,511 275,728 1,284,481 559,021
---------- ---------- ---------- ----------
Earnings Before
Income Taxes 1,445,578 1,976,379 6,430,412 5,896,668
Provision for
Income Taxes 590,977 819,748 2,622,625 2,425,886
---------- ---------- ---------- ----------
Net Earnings $ 854,601 $ 1,156,631 $ 3,807,787 $ 3,470,782
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per Common and
Common Equivalent
Share Amounts:
Net Earnings $ .18 $ .24 $ .80 $ .73
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted Average
Common Shares
Outstanding and
Equivalents 4,771,453 4,790,450 4,764,159 4,754,897
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Cash Dividends
Declared and Paid $ .06 $ .05 $ .18 $ .15
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<PAGE> -4-
LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(Unaudited)
------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 123,151 $ 111,060
Accounts Receivable - Net 18,091,935 16,751,894
Inventories
Raw Material 1,774,704 1,678,239
Work in Process and Finished Goods 3,121,884 2,653,028
Prepaid and Refundable Income Taxes 1,806,761 2,027,147
Prepaid Expenses and Other Current Assets 4,777,489 2,665,358
---------- ----------
Total Current Assets 29,695,924 25,886,726
PROPERTY AND EQUIPMENT:
Cost 95,982,629 90,326,887
Accumulated Depreciation (55,250,629) (51,469,024)
---------- ----------
Net Property and Equipment 40,732,000 38,857,863
OTHER ASSETS 5,622,143 5,776,979
---------- ----------
TOTAL ASSETS $76,050,067 $70,521,568
---------- ----------
---------- ----------
CURRENT LIABILITIES:
Current Maturities on Debt $ 1,492,214 $ 1,501,478
Accounts Payable 7,674,856 8,281,648
Accrued Expenses 6,933,494 7,496,115
---------- ----------
Total Current Liabilities 16,100,564 17,279,241
DEFERRED INCOME TAXES 6,671,387 6,491,387
LONG-TERM DEBT (less Current Maturities) 20,633,727 16,699,942
OTHER NON-CURRENT LIABILITIES 4,977,534 5,382,482
SHAREHOLDERS' EQUITY:
Common Shares, $2.50 par value: 14,183,493 14,183,493
Authorized 12,000,000 shares in 1995 and
1994. Issued 5,673,397 Shares in 1995 and 1994
Additional Paid-In Capital 1,512,106 1,531,600
Earnings Retained in the Business 17,519,491 14,561,840
Shares held in Treasury (946,006 in
1995 and 956,381 in 1994), at Cost (5,347,038) (5,405,657)
Underfunded Pension Liability Adjustment (201,197) (202,760)
---------- ----------
Total Shareholders' Equity 27,666,855 24,668,516
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $76,050,067 $70,521,568
---------- ----------
---------- ----------
</TABLE>
<PAGE> -5-
LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
-----------------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH
Cash Flows from Operating Activities:
Net Earnings $ 3,807,787 $ 3,470,782
Adjustments to Reconcile Net Earnings
to Net Cash Provided by (Used in)
Operating Activities:
Depreciation 3,923,733 3,232,580
Increase in Deferred Taxes 180,000 135,000
Change in Assets and Liabilities (net of
effects from purchase of Impact Industries,
Inc. in 1994) (5,541,722) (2,198,167)
---------- ----------
Total Adjustments to Reconcile Net Earnings
to Net Cash Provided by Operating Activities (1,437,989) 1,169,413
---------- ----------
Net Cash Provided by Operating Activities 2,369,798 4,640,195
Cash Flows from Investing Activities:
Capital Expenditures (5,832,093) (3,674,395)
Proceeds from Note Receivable for
Sale of International Affiliate --- 484,000
Proceeds from Notes Receivable for
Sales of Heat Treat Facilities 400,000 1,304,350
Payment for Purchase of Impact Industries, Inc.,
Net of Cash Acquired --- (5,497,106)
---------- ----------
Net Cash Used in Investing Activities (5,432,093) (7,383,151)
Cash Flows from Financing Activities:
Net Borrowings Under Revolving Credit Agreement 4,700,000 9,800,000
Principal Payments on Long-Term Debt (700,000) ---
Repayment of Long-Term Debt of Impact
Industries, Inc. --- (6,411,633)
Principal Payments of Capital Lease Obligations (75,479) (38,488)
Dividends Paid (850,135) (706,216)
---------- ----------
Net Cash Provided by Financing Activities 3,074,386 2,643,663
Net Increase (Decrease) in Cash 12,091 (99,293)
Cash at Beginning of Period 111,060 210,660
---------- ----------
Cash at End of Period $ 123,151 $ 111,367
---------- ----------
---------- ----------
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ 1,261,289 $ 530,990
Income Taxes Paid - Net of Refunds 2,222,239 1,558,199
</TABLE>
<PAGE> -6-
LINDBERG CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
NOTE 1 The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K (as
amended on Form 10-K/A, dated September 14, 1995).
Statements for the three month and nine month periods ended September
30, 1995 and September 30, 1994 reflect, in the opinion of the
Company, all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the results of these periods.
Results for interim periods are not necessarily indicative of results
for a full year.
NOTE 2 On November 2, 1995, the Company refinanced a portion of its debt.
Ten million dollars of senior notes were issued, the proceeds of which
were used to retire the outstanding balance of the Company's term loan
and a portion of the outstanding balance on its revolving credit
facility. The notes bear interest at 7.16% and have a seven-year
final maturity. Equal annual principal payments on the notes commence
on the third anniversary of closing and continue on each anniversary
date through the life of the notes. The Company retained the $20
million of credit available through its revolving credit facility
and as of November 13, 1995 had $7.3 million of unused credit.
NOTE 3 No material changes have occurred with respect to the Company's
contingent liabilities outlined in the Company's 1994 10-K (as amended
on Form 10-K/A) through the date of this report.
<PAGE> -7-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION:
For the nine months ended September 30, 1995, the Company's borrowings increased
$3.9 million to $22.1 million from $18.2 million. Correspondingly, the Company's
debt-to-capitalization ratio increased to 44% from the year-end level of 42%.
The increase in debt was required to fund capital expenditures and to support
higher levels of working capital. Significant borrowings were also required
related to the Company's Solon, Ohio facility which was damaged by a fire in
December 1994.
Capital expenditures in 1995 through September were $5.8 million. Approximately
14% of this amount related to the Company's continued development of its
Strategic Partnership 2000 program. Overall, a majority of the capital
expenditures incurred through the first nine months of 1995 was for expansion
purposes. The Company expects to invest about $7 million in capital projects
for the entire year.
Approximately $2.0 million of the total amount spent by the Company to repair or
replace the fire-damaged portions of the plant and equipment at the Solon
facility had not been recovered from insurance reimbursements as of September
30, 1995. The Company expects limited additional funds will be needed in the
fourth quarter to complete the restoration of the facility and anticipates
receiving the full settlement for the claim from its insurance company by year-
end 1995.
Also during the year, the final $400,000 receivable related to the sale of the
Company's operations in Georgia in December 1993 was collected.
On October 25, 1995, the Board of Directors declared a cash dividend of $.07 on
each share of the Company's common stock, payable on December 1, 1995, to
shareholders of record at the close of business on November 10, 1995. This
dividend increases by $.01 the dividend paid in the previous quarter. As a
result, this will increase total annual dividend payments by approximately
$190,000.
On November 2, 1995, the Company refinanced a portion of its debt. Ten million
dollars of senior notes were issued, the proceeds of which were used to retire
the outstanding balance of the Company's term loan and a portion of the
outstanding balance on its revolving credit facility. The notes bear interest
at 7.16% and have a seven-year final maturity. Equal annual principal payments
on the notes commence on the third anniversary of closing and continue
on each anniversary date through the life of the notes. The Company
retained the $20 million of credit available through its revolving
credit facility and as of November 13, 1995 had $7.3 million of
unused credit. The Company expects its current debt level to decrease
by year-end due primarily to resolution of the fire insurance claim discussed
above and to a reduced amount of capital expenditures in the fourth quarter.
<PAGE> -8-
OF RESULTS OF OPERATIONS:
Quarter Ended September 30, 1995 and 1994
Sales for the quarter ended September 30, 1995 increased a modest 1.7%, to $27.4
million, over 1994's third quarter results of $26.9 million. Broken down by
segment, the Company's Heat Treating divisions showed the stronger performance
during the quarter with a rise of 8.0% in sales over the same period last year.
The Company's Precision Products segment had quarterly sales of about $11.5
million, down from $12.3 million in sales in the third quarter of 1994. The
softer-than-expected sales from the latter segment related to its automotive and
consumer products customers.
Earnings from operations for the third quarter of 1995 were $1.9 million, which
was $386,000, or 17.1%, lower than the 1994 third quarter results. The
Company's Heat Treating segment increased its third quarter earnings from
operations from that segment's corresponding quarter totals from last year.
Earnings from operations from the Precision Products segment decreased in the
1995 third quarter primarily due to higher-than-expected start up costs in
setting up a new product line at Impact Industries. The new line, being tooled
for a major automotive electronic parts manufacturer, is expected to increase
Impact's sales with the customer by several million dollars annually over the
next three years. The Company anticipates improved results at Impact through
the end of the year.
Net earnings for the 1995 third quarter were $855,000, down from $1.2 million
last year. The lower earnings were a result of the modest quarterly sales
increase combined with higher operating costs, largely resulting from the
inefficiencies created in preparing for the new product line at Impact
Industries. Another contributing factor to the lower net income figure during
the third quarter was an increase of $145,000 in interest expense over 1994's
third quarter interest expense. The increase in interest charges was a result
of higher borrowing levels as well as higher interest rates during 1995.
Nine Months Ended September 30, 1995 and 1994
For the nine months ended September 30, 1995, sales were up 27.8%, to $92.3
million, over 1994's nine-month sales total of $72.2 million. Eliminating the
effect of Impact Industries, which was acquired in April 1994, year-to-date
sales were 14.0%, or $8.1 million, above last year's $58.4 million in sales.
The increase in sales occurred primarily in the strong first half of the year
which coincided with a strong overall national economy and automotive sector
during that period.
Earnings from operations for the first three quarters of 1995 were $7.7 million
as compared to $6.5 million through three quarters of 1994. The improvement in
earnings from operations in the first nine months of 1995 over the corresponding
period of last year resulted primarily from the increase in sales mentioned
above, as well as the Company's general focus on enhancing productivity and
reducing costs.
<PAGE> -9-
Net income for the year, through September 30, 1995, was $3.8 million, a 9.7%
increase over last year's $3.5 million. The increase related to the
aforementioned reasons, partially offset by $725,000 of additional interest
expense in 1995 as compared to the first nine months of 1994. The increased
interest expense was incurred due to higher debt levels resulting from the
acquisition of Impact in 1994 and to higher interest rates.
<PAGE> -10-
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits Required by Item 601 of Regulation S-K - Exhibits
required by Item 601 of Regulation S-K are listed in the
Exhibit Index which is attached hereto at page 12 and
which is incorporated herein by reference.
(b) Reports on Form 8-K - There were no reports on Form
8-K filed in the three months
ended September 30, 1995.
<PAGE> -11-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LINDBERG CORPORATION
Principal Financial and Accounting By /S/ Stephen S. Penley
Officer: ----------------------------
Stephen S. Penley
Senior Vice President
and Chief Financial Officer
Dated: November 13, 1995
<PAGE> -12-
LINDBERG CORPORATION
Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 1995
Exhibit Index
Page Number (1)
Number and Description of Exhibit (or reference)
- --------------------------------- ---------------
2. Plan of acquisition, reorganization,
arrangement, liquidation or succession
2.1 Stock Purchase Agreement Dated
April 19, 1994 among Rexcorp
International Ltd., Marle Management Ltd.,
D.F. Haslam Management Ltd., and Gary E.
Miller and Lindberg Corporation (2)
3. Articles of Incorporation and By-Laws
3.1 Certificate of Incorporation (composite) (3)
3.2 1979 Amendment to Certificate of Incorporation (4)
3.3 1987 Amendment to Certificate of Incorporation (5)
3.4 By-Laws (as amended) Attached
4. Instruments defining the rights of security
holders, including indentures
4.1 Amended and Restated Credit Agreement (6)
Dated as of April 28, 1994
4.2 First Amendment to the Amended and Restated
Credit Agreement Dated as of
November 2, 1995 Attached
4.3 Note Agreement Dated as of October 15, 1995 Attached
10. Material Contracts
10.1 Description of Bonus Program (7)
10.2 Consulting Agreement Between the
Registrant and G.H. Bodeen dated
October 25, 1990 (8)
10.3 1991 Stock Option Plan for Key Employees (9)
10.4 1991 Stock Option Plan for Directors (10)
11. Statement re computation of net earnings
per common share Attached
27. Financial Data Schedule Attached
<PAGE> -13-
(1) Shown only in manually signed original.
(2) Incorporated by reference to Exhibit 2.1 of the Registrant's Report on
Form 8-K dated May 13, 1994, Commission file no. 0-8287.
(3) Incorporated by reference to Exhibit 3.1 of the Registrant's Report on
Form 10-K for the year ended December 31, 1980, Commission file no. 0-8287.
(4) Incorporated by reference to Exhibit 3.2 of the Registrant's Report on
Form 10-Q for the quarter ended March 31, 1995, Commission file no. 0-8287.
(5) Incorporated by reference to page 6 of the Registrant's 1987 proxy
statement filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1986, Commission file no. 0-8287.
(6) Incorporated by reference to Exhibit 4.2 of the Registrant's Report on
Form 8-K dated May 13, 1994, Commission file no. 0-8287.
(7) Incorporated by reference to page 5 of the Registrant's 1991 proxy
statement filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990, Commission file no. 0-8287.
(8) Incorporated by reference to Exhibit 10.5 of the Registrant's Report on
Form 10-K for the year ended December 31, 1990, Commission file no. 0-8287.
(9) Incorporated by reference to Appendix A of the Registrant's 1995 proxy
statement filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994, Commission file no. 0-8287.
(10) Incorporated by reference to Appendix B of the Registrant's 1995 proxy
statement filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994, Commission file no. 0-8287.
Exhibit 3.4
BY-LAWS
OF
LINDBERG CORPORATION
ARTICLE I
Offices
Section 1. The registered office of the corporation in Delaware shall
be in the City of Wilmington, County of New Castle.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Chicago, State of Illinois, at such place
as may be fixed from time to time by the board of directors, or at such other
place either within or without the State of Delaware as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held at 9:00 A.M.
on the last Wednesday in April of each year if not a legal holiday, or if a
legal holiday, then on the next secular day following, or at such other date and
time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. At each annual meeting, stockholders shall
elect by such vote as is required by Article Tenth of the corporation's
certificate of incorporation a board of directors, and transact such other
business as may properly be brought before the meeting. Elections of directors
need not be by written ballot.
Section 3. For business properly to be brought before any meeting of
stockholders by a stockholder, the stockholder must have given timely notice
thereof in proper written form to the secretary of the corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than 30 days nor
more than 60 days prior to the date of the meeting; provided, however, that in
the event that less than 40 days notice or prior public disclosure of the date
of the meeting is given or made to stockholders, for such notice by the
stockholder to be timely, it must be so received prior to the date of the
meeting and not later than the close of business on the tenth day following the
day on which such notice of the date of the meeting was mailed or such public
<PAGE> 2
disclosure was made. To be in proper written form, a stockholder's notice to
the secretary shall set forth in writing as to each matter the stockholder
proposes to bring before the meeting: (i) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting; (ii) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business; (iii) the
number of the shares of capital stock of the corporation which are owned by the
stockholder, beneficially and of record, as of the record date for the meeting;
and (iv) any material interest of the stockholder in such business. The chairman
of the meeting shall have the sole authority to determine whether business was
properly brought before the meeting in accordance with the provisions of this
Section 3 of Article II and, if the chairman of the meeting should determine
that any such business was not so properly brought, he or she shall so declare
to the meeting, and any such business not properly brought before the meeting
shall not be transacted.
Section 4. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten nor more than 60 days (or in the case a vote
of stockholders on a merger or consolidation is one of the stated purposes of
the annual meeting, not less than 20 or more than 60 days) before the date of
the meeting.
Section 5. The officer who has charge of the stock ledger of the
corporation shall prepare, or cause to be prepared, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 6. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman of the board or the president and
shall be called by the president or secretary at the request in writing of a
majority of the board of directors. Such request shall state the purpose or
purposes of the proposed meeting.
Section 7. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten or more than 60 days (or in the case
of a merger or consolidation, not less than 20 or more than 60 days) before the
date of the meeting, to each stockholder entitled to vote at such meeting.
<PAGE> 3
Section 8. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 9. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. Abstentions shall be counted as present in person
or represented by proxy for purposes of determining the existence of a quorum.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified. If the adjournment is
for more than 30 days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 10. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting
(other than the election of directors, which shall be determined by a plurality
vote), unless the question is one upon which, by express provision of statute,
these by-laws or of the certificate of incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question. Abstentions shall not be included in calculating the
number of votes cast on, in favor of, or in opposition to any questions.
Section 11. Unless otherwise provided in the certificate of
incorporation or these by-laws, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted or acted upon after eleven months from its date, unless the proxy
expressly provides for a longer period.
ARTICLE III
Directors
Section 1. The number of directors which shall constitute the whole
board of directors shall be a maximum of seven. The number of directors may be
changed from time to time, as provided by Article Tenth of the corporation's
certificate of incorporation. Directorships, the terms of which expire as
provided in said Article Tenth, shall be filled at each annual meeting of the
stockholders, except as provided in Section 2 of this Article III, and each
director elected shall hold office until his successor is elected and qualified
or until his earlier resignation or removal. Directors need not be
stockholders.
<PAGE> 4
Section 2. Any vacancies occurring in the board of directors and
newly-created directorships resulting from an increase in the authorized number
of directors may be filled by a majority of the remaining directors though less
than a quorum of the board of directors, and any director so chosen shall hold
office until the next election of the class for which he was chosen and until
his successor is duly elected and qualified.
Section 3. Nominations for any election of a director may be made by
the board of directors, a committee appointed by the board of directors, or by
any stockholder entitled to vote generally in the election of directors who
complies with the procedures set forth in this Section 3 of Article III. All
nominations by stockholders must be made pursuant to timely notice in proper
written form to the secretary of the corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 30 days nor more than 60 days prior to
the date of the meeting; provided, however that in the event that less than 40
days notice or prior public disclosure of the date of the meeting is given to
stockholders, for such notice by the stockholder to be timely, it must be so
received prior to the date of the meeting and not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. To be in proper
written form, such stockholder's notice shall set forth in writing (a) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on the corporation's books, of such stockholder
and (ii) the number of shares of capital stock of the corporation which are
owned by such stockholder, beneficially and of record, as of the record date for
the meeting. At the request of the board of directors, any person nominated by
the board of directors, or a committee appointed by the board of directors, for
election as a director shall furnish to the secretary of the corporation the
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee. The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this Section 3 of Article III, and
the defective nomination shall thereupon be disregarded.
Section 4. The business of the corporation shall be managed by its
board of directors, which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
only by the stockholders.
<PAGE> 5
Meetings of the Board of Directors
Section 5. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 6. The first meeting of each newly elected board of directors
shall be held without other notice than this by-laws, immediately after, and at
the same place as, the annual meeting of stockholders, provided a quorum shall
be present. In the event of the failure to hold the first meeting of a newly
elected board at such time and place, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 7. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 8. Special meetings of the board may be called by the
chairman of the board or the president on two days' notice to each director,
either personally or by mail or by telegram; special meetings shall be called by
the president or secretary in like manner and on like notice at the written
request of two directors.
Section 9. At all meetings of the board a majority of the total
number of directors then constituting the whole board shall constitute a quorum
for the transaction of business and the vote of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the board
of directors, except as may be otherwise specifically provided by statute or by
the certificate of incorporation. If a quorum shall not be present at any
meeting of the board of directors, a majority of the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee; and any member of the board of
directors or of any committee thereof may participate in a meeting of such board
or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such meeting shall constitute present in person
at such meeting.
<PAGE> 6
Committees of Directors
Section 11. The board of directors may have any executive committee,
an audit committee, an executive compensation committee, a finance committee, a
nominating committee, an incentive stock option committee, a directors stock
option committee, and such other committees as they may designate by resolution
passed by a majority of the whole board, each committee to consist of one 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 any meeting of the committee. Any such committee, to the
extent provided in the resolution of the board of directors, when the board of
directors is not in session, shall have and may exercise the powers of the board
of directors 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 or alternate members designated by
the board, 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 of directors to act at the
meeting in the place of any such absent or disqualified member. Notwithstanding
the foregoing provisions of this Section 10 of this Article III, no such
committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of the
dissolution, or amending the by-laws of the corporation; and, unless the
resolution or the certificate of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 12. Each committee shall have a chairman, appointed by the
board of directors, who shall preside at all meetings of such committee. Each
committee shall keep regular minutes of its meetings and report the same to the
board of directors when required.
Compensation of Directors
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have authority to
fix the compensation of directors. The directors may be paid their expenses, if
any, of attendance at each meeting of the board of directors and may be paid a
fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation for
attending committee meetings, and the chairmen of such committees may be paid an
additional fixed sum for their services as chairmen.
<PAGE> 7
ARTICLE IV
Notices
Section 1. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram or by electronic facsimile transmission
and shall be deemed to be given at the time of delivery to the telegraph company
or at the time of electronic facsimile transmission.
Section 2. Whenever any notice is required to be given by statute or
by the certificate of incorporation or these by-laws, a waiver thereof in
writing signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE V
Officers
Section 1. The officers of the corporation shall include a chairman
of the board, a president, one or more vice presidents (the number and
designation thereof to be determined by the board of directors), a secretary, a
treasurer, a controller and such assistant secretaries, assistant treasurers or
other officers as may be elected or appointed by the board of directors. Any
two or more offices may be held by the same person.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall elect a chairman of the board and president
from among the directors and shall elect one or more vice presidents, a
secretary, a treasurer and such assistant officers or other officers as it shall
deem advisable.
Section 3. The board of directors may from time to time appoint such
other officers and agents as it shall deem advisable, who shall hold their
offices for such terms and shall perform such duties as from time to time may be
prescribed by the board of directors or the president.
Section 4. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 5. Each officer of the corporation shall hold office until
his successor is chosen and qualified or until his earlier death, resignation or
removal. Any officers elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the board of
directors. Election or appointment as an officer or agent shall not of itself
create contract rights. Any vacancy occurring in any office of the corporation
may be filled by the board of directors.
<PAGE> 8
Chairman of the Board
Section 6. The chairman of the board shall preside at all meetings of
the stockholders and the board of directors. He may sign certificates for
shares of the corporation and any deeds, mortgages, bonds, contracts, or other
instruments which the board of directors has authorized to be executed, whether
or not under the seal of the corporation, except in cases where the signing and
execution thereof shall be expressly delegated by the board of directors or by
these by-laws to some other officer or agent of the corporation, and he shall
perform such other duties and have such other powers as from time to time may be
prescribed by the board of directors.
President
Section 7. The president shall be the chief executive officer of the
corporation. Subject to the direction of the board of directors, he shall have
general and active management responsibility for the business of the corporation
and general supervision of the other officers, agents and employees of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. In the absence of the chairman of the board,
or in the event of his inability to act, he shall preside at all meetings of the
stockholders and of the board of directors. He may sign certificates for shares
of the corporation, and any deeds, mortgages, bonds, contracts, or other
instruments, whether or not under the seal of the corporation, except in cases
where the signing and execution thereof shall be expressly delegated by the
board of directors or by these by-laws to some other officer or agent of the
corporation, and shall perform such other duties and have such other powers as
from time to time may be prescribed by the board of directors.
Vice Presidents
Section 8. In the absence of the president, or in the event of his
inability to act, the vice president (or if there be more than one, the
executive vice presidents, senior vice presidents or the vice presidents in the
order designated, or in the absence of any designation then in the order named
in the most recent resolution providing for the annual election of officers)
shall perform the duties of the president and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the president. The vice
presidents shall perform such other duties and have such other powers as from
time to time may be prescribed by the board of directors or the president.
Secretary
Section 9. The secretary shall: (a) keep the minutes of the
stockholders' and the board of directors' meetings in one or more books provided
for that purpose; (b) see that all notices are duly given in accordance with the
provisions of these by-laws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and see that the seal of
the corporation or a facsimile thereof is affixed to, and attested to, all
certificates for shares prior to the issue thereof and that the seal of the
<PAGE> 9
corporation is affixed to, and attested to, all documents, the execution of
which on behalf of the corporation under its seal is duly authorized in
accordance with the provisions of these by-laws; (d) keep or cause to be kept a
register of the mailing address of each stockholder which shall be furnished to
the secretary or any transfer agent of the corporation by such stockholder; (e)
sign, with the chairman of the board, the president or a vice president,
certificates for shares of the corporation, the issue of which shall have been
authorized by resolution of the board of directors; (f) have general charge of
the stock transfer books of the corporation; and (g) in general perform all
duties incident to the office of the secretary and such other duties as from
time to time may be prescribed by the board of directors or the president.
Treasurer
Section 10. The treasurer shall: (a) be the chief financial officer
and shall have charge and custody of and be responsible for all funds and
securities of the corporation, the receipt and disbursement, subject to the
direction of the board of directors, of all moneys due and payable to or by the
corporation and to deposit funds and securities of the corporation in such
banks, trust companies or other depositaries as shall be selected in accordance
with these by-laws; and (b) in general perform all the duties incident to the
office of treasurer and such other duties as from time to time may be prescribed
by the board of directors or the president. If required by the board of
directors, the treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the board of directors
shall determine.
Assistant Treasurers and Assistant Secretaries
Section 11. The assistant secretaries as thereunto authorized by the
board of directors may sign with the chairman of the board, the president or a
vice president certificates for shares of the corporation, the issue of which
shall have been authorized by a resolution of the board of directors. The
assistant treasurers shall, if required by the board of directors, give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the board of directors shall determine. The assistant secretaries and
assistant treasurers in general shall perform such duties as from time to time
may be prescribed by the secretary or the treasurer, respectively, or by the
board of directors or the president.
Controller
Section 12. The controller shall: (a) have responsibility to record
the transactions of the corporation in the books of account of the corporation;
(b) report the results of operations and financial condition of the corporation
to stockholders, directors, and officers of the corporation; (c) maintain proper
internal controls over the assets of the corporation, and (d) in general perform
such other duties as from time to time may be prescribed by the chief financial
officer, by the board of directors, or by the president.
<PAGE> 10
ARTICLE VI
Contracts, Loans, Checks, Deposits and Investments
Section 1. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
Section 2. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances.
Section 3. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner, as shall from time to time be determined by
resolution of the board of directors.
Section 4. 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 depositaries as the board of directors may authorize.
ARTICLE VII
Certificates for Shares and Their Transfer
Section 1. Each holder of stock in the corporation shall be entitled
to have a certificate in such form as may be determined by the board of
directors, signed by or in the name of the corporation by the chairman of the
board, the president or a vice president and by the secretary or an assistant
secretary, or the treasurer or an assistant treasurer of the corporation, and
sealed with the seal or a facsimile of the seal of the corporation. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name of the person to who the shares represented thereby are issued, and
with the number of shares and date of issue, shall be entered on the book of the
corporation.
Section 2. Upon surrender to any transfer agent of the corporation of
a certificate for shares of the corporation, duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, the
corporation shall issue a new certificate to the person entitled thereto and
cancel the old certificate and record the transaction on the books of the
corporation. The person in whose name shares stand on the books of the
corporation shall be deemed the owner thereof for all purposes as regards the
corporation.
<PAGE> 11
Section 3. The board of directors may appoint one or more transfer
agents and registrars of transfers, and may require all stock certificates to be
countersigned by such transfer agent and registered by such registrar. The
board of directors shall have authority to make or approve rules and regulations
concerning the issue, transfer and registration of certificates for shares.
Section 4. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if such officer, transfer agent or registrar were still authorized at the
date of issue.
Section 5. The board of directors may authorize the issuance of a new
certificate in lieu of a certificate alleged by the holder thereof to have been
stolen, lost mutilated or destroyed, upon compliance by such holder, or his
legal representatives, with such requirements as the board of directors may
impose or authorize. Such authorization by the board of directors may be
general or confined to specific instances.
ARTICLE VIII
Fixing Record Date
In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect to any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
be given not less than ten nor more than sixty days (or in the case of a merger
or consolidation, not less than twenty or more than sixty days) before the date
of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
ARTICLE IX
Dividends
The board of directors may from time to time, declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its certificate of incorporation.
<PAGE> 12
ARTICLE X
General Provisions
Seal
Section 1. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Fiscal Year
Section 2. The fiscal year of the corporation shall begin on the
first day of January in each year and end on the thirty-first day of December in
each year.
ARTICLE XI
Amendments
Section 1. Subject to the provisions of Article Tenth of the
corporation's certificate of incorporation, these by-laws may be altered,
amended or repealed and new by-laws may be adopted at any meeting of the board
of directors or at any meeting of stockholders, held pursuant to notice duly
given.
ARTICLE XII
Emergency Directors
Section 1. The board of directors, by resolution, may provide for
emergency directors and appoint or designate the manner in which emergency
directors shall be determined. To the extent provided in said resolution and as
provided by Section 110 of the Delaware General Corporation Law, such emergency
directors, together with any remaining directors able to perform their duties,
shall have and may exercise the powers of the board of directors in the
management of the business and affairs of the corporation, and shall thereby be
deemed to constitute the board of directors of the corporation, during any
interval commencing when the board of directors shall be unable to function by
reason of vacancies due to death, incapacity, or catastrophe or other similar
emergency conditions, as a result of which a quorum of the board of directors or
a standing committee thereof cannot readily be convened for action. Such
emergency directors, including any remaining directors able to perform their
duties, shall, during the term they are authorized to function as provided
herein, have the power to appoint such temporary officers to fill existing
vacancies as the circumstances may require, to remove officers as the
circumstances may require, to authorize the seal of the corporation to be
affixed to all papers which may require it, and to take any and all other
<PAGE> 13
actions as may be required and permitted in conformity with the provisions of
Section 110 of the Delaware General Corporation Law. The emergency directors
shall consist of any available members of the board of directors and any other
persons in such order as named by the board of directors on any list as it may
compile from time to time for purposes of appointing such emergency directors.
If the board of directors shall have failed to compile any list for purposes of
appointing emergency directors, the emergency directors shall consist of (in the
order specified below) any available members of the board of directors, the
chairman of the board, the president, the vice presidents (in order of
seniority), the secretary, the treasurer, the controller, the assistant
secretaries (in order of seniority), and the assistant treasurers (in order of
seniority) of the corporation. The chairman of the emergency directors shall be
the highest ranking available person on any list compiled by the board of
directors for purposes of appointing the emergency directors, or, if the board
of directors shall have failed to compile any such list, the highest ranking
available person of the following: the chairman, the most senior member of the
board of directors, the president, the most senior vice president, the
secretary, the treasurer, the controller, the most senior assistant secretary,
and the most senior assistant treasurer.
Section 2. The emergency directors shall meet as promptly as possible
after the occurrence of the event herein described which would activate their
appointment and at such subsequent time or times as it may designate until a
board of directors has been duly elected by the stockholders and qualified. A
meeting of the emergency directors may be called by any emergency director,
notice of which meeting need be given only to such emergency directors as it is
feasible to reach at the time. Such emergency directors shall make their own
rules of procedure except to the extent otherwise provided by resolution of the
board of directors. The emergency directors in attendance at the meeting shall
constitute a quorum.
Section 3. During such times as the emergency directors shall be
required to function pursuant to the provisions hereof, in the absence of the
chief executive officer, the chairman of said emergency directors shall function
as, and have the powers of, the chief executive officer of the corporation and
shall preside at all meetings of the stockholders and the emergency directors.
The chief executive officer shall have and exercise, subject to the direction of
the emergency directors, general charge and supervision over the business and
affairs of the corporation.
Section 4. To the extent not inconsistent with the provisions of this
Article XII or Section 110 of the Delaware General Corporation Law, all other
provisions of these bylaws shall remain in effect during the interval in which
the emergency directors shall be required to function pursuant to the provisions
hereof.
<PAGE> 14
ARTICLE XIII
Indemnification
Section 1. The right to indemnification conferred by Article Eighth
of the corporation's certificate of incorporation shall include the right to be
paid by the corporation the expenses (including attorneys' fees) incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that if the Delaware General Corporation Law requires, an advancement
of expenses incurred by an indemnitee in his capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined that such indemnitee is not entitled to be indemnified
for such expenses under Article Eighth of the corporation's certificate of
incorporation or otherwise. This Article XIII shall not be amended in a manner
which diminishes the rights conferred hereby upon any then current or former
director or officer of the corporation.
Exhibit 4.2
FIRST AMENDMENT
TO
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is entered into as of November 2, 1995 among LINDBERG CORPORATION,
a Delaware corporation (the "Company"), various financial institutions
(collectively, the "Banks"), and BANK OF AMERICA ILLINOIS (formerly Continental
Bank N.A.), as agent for the Banks (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Company, the Agent and the Banks are parties to an Amended and
Restated Credit Agreement dated as of April 28, 1994 (the "Credit Agreement");
and
WHEREAS, the Company has requested that the Credit Agreement be amended in
certain respects.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS.
Terms defined in the Credit Agreement and not otherwise defined herein are
used herein as therein defined.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. On the Effective Date
(defined below):
2.1 Section 1.1 of the Credit Agreement shall be amended by having the
following definitions added thereto in their appropriate alphabetical positions:
"Note Agreement" means the Note Agreement dated as of October 15, 1995
among the Company and certain purchasers relating to the Senior Notes.
"Senior Notes" means the $10,000,000 7.16% senior unsecured promissory
notes of the Company due October 30, 2002 issued pursuant to the Note Agreement.
2.2 Section 10.7(b) of the Credit Agreement shall be amended and restated
in its entirety to read as follows:
<PAGE> 2
(b) Debt. Create, incur or assume any Funded Debt or Current Debt,
except
(i) Funded Debt under the Loan Documents,
(ii) Funded Debt evidenced by the Senior Notes,
(iii) Funded Debt secured by Liens permitted by the provisions
of clauses (iv), (v), (vi), (vii) and (ix) of Section 10.7(a),
(iv) Funded Debt of any Subsidiary to the Company or any
Subsidiary,
(v) Debt of the Company not otherwise permitted by this
Section 10.7(b) in an aggregate principal amount not to exceed $10,000,000 at
any one time outstanding, and
(v) Debt listed under the heading "Continuing Debt" on Exhibit
H;
2.3 Section 10.7(c) of the Credit Agreement shall be amended by (i)
deleting the word "or" following clause (vii) thereof, (ii) replacing the
semicolon at the end of clause (viii) thereof with a ", or" and (iii) adding the
following clause (ix):
(ix) a guarantee by Impact of the Senior Notes in the form of
the Subsidiary Guaranty attached as Exhibit B to the Note Agreement;
2.4 Clause (v) of Section 10.7(i) of the Credit Agreement shall be
amended by deleting the words "clause (v) or clause (vi)" where they appear and
inserting in lieu thereof the words "clauses (v), (vi) or (ix)".
2.5 Exhibit C to the Credit Agreement shall be amended by deleting
therefrom the reference to Rexcorp U.S. Inc.
SECTION 3. WAIVER.
On the Effective Date, the Banks shall waive, as of May 1, 1995, any Event
of Default arising from the Company's failure to comply with Section 10.7(b) of
the Credit Agreement by having issued for its benefit standby letters of credit
in an aggregate stated amount of $4,500,000.
SECTION 4. CONDITIONS PRECEDENT.
The amendments to the Credit Agreement set forth in Section 2 of this
Amendment and the waiver to the Credit Agreement set forth in Section 3 of this
Amendment shall become effective on such date (the "Effective Date") when the
following conditions precedent have been satisfied:
<PAGE> 3
4.1 Receipt of Documents. The Agent shall have received all of the
following, each duly executed and dated the date hereof, and each in a
sufficient number of signed counterparts to provide one to each Bank:
(a) Amendment. An original of this Amendment duly executed by the
Company and each Bank and an original of the consent attached to the foot hereof
executed by Impact.
(b) Certificate. A certificate, dated the Effective Date and signed
by a duly authorized representative of the Company, as to the matters set forth
in Section 4.2, in form and substance satisfactory to the Agent.
(c) Resolutions. A copy, certified by the secretary or an assistant
secretary of the Company, of resolutions of the Board of Directors of the
Company authorizing or ratifying the execution and delivery of this Amendment
and the borrowings under the Credit Agreement, as amended hereby.
(d) Incumbency and Signatures. A certificate of the secretary or an
assistant secretary of the Company certifying the names of the officer or
officers of the Company authorized to sign this Amendment, together with a
sample of the true signature of each such officer.
(e) Other. Such other documents as the Agent or any Bank may
reasonably request.
4.2 Warranties True and Absence of Defaults. (i) No Event of Default or
Unmatured Event of Default shall have occurred and shall be continuing as of the
Effective Date (after giving effect to this Amendment) and (ii) the warranties
set forth in the Credit Agreement and each other Loan Document shall be true and
correct in all material respects with the same effect as if made on the
Effective Date.
4.3 Prepayment of Term Loans. The Agent shall have received for the
account of each Bank a prepayment of 100% of the outstanding principal balance
of the Term Loans from the cash proceeds of the sale of the Company's 7.16%
senior unsecured promissory notes due October 30, 2002, which prepayment shall
comply with Section 6.2.2 of the Credit Agreement.
SECTION 5. MISCELLANEOUS.
5.1 Warranties True and Absence of Defaults. In order to induce the
Agent and the Banks to enter into this Amendment, the Company hereby warrants to
the Agent and the Banks that, as of the date hereof and the Effective Date:
<PAGE> 4
(a) The warranties set forth in Section 9 of the Credit Agreement and
in each other Loan Document are true and correct in all material respects with
the same effect as if made on the date hereof and the Effective Date (it being
understood that Rexcorp is no longer a Subsidiary of the Company).
(b) No Event of Default or Unmatured Event of Default exists as of
each such date.
5.2 Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois.
5.3 Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when so executed and delivered, shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
5.4 References to Credit Agreement. Except as amended hereby, the Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. On and after the effectiveness hereof, each
reference in the Credit Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of like import, and each reference to the Credit Agreement in
any Note or other Loan Document, shall be deemed a reference to the Credit
Agreement, as amended hereby.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
and year first above written.
LINDBERG CORPORATION
By: Stephen M. Penley
--------------------------
Title: Senior Vice President
and Chief Financial
Officer
BANK OF AMERICA ILLINOIS,
as Agent
By: David A. Johanson
--------------------------
Title: Agency Management Services
Senior Agency Officer
BANK OF AMERICA ILLINOIS,
as a Bank
By: John P. Hesselmann
--------------------------
Title: Senior Vice President
HARRIS TRUST AND SAVINGS BANK
By: Susan M. Kaminski
--------------------------
Title: Vice President
<PAGE> 6
The undersigned, Impact Industries, Inc., hereby acknowledges, consents and
agrees to the foregoing Amendment, and reaffirms that its obligations under the
Guaranty dated as of April 29, 1994 executed in favor of the Agent and the Banks
continue in full force and effect with respect to the Credit Agreement, as
amended by the foregoing Amendment.
IMPACT INDUSTRIES, INC.
By: Stephen Penley
--------------------------
Title: Vice President, Finance
Secretary and Treasurer
Exhibit 4.3
LINDBERG CORPORATION
NOTE AGREEMENT
Dated as of October 15, 1995
$10,000,000 Principal Amount
7.16% Senior Notes
Due October 30, 2002
<PAGE> 2
TABLE OF CONTENTS
PAGE (1)
Section 1. DESCRIPTION OF NOTES AND COMMITMENT 1
1.1. Description of Notes 1
1.2. Commitment; Closing Date 1
1.3. Guaranty 2
Section 2. PREPAYMENT OF NOTES 2
2.1. Required Prepayments 2
2.2. Optional Prepayments 2
2.3. Notice of Prepayments 2
2.4. Surrender of Notes on Prepayment or Exchange 3
2.5. Direct Payment and Deemed Date of Receipt 3
2.6. Allocation of Payments 3
2.7. Payments Due on Saturdays, Sundays and Holidays 3
Section 3. REPRESENTATIONS 4
3.1. Representations of the Company 4
3.2. Representations of the Purchaser 10
Sectin 4. CLOSING CONDITIONS 12
4.1. Representations and Warranties 12
4.2. Legal Opinions 12
4.3. Events of Default 12
4.4. Payment of Fees and Expenses 12
4.5. Legality of Investment 12
4.6. Subsidiary Guaranty 13
4.7. Private Placement Number 13
4.8. Proceedings and Documents 13
Section 5. INTERPRETATION OF AGREEMENT 13
5.1. Certain Terms Defined 13
5.2. Accounting Principles 21
5.3. Valuation Principles 21
5.4. Direct or Indirect Actions 21
Section 6. AFFIRMATIVE COVENANTS 22
6.1. Corporate Existence 22
6.2. Insurance 22
6.3. Taxes, Claims for Labor and Materials 22
6.4. Maintenance of Properties 22
6.5. Maintenance of Records 22
6.6. Financial Information and Reports 23
6.7. Inspection of Properties and Records 25
6.8. ERISA 25
6.9. Compliance with Laws 26
6.10. Acquisition of Notes 26
6.11. Private Placement Number 26
<PAGE> 3
PAGE (1)
Section 7. NEGATIVE COVENANTS 27
7.1. Adjusted Consolidated Net Worth 27
7.2. Fixed Charges Ratio 27
7.3. Indebtedness 27
7.4. Liens 28
7.5. Restricted Payments 28
7.6. Merger or Consolidation 29
7.7. Sale of Assets 30
7.8. Disposition of Stock of Restricted Subsidiaries 30
7.9. Designation of Unrestricted Subsidiaries 30
7.10. No Impairment of Subsidiaries 31
7.11. Transactions with Affiliates 31
7.12. Nature of Business 31
Section 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR 31
8.1. Nature of Events 31
8.2. Remedies on Default 33
8.3. Annulment of Acceleration of Notes 33
8.4. Other Remedies 34
8.5. Conduct No Waiver; Collection Expenses 34
8.6. Remedies Cumulative 34
8.7. Notice of Default 34
Sectin 9. AMENDMENTS, WAIVERS AND CONSENTS 34
9.1. Matters Subject to Modification 34
9.2. Solicitation of Holders of Notes 35
9.3. Binding Effect 35
Section 10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE
AND REPLACEMENT 35
10.1. Form of Notes 35
10.2. Note Register 36
10.3. Issuance of New Notes upon Exchange or Transfer 36
10.4. Replacement of Notes 36
Section 11. MISCELLANEOUS 36
11.1. Expenses 36
11.2. Notices 37
11.3. Reproduction of Documents 37
11.4. Successors and Assigns 37
11.5. Law Governing 38
11.6. Headings 38
11.7. Counterparts 38
11.8. Reliance on and Survival of Provisions 38
11.9. Integration and Severability 38
<PAGE> 4
PAGE (1)
SCHEDULE I 40
ANNEXES 43
I Subsidiaries 43
II Indebtedness 44
III Restricted Investments 45
IV Liens 46
EXHIBITS 47
A Form of Senior Note 47
B Subsidiary Guaranty 50
C Form of Legal Opinion of Purchaser's Counsel 58
D Form of Legal Opinion of the Company's Counsel 60
(1) Refers to page numbers appearing in paper format copies.
<PAGE> 5
LINDBERG CORPORATION
NOTE AGREEMENT
Dated as of October 15, 1995
To Each of the Purchasers
Named in the Attached Schedule I
Ladies and Gentlemen:
LINDBERG CORPORATION, a Delaware corporation (the "Company") agrees with
you as follows:
Section 1. DESCRIPTION OF NOTES AND COMMITMENT
1.1. Description of Notes. The Company has authorized the issuance and
sale of $10,000,000 aggregate principal amount of its Senior Notes (the
"Notes"), to be dated the date of issuance, to bear interest from such date
(computed on the basis of a 360-day year comprised of twelve 30-day months),
payable semi-annually on April 30 and October 30 of each year, commencing April
30, 1996, and at maturity, at the rate of 7.16% per annum prior to maturity and
to bear interest on any overdue principal (including any overdue optional or
required prepayment), and (to the extent legally enforceable) on any overdue
Make-Whole Amount and on any overdue installment of interest at the rate of
9.16% per annum. The Notes shall be expressed to mature on October 30, 2002 and
shall be substantially in the form attached as Exhibit A. The term "Notes" as
used herein shall include each Note delivered pursuant to this Note Agreement
(the "Agreement") and each Note delivered in substitution or exchange therefor
and, where applicable, shall include the singular number as well as the plural.
Any reference to you in this Agreement shall in all instances be deemed to
include any nominee of yours or any separate account or other person on whose
behalf you are purchasing Notes. You and the other purchasers are sometimes
referred to herein individually as a "Purchaser" and collectively as the
"Purchasers."
1.2. Commitment; Closing Date. Subject to the terms and conditions hereof
and on the basis of the representations and warranties hereinafter set forth,
the Company agrees to issue and sell to you, and you agree to purchase from the
Company, Notes in the aggregate principal amount set forth opposite your name in
the attached Schedule I at a price of 100% of the principal amount thereof.
<PAGE> 6
Delivery of and payment for the Notes shall be made at the offices of the
Gardner, Carton & Douglas, Quaker Tower, 321 North Clark Street, Suite 3400,
Chicago, Illinois 60610, at 9:00 a.m., Chicago time, on November 2, 1995 or such
other time on such later date, not later than Noon, Chicago time on November 2,
1995 as may be mutually agreed upon by the Company and the Purchasers (the
"Closing Date"). The Notes shall be delivered to you in the form of one or more
Notes in fully registered form, issued in your name or in the name of your
nominee. Delivery of the Notes to you on the Closing Date shall be against
payment of the purchase price thereof in Federal funds or other funds in U.S.
dollars immediately available at Bank of America Illinois, Chicago, Illinois,
ABA No. 071-000-039, for credit to the account of Lindberg Corporation, Account
No. 75-10810. If on the Closing Date the Company shall fail to tender the Notes
to you, you shall be relieved of all remaining obligations under this Agreement.
Nothing in the preceding sentence shall relieve the Company of any liability
occasioned by such failure to deliver the Notes.
1.3. Guaranty. The Notes will be guaranteed by the Subsidiary Guarantors
pursuant to the Subsidiary Guaranty. In the event that any other Subsidiary
shall hereafter guaranty Indebtedness of the Company to banks, the Company
agrees to cause such Subsidiary to guaranty the Notes concurrently therewith to
the same extent.
Section 2. PREPAYMENT OF NOTES
2.1. Required Prepayments. In addition to payment of all outstanding
principal of the Notes at maturity and regardless of the amount of Notes which
may be outstanding from time to time, the Company shall prepay and there shall
become due and payable on October 30 in each year $2,000,000 of the principal
amount of the Notes or such lesser amount as would constitute payment in full on
the Notes, commencing October 30, 1998 and ending October 30, 2001, inclusive,
with the remaining principal payable on October 30, 2002. Each such prepayment
shall be at a price of 100% of the principal amount prepaid, together with
interest accrued thereon to the date of prepayment, without a Make-Whole Amount.
2.2. Optional Prepayments. (a) Upon notice as provided in Section 2.3(a)
and (b), the Company may prepay the Notes, in whole or in part, on any interest
payment date, in an amount not less than $1,000,000, in integral multiples of
$100,000 in excess thereof or such lesser amount as shall constitute payment in
full of the Notes, at a price of 100% of the principal amount to be prepaid,
plus interest accrued thereon to the date of prepayment, plus the Make-Whole
Amount.
(b) Any optional prepayment of less than all of the Notes outstanding
pursuant to Section 2.2(a) shall be applied to reduce, in inverse order of
maturity, the prepayments and payment at maturity required by Section 2.1.
(c) Except as provided in Section 2.1, Section 7.7 or this Section 2.2,
the Notes shall not be prepayable in whole or in part.
<PAGE> 7
2.3. Notice of Prepayments. (a) The Company shall give notice of any
optional prepayment of the Notes pursuant to Section 2.2(a) to each holder of
the Notes not less than 30 nor more than 60 days before the date fixed for
prepayment, specifying (i) such date, (ii) the principal amount of the holder's
Notes to be prepaid on such date, (iii) the Determination Date for calculating
the Make-Whole Amount, (iv) a calculation of the estimated amount of the Make-
Whole Amount showing in detail the method of calculation, and (v) the accrued
interest applicable to the prepayment. Notice of prepayment having been so
given, the aggregate principal amount of the Notes specified in such notice,
together with accrued interest thereon and the actual Make-Whole Amount, shall
become due and payable on the prepayment date.
(b) The Company also shall give notice on the Determination Date to each
holder of the Notes to be prepaid pursuant to Section 2.2(a), by telecopy,
telegram or other same-day written communication, of the Make-Whole Amount
applicable to such prepayment and the details of the calculations used to
determine the amount of such Make-Whole Amount. Such calculations shall be
subject to the concurrence of each holder of the Notes to be prepaid.
2.4. Surrender of Notes on Prepayment or Exchange. Subject to Section 2.5,
upon any partial prepayment of a Note pursuant to this Section 2 or partial
exchange of a Note pursuant to Section 10.3, such Note may, at the option of the
holder thereof, (i) be surrendered to the Company pursuant to Section 10.3 in
exchange for a new Note or Notes equal to the principal amount remaining unpaid
on the surrendered Note, or (ii) be made available to the Company, at the
Company's principal office, for notation thereon of the portion of the principal
so prepaid or exchanged. In case the entire principal amount of any Note is
prepaid or exchanged, such Note shall be surrendered to the Company following
such prepayment for cancellation and shall not be reissued, and no Note shall be
issued in lieu of such Note.
2.5. Direct Payment and Deemed Date of Receipt. Notwithstanding any other
provision contained in the Notes or this Agreement, the Company will pay all
sums becoming due on each Note held by you or any subsequent Institutional
Holder by wire transfer of immediately available funds to such account as you
have designated in Schedule I, or as you or such subsequent Institutional Holder
may otherwise designate by notice to the Company, in each case without
presentment and without notations being made thereon, except that any such Note
so paid or prepaid in full shall be surrendered to the Company for cancellation.
Any wire transfer shall identify such payment in the manner set forth in
Schedule I and shall identify the payment as principal, Make-Whole Amount, if
any, and/or interest. You and any subsequent Institutional Holder of a Note to
which this Section 2.5 applies agree that, before selling or otherwise
transferring any such Note, you or it will make a notation thereon of the
aggregate amount of all payments of principal theretofore made and of the date
to which interest has been paid and, upon written request of the Company, will
provide a copy of such notations to the Company. You will notify the Company if
you sell or otherwise transfer a Note. Any payment made pursuant to this
Section 2.5 shall be deemed received on the payment date only if received before
<PAGE> 8
11:00 A.M., Chicago time. Payments received after 11:00 A.M., Chicago time,
shall be deemed received on the next succeeding Business Day.
2.6. Allocation of Payments. In the case of a prepayment pursuant to
Section 2.1 or 2.2(a), if less than the entire principal amount of all of the
Notes outstanding is to be paid, the Company will prorate the aggregate
principal amount to be prepaid among the outstanding Notes in proportion to the
unpaid principal amounts thereof.
2.7. Payments Due on Saturdays, Sundays and Holidays. If any interest
payment date on the Notes or the date fixed for any other payment of any Note or
exchange of any Note is not a Business Day, then such payment or exchange need
not be made on such date but may be made on the next succeeding Business Day;
provided that if such date is in connection with a payment or prepayment of
principal, interest shall be paid to such succeeding Business Day.
Section 3. REPRESENTATIONS
3.1. Representations of the Company. As an inducement to, and as part of
the consideration for, your purchase of the Notes pursuant to this Agreement,
the Company represents and warrants to you as follows:
(a) Corporate Organization and Authority. The Company is a solvent
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and as presently proposed to be conducted, to enter into and perform
the Agreement and to issue and sell the Notes as contemplated in this Agreement.
(b) Qualification to Do Business. The Company is duly qualified or
licensed and in good standing as a foreign corporation authorized to do business
in each jurisdiction where the nature of the business transacted by it or the
character of its properties owned or leased makes such qualification or
licensing necessary, except for jurisdictions, individually or in the aggregate,
where the failure to be so licensed or qualified could not have a Material
Adverse Effect.
(c) Subsidiaries. The Company has no Subsidiaries except those listed in
the attached Annex I, which correctly sets forth the jurisdiction of
incorporation and the percentage of the outstanding Voting Stock of each
Subsidiary which is owned, of record or beneficially, by the Company and/or one
or more Subsidiaries. Each Restricted Subsidiary is so designated on Annex I.
Each Subsidiary has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization and
is duly licensed or qualified and in good standing as a foreign corporation or
other organization in each other jurisdiction where the nature of the business
transacted by it or the character of its properties owned or leased makes such
qualification or licensing necessary, except for jurisdictions, individually or
in the aggregate, where the failure to be so licensed or qualified would not
have a Material Adverse Effect. Each Subsidiary has full corporate or other
<PAGE> 9
power and authority to own and operate its properties and to carry on its
business as now conducted and as presently proposed to be conducted. The
Company and each Subsidiary have good and marketable title to all of the shares
they purport to own of the capital stock of each Subsidiary, free and clear in
each case of any Lien, except as otherwise disclosed in the attached Annex IV,
and all such shares have been duly issued and are fully paid and nonassessable.
(d) Financial Statements. The consolidated balance sheets of the Company
and its Subsidiaries as of December 31, 1994, 1993, 1992, 1991, 1990 and 1989,
and the related consolidated statements of earnings, shareholders' equity and
cash flows for the years ended on such dates, accompanied by the reports and
unqualified opinions of Arthur Andersen LLP, independent public accountants,
copies of which have heretofore been delivered to you, were prepared in
conformity with GAAP consistently applied throughout the periods involved
(except as otherwise noted therein) and present fairly the consolidated
financial position of the Company and its Subsidiaries on such dates and their
consolidated results of operations and cash flows for the years then ended.
The unaudited consolidated balance sheet of the Company and its
Subsidiaries as of June 30, 1995, the unaudited consolidated statements of
earnings for the three and six months ended June 30, 1995 and 1994, and the
unaudited consolidated statements of cash flows for the six months ended
June 30, 1995 and 1994, copies of which have heretofore been delivered to you,
were prepared in conformity with GAAP consistently applied throughout the
periods involved and present fairly the consolidated financial position of the
Company and its Subsidiaries on such date and their consolidated results of
operations and cash flows for the periods ended on such dates.
(e) No Contingent Liabilities or Adverse Changes. Neither the Company nor
any of its Subsidiaries has any contingent liabilities which, individually or in
the aggregate, are material to the Company and its Subsidiaries taken as a
whole, other than as indicated in the most recent audited financial statements
described in Section 3.1(d), and, except as set forth in such financial
statements, since December 31, 1994 there have been no changes in the condition,
financial or otherwise, of the Company and its Subsidiaries except changes
occurring in the ordinary course of business, none of which, individually or in
the aggregate, are material.
(f) No Pending Litigation or Proceedings. There are no actions, suits or
proceedings at law or in equity or before or by any Federal, state, municipal or
other governmental or administrative instrumentality or other agency, domestic
or foreign, pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary which could result in a Material Adverse Effect.
(g) Compliance with Law. (i) Neither the Company nor any Subsidiary is:
(x) in default with respect to any order, writ, injunction or decree of any
court to which it is a party; or (y) in default in any material respect under
any law, rule, regulation, ordinance or order, relating to its or their
respective businesses.
<PAGE> 10
(ii) None of the Company, any Subsidiary, or any Affiliate of the
Company is an entity defined as a "designated national" within the meaning of
the Foreign Assets Control Regulations, 31 C.F.R. Chapter V, or is in violation
of any Federal statute or Presidential Executive Order, or any rules or
regulations of any department, agency or administrative body promulgated under
any such statute or Order, concerning trade or other relations with any foreign
country or any citizen or national thereof or the ownership or operation of any
property and no restriction or prohibition under any such statute, order, rule
or regulation has a Material Adverse Effect.
(h) ERISA. (i) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance in all material respects with all
applicable laws. Neither the Company nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in Section
3 of ERISA), and no event, transaction or condition has occurred or exists that
could reasonably be expected to result in the incurrence of any such liability
by the Company or any ERISA Affiliate, or in the imposition of any Lien on any
of the rights, properties or assets of the Company or any ERISA Affiliate, in
either case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the aggregate material.
(ii) The present value of the aggregate benefit liabilities under
each of the Plans (other than multiemployer plans), determined as of the end of
such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities by more than $170,000 in the
case of a single Plan and all Plans in the aggregate are not underfunded. The
term "benefit liabilities" has the meaning specified in section 4001 of ERISA
and the terms "current value" and "present value" have the meaning specified in
section 3 of ERISA.
(iii) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are material.
(iv) The expected postretirement benefit obligation (determined
as of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by section
4980B of the Code) of the Company and its Subsidiaries, is not material.
<PAGE> 11
(v) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.
The representation by the Company in the first sentence of this clause (v) is
made in reliance upon and subject to the accuracy of your representation in
Section 3.2(b) as to the sources of the funds used to pay the purchase price of
the Notes to be purchased by you.
(i) Title to Properties. Except as disclosed on the most recent audited
consolidated balance sheet described in Section 3.1(d), the Company and each
Subsidiary have (i) good and marketable title in fee simple or its equivalent
under applicable law to all the real property owned by them and (ii) good and
marketable title to all of the other property reflected in such balance sheet or
subsequently acquired by the Company or any Subsidiary (except as sold or
otherwise disposed of in the ordinary course of business), in each case free
from all Liens or defects in title except those permitted by Section 7.4.
(j) Leases. The Company and each Subsidiary enjoy peaceful and
undisturbed possession under all leases under which the Company or such
Subsidiary is a lessee or is operating, except for leases the termination of
which, individually or in the aggregate, would not have a Material Adverse
Effect.
(k) Franchises, Patents, Trademarks and Other Rights. The Company and
each Subsidiary have all franchises, permits, licenses and other authority
necessary to carry on or used in their businesses as now being conducted, and
none are in default under any of such franchises, permits, licenses or other
authority except for franchises, permits, licenses or other authority, the lack
or loss of which, or default under, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. The Company and each
Subsidiary own or possess all patents, trademarks, service marks, trade names,
copyrights, licenses and rights with respect to the foregoing necessary for, or
used by them in, the present conduct of their businesses.
(l) Authorization. This Agreement and the Notes have been duly authorized
on the part of the Company and the Agreement does, and the Notes when issued
will, constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their terms, except to the extent that
enforcement of the Notes may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application relating to or
affecting the enforcement of the rights of creditors or by equitable principles,
regardless of whether enforcement is sought in equity or at law. The sale of
the Notes, the execution and delivery of the Agreement and compliance by the
Company with all of the provisions of this Agreement and the Notes (i) are
within the Company's corporate powers, (ii) have been duly authorized by proper
corporate action, (iii) are legal and will not violate any provisions of any law
or regulation or order of any court, governmental authority or agency, and
(iv) will not result in any breach of any of the provisions of, constitute a
default under, or result in the creation of any Lien on any property of the
<PAGE> 12
Company or any Subsidiary under the provisions of any charter document, by-law,
loan agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their property are bound. The
Subsidiary Guaranty has been duly authorized on the part of each Subsidiary
Guarantor, and constitutes the legal, valid and binding obligation of such
Subsidiary Guarantor enforceable in accordance with its terms, except to the
extent that the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in equity or
at law. The execution, delivery and performance by each Subsidiary Guarantor of
the Subsidiary Guaranty, (i) are within its corporate powers, (ii) have been
duly authorized by proper corporate action and (iii) are legal, will not violate
any provisions of any law, rule, regulation or ordinance or any order, judgment,
decree or ruling of any court, arbitrator or governmental authority or agency
and will not result in any breach of any of the provisions of, or constitute a
default under, or result in the creation of any lien or encumbrance on any
property of such Subsidiary Guarantor under the provisions of, any charter
document, by-law, indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease or any other agreement or instrument to which it is a party or
by which it or its property may be bound or affected.
(m) No Defaults. No event has occurred and no condition exists which,
upon the issuance of the Notes, would constitute a Default or an Event of
Default under this Agreement. Neither the Company nor any Subsidiary is in
default under any charter document, by-law, loan agreement or other material
agreement or material instrument to which it is a party or by which it or its
property is bound.
(n) Governmental Consent. None of (i) the nature of the Company or any of
its Subsidiaries, their respective businesses or properties, (ii) any
relationship between the Company or any of its Subsidiaries and any other
Person, or (iii) any circumstances relative to the offer, issuance, sale or
delivery of the Notes or execution and delivery of this Agreement is such as to
require a consent, approval or authorization of, withholding of objection on the
part of, or filing, registration or qualification with, any governmental
authority on the part of the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement, the Subsidiary Guaranty, or
the offer, issuance, sale or delivery of the Notes.
(o) Taxes. All tax returns required to be filed by the Company or any
Subsidiary in any jurisdiction have been filed, and all taxes, assessments, fees
and other governmental charges upon the Company or any Subsidiary, or upon any
of their respective properties, income or franchises, which are due and payable,
have been paid timely or within appropriate extension periods or contested in
good faith by appropriate proceedings that stay the collection thereof by the
applicable governmental authority during the period of the contest and as to
which adequate reserves are maintained in accordance with generally accepted
accounting principles. The Federal income tax liability of the Company and its
Subsidiaries for all taxable years up to and including the taxable year ended
<PAGE> 13
December 31, 1991 have been finally resolved and no material controversy in
respect of additional taxes due since such date is pending or, to the Company's
knowledge, threatened. The provisions for taxes on the books of the Company and
each Subsidiary are adequate for all open years and for the current fiscal
period.
(p) Status under Certain Statutes. Neither the Company nor any Subsidiary
is: (i) a "public utility company" or a "holding company," or an "affiliate" or
a "subsidiary company" of a "holding company," or an "affiliate" of such a
"subsidiary company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, (ii) a "public utility" as defined in the
Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act of 1940, as
amended.
(q) Private Offering. Neither the Company nor BA Securities, Inc., the
only other Person authorized or employed by the Company as agent, broker, dealer
or otherwise in connection with the offering of the Notes or any similar
security of the Company, has offered any of the Notes or any similar security of
the Company for sale to, solicited offers to buy any thereof from, or otherwise
approached or negotiated with respect thereto with any prospective purchaser,
other than institutional investors, including the Purchaser, each of whom was
offered all or a portion of the Notes at private sale for investment. Neither
the Company nor anyone acting on its authorization will offer the Notes, or any
part thereof or any similar security for issuance or sale to, or solicit any
offer to acquire any of the same from, anyone so as to bring the issuance and
sale of the Notes within the provisions of Section 5 of the Securities Act.
(r) Effect of Other Instruments. Neither the Company nor any Subsidiary
is bound by any agreement or instrument or subject to any charter or other
corporate restriction which (i) in any way restricts any Subsidiary's ability to
pay dividends or make advances to the Company or (ii) has a Material Adverse
Effect.
(s) Use of Proceeds. The Company will apply the net proceeds from the
sale of the Notes to the repayment of Indebtedness to Banks. None of the
transactions contemplated in this Agreement (including, without limitation
thereof, the use of the proceeds from the sale of the Notes) will violate or
result in a violation of Section 7 of the Exchange Act, or any regulations
issued pursuant thereto, including, without limitation, Regulations G, T, U and
X of the Board of Governors of the Federal Reserve System (12 C.F.R.,
Chapter II). None of the proceeds from the sale of the Notes will be used to
purchase or carry or refinance any borrowing the proceeds of which were used to
purchase or carry any "margin stock" or "margin security" in violation of
Regulations G, T, U or X.
<PAGE> 14
(t) Condition of Property. All of the facilities of the Company and its
Subsidiaries are in sound operating condition and repair, except for facilities
being repaired in the ordinary course of business or facilities which,
individually or in the aggregate, are not material to the Company and its
Subsidiaries, taken as a whole.
(u) Books and Records. The Company and each Subsidiary (i) maintain
books, records and accounts in reasonable detail which accurately and fairly
reflect their respective transactions and business affairs, and (ii) maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that transactions are executed in accordance with management's
general or specific authorization and to permit preparation of financial
statements in accordance with GAAP.
(v) Environmental Compliance. The Company and each Subsidiary (including
their operations and the conditions at or in their Facilities) comply with all
Environmental Laws except for violations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;
the Company and each Subsidiary have obtained all permits under Environmental
Laws necessary to their respective operations, all such permits are in full
force and effect; and the Company and each Subsidiary are in compliance with all
material terms and conditions of such permits except for such permits,
individually or in the aggregate, the lack of which noncompliance with which
could not be expected to have a Material Adverse Effect; and except as so
disclosed, neither the Company nor any of its Subsidiaries has any material
liability (contingent or otherwise) in connection with any Release of any
Hazardous Material or the existence of any Hazardous Material on, under or about
any Facility that could give rise to an Environmental Claim that could
reasonably be expected to have a Material Adverse Effect.
(w) Indebtedness. Annex II sets forth a list of all outstanding
Indebtedness of the Company and its Subsidiaries as of the date of September 30,
1995, since which date there has been no material change in the amounts,
interest rates, sinking funds, installment payments or maturities thereof.
Neither the Company nor any Subsidiary is in default, and no waiver of default
is currently in effect, in the payment of any principal or interest on any
Indebtedeness of the Company or such Subsidiary and no event or condition exists
with respect to any Indebtedness of the Company or any Subsidiary that would
permit (or that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Indebtedness to become due and payable before its
stated maturity or before its regularly scheduled dates of payment. Except as
disclosed in Annex II, neither the Company nor any Subsidiary has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by Section 7.4.
<PAGE> 15
(x) Solvency of the Subsidiaries. After giving effect to the transactions
contemplated herein, (i) the present fair salable value of the assets of each
Subsidiary is in excess of the amount that will be required by each Subsidiary
to pay its respective probable liability on its existing debts as such debts
become absolute and matured, (ii) the property remaining in the hands of each
Subsidiary is not an unreasonably small amount of capital, and (iii) each
Subsidiary is able to pay, and does not intend to take or fail to take any
action such that it will be unable to pay, its debts as they mature.
(y) Full Disclosure. None of the Private Placement Memorandum, the
financial statements referred to in Section 3.1(d), this Agreement, any other
written statement or document furnished by or on behalf of the Company to you in
connection with the negotiation of the sale of the Notes and the execution and
delivery of the Agreement, taken together, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading in light of the circumstances under which they
were made. There is no fact (exclusive of general economic, political or social
conditions or trends) particular to the Company and known by the Company that
the Company has not disclosed to you and that has a Material Adverse Effect or,
so far as the Company can now foresee, will have, individually or in the
aggregate, a Material Adverse Effect.
3.2. Representations of the Purchaser. (a) You represent, and in entering
into this Agreement the Company understands, that you are acquiring the Notes
for your own account and not with a view to any distribution thereof, provided
that the disposition of your property shall at all times be and remain within
your control; subject, however, to compliance with Federal securities laws. You
acknowledge that the Notes have not been registered under the Securities Act and
you understand that the Notes must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. You have been advised that the Company does not
contemplate registering, and is not legally required to register, the Notes
under the Securities Act.
(b) You further represent that, as of the date of this Agreement,
at least one of the following statements is an accurate representation as to
each source of funds (a "Source") to be used by you to pay the purchase
price of the Notes to be purchased by you hereunder:
(i) if you are an insurance company, the Source does not
include assets allocated to any separate account maintained by you in
which any employee benefit plan (or its related trust) has any
interest, other than a separate account that is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account;
<PAGE> 16
(ii) the Source is either (i) an insurance company pooled
separate account, within the meaning of Prohibited Transaction
Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38 (issued
July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund;
(iii) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this
clause (iii);
(iv) the Source is a governmental plan;
(v) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (b)(v);
(vi) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA; or
(vii) if you are an insurance company and the Source
includes assets of your general account, such acquisition would be
exempt under PTE 95-60 (issued July 12, 1995).
As used in this Section 3.2(b), the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA.
<PAGE> 17
Section 4. CLOSING CONDITIONS
Your obligation to purchase the Notes on the Closing Date shall be subject
to the performance by the Company of its agreements hereunder which are to be
performed at or prior to the time of delivery of the Notes, and to the following
conditions to be satisfied on or before the Closing Date:
4.1. Representations and Warranties. The representations and warranties of
the Company contained in this Agreement, in the certificates delivered pursuant
to this Section 4 or otherwise made in connection herewith shall be true and
correct on or as of the Closing Date and the Company shall have delivered to you
a certificate to such effect, dated the Closing Date and executed by the
president, the chief financial officer or the chief accounting officer of the
Company.
4.2. Legal Opinions. You shall have received from Gardner, Carton &
Douglas, who is acting as your special counsel in this transaction, and from
Bell, Boyd & Lloyd, counsel to the Company, their opinions, dated such Closing
Date, in form and substance satisfactory to you and covering substantially the
matters set forth or provided in the attached Exhibits B and C, respectively.
4.3. Events of Default. No event shall have occurred and be continuing on
the Closing Date which would constitute a Default or an Event of Default, and
the Company shall have delivered to you a certificate to such effect, dated the
Closing Date and executed by the president, the chief financial officer or the
chief accounting officer of the Company.
4.4. Payment of Fees and Expenses. The Company shall have paid all fees,
expenses, costs and charges, including the reasonable fees and expenses of
Gardner, Carton & Douglas, your special counsel, incurred by you through the
Closing Date and incident to the proceedings in connection with, and
transactions contemplated by, this Agreement and the Notes.
4.5. Legality of Investment. Your acquisition of the Notes shall
constitute a legal investment as of the Closing Date under the laws and
regulations of each jurisdiction to which you may be subject (without resort to
any "basket" or "leeway" provision which permits the making of an investment
without restrictions as to the character of the particular investment being
made), and such acquisition shall not subject you to any penalty or other
onerous condition in or pursuant to any such law or regulation; and you shall
have received such certificates or other evidence as you may reasonably request
to establish compliance with this condition.
4.6. Subsidiary Guaranty. The Subsidiary Guarantors shall have executed
and delivered the Subsidiary Guaranty.
4.7. Private Placement Number. A private placement number with respect to
the Notes shall have been issued by S&P.
<PAGE> 18
4.8. Proceedings and Documents. All corporate proceedings taken in
connection with the transactions contemplated by this Agreement and all
documents necessary to the consummation of such transactions shall be
satisfactory in form and substance to you and your special counsel, and you and
your special counsel shall have received copies (executed or certified as may be
appropriate) of all legal documents or proceedings which you and they may
reasonably request.
Section 5. INTERPRETATION OF AGREEMENT
5.1. Certain Terms Defined. The terms hereinafter set forth when used in
this Agreement shall have the following meanings:
Adjusted Consolidated Net Worth - The consolidated stockholders' equity of
the Company and its Restricted Subsidiaries determined in accordance with GAAP,
(i) less Restricted Investments in excess of 10% of consolidated stockholders'
equity as so determined and (ii) plus, to the extent previously deducted
pursuant to foregoing clause (i), any net return of capital in cash received
after the Closing Date from Restricted Investments.
Affiliate - Any Person (other than a Restricted Subsidiary or an original
Purchaser) (i) who is a director or executive officer of the Company or any
Subsidiary, (ii) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Company,
(iii) which beneficially owns or holds securities representing 5% or more of the
combined voting power of the Voting Stock of the Company or any Subsidiary, or
(iv) of which securities representing 5% or more of the combined voting power of
its Voting Stock (or in the case of a Person not a corporation, 5% or more of
its equity) is beneficially owned or held by the Company or any Subsidiary. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Agreement - As defined in Section 1.1.
Business Day - Any day, other than Saturday, Sunday or a legal holiday or
any other day on which banking institutions in Chicago, Illinois generally are
authorized by law to close.
Capitalized Lease - Any lease the obligation for Rentals with respect to
which, in accordance with GAAP, would be required to be capitalized on a balance
sheet of the lessee or for which the amount of the asset and liability
thereunder, as if so capitalized, would be required to be disclosed in a note to
such balance sheet.
Capitalized Lease Obligation - Any amounts required to be capitalized under
any Capitalized Lease.
Closing Date - As defined in Section 1.2.
<PAGE> 19
Code - The Internal Revenue Code of 1986, as amended.
Consolidated Funded Debt - Funded Debt of the Company and its Restricted
Subsidiaries determined on a consolidated basis in accordance with GAAP.
Consolidated Income Available for Fixed Charges - For any period, the sum
of (i) Consolidated Net Income for such period (to the extent deducted in
determining Consolidated Net Income), (ii) all provisions for any federal,
state, or other income taxes made by the Company and its Restricted Subsidiaries
in accordance with GAAP during such period, and (iii) Fixed Charges for such
period.
Consolidated Indebtedness - Indebtedness of the Company and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
Consolidated Net Income - For any period, the net income (or deficit) of
the Company and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP and after eliminating earnings or
losses attributable to outstanding minority interests, but excluding in any
event (i) net earnings and losses of any Restricted Subsidiary accrued prior to
the date it became a Restricted Subsidiary; (ii) net earnings and losses of any
corporation (other than a Restricted Subsidiary), substantially all the assets
of which have been acquired in any manner, realized by such other corporation
prior to the date of such acquisition; (iii) net earnings and losses of any
corporation (other than a Restricted Subsidiary) with which the Company or a
Restricted Subsidiary shall have consolidated or which shall have merged into or
with the Company or a Restricted Subsidiary prior to the date of such
consolidation or merger; (iv) net earnings of any business entity (other than a
Restricted Subsidiary) in which the Company or any Restricted Subsidiary has an
ownership interest unless such net earnings shall have actually been received by
the Company or such Restricted Subsidiary in the form of cash distributions;
(v) any portion of the net earnings of any Restricted Subsidiary which for any
reason is legally or contractually unavailable for payment of cash dividends to
the Company or any other Restricted Subsidiary; (vi) earnings resulting from any
reappraisal, revaluation or write-up of assets; (vii) any reversal of any
extraordinary, unusual or nonrecurring contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from income
arising during the period in which such reversal occurs; (viii) any gain or loss
(net of any tax effect) resulting from the sale of capital assets other than in
the ordinary course of business; (ix) extraordinary, unusual or nonrecurring
gains or losses; and (x) proceeds of any insurance policy.
Consolidated Short-Term Debt - All Indebtedness of the Company and its
Restricted Subsidiaries determined on a consolidated basis in accordance with
GAAP, other than Consolidated Funded Debt.
Consolidated Total Assets - The total assets of the Company and its
Restricted Subsidiaries determined on a consolidated basis in accordance with
GAAP.
<PAGE> 20
Consolidated Total Capitalization - The sum of Adjusted Consolidated Net
Worth and Consolidated Funded Indebtedness.
Default - Any event which, with the lapse of time or the giving of notice,
or both, would become an Event of Default.
Determination Date - One Business Day before the date fixed for a
prepayment pursuant to Section 2.1(a) or (b) or Section 7.7 or the date of
declaration pursuant to Section 8.2.
Environmental Claim - Any notice of violation, claim, demand, abatement
order or other order by any Person for any damage, including personal injury
(including sickness, disease or death), tangible or intangible property damage,
contribution, indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, resulting from or based
upon (i) the existence of a Release (whether sudden or non-sudden or accidental
or non-accidental) of, or exposure to, any Hazardous Material in, into or onto
the environment at, in, by, from or related to any Facility, (ii) the use,
handling, transportation, storage, treatment or disposal of Hazardous Materials
in connection with the operation of any Facility, or (iii) the violation, or
alleged violation, of any statute, rule, regulation, ordinance, order, permit,
license or authorization of or from any governmental authority, agency or court
relating to environmental matters pertaining to the Facilities.
Environmental Laws - All laws relating to environmental matters, including
those relating to (i) fines, orders, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries resulting from the
Release or threatened Release of Hazardous Materials and to the generation, use,
storage, transportation, or disposal of Hazardous Materials, in any manner
applicable to the Company or any of its Subsidiaries or any of their respective
properties, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean
Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), and the Emergency Planning and Community Right-to-
Know Act (42 U.S.C. Section 11001 et seq.), and (ii) environmental protection,
including the National Environmental Policy Act (42 U.S.C. Section 4321 et
seq.), and comparable state laws, each as amended or supplemented, and any
similar or analogous local, state and federal statutes and regulations
promulgated pursuant thereto, each as in effect as of the date of determination.
ERISA - The Employee Retirement Income Act of 1974, as amended from
time to time and any successor statute.
<PAGE> 21
ERISA Affiliate - The Company and (i) any corporation that is a member
of a controlled group of corporations within the meaning of Section 414(b)
of the Code of which the Company is a member, (ii) any trade or business
(whether or not incorporated) which is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the
Code of which the Company is a member, and (iii) any member of an affiliated
service group within the meaning of Section 414(m) or (o) of the Code of
which the Company, any corporation described in clause (i) above or any
trade or business described in clause (ii) above is a member.
Event of Default - As defined in Section 8.1.
Exchange Act - The Securities Exchange Act of 1934, as amended.
Facility - Any and all real property (including all buildings, fixtures or
other improvements located thereon) now or heretofore or hereafter owned,
leased, operated or used (under permit or otherwise) by the Company or any of
its Subsidiaries.
Fixed Charges - For any period, the sum of net interest expense (including
capitalized interest and the interest component of Rentals paid or accrued under
Capitalized Leases) plus, without duplication, Rentals under leases other than
Capitalized Leases paid or accrued by the Company and its Restricted
Subsidiaries, in each case in accordance with GAAP.
Funded Debt - As of any date of determination, all Indebtedness properly
classified as long-term debt in accordance with GAAP, including (i) Indebtedness
which by its terms matures more than one year from the date of creation
(including any portion thereof payable within a year), (ii) Indebtedness
outstanding under a revolving credit or similar agreement providing for
borrowings (and renewals and extensions thereof) over a period of more than one
year notwithstanding that any such Indebtedness may be payable within one year
after the creation thereof, and (iii) the principal portion of obligations under
Capitalized Leases.
GAAP - Generally accepted accounting principles in effect from time to time
in the United States.
Guaranties - All obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) of a
Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or
other obligation of any other Person in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor; (ii) to advance or supply funds (x) for the purchase or payment of
such Indebtedness or obligation, (y) to maintain working capital or other
balance sheet condition, or (z) otherwise to advance or make available funds for
the purchase or payment of such Indebtedness or obligation; (iii) to lease
property or to purchase securities or other property or services primarily for
<PAGE> 22
the purpose of assuring the owner of such Indebtedness or obligation against
loss in respect thereof; or (iv) otherwise to assure the owner of the
Indebtedness or obligation against loss in respect thereof. For the purposes of
all computations made under this Agreement, Guaranties in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the
principal amount of such Indebtedness which has been guaranteed, and Guaranties
in respect of any other obligation or liability or any dividend shall be deemed
to be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
Hazardous Materials - (i) Any chemical, material or substance defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste," "restricted hazardous
waste," or "toxic substances" or words of similar import under any Environmental
Laws; (ii) any oil, petroleum or petroleum derived substance, any drilling
fluid, produced water or other waste associated with the exploration,
development or production of crude oil, any flammable substance or explosive,
any radioactive material, any hazardous waste or substance, any toxic waste or
substance or any other material or pollutant that (x) poses a hazard to any
property of the Company or any of its Subsidiaries or to Persons on or about
such property or (y) causes such property to be in violation of any
Environmental Law; (iii) any friable asbestos, urea formaldehyde foam
insulation, electrical equipment which contains any oil or dielectric fluid with
levels of polychlorinated biphenyls in excess of fifty parts per million; and
(iv) any other chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority.
Indebtedness - For any Person, without duplication, all (i) obligations
for borrowed money or to pay the deferred purchase price of property or
assets (except trade account payables), (ii) obligations secured by any Lien
upon property or assets owned by such Person, even though such Person has
not assumed or become liable for the payment of such obligations,
(iii) obligations created or arising under any conditional sale or other
title retention agreement with respect to property acquired, notwithstanding
the fact that the rights and remedies of the seller, lender or lessor under
such agreement in the event of default are limited to repossession or sale
of property, (iv) Capitalized Lease Obligations, and (v) Guaranties of
obligations of others of the character referred to in this definition.
Institutional Holder - Any bank, trust company, insurance company, pension
fund, mutual fund or other similar financial institution, including, without
limiting the foregoing, any "qualified institutional buyer" within the meaning
of Rule 144A under the Securities Act, which is or becomes a holder of any Note.
Investments - All investments made, in cash or by delivery of property,
directly or indirectly, by any Person, in any other Person, whether by
acquisition of shares of capital stock, indebtedness or other obligations or
securities or by loan, advance, capital contribution or otherwise; provided,
however, that "Investments" shall not mean or include investments in property to
be used or consumed in the ordinary course of business.
<PAGE> 23
Lien - Any mortgage, pledge, security interest, encumbrance, lien or charge
of any kind, including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, including a Capitalized Lease, and the filing of or agreement to file
any financing statement under the Uniform Commercial Code of any jurisdiction in
connection with any of the foregoing.
Make-Whole Amount - As of any Determination Date, to the extent that the
Reinvestment Yield on such Determination Date is lower than the interest rate
payable on or in respect of the Notes, the excess of (a) the present value of
the principal and interest payments to be foregone by any prepayment (exclusive
of accrued interest on such Notes through the date of prepayment) on such Notes
(taking into account the manner of application of such prepayment required by
Section 2.2(b)), determined by discounting (semi-annually on the basis of a 360-
day year composed of twelve 30-day months), such payments at a rate that is
equal to the Reinvestment Yield, over (b) the aggregate principal amount of such
Notes then to be prepaid or paid. To the extent that the Reinvestment Yield on
any Determination Date is equal to or higher than the interest rate payable on
or in respect of such Notes, the Make-Whole Amount is zero.
Material Adverse Effect - (i) A material adverse effect on the business,
properties, profits, prospects, operations or condition, financial or otherwise,
of the Company and its Restricted Subsidiaries, taken as a whole, (ii) the
impairment of the ability of the Company to perform its obligations under this
Agreement or the Notes, (iii) the impairment of the ability of any Subsidiary
Guarantor to perform its obligations under the Subsidiary Guaranty, or (iv) the
impairment of the ability of the holders of the Notes to enforce such
obligations.
Moody's - Moody's Investor Services, Inc.
Multiemployer Plan - As defined in Section 3.1(h).
Notes - As defined in Section 1.1.
PBGC - The Pension Benefit Guaranty Corporation or any successor thereto.
Person - Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government, or any governmental authority, agency or political subdivision.
Plan - Any employee pension benefit plan, as defined in Section 3(2) of
ERISA, that has been established by, or contributed to, or is maintained by the
Company or any ERISA Affiliate.
Private Placement Memorandum - The Private Placement Memorandum dated
September 1995.
Purchaser - As defined in Section 1.1.
<PAGE> 24
Reinvestment Yield - The sum of (i) 0.50% plus (ii) the yield reported, as
of 10:00 A.M. (New York City time) on the Determination Date, on the Cantor-
Fitzgerald Brokerage Screen available on the Bloomberg and Knight Ridder
Information System (or, if not available, any other nationally recognized
trading screen reporting on-line intraday trading in United States government
securities) for actively traded U.S. Treasury securities having a maturity equal
to the Weighted Average Life to Maturity of the Notes then being prepaid or paid
as of the date of prepayment or payment, rounded to the nearest month, or if
such yields shall not be reported as of such time or the yields reported as of
such time are not ascertainable in accordance with the preceding clause, then
the arithmetic mean of the yields published in the statistical release
designated H.15(519) (or any successor publication) of the Board of Governors of
the Federal Reserve System under the caption "U.S. Government Securities--
Treasury Constant Maturities" (the "statistical release") for the maturity
corresponding to the remaining Weighted Average Life to Maturity of the Notes as
of the date of such prepayment or payment rounded to the nearest month. For
purposes of calculating the Reinvestment Yield, the most recent weekly
statistical release published prior to the applicable Determination Date shall
be used. In the event the statistical release is not published, the arithmetic
mean of such reasonably comparable index as may be designated by the holders of
at least 51% in aggregate principal amount of the Notes, for the maturity
corresponding to the remaining Weighted Average Life to Maturity of the Notes as
of the date of prepayment or payment, as the case may be, rounded to the nearest
month shall be used. If no maturity exactly corresponding to such rounded
Weighted Average Life to Maturity shall appear therein, yields for the two most
closely corresponding published maturities (one of which occurs prior and the
other subsequent to the Weighted Average Life to Maturity) shall be calculated
pursuant to the foregoing sentence and the Reinvestment Yield shall be
interpolated from such yields on a straight-line basis (rounding, in each of
such relevant periods, to the nearest month).
Release - Any release, spill, emission, leaking, pumping, pouring,
emptying, dumping, injection, escaping, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment (including the
abandonment or disposal of any barrel, container or other closed receptacle
containing any Hazardous Material), or into or out of any Facility, including
the movement of any Hazardous Material through the air, soil, surface water,
groundwater or property.
Rentals - As of the date of any determination thereof, all fixed payments
(including all payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by the Company or
a Restricted Subsidiary, as lessee or sublessee under a lease of real or
personal property, but exclusive of any amounts required to be paid by the
Company or a Restricted Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes,
assessments, amortization and similar charges. Fixed rents under any so-called
"percentage leases" shall be computed on the basis of the minimum rents, if any,
required to be paid by the lessee, regardless of sales volume or gross revenues.
<PAGE> 25
Restricted Investments - Any Investment of the Company and its Restricted
Subsidiaries other than:
(i) Investments in Restricted Subsidiaries;
(ii) Investments in a Person which, as a result thereof, becomes a
Restricted Subsidiary;
(iii) Investments in (A) commercial paper maturing in 270 days or
less from the date of issuance which is rated in one of the top two rating
classifications by at least one nationally recognized rating agency,
(B) certificates of deposit or banker's acceptances maturing within one year
from the date of issuance of commercial banks located in the United States of
America, which are rated within one of the top two ratings classifications by at
least one nationally recognized rating agency, (C) obligations of or fully
guaranteed by the United States of America or an agency thereof maturing within
three years from the date of issuance, (D) municipal securities maturing within
three years of the date of acquisition which are rated in one of the top two
rating classifications by at least one nationally recognized rating agency, and
(E) money market instrument programs that are properly classified as current
assets in accordance with GAAP; and
(iv) Investments as of the date of this Agreement which are listed in
the attached Annex III.
Restricted Subsidiary - means any Subsidiary (i) 80% or more of the
Voting Stock of which is owned by the Company and/or one or more Wholly-
Owned Restricted Subsidiaries, (ii) which is organized under the laws of the
United States or any state thereof, (iii) which maintains substantially all
of its assets and conducts substantially all of its business within the
United States, (iv) which the Company has designated a Restricted Subsidiary
by notice (including designation in Annex I) to the holders of the Notes,
and (v) which has not been designated a Restricted Subsidiary more than once
previously.
S&P - Standard & Poor's Corporation.
Securities Act - The Securities Act of 1933, as amended.
Subsidiary - Any corporation of which shares of Voting Stock representing
more than 50% of the combined voting power of each outstanding class of Voting
Stock are owned, directly or indirectly, by the Company.
Subsidiary Guarantors - Impact Industries, Inc. and any other Person which
hereafter executes and delivers to the holders of the Notes a counterpart
signature page to the Subsidiary Guaranty.
Subsidiary Guaranty - The Subsidiary Guaranty in substantially the form of
the attached Exhibit B, as amended from time to time.
<PAGE> 26
Unrestricted Subsidiary - Any Subsidiary which has not been designated a
Restricted Subsidiary or which is hereafter designated an Unrestricted
Subsidiary by the Company by notice to holders of the Notes.
Voting Stock - Capital stock of any class of a corporation having power
under ordinary circumstances to vote for the election of members of the board of
directors of such corporation, or persons performing similar functions.
Weighted Average Life to Maturity - As applied to any prepayment of
principal of the Notes or to any Subordinated Funded Debt, at any date, the
number of years obtained by dividing (a) the then outstanding principal amount
of the Notes to be prepaid, into (b) the sum of the products obtained by
multiplying (i) the amount of each then remaining installment, sinking fund,
serial maturity, or other required payment, including payment at final maturity,
foregone by virtue of such prepayment of the Notes, by (ii) the number of years
(calculated to the nearest 1/12th) which would have elapsed between such date
and the making of such payment.
Wholly-Owned - When applied to a Subsidiary or a Restricted Subsidiary, any
Subsidiary or Restricted Subsidiary 100% of the Voting Stock of which is owned
by the Company and/or its Wholly-Owned Subsidiaries, other than directors'
qualifying shares.
Terms which are not defined in this Section and are defined in other
Sections of this Agreement shall have the meanings specified therein.
5.2. Accounting Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with GAAP,
except where such principles are inconsistent with the requirements of this
Agreement.
5.3. Valuation Principles. Except where indicated expressly to the
contrary by the use of terms such as "fair value," "fair market value" or
"market value," each asset, each liability and each capital item of any Person,
and any quantity derivable by a computation involving any of such assets,
liabilities or capital items, shall be taken at the net book value thereof for
all purposes of this Agreement. "Net book value" with respect to any asset,
liability or capital item of any Person shall mean the amount at which the same
is recorded or, in accordance with GAAP should have been recorded, in the books
of account of such Person, as reduced by any reserves which have been or, in
accordance with GAAP should have been, set aside with respect thereto, but in
every case (whether or not permitted in accordance with GAAP) without giving
effect to any write-up, write-down or write-off (other than any write-down or
write-off the entire amount of which was charged to Consolidated Net Income or
to a reserve which was a charge to Consolidated Net Income) relating thereto
which was made after the date of this Agreement.
<PAGE> 27
5.4. Direct or Indirect Actions. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
Section 6. AFFIRMATIVE COVENANTS
The Company agrees that, for so long as any amount remains unpaid on any
Note:
6.1. Corporate Existence. The Company will maintain and preserve, and will
cause each Restricted Subsidiary to maintain and preserve, its corporate
existence and right to carry on its business and maintain, preserve, renew and
extend all of its rights, powers, privileges and franchises necessary to the
proper conduct of its business; provided, however, that the foregoing shall not
prevent any transaction permitted by Section 7.6 or Section 7.7 or the
termination of the corporate existence of any Restricted Subsidiary if, in the
opinion of the Board of Directors of the Company, such termination is in the
best interests of the Company, is not disadvantageous to holders of the Notes
and is not otherwise prohibited by this Agreement.
6.2. Insurance. The Company will, and will cause each Subsidiary to,
maintain insurance coverage with financially sound and reputable insurers in
such forms and amounts, with such deductibles and against such risks as are
required by law or sound business practice and are customary for corporations of
the Company's size engaged in the same or similar businesses and owning and
operating similar properties as the Company and its Subsidiaries.
6.3. Taxes, Claims for Labor and Materials. The Company will pay and
discharge when due, and will cause each Subsidiary to pay and discharge when
due, all taxes, assessments and governmental charges or levies imposed upon it
or its property or assets, or upon properties leased by it (but only to the
extent required to do so by the applicable lease), prior to the date on which
penalties other than application of interest or revocation of discount attach
thereto, and all lawful claims which, if unpaid, could reasonably be expected to
become a Lien upon its property or assets, provided that neither the Company nor
any Subsidiary shall be required to pay any such tax, assessment, charge, levy
or claim, the payment of which is being contested in good faith and by proper
proceedings that will stay the forfeiture or sale of any property and with
respect to which adequate reserves are maintained in accordance with GAAP.
6.4. Maintenance of Properties. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties (whether owned in fee or a leasehold interest) essential to its
business in good repair and working order, ordinary wear and tear excepted, and
from time to time will make all necessary repairs, replacements, renewals,
improvements and additions.
<PAGE> 28
6.5. Maintenance of Records. The Company will keep, and will cause each
Subsidiary to keep, at all times proper books of record and account in which
full, true and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary, in
accordance with GAAP consistently applied throughout the period involved (except
for such changes as are disclosed in such financial statements or in the notes
thereto and concurred in by the Company's independent certified public
accountants), and the Company will, and will cause each Subsidiary to, provide
reasonable protection against loss or damage to such books of record and
account.
6.6. Financial Information and Reports. The Company will furnish to you
and to any other Institutional Holder (in duplicate if you or such other holder
so request) the following:
(a) As soon as available and in any event within 45 days after the end of
each of the first three quarterly accounting periods of each fiscal year of the
Company, a consolidated balance sheet of the Company and its Restricted
Subsidiaries as of the end of such period and consolidated statements of
earnings and cash flows of the Company and its Restricted Subsidiaries for the
periods beginning on the first day of such fiscal year and the first day of such
quarterly accounting period (with respect to earnings only) and ending on the
date of such balance sheet, setting forth in comparative form the corresponding
consolidated figures for the corresponding periods of the preceding fiscal year,
all in reasonable detail, prepared in accordance with GAAP consistently applied
throughout the period involved (except for changes disclosed in such financial
statements or in the notes thereto and concurred in by the Company's independent
certified public accountants) and certified by the chief financial officer or
chief accounting officer of the Company (i) outlining the basis of presentation,
and (ii) stating that the information presented in such statements presents
fairly the financial condition of the Company and its Restricted Subsidiaries
and the results of operations for the period, subject to customary year-end
audit adjustments; provided that delivery within the time period specified above
of copies of the Company's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 6.6(a);
(b) As soon as available and in any event within 90 days after the last
day of each fiscal year, a consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the end of such fiscal year and the related
consolidated statements of operations, shareholders' equity and cash flows for
such fiscal year, in each case setting forth in comparative form figures for the
preceding fiscal year, all in reasonable detail, prepared in accordance with
generally accepted accounting principles consistently applied throughout the
period involved (except for changes disclosed in such financial statements or in
the notes thereto and concurred in by independent certified public accountants)
and accompanied by a report unqualified as to scope of audit and unqualified as
to going concern as to the consolidated balance sheet and the related
consolidated statements of earnings, shareholders' equity and cash flows by
Arthur Andersen LLP, or any other firm of independent public accountants of
<PAGE> 29
recognized national standing selected by the Company, to the effect that such
financial statements have been prepared in conformity with GAAP and present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Company and its Restricted Subsidiaries and
that the examination of such financial statements by such accounting firm has
been made in accordance with generally accepted auditing standards; provided
that the delivery within the time period specified above of the Company's Annual
Report on Form 10-K for such fiscal year (together with the Company's annual
report to shareholders, if any, prepared pursuant to Rule 14a-3 under the
Exchange Act) prepared in accordance with the requirements therefor and filed
with the Securities and Exchange Commission, together with the accountant's
certificate described in this Section 6.6(b), shall be deemed to satisfy the
requirements of this Section 6.6(b);
(c) Together with the financial statements delivered pursuant to
paragraphs (a) and (b) of this Section 6.6, a certificate of the chief financial
officer or chief accounting officer of the Company, (i) to the effect that such
officer has reexamined the terms and provisions of this Agreement and that on
the date such calculations were made during the periods covered by such
financial reports and as of the end of such periods the Company is not, or was
not, in default in the fulfillment of any of the terms, covenants, provisions
and conditions of this Agreement and that no Default or Event of Default is
occurring or has occurred as of the date of such certificate, during such
periods and as of the end of such periods, or if such officer is aware of any
Default or Event of Default, such officer shall disclose in such statement the
nature thereof, its period of existence and what action, if any, the Company has
taken or proposes to take with respect thereto, and (ii) stating whether the
Company is in compliance with Sections 7.1 through 7.12 and setting forth, in
sufficient detail, the information and computations required to establish
whether or not the Company was in compliance with the requirements of
Sections 7.1 through 7.7 during the periods covered by the financial reports
then being furnished and as of the end of such periods;
(d) Together with the financial reports delivered pursuant to
paragraph (b) of this Section 6.6, a letter from the Company's independent
certified public accountants stating that in making the examination necessary
for expressing an opinion on such financial statements, nothing came to their
attention that caused them to believe that there is in existence or has occurred
any Default or Event of Default hereunder (the occurrence of which is
ascertainable by accountants in the course of normal audit procedures) or, if
such accountants shall have obtained knowledge of any such Default or Event of
Default, describing the nature thereof and the length of time it has existed;
(e) Promptly after the Company obtains knowledge thereof, notice of any
litigation or any governmental proceeding pending against the Company or any
Subsidiary in which the damages sought exceed $1,000,000, individually or in the
aggregate, or which might reasonably be expected to result in a Material Adverse
Effect;
<PAGE> 30
(f) As soon as available, copies of each financial statement, notice,
report and proxy statement which the Company shall furnish to its stockholders;
within 15 days after filing, copies of each registration statement and periodic
report which the Company may file with the Securities and Exchange Commission,
and any similar or successor agency of the Federal government administering the
Securities Act, the Exchange Act or the Trust Indenture Act of 1939, as amended;
without duplication, within 15 days after filing, copies of each report (other
than reports relating solely to the issuance of, or transactions by others
involving, its securities) relating to the Company or its securities which the
Company may file with any securities exchange on which any of the Company's
securities may be registered; copies of any orders in any material proceedings
to which the Company or any of its Subsidiaries is a party, issued by any
governmental agency, Federal or state, having jurisdiction over the Company or
any of its Subsidiaries; and, except at such times as the Company is a reporting
company under Section 13 or 15(d) of the Exchange Act or has complied with the
requirements for the exemption from registration under the Exchange Act set
forth in Rule 12g-3-2(b), such financial or other information as any holder of
the Notes or prospective purchaser of the Notes may reasonably request;
(g) As soon as available, a copy of each other report submitted to the
Company or any Subsidiary by independent accountants retained by the Company or
any Restricted Subsidiary in connection with any interim or special audit made
by them of the books of the Company or any Subsidiary;
(h) Promptly following any change in the composition of the Company's
Restricted Subsidiaries and annually following any change in the composition of
the Company's other Subsidiaries from that set forth in Annex I, as theretofore
updated pursuant to this paragraph, an updated list setting forth the
information specified in Annex I; and
(i) Such additional information as you or such other Institutional Holder
of the Notes may reasonably request concerning the Company and its Restricted
Subsidiaries.
6.7. Inspection of Properties and Records. The Company will allow, and
will cause each Subsidiary to allow, any representative of you or any other
Institutional Holder, so long as you or such other Institutional Holder holds
any Note, to visit and inspect any of its properties, to examine its books of
record and account and to discuss its affairs, finances and accounts with its
officers and its present and former public accountants (and by this provision
the Company authorizes such accountants to discuss with you or such
Institutional Holder its affairs, finances and accounts in the presence of an
officer of the Company if no Default or Event of Default has occurred and is
continuing. Such visitations and inspections shall take place at such
reasonable times, upon reasonable notice and as often as you or such
Institutional Holder may reasonably request, and if, at the time thereof any
Default or Event of Default has occurred and is continuing, at the Company's
expense.
<PAGE> 31
6.8. ERISA . (a) All assumptions and methods used to determine the
actuarial valuation of employee benefits, both vested and unvested, under any
Plan subject to Title IV of ERISA, and each such Plan, whether now existing or
adopted after the date hereof, will comply in all material respects with ERISA.
(b) The Company will not at any time permit any Plan established,
maintained or contributed to by it or any ERISA Affiliate to:
(i) engage in any "prohibited transaction" as such term is
defined in Section 4975 of the Code or in Section 406 of ERISA;
(ii) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA, whether or not waived; or
(iii) be terminated under circumstances which are likely to
result in the imposition of a Lien on the property of the Company or any
ERISA Affiliate pursuant to Section 4068 of ERISA;
if the event or condition described in clauses (i), (ii) or (iii) above is
likely to subject the Company or an ERISA Affiliate to liabilities which,
individually or in the aggregate, might reasonably be expected to have a
Material Adverse Effect.
(c) Upon the request of you or any subsequent Institutional Holder,
the Company will furnish a copy of the annual report of each Plan (Form
5500) required to be filed with the Internal Revenue Service.
(d) Within 5 days after obtaining knowledge thereof, the Company will
give you and any subsequent Institutional Holder written notice of (i) a
reportable event with respect to any Plan; (ii) the institution of any steps
by any of the Company, any ERISA Affiliate or the PBGC to terminate any
Plan; (iii) the institution of any steps by any of the Company or any ERISA
Affiliate to withdraw from any Plan; (iv) a prohibited transaction in
connection with any Plan; (v) any material increase in the contingent
liability of the Company or any Restricted Subsidiary with respect to any
post-retirement welfare liability; or (vi) the taking of any action by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
to any of the foregoing which, in any of the events specified above, might
reasonably be expected to result in a Material Adverse Effect.
6.9. Compliance with Laws. (a) The Company will comply, and will cause
each Subsidiary to comply, with all laws, rules and regulations, including
Environmental Laws, relating to its or their respective businesses, other than
laws, rules and regulations the failure to comply with which or the sanctions
and penalties resulting therefrom, individually or in the aggregate, would not
have a Material Adverse Effect; provided, however, that the Company and its
Subsidiaries shall not be required to comply with laws, rules and regulations
the validity or applicability of which are being contested in good faith and by
appropriate proceedings and as to which the Company has established adequate
reserves on its books in accordance with GAAP.
<PAGE> 32
(b) Promptly upon the occurrence thereof, the Company will give you and
each other Institutional Holder notice of the institution of any proceedings
against, or the receipt of notice of potential liability or responsibility of,
the Company or any Subsidiary for violation, or the alleged violation, of any
Environmental Law which violation could reasonably be expected to result in a
Material Adverse Effect.
6.10. Acquisition of Notes. Neither the Company, any Subsidiary nor
any Affiliate of any of them, directly or indirectly, will repurchase, redeem,
prepay or otherwise acquire, directly or indirectly, any Notes except upon the
payment or prepayment of the Notes pursuant to Section 2.1, Section 2.2(a) or
Section 7.7. The Company will forthwith cancel any Notes in any manner or at
any time acquired by the Company, any Subsidiary, or any Affiliate of any of
them and such Notes shall not be deemed to be outstanding for any of the
purposes of this Agreement, or the Notes.
6.11. Private Placement Number. The Company consents to the filing by
your special counsel of copies of this Agreement with S&P to obtain a private
placement number.
Section 7. NEGATIVE COVENANTS
The Company agrees that, for so long as any amount remains unpaid on any
Note:
7.1. Adjusted Consolidated Net Worth. The Company will not permit its
Adjusted Consolidated Net Worth to be less than $20,000,000, plus 40% of
Consolidated Net Income (100% in the case of a net deficit) for each fiscal year
ending after December 31, 1994.
7.2. Fixed Charges Ratio. The Company will not permit the ratio
(calculated as of the end of each fiscal quarter) of Consolidated Income
Available for Fixed Charges to Fixed Charges for the period of 4 quarters ending
as of each fiscal quarter to be less than 1.5 to 1.0.
7.3. Indebtedness. The Company will not, and will not permit any
Restricted Subsidiary to, permit to exist, create, assume, incur or otherwise be
or become liable for, directly or indirectly, any Indebtedness other than:
(a) the Notes;
(b) Outstanding Funded Debt of the Company and its Restricted Subsidiaries
described in the attached Annex II;
(c) Funded Debt of a Restricted Subsidiary owed to the Company or another
Wholly-Owned Restricted Subsidiary;
(d) Additional Funded Debt, provided that Consolidated Funded Debt does
not exceed 55% of Consolidated Total Capitalization at any time;
<PAGE> 33
(e) Consolidated Short-Term Debt, provided that during the immediately
preceding 12 calendar months there has been a period of 30 consecutive days
during which Consolidated Short-Term Debt outstanding during such period could
have been incurred as Funded Debt; and
(f) Additional Indebtedness of Restricted Subsidiaries, provided that at
the time of incurrence and after giving effect thereto and to the application of
the proceeds therefrom,
(i) such Indebtedness may be incurred pursuant to paragraph (d) or
(e), as appropriate, of this Section 7.3, and
(ii) the sum (without duplication) of outstanding (A) Indebtedness of
Restricted Subsidiaries (other than Funded Debt referred to in paragraph (c) of
this Section 7.3), and (B) Indebtedness of the Company or any Restricted
Subsidiary secured by Liens permitted by Section 7.4(g) is less than 10% of
Adjusted Consolidated Net Worth.
7.4. Liens. The Company will not, and will not permit any Restricted
Subsidiary to, permit to exist, create, assume or incur, directly or indirectly,
any Lien on its properties or assets, whether now owned or hereafter acquired,
except:
(a) Liens existing on property or assets of the Company or any Restricted
Subsidiary as of the date of this Agreement that are described in the attached
Annex IV;
(b) Liens for taxes, assessments or governmental charges not then due and
delinquent or the validity of which is being contested in good faith and as to
which the Company has established adequate reserves on its books;
(c) Liens arising in connection with court proceedings, provided the
execution of such Liens is effectively stayed, such Liens are being contested in
good faith by appropriate proceedings and the Company has established adequate
reserves therefor on its books;
(d) Liens arising in the ordinary course of business and not incurred in
connection with the borrowing of money (including encumbrances in the nature of
zoning restrictions, easements, rights and restrictions of record on the use of
real property, defects in title and landlord's, lessor's, mechanics' and
materialmen's liens) that in the aggregate do not materially interfere with the
conduct of the business of the Company and its Restricted Subsidiaries taken as
a whole or materially impair the value of the property or assets subject
thereto;
(e) Liens securing Indebtedness of a Restricted Subsidiary to the Company;
<PAGE> 34
(f) Liens on property created substantially contemporaneously or within
90 days of the acquisition thereof to secure or provide for all or a portion of
the purchase price of such property; provided that such Liens do not extend to
other property of the Company or any Restricted Subsidiary and that the
aggregate principal amount of Indebtedness secured by each such Lien does not
exceed the purchase price of the property subject thereto; and
(g) Liens not otherwise permitted by paragraphs (a) through (f) above
incurred subsequent to the Closing Date to secure Indebtedness, provided that at
the time of incurring such additional Indebtedness and after giving effect
thereto and to the application of the proceeds therefrom, (i) the sum (without
duplication) of outstanding (A) Indebtedness of Restricted Subsidiaries (other
than Funded Debt referred to in paragraph (c) of Section 7.3), and
(B) Indebtedness of the Company or any Restricted Subsidiary secured by Liens
permitted by this Section 7.4(g) does not exceed 10% of Adjusted Consolidated
Net Worth.
7.5. Restricted Payments. The Company will not, except as hereinafter
provided:
(a) declare or pay any dividends, either in cash or property, on any
shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of common stock of the Company);
(b) directly or indirectly, or through any Subsidiary, purchase, redeem,
retire or otherwise acquire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its capital
stock; or
(c) make any other payment or distribution, either directly or indirectly,
or through any Subsidiary, in respect of its capital stock;
(all such non-permitted declarations, payments, purchases, redemptions,
retirements, acquisitions or distributions being hereinafter referred to as
"Restricted Payments") unless, after giving effect thereto, (i) the aggregate
amount of Restricted Payments made after December 31, 1994 to and including the
date of making the Restricted Payment in question would not exceed the sum of:
(x) $2,000,000; (y) 40% of cumulative Consolidated Net Income for each fiscal
year of the Company since December 31, 1994 (less 100% thereof in case of a
deficit); (z) the net cash proceeds received by the Company from the sale of
capital stock subsequent to the Closing Date; and (ii) no Default or Event of
Default exists or would exist.
7.6. Merger or Consolidation. The Company will not, and will not permit
any Restricted Subsidiary to, merge or consolidate with, or sell all or
substantially all of its assets to, any Person, except that:
(a) The Company may merge into or consolidate with, or sell all or
substantially all of its assets to, any Person or permit any Person to merge
into it, provided that immediately after giving effect thereto,
<PAGE> 35
(i) The Company is the successor corporation or, if the Company is
not the successor corporation, the successor corporation is a solvent
corporation organized under the laws of a state of the United States of America
or the District of Columbia and expressly assumes in writing the Company's
obligations under this Agreement and the Notes;
(ii) There shall exist no Default or Event of Default; and
(iii) The Company or such successor corporation could incur at
least $1.00 of additional Funded Debt under Section 7.3(d); and
(b) Any Restricted Subsidiary may (i) merge into the Company or a Wholly-
Owned Restricted Subsidiary, (ii) sell, transfer or lease all or any part of its
assets to the Company or a Wholly-Owned Restricted Subsidiary, (iii) merge into
any Person which, as a result of such merger, becomes a Wholly-Owned Restricted
Subsidiary, or (iv) merge with any Person which does not become a Restricted
Subsidiary as a result of such merger so long as such merger is otherwise
permitted by Section 7.7; provided in each instance set forth in clauses (i)
through (iv) that immediately before and after giving effect thereto there shall
exist no Default or Event of Default.
7.7. Sale of Assets. The Company will not, and will not permit any
Restricted Subsidiary to, sell, lease, transfer or otherwise (including by way
of merger) dispose of (collectively a "Disposition") any assets, including
capital stock of Subsidiaries, in one or a series of transactions, other than in
the ordinary course of business, to any Person, except to the Company or a
Wholly-Owned Restricted Subsidiary, (i) if, in any fiscal year, after giving
effect to such Disposition, the aggregate net book value of assets subject to
Dispositions during such fiscal year would exceed 10% of Consolidated Total
Assets as of the end of the immediately preceding fiscal year or (ii) if a
Default or Event of Default exists or would exist. Notwithstanding the
foregoing, the Company may, or may permit a Restricted Subsidiary to, make a
Disposition and the assets subject to such Disposition shall not be subject to
or included in the foregoing limitation and computation contained in clause (i)
of the preceding sentence to the extent that (x) such assets are leased back by
the Company or such Restricted Subsidiary, as lessee, within 180 days following
the acquisition (by the Company or such Restricted Subsidiary) or completion of
construction of such assets or (y) the net proceeds from such Disposition are
(1) reinvested in productive assets of the Company or a Restricted Subsidiary of
at least equivalent value within 180 days of such Disposition or (2) applied to
the payment or prepayment of outstanding senior Indebtedness. Any repayment of
Notes pursuant to this Section 7.7 shall be in accordance with Section 2.2(a).
7.8. Disposition of Stock of Restricted Subsidiaries. The Company will not
permit any Restricted Subsidiary to issue its capital stock, or any warrants,
rights or options to purchase, or securities convertible into or exchangeable
for, such capital stock, to any Person other than the Company or a Wholly-Owned
Restricted Subsidiary. The Company will not, and will not permit any Restricted
Subsidiary to, sell, transfer or otherwise dispose of (other than to the Company
or a Wholly-Owned Restricted Subsidiary) any capital stock (including any
<PAGE> 36
warrants, rights or options to purchase, or securities convertible into or
exchangeable for, capital stock) or Indebtedness of any Restricted Subsidiary,
unless:
(a) simultaneously therewith all Investments in such Restricted
Subsidiary owned by the Company and every other Restricted Subsidiary are
disposed of as an entirety;
(b) such Restricted Subsidiary does not have any continuing Investment
in the Company or any other Subsidiary not being simultaneously disposed of;
and
(c) such sale, transfer or other disposition is permitted by
Section 7.7.
7.9. Designation of Unrestricted Subsidiaries The Company will not
designate any Restricted Subsidiary as an Unrestricted Subsidiary if such
Subsidiary has been designated an Unrestricted Subsidiary more than once
previously and unless immediately before and after such designation:
(a) such Subsidiary does not own any Investment in the Company or any
Restricted Subsidiary;
(b) there exists no Default or Event of Default; and
(c) the Company could incur at least $1.00 of additional Indebtedness.
7.10. No Impairment of Subsidiaries. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any agreement or amend the
charter or by-laws of such Restricted Subsidiary or take or omit to take any
action, the effect of which is to impair the ability of any Restricted
Subsidiary to pay dividends or make distributions to the Company, or if the
Company is not its parent, to its parent.
7.11. Transactions with Affiliates. The Company will not, and will not
permit any Restricted Subsidiary to, enter into any transaction (including the
furnishing of goods or services) with an Affiliate, except on terms and
conditions no less favorable to the Company or such Restricted Subsidiary than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate.
7.12. Nature of Business. The Company will not, and will not permit
any Restricted Subsidiary to, engage in any business if, as a result thereof,
the business then to be conducted by the Company and its Restricted
Subsidiaries, taken as a whole, would cease to be substantially that described
in the Private Placement Memorandum.
<PAGE> 37
Section 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1. Nature of Events. An "Event of Default" shall exist if any one or
more of the following occurs:
(a) Any default in the payment of interest when due on any of the Notes
and continuance of such default for a period of five Business Days;
(b) Any default in the payment of the principal or Make-Whole Amount of
any of the Notes at maturity, upon acceleration of maturity or at any date fixed
for prepayment;
(c) Any (i) default in the payment of the principal of, or interest or
premium on, any other Indebtedness of the Company and its Restricted
Subsidiaries aggregating in excess of $1,000,000 as and when due and payable
(whether by lapse of time, declaration, call for redemption or otherwise) and
the continuation of such default beyond the period of grace, if any, allowed
with respect thereto, or (ii) default (other than a payment default) under any
mortgages, agreements or other instruments of the Company and its Restricted
Subsidiaries under or pursuant to which such Indebtedness aggregating in excess
of $1,000,000 is issued, and the continuation of such default beyond the period
of grace, if any, allowed with respect thereto.
(d) Any default in the observance or performance of Sections 7.1 through
7.12 or Section 8.7;
(e) Any default in the observance or performance of any other covenant or
provision of this Agreement which is not remedied within 30 days after notice
thereof to the Company by any holder of a Note;
(f) Default under the Subsidiary Guaranty which continues beyond the
period of grace, if any, allowed with respect thereto;
(g) The Subsidiary Guaranty shall cease to be in full force and effect for
any reason whatsoever, including, without limitation, a determination by any
governmental body or court that the Subsidiary Guaranty is invalid, void or
unenforceable insofar as any Subsidiary Guarantor is concerned or any Subsidiary
Guarantor shall contest or deny in writing the validity or enforceability of any
of its obligations under the Subsidiary Guaranty;
(h) Any representation or warranty made by or on behalf of the Company in
this Agreement, or made by or on behalf of the Company in any written statement
or certificate furnished by or on behalf of the Company in connection with the
issuance and sale of the Notes or furnished by or on behalf of the Company
pursuant to this Agreement, proves incorrect in any material respect as of the
date of the issuance or making thereof;
<PAGE> 38
(i) Any judgment, writ or warrant of attachment or any similar process in
an aggregate amount in excess of $500,000 shall be entered or filed against the
Company or any Restricted Subsidiary or against any property or assets of either
and remain unpaid, unvacated, unbonded or unstayed (through appeal or
otherwise);
(j) The Company or any Restricted Subsidiary shall
(i) generally not pay its debts as they become due or admit in
writing its inability to pay its debts generally as they become due;
(ii) file a petition in bankruptcy or for reorganization or for the
adoption of an arrangement under the Federal Bankruptcy Code, or any similar
applicable bankruptcy or insolvency law, as now or in the future amended (herein
collectively called "Bankruptcy Laws"); file an answer or other pleading
admitting or failing to deny the material allegations of such a petition; fail
to obtain the dismissal of such a petition within 60 days of its filing or be
subject to an order for relief or a decree approving such a petition; or file an
answer or other pleading seeking, consenting to or acquiescing in relief
provided for under the Bankruptcy Laws;
(iii) make an assignment of all or a substantial part of its
property for the benefit of its creditors;
(iv) seek or consent to or acquiesce in the appointment of a receiver,
liquidator, custodian or trustee of it or for all or a substantial part of its
property;
(v) be finally adjudicated bankrupt or insolvent;
(vi) be subject to the entry of a court order, which shall not be
vacated, set aside or stayed within 60 days of the date of entry, (A) appointing
a receiver, liquidator, custodian or trustee of it or for all or a substantial
part of its property, (B) for relief pursuant to an involuntary case brought
under, or effecting an arrangement in, bankruptcy, (C) for a reorganization
pursuant to the Bankruptcy Laws, or (D) for any other judicial modification or
alteration of the rights of creditors; or
(vii) be subject to the assumption of custody or sequestration by
a court of competent jurisdiction of all or a substantial part of its property,
which custody or sequestration shall not be suspended or terminated within 60
days from its inception.
8.2. Remedies on Default. When any Event of Default described in
paragraphs (c) through (i) of Section 8.1 has occurred and is continuing, the
holders of more than 25% in aggregate principal amount of the Notes then
outstanding may, by notice to the Company, declare the entire principal,
together with the Make-Whole Amount (to the extent permitted by law) and all
interest accrued on all Notes to be, and such Notes shall thereupon become,
forthwith due and payable, without any presentment, demand, protest or other
<PAGE> 39
notice of any kind, all of which are expressly waived. Notwithstanding the
foregoing, (i) when any Event of Default described in paragraphs (a) or (b) of
Section 8.1 has occurred and is continuing, any holder may by notice to the
Company declare the entire principal, and all interest accrued on the Notes,
together with the Make-Whole Amount (to the extent permitted by law), then held
by such holder to be, and such Notes shall thereupon become, forthwith due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which are expressly waived, and (ii) when any Event of Default described
in paragraph (j) of Section 8.1 has occurred, then the entire principal,
together with the Make-Whole Amount (to the extent permitted by law) and all
interest accrued on all outstanding Notes shall immediately become due and
payable without presentment, demand or notice of any kind. Upon the Notes or
any of them becoming due and payable as aforesaid, the Company will forthwith
pay to the holders of such Notes the entire principal of and interest accrued on
such Notes, plus the Make-Whole Amount which shall be calculated on the
Determination Date.
8.3. Annulment of Acceleration of Notes. The provisions of Section 8.2 are
subject to the condition that if the principal of, the Make-Whole Amount and
accrued interest on the Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in
paragraphs (a) through (h), inclusive, of Section 8.1, the holder or holders of
76% in aggregate principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, provided that (i) at the time such declaration is annulled
and rescinded no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement, (ii) all arrears of interest
upon all the Notes and all other sums payable under the Notes and under this
Agreement (except any principal, Make-Whole Amount or interest on the Notes
which has become due and payable solely by reason of such declaration under
Section 8.2) shall have been duly paid, and (iii) each and every Default or
Event of Default shall have been cured or waived; and provided further, that no
such rescission and annulment shall extend to or affect any subsequent Default
or Event of Default or impair any right consequent thereto.
8.4. Other Remedies. If any Event of Default shall be continuing, any
holder of Notes may enforce its rights by suit in equity, by action at law, or
by any other appropriate proceedings, whether for the specific performance (to
the extent permitted by law) of any covenant or agreement contained in this
Agreement or in the Notes or in aid of the exercise of any power granted in this
Agreement, and may enforce the payment of any Note held by such holder and any
of its other legal or equitable rights.
8.5. Conduct No Waiver; Collection Expenses. No course of dealing on the
part of any holder of Notes, nor any delay or failure on the part of any holder
of Notes to exercise any of its rights, shall operate as a waiver of such rights
or otherwise prejudice such holder's rights, powers and remedies. If the
Company fails to pay, when due, the principal of, the Make-Whole Amount, or the
interest on, any Note, or fails to comply with any other provision of this
Agreement, the Company will pay to each holder, to the extent permitted by law,
<PAGE> 40
on demand, such further amounts as shall be sufficient to cover the cost and
expenses, including but not limited to reasonable attorneys' fees, incurred by
such holders of the Notes in collecting any sums due on the Notes or in
otherwise enforcing any of their rights incident to an Event of Default.
8.6. Remedies Cumulative. No right or remedy conferred upon or reserved to
any holder of Notes under this Agreement is intended to be exclusive of any
other right or remedy, and every right and remedy shall be cumulative and in
addition to every other right or remedy given under this Agreement or now or
hereafter existing under any applicable law. Every right and remedy given by
this Agreement or by applicable law to any holder of Notes may be exercised from
time to time and as often as may be deemed expedient by such holder, as the case
may be.
8.7. Notice of Default. With respect to Defaults, Events of Default or
claimed defaults, the Company will give the following notices:
(a) The Company promptly will furnish to each holder of a Note written
notice of the occurrence of a Default or an Event of Default. Such notice shall
specify the nature of such default, the period of existence thereof and what
action the Company has taken or is taking or proposes to take with respect
thereto.
(b) If the holder of any Note or of any other evidence of Indebtedness of
the Company or any Subsidiary gives any notice or takes any other action with
respect to a claimed default, the Company will forthwith give written notice
thereof to each holder of the then outstanding Notes, describing the notice or
action and the nature of the claimed default.
Section 9. AMENDMENTS, WAIVERS AND CONSENTS
9.1. Matters Subject to Modification. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holder or holders of at least 51% in aggregate
principal amount of outstanding Notes; provided, however, that, without the
written consent of the holder or holders of all of the Notes then outstanding,
no such waiver, modification, alteration or amendment shall be effective which
will (i) change any of the provisions, including definitions, relating to
payment (including any required prepayment) of the principal of, Make-Whole
Amount or the interest on any Note, (ii) change the amount of any payment or
prepayment of principal or Make-Whole Amount, or reduce the rate of interest
thereon, or (iii) change any of the provisions of Section 8.1, Section 8.2,
Section 8.3 or this Section 9.
9.2. Solicitation of Holders of Notes. Neither the Company nor any Person
acting on the Company's behalf will solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of the Notes (irrespective of the
<PAGE> 41
amount of Notes then owned by it) shall concurrently be informed thereof by the
Company and shall be afforded the opportunity of considering the same and shall
be supplied by the Company with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and correct copies of
any waiver or consent effected pursuant to the provisions of this Section 9
shall be delivered by the Company to each holder of outstanding Notes forthwith
following the date on which the same shall have been executed and delivered by
the holder or holders of the requisite percentage of outstanding Notes. The
Company will not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fees or
otherwise, to any holder of the Notes as consideration for or as an inducement
to the entering into by any holder of the Notes of any waiver or amendment of
any of the terms and provisions of this Agreement, unless such remuneration is
concurrently paid, on the same terms, ratably to each holder of the then
outstanding Notes. Any consent made by a holder of Notes that has transferred
or has agreed to transfer its Notes to the Company, any Subsidiary, or any
Affiliate thereof and has provided or has agreed to provide such written consent
as a condition to such transfer shall be void and of no force and effect except
solely as to such holder, and any amendments effected or waivers granted or to
be effected or granted that would not have been or would not be so effected or
granted but for such consent (and the consents of all other holders of Notes
that were acquired under the same or similar conditions) shall be void and of no
force and effect retroactive to the date such amendment or waiver initially took
or takes effect, except solely as to such holder.
9.3. Binding Effect. Any such amendment or waiver shall apply equally to
all the holders of the Notes and shall be binding upon them, upon each future
holder of any Note and upon the Company whether or not such Note shall have been
marked to indicate such amendment or waiver. No such amendment or waiver shall
extend to or affect any obligation not expressly amended or waived or impair any
right related thereto.
Section 10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
10.1. Form of Notes. Each Note initially delivered under this
Agreement will be in the form of one fully registered Note in the form attached
as Exhibit A. The Notes are issuable only in fully registered form and in
denominations of at least $250,000 (or the remaining outstanding balance
thereof, if less than $250,000).
10.2. Note Register. The Company shall cause to be kept at its
principal office a register (the "Note Register") for the registration and
transfer of the Notes. The names and addresses of the holders of Notes, the
transfer thereof and the names and addresses of the transferees of the Notes
shall be registered in the Note Register. The Company may deem and treat the
person in whose name a Note is so registered as the holder and owner thereof for
all purposes (subject to the provisions of Section 2.5) and shall not be
affected by any notice to the contrary, until due presentment of such Note for
registration of transfer as provided in this Section 10.
<PAGE> 42
10.3. Issuance of New Notes upon Exchange or Transfer. Upon surrender
for exchange or registration of transfer of any Note at the office of the
Company designated for notices in accordance with Section 11.2, the Company
shall execute and deliver, at its expense, one or more new Notes of any
authorized denominations requested by the holder of the surrendered Note, each
dated the date to which interest has been paid on the Notes so surrendered (or,
if no interest has been paid, the date of such surrendered Note), but in the
same aggregate unpaid principal amount as such surrendered Note, and registered
in the name of such person or persons as shall be designated in writing by such
holder. Every Note surrendered for registration of transfer shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or by his attorney duly authorized in writing. The
Company may condition its issuance of any new Note in connection with a transfer
by any Person on compliance with Section 3.2, by Institutional Holders on
compliance with Section 2.4 and on the payment to the Company of a sum
sufficient to cover any stamp tax or other governmental charge imposed in
respect of such transfer.
10.4. Replacement of Notes. Upon receipt of evidence satisfactory to
the Company of the loss, theft, mutilation or destruction of any Note, and in
the case of any such loss, theft or destruction upon delivery of a bond of
indemnity in such form and amount as shall be reasonably satisfactory to the
Company or in the event of such mutilation upon surrender and cancellation of
the Note, the Company, without charge to the holder thereof, will make and
deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or
mutilated Note. If any such lost, stolen or destroyed Note is owned by you or
any other Institutional Holder, then the affidavit of an authorized officer of
such owner setting forth the fact of such loss, theft or destruction and of its
ownership of the Note at the time of such loss, theft or destruction shall be
accepted as satisfactory evidence thereof, and no further indemnity shall be
required as a condition to the execution and delivery of a new Note, other than
a written agreement of such owner (in form reasonably satisfactory to the
Company) to indemnify the Company.
Section 11. MISCELLANEOUS
11.1. Expenses. Whether or not the purchase of Notes herein
contemplated shall be consummated, the Company agrees to pay directly all
reasonable expenses (including reasonable fees and expenses of counsel) in
connection with the preparation, execution and delivery of this Agreement and
the transactions contemplated by this Agreement, including, but not limited to,
out-of-pocket expenses, recording and filing fees, including the filing fees of
S&P in connection with obtaining a private placement number, title insurance
charges, recording fees and filing charges and fees and disbursements of special
counsel, photocopying and printing costs and charges for shipping the Notes,
adequately insured, to you at your home office or at such other address as you
may designate, and all similar expenses (including the fees and expenses of
counsel, the reasonable allocated costs of staff counsel and the fees and
expenses of a financial advisor, but only in connection with any work-out,
renegotiation or restructuring in the case of a financial advisor) relating to
<PAGE> 43
any amendments, waivers or consents in connection with this Agreement or the
Notes, including, but not limited to, any such amendments, waivers or consents
resulting from any Default, Event of Default, work-out, renegotiation or
restructuring relating to the performance by the Company or any Subsidiary of
their obligations under this Agreement or the Notes. The Company also agrees
that it will pay and save you harmless against any and all liability with
respect to stamp and other documentary taxes, if any, which may be payable, or
which may be determined to be payable in connection with the execution and
delivery of this Agreement or the Notes (but not in connection with a transfer
of any Notes), whether or not any Notes are then outstanding. The obligations
of the Company under this Section 11.1 shall survive the retirement of the
Notes.
11.2. Notices. Except as otherwise expressly provided herein, all
communications provided for in this Agreement shall be in writing and delivered
or sent by registered or certified mail, return receipt requested, or by
overnight courier (i) if to you, to the address set forth below your name in
Schedule I, or to such other address as you may in writing designate, (ii) if to
any other holder of the Notes, to such address as the holder may designate in
writing to the Company, and (iii) if to the Company, to Lindberg Corporation,
6133 North River Road, Suite 700, Rosemont, Illinois 60018, Attention: Chief
Financial Officer, or to such other address as the Company may in writing
designate.
11.3. Reproduction of Documents. This Agreement and all documents
relating hereto, including, without limitation, (i) consents, waivers and
modifications which may hereafter be executed, (ii) documents received by you at
the closing of the purchase of the Notes (except the Notes themselves), and
(iii) financial statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process, and you may destroy any original document so reproduced. The Company
agrees and stipulates that any such reproduction which is legible shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence; provided that nothing herein contained shall
preclude the Company from objecting to the admission of any reproduction on the
basis that such reproduction is not accurate, has been altered or is otherwise
incomplete.
11.4. Successors and Assigns. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns.
11.5. Law Governing. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of Illinois.
<PAGE> 44
11.6. Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
11.7. Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart or reproduction thereof permitted by
Section 11.3.
11.8. Reliance on and Survival of Provisions. All written covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant to this Agreement, whether or not in connection
with a closing, (i) shall be presumed to have been relied upon by you,
notwithstanding any investigation heretofore or hereafter made by you or on your
behalf and (ii) shall survive the delivery of this Agreement and the Notes.
11.9. Integration and Severability. This Agreement embodies the entire
agreement and understanding between you and the Company, and supersedes all
prior agreements and understandings relating to the subject matter hereof. In
case any one or more of the provisions contained in this Agreement or in any
Note, or application thereof, shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained in this Agreement and in any Note, and any other application thereof,
shall not in any way be affected or impaired thereby.
<PAGE> 45
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Agreement to be executed and delivered by their respective officer or officers
thereunto duly authorized.
LINDBERG CORPORATION
By: /s/ Leo G. Thompson
----------------------
Leo G. Thompson
President and Chief Executive Officer
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Sarah J. Pitts
----------------------
Title: Counsel
By: /s/ John D. Cleavenger
-----------------------
Title: Counsel
NIPPON LIFE INSURANCE COMPANY OF
AMERICA, an Iowa corporation, by its
attorney in fact, Principal Mutual Life
Insurance Company, an Iowa corporation
By: /s/ Sarah J. Pitts
-----------------------
Title: Counsel
By: /s/ John D. Cleavenger
-----------------------
Title: Counsel
<PAGE> 46
SCHEDULE I
Principal Amount of Notes to Be Purchased
Name and Address of Purchaser Principal Amount of Notes
Principal Mutual Life Insurance $9,250,000
Company
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Securities
Address for all communications is as above,
except notices of payment and written confirmations
of wire or inter-bank transfers, which shall be addressed to:
Principal Mutual Life Insurance
Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Accounting and
Treasury - Securities
All payments are to be by bank wire transfer of
immediately available funds to:
ABA 073000228
Norwest Bank Iowa, N.A.
Des Moines, Iowa
For credit to Principal Mutual Life Insurance Company
Account No. 014752
OBI*07*S*60561@
(indicate whether payment is for principal or interest,
interest rate, and the name of the bond)
Taxpayer ID # 42-0127290
<PAGE> 47
SCHEDULE I
Principal Amount of Notes to Be Purchased
Name and Address of Purchaser Principal Amount of Notes
Principal Mutual Life Insurance $500,000
Company
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Securities
Address for all communications is as above, except
notices of payment and written confirmations of wire
or inter-bank transfers, which shall be addressed to:
Principal Mutual Life Insurance
Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Accounting and
Treasury - Securities
All payments are to be by bank wire transfer of
immediately available funds to:
ABA 073000228
Norwest Bank Iowa, N.A.
Des Moines, Iowa
For credit to Principal Mutual Life Insurance Company
Account No. 032395
OBI*07*S*60561@
(indicate whether payment is for principal or interest,
interest rate, and the name of the bond)
Taxpayer ID # 42-0127290
<PAGE> 48
SCHEDULE I
Principal Amount of Notes to Be Purchased
Name and Address of Purchaser Principal Amount of Notes
Nippon Life Insurance Company $250,000
of America
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Securities
Address for all communications is as above, except
notices of payment and written confirmation of wire
or inter-bank transfers, which shall be addressed to:
Nippon Life Insurance Company
of America
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Accounting and
Treasury - Securities
All payments are to be by bank wire transfer of
immediately available funds to:
ABA 073000228
Norwest Bank Iowa, N.A.
Des Moines, Iowa
For credit to Nippon Life Insurance Company of America
Account No. 7051775
OBI*07*S*60561@
(indicate whether payment is for principal or interest,
interest rate, and the name of the bond)
Taxpayer ID # 04-2509896
<PAGE> 49
ANNEX I
Subsidiaries
Impact Industries, Inc.*
State of Incorporation: Delaware
% owned by Lindberg Corporation: 100%
States in which qualified to do business: Delaware, Illinois
* This Subsidiary is designated a Restricted Subsidiary
<PAGE> 50
ANNEX II
Indebtedness
Indebtedness at September 30, 1995
<TABLE>
<CAPTION>
Description Principal Amount
<S> <C>
Term Loan, payable to
Bank of America Illinois* $ 5,600,000
Revolving Loan, payable to
Bank of America Illinois(1) $ 16,300,000
Capitalized Leases $ 225,941
Total Indebtedness $ 22,125,941
</TABLE>
* These loans are guaranteed by the Company's wholly-owned subsidiary, Impact
Industries, Inc.
<PAGE> 51
ANNEX III
Restricted Investments
NONE
<PAGE> 52
ANNEX IV
Liens
NONE
<PAGE> 53
EXHIBIT A
LINDBERG CORPORATION
7.16% SENIOR NOTE
Due October 30, 2002
No. R-
- -------- --, ----
LINDBERG CORPORATION, a Delaware corporation (the "Company), for value
received, promises to pay to or registered assigns, on
October 30, 2002, the principal amount of $ and to pay interest
(computed on the basis of a 360-day year of twelve 30-day months) on the
principal amount from time to time remaining unpaid hereon at the rate of 7.16%
per annum from the date hereof until maturity, payable on April 30 and
October 30 in each year, commencing April 30, 1996, and at maturity, and to pay
interest on any overdue principal, on any overdue Make-Whole Amount and (to the
extent legally enforceable) on any overdue installment of interest at a per
annum rate of 9.16% until paid. Payments of the principal of, the Make-Whole
Amount, if any, and the interest on this Note shall be made in lawful money of
the United States of America at the principal office of the Company.
This Note is issued under and pursuant to the terms and provisions of the
Note Agreement, dated as of October 15, 1995, entered into by the Company with
the Purchasers named in Schedule I thereto (the "Note Agreement"), and this Note
and any holder hereof are entitled to all of the benefits provided for by such
Note Agreement or referred to therein. Reference is made to the Note Agreement
for a statement of such benefits.
As provided in the Note Agreement, upon surrender of this Note for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder hereof or its attorney duly
authorized in writing, a new Note for a like unpaid principal amount will be
issued to, and registered in the name of, the transferee upon the payment of the
taxes or other governmental charges, if any, that may be imposed in connection
therewith. The Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
<PAGE> 54
This Note may be declared due prior to its expressed maturity date,
voluntary prepayments may be made hereon and certain prepayments are required to
be made hereon all in the events, on the terms and in the manner as provided in
the Note Agreement. Such prepayments include certain required prepayments on
October 30 of each year commencing October 30, 1998 through October 30, 2001,
inclusive, with the remaining principal payable on October 30, 2002, and certain
optional prepayments with a Make-Whole Amount.
Should the indebtedness represented by this Note or any part thereof be
collected in any proceeding provided for in the Note Agreement or be placed in
the hands of attorneys for collection, the Company agrees to pay, in addition to
the principal, Make-Whole Amount, if any, and interest due and payable hereon,
all costs of collecting this Note, including reasonable attorneys' fees and
expenses.
This Note and the Note Agreement are governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Illinois.
LINDBERG CORPORATION
By:
----------------------------
Its:
---------------------------
<PAGE> 55
GUARANTY ENDORSEMENT
Payment of principal, interest and Make-Whole Amount, if any, with respect
to this Note is guaranteed pursuant to the terms of the Subsidiary Guaranty
dated November 2, 1995 of the undersigned. Subject to the terms thereof, which
are incorporated herein by reference, the undersigned guarantees the prompt
payment when due of the principal, Make-Whole Amount, if any, and interest, on
this Note.
IMPACT INDUSTRIES, INC.
By:
---------------------------
Title:
------------------------
<PAGE> 56
EXHIBIT B
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY dated November 2, 1995 (the "Guaranty") is made,
jointly and severally, by Impact Industries, Inc., a Delaware corporation, and
those additional entities that hereafter become parties hereto by executing
counterpart signature pages in the form of Annex I hereof (each a "Guarantor"
and collectively the "Guarantors") in favor of (i) the Purchasers named in
Schedule I to the Note Agreement dated as of October 15, 1995 (as amended or
modified and in effect from time to time, referred to herein as the "Note
Agreement") between Lindberg Corporation, a Delaware corporation (the
"Company"), and the Purchasers and (ii) each other holder of the Company's 7.16%
Senior Notes due October 30, 2002 (the "Notes") from time to time and their
respective successors and assigns (collectively, such holders and their
respective successors and assigns are hereinafter referred to as the "Holders").
All capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed to such terms in the Note Agreement.
W I T N E S S E T H :
WHEREAS, as an inducement to, and as part of the consideration for, their
purchase of the Notes, the Purchasers are to receive, in accordance with the
terms of the Note Agreement, a guarantee of the Company's obligations under the
Note Agreement and the Notes from each of the Guarantors, each of which is a
Subsidiary of the Company;
WHEREAS, certain of the proceeds of the Notes have been and will be
advanced to or for the benefit of the Guarantors, and thus, all unpaid principal
of and accrued and unpaid interest on the Notes and all other obligations of the
Company to the Holders now existing or hereafter arising under the Note
Agreement were and continue to be incurred for and have inured and will continue
to inure to the benefit of the Guarantors (which benefits are hereby
acknowledged); and
WHEREAS, in consideration of the benefits that inure to the Guarantors, the
Guarantors desire to guarantee the due and punctual payment of all Guaranteed
Debt (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the Guarantors, jointly and severally, covenant and agree as follows:
1. Guaranty. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees, subject to the limitations set forth in Section 9,
the full and prompt payment when due (whether at stated maturity, upon
acceleration or otherwise) of all unpaid principal of, accrued and unpaid
interest and Make-Whole Amount, if any, on the Notes, all accrued and unpaid
fees and all other obligations of the Company to the Holders now existing or
<PAGE> 57
hereafter incurred under or arising out of or in connection with the Notes or
the Note Agreement, and the performance of the Notes and the Note Agreement (all
such principal, interest, Make-Whole Amount, fees, obligations and liabilities
being collectively referred to herein as the "Guaranteed Debt"), whether
according to the present terms of the Guaranteed Debt or any change or changes
in the terms, covenants and conditions of any of the Guaranteed Debt, now or at
any time hereafter made or granted, or any earlier or accelerated date or dates
for payment or performance of the agreements set forth in the Guaranteed Debt.
It is understood that this Guaranty is a continuing guarantee of the payment of
the indebtedness represented by the Guaranteed Debt, is not limited to a
guarantee of collection of the indebtedness represented by the Guaranteed Debt
and shall remain in full force and effect until the indefeasible payment in full
of the Guaranteed Debt. Each Guarantor agrees that all references in this
Guaranty to Guaranteed Debt of the Company shall include any successor or
assignee of the Company so long as this Guaranty remains in effect.
2. Waiver. Each Guarantor waives notice of the acceptance of this
Guaranty and of the occurrence of any and all of the events described in
Section 3. Each Guarantor further waives presentment, protest, notice, demand
or action on delinquency in respect of the Guaranteed Debt or any part thereof.
Each Guarantor agrees that the time or place of payment of the Guaranteed Debt
may be changed or extended, in whole or in part, to a time certain or otherwise,
and may be renewed or accelerated, in whole or in part; that the Company may be
granted indulgences generally; that any of the provisions of the Notes or the
Note Agreement may be modified, amended or waived; that any party liable for
the payment thereof may be granted indulgences or released; and that any other
party liable for the payment of the Guaranteed Debt or liable upon any security
therefor may be released, in whole or in part, at, before and/or after the
stated, extended or accelerated maturity of the Guaranteed Debt, all without
notice to or further assent by any Guarantor, which shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence or release.
3. Certain Rights of Holders. The validity and enforceability of this
Guaranty against each Guarantor shall not be impaired or affected by any of the
following, whether occurring before or after receipt by the Holders of any
notice of termination of this Guaranty: (a) any extension, modification,
continuation or renewal of, or indulgence with respect to, or substitutions for,
the Guaranteed Debt or any part thereof or any agreement relating thereto (other
than any agreement between the Purchaser or any other Holder and one or more
Guarantors specifically modifying or amending the terms of this Guaranty in
accordance with Section 9) at any time; (b) any failure or omission to enforce
any right, power or remedy with respect to the Guaranteed Debt or any part
thereof or any agreement relating thereto; (c) any waiver of any right, power or
remedy or of any default with respect to the Guaranteed Debt or any part thereof
or any agreement relating thereto; (d) any release, surrender, compromise,
settlement, waiver, subordination or modification, with or without
consideration, of any other guaranties with respect to the Guaranteed Debt or
any part thereof, or any other obligation of any Person with respect to the
Guaranteed Debt or any part thereof; (e) the enforceability or validity of the
<PAGE> 58
Guaranteed Debt or any part thereof or the genuineness, enforceability or
validity of any agreement relating thereto; (f) the application of payments
received from any source to the payment of indebtedness of the Company or any
Subsidiary other than the Guaranteed Debt, any part thereof or amounts which are
not covered by this Guaranty even though a Holder might lawfully have elected to
apply such payments to any part or all of the Guaranteed Debt or to amounts
which are not covered by this Guaranty; or (g) any other circumstances which
otherwise under the laws of any jurisdiction constitute a legal or equitable
discharge of a surety or a guarantor or a bar (in the nature of a moratorium or
otherwise) to the enforcement of the rights of a Holder against the Company, all
whether or not any Guarantor shall have had notice or knowledge of any act or
omission referred to in the foregoing clauses (a) through (g) of this paragraph.
Each Guarantor agrees that such Guarantor's obligation to make payment in
accordance with the terms of this Guaranty shall not be impaired, modified,
changed, released or limited in any manner whatsoever in the event any portion
of the Guaranteed Debt is invalid or unenforceable against the Company, or by
any impairment, modification, change, release or limitations of the liability of
the Company or its estate in bankruptcy resulting from the operation of any
present or future provision of the Federal Bankruptcy Code or other similar
federal or state statute, or from the decision of any court.
4. Absolute Guaranty. The obligations of each Guarantor under this
Guaranty are joint and several and are absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, without limitation,
(i) any action or inaction by a Holder or any other circumstance contemplated in
Section 3; or (ii) the existence of any other guaranties of the Guaranteed Debt,
whether or not such other guaranties have been acted upon in any way.
5. Primary Liability of Guarantors. This Guaranty is a primary
obligation of each Guarantor. Each Guarantor agrees that this Guaranty may be
enforced by the Holders, or any of them, and each Guarantor hereby waives the
right to require the Holders (or any of them) to proceed against the Company or
any other person (including a co-guarantor) or to require the Holders (or any of
them) to pursue any other remedy or enforce any other right. Each Guarantor
further agrees that nothing contained herein shall prevent the Holders, or any
of them, from suing on the Notes or the Note Agreement or from exercising any
other rights available to it under the Notes or the Note Agreement and the
exercise of any of the aforesaid rights and the completion of any foreclosure
proceedings shall not constitute a discharge of any of the Guarantor's
obligations hereunder.
6. Continuing Guaranty, etc. This Guaranty shall continue in full force
and effect until the Guaranteed Debt is indefeasibly paid in full,
notwithstanding any extensions, modifications, renewals or indulgences with
respect to, or substitutions for, the Guaranteed Debt. Notwithstanding the
foregoing, this Guaranty shall continue to be effective, or be reinstated, as
the case may be, if at any time payment, or any part thereof, of any of the
Guaranteed Debt is rescinded or must otherwise be restored or returned by any
Holder upon the insolvency, bankruptcy, dissolution, liquidation or
<PAGE> 59
reorganization of the Company, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Company or any substantial part of its property, or otherwise, all as though
such payments had not been made. No failure or delay on the part of any Holder
in exercising any right, power or privilege hereunder and no course of dealing
between any Guarantor or any Holder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which any Holder would otherwise have. No notice to or demand on any Guarantor
in any case shall entitle any Guarantor to any other or future notice or demand
in similar or other circumstances or constitute a waiver of the rights of any
Holder to act in any circumstances without notice or demand. Credit may be
granted or continued from time to time by the Holders to the Company without
notice to or authorization from any Guarantor regardless of the Company's
financial or other condition at the time of any such grant or continuation.
7. Maximum Liability of Guarantor. Anything herein or in any other
document, instrument or agreement executed and delivered in connection herewith
to the contrary notwithstanding, the maximum liability of a Guarantor hereunder
as at any date of determination thereof shall in no event exceed such
Guarantor's Maximum Guaranteed Amount (as defined below) as determined as of the
date of the execution and delivery of this Guaranty (unless a later date shall
be deemed by a court of competent jurisdiction to be applicable to the
determination of the solvency of such Guarantor for purposes of any applicable
federal or state fraudulent transfer, fraudulent conveyance or similar law
governing debtors and the enforceability of debtors' obligations ("Applicable
Insolvency Law"), in which event such other date shall apply), increased by any
increase (but not decreased by any subsequent decrease) in such Guarantor's
Maximum Guaranteed Amount, unless the inclusion of any such increase is contrary
to any Applicable Insolvency Law. For the purpose of this paragraph, "Maximum
Guaranteed Amount" shall mean the greater of (i) the aggregate amount of the
Guaranteed Debt the proceeds of which are used to make a Valuable Transfer (as
defined below) to such Guarantor and (ii) ninety-five percent (95%) of the
Adjusted Net Worth (as defined below) of such Guarantor, provided that in no
event shall the amount specified in this clause (ii) be an amount that would
result in such Guarantor having unreasonably small capital, as such term is used
in any Applicable Insolvency Law. For the purpose of this paragraph, "Valuable
Transfer" shall mean the amount of (i) all loans, advances or capital
contributions made to the Guarantor with proceeds of the Guaranteed Debt;
(ii) all debt securities or other obligations of the Guarantor acquired from the
Guarantor or retired by the Guarantor with proceeds of the Guaranteed Debt;
(iii) the fair market value of all property acquired with proceeds of the
Guaranteed Debt and transferred, absolutely and not as collateral, to the
Guarantor; (iv) all equity securities of the Guarantor acquired from the
Guarantor with proceeds of the Guaranteed Debt; and (v) the value of any
quantifiable economic benefits not included in clauses (i) through (iv), above,
but includable in accordance with Applicable Insolvency Law, accruing to the
Guarantor as a result of the Guaranteed Debt. For purposes of this paragraph,
<PAGE> 60
"Adjusted Net Worth" shall mean the excess of (i) the amount of the "present
fair salable value" of the assets of the Guarantor as of the date of
determination, over (ii) the amount of all "liabilities of such Guarantor,
contingent or otherwise", as of the date of determination, as such quoted terms
are determined in accordance with Applicable Insolvency Law. In determining the
Adjusted Net Worth of the Guarantor for purposes of calculating the Maximum
Guaranteed Amount for the Guarantor, the liabilities of the Guarantor to be used
in such determination pursuant to clause (ii) of the preceding sentence shall in
any event include any amounts guaranteed by the Guarantor pursuant to clause (i)
of the definition of Maximum Guaranteed Amount.
8. Successors; Assigns. This Guaranty shall be binding upon each
Guarantor and its respective successors and permitted assigns and shall inure to
the benefit of the Purchaser, each other Holder and their respective successors
and assigns. Each Guarantor expressly waives notice of transfer or assignment
of the Guaranteed Debt, or any part thereof, or of the rights of any Holder
hereunder. Failure to give notice will not affect the liabilities of each
Guarantor hereunder.
9. Amendment; Waiver. This Guaranty may be amended only by an instrument
in writing executed jointly by the Guarantors and each Holder of Notes then
outstanding.
10. Note Agreement. Each Guarantor acknowledges that an executed (or
conformed) copy of the Note Agreement has been made available to its principal
executive officers and such officers are familiar with the contents thereof.
11. Setoff. In addition to, and without limitation of, any rights of the
Holders under applicable law, any indebtedness from such Holders to any
Guarantor (including all account balances, whether provisional or final and
whether or not collected or available) may be offset and applied toward the
payment of the obligations owing to such Holders, whether or not the Guaranteed
Debt, or any part thereof, shall then be due.
12. Notices. All notices and other communications hereunder shall be made
in the manner and with the effect provided in Section 11.2 of the Note
Agreement, if to any Holder, at the address for notices specified in the Note
Agreement, and, if to any Guarantor, to:
Impact Industries, Inc.
c/o Lindberg Corporation
6133 North River Road - Suite 700
Rosemont, Illinois 60018
Attention: Chief Financial Officer
13. Choice of Law. This Guaranty shall be construed in accordance with
the internal laws (and not the law of conflicts) of the State of Illinois.
<PAGE> 61
14. Expenses; Indemnity. In addition to its Maximum Guaranteed Amount,
each Guarantor agrees to reimburse (to the extent the Holder is not so
reimbursed by the Company or any other Guarantor) (i) each Holder for any costs
and out-of-pocket expenses (including reasonable attorneys' fees and reasonable
time charges of attorneys for such Holder, which attorneys may be employees of
such Holder) paid or incurred by such Holder in connection with any amendment
and modification of this Guaranty and (ii) each Holder for any costs and out-of-
pocket expenses (including attorneys' fees and time charges of attorneys for
such Holder, which attorneys may be employees of such Holder) paid or incurred
by such Holder in connection with the collection and enforcement of this
Guaranty. Each Guarantor further agrees to indemnify each Holder, and its
directors, officers and employees, against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not such Holder is
a party thereto) which it may pay or incur arising out of or relating to this
Guaranty, provided, however, that such Holder, and its directors, officers or
employees, shall not have a right to be indemnified or held harmless hereunder
for its own gross negligence or willful misconduct. The obligations of the
Guarantors under this Section 14 shall survive the termination of this Guaranty.
15. Submission to Jurisdiction. Each Guarantor hereby irrevocably submits
to the jurisdiction of the courts of the State of Illinois and of the courts of
the United States of America having jurisdiction in the State of Illinois for
the purpose of any legal action or proceeding in any such court with respect to,
or arising out of, this Guaranty, the Note Agreement or the Notes. The
Guarantors designate and appoint CT Corporation System, Chicago, Illinois as
their lawful agent in the State of Illinois upon which may be served and which
may accept and acknowledge, for and on behalf of each Guarantor all process in
any action, suit or proceedings that may be brought against any Guarantor in any
of the courts referred to in this Section 15 and agrees that such service of
process, or the acceptance or acknowledgment thereof by said agent, shall be
valid, effective and binding in every respect, provided, however, that if said
agency shall cease for any reason whatsoever, each Guarantor designates and
appoints, without power or revocation, the Secretary of State of the State of
Illinois to serve as its agent for service of process. If the Purchaser or any
other holder of any Note shall cause process to be served upon any Guarantor by
being served upon such agent, a copy of such process shall also be mailed to
such Guarantor by United States registered mail, first class postage prepaid, at
such Guarantor's address set forth in Section 12.
16. Entire Agreement; Severability of Provisions. This Guaranty
constitutes the entire agreement of the Guarantors with the Purchaser with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to the subject matter hereof. Any provision in this
Guaranty that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Guaranty are declared to be
severable.
<PAGE> 62
17. Captions. Captions are for reference only and in no way limit the
terms of the Guaranty.
18. Counterparts. This Guaranty may be executed in one or more
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument. The failure
of any Guarantor to execute a counterpart hereof shall not affect or impair the
validity or enforceability of this Guaranty against any Guarantor executing this
Guaranty.
19. Severability of Provisions. Any provision in this Guaranty that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of this Guaranty are declared to be severable.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed
and delivered as of the date first above written.
IMPACT INDUSTRIES, INC.
By:
-----------------------------
Stephen S. Penley
Vice-President, Finance,
Secretary and Treasurer
<PAGE> 63
Annex I
to Guaranty
[Form of Counterpart Signature Page to Guaranty]
By signing below, [each of] the undersigned becomes a Guarantor under the
Subsidiary Guaranty, dated as of , 199 , [as amended] (the
"Guaranty"), to which this signature page is attached and agrees to be made a
part of, and agrees to be bound by the terms of the Guaranty.
[Guarantor]
Date: By:
--------------------- ----------------------------
Title:
-------------------------
[Guarantor]
Date: By:
--------------------- ----------------------------
Title:
-------------------------
[Guarantor]
Date: By:
--------------------- ----------------------------
Title:
-------------------------
<PAGE> 64
EXHIBIT C
LEGAL OPINIONS
The opinion of Gardner, Carton & Douglas, special counsel for the
Purchaser, shall be to the effect that:
1. The Company is a corporation organized and validly existing in good
standing under the laws of the State of Illinois, with all requisite corporate
power and authority to enter into the Agreement and to issue and sell the Notes.
2. The Agreement and the Notes have been duly authorized by proper
corporate action on the part of the Company, have been duly executed and
delivered by an authorized officer of the Company, and constitute the legal,
valid and binding agreements of the Company, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law.
3. The Subsidiary Guaranty has been duly authorized by proper corporate
action on the part of each Subsidiary Guarantor, has been duly executed and
delivered by an authorized officer of each Subsidiary Guarantor, and constitutes
the legal, valid and binding obligation of each Subsidiary Guarantor,
enforceable in accordance with its terms, except to the extent the enforcement
of the Subsidiary Guaranty may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application relating to or
affecting the enforcement of the rights of creditors or by equitable principles,
regardless of whether enforcement is sought in a proceeding in equity or at law.
4. Based upon the representations set forth in the Agreement, the
offering, sale and delivery of the Notes and the issuance and delivery of the
Subsidiary Guaranty do not require the registration of the Notes or the
Subsidiary Guaranty under the Securities Act of 1933, as amended, nor the
qualification of an indenture under the Trust Indenture Act of 1939, as amended.
5. The issuance and sale of the Notes, the execution and delivery of the
Agreement and compliance with the terms and provisions of the Notes and the
Agreement will not conflict with or result in any breach of any of the
provisions of the Certificate of Incorporation or By-Laws of the Company.
6. The execution, delivery and performance of the Subsidiary Guaranty
will not violate any provisions of the Certificates of Incorporation or By-Laws
of the Subsidiary Guarantors.
<PAGE> 65
7. No approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any governmental body, Federal or
state, is necessary in connection with the execution and delivery of the Note
Agreement or the Notes.
The opinion of Gardner, Carton & Douglas also shall state that the legal opinion
of Bell, Boyd & Lloyd, counsel for the Company, delivered to you pursuant to the
Agreement, is satisfactory in form and scope to Gardner, Carton & Douglas, and,
in its opinion, the Purchasers and it are justified in relying thereon and shall
cover such other matters relating to the sale of the Notes and the execution and
delivery of the Agreement as the Purchasers may reasonably request.
<PAGE> 66
EXHIBIT D
LEGAL OPINIONS
The opinion of Bell, Boyd & Lloyd, counsel for the Company, shall be to the
effect that:
1. Each of the Company and each Subsidiary is a corporation duly
incorporated, validly existing in good standing under the laws of its
jurisdiction of incorporation, and each has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted, and, in the case of the Company, to enter into and perform under the
Note Agreement and to issue and sell the Notes.
2. The Note Agreement and the Notes have been duly authorized by proper
corporate action on the part of the Company, have been duly executed and
delivered by an authorized officer of the Company, and constitute the legal,
valid and binding agreements of the Company, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law.
3. Based upon the representations set forth in the Note Agreement, the
offering, sale and delivery of the Notes and delivery of the Subsidiary Guaranty
do not require the registration of the Notes or the Subsidiary Guaranty under
the Securities Act of 1933, as amended, or the qualification of an indenture
under the Trust Indenture Act of 1939, as amended.
4. No authorization, approval or consent of any governmental or
regulatory body is necessary or required in connection with the execution and
delivery by the Company of the Note Agreement or the offering, issuance and sale
by the Company of the Notes, and no designation, filing, declaration,
registration and/or qualification with any governmental authority is required in
connection with the offer, issuance and sale of the Notes by the Company.
5. The issuance and sale of the Notes by the Company, the performance of
the terms and conditions of the Notes and the Note Agreement and the execution
and delivery of the Note Agreement do not conflict with, or result in any breach
or violation of any of the provisions of, or
constitute a default under, or result in the creation or imposition of any Lien
upon the property of the Company or any Subsidiary pursuant to the provisions of
(i) the Certificate of Incorporation or By-laws of the Company or any
Subsidiary, (ii) any loan agreement to which the Company or any Subsidiary is a
party or by which any of them or their property is bound, (iii) any other
agreement or instrument known to such counsel to which the Company or any
Subsidiary is a party or by which any of them or their property is bound,
<PAGE> 67
(iv) any law (including usury laws) or regulation applicable to the Company, or
(v) any order, writ, injunction or decree of any court or governmental authority
applicable to the Company.
6. All of the issued and outstanding shares of capital stock of each
Subsidiary have been duly and validly issued, are fully paid and nonassessable
and are owned of record by the Company.
7. Neither the Company nor any Subsidiary is (i) a "public utility
company" or a "holding company," or an "affiliate" or a "subsidiary company" of
a "holding company," or an "affiliate" of such a "subsidiary company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended
(the "1935 Act"), (ii) a "public utility" as defined in the Federal Power Act,
as amended, or (iii) an "investment company" or an "affiliated person" thereof,
as such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
8. The issuance of the Notes and the intended use of the proceeds of the
sale of the Notes do not violate or conflict with Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
The opinion of Bell, Boyd & Lloyd, counsel for the Company, shall cover
such other matters relating to the sale of the Notes as the Purchasers may
reasonably request. With respect to matters of fact on which such opinion is
based, such counsel shall be entitled to rely on appropriate certificates of
public officials and officers of the Company and with respect to matters
governed by the laws of any jurisdiction other than the United States of
America, the General Corporation Law of the State of Delaware, and the laws of
the State of Illinois, such counsel may rely upon the opinions of counsel deemed
(and stated in their opinion to be deemed) by them to be competent and reliable.
Exhibit 11
COMPUTATION OF NET EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
------------------ -----------------
<S> <C> <C> <C> <C>
EARNINGS
Net Earnings $ 854,601 $1,156,631 $3,807,787 $3,470,782
--------- --------- --------- ---------
SHARES
Weighted Average Number
of Common Shares Outstanding 4,726,963 4,712,637 4,723,511 4,708,671
Common Share Equivalents 44,490 77,813 40,648 46,226
--------- --------- --------- ---------
Weighted Average Common
Shares Outstanding and
Equivalents 4,771,453 4,790,450 4,764,159 4,754,897
--------- --------- --------- ---------
--------- --------- --------- ---------
PRIMARY EARNINGS PER
COMMON SHARE
Net Earnings $ .18 $ .24 $ .80 $ .73
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 123,151
<SECURITIES> 0
<RECEIVABLES> 18,091,935
<ALLOWANCES> 0
<INVENTORY> 4,896,588
<CURRENT-ASSETS> 29,695,924
<PP&E> 95,982,629
<DEPRECIATION> 55,250,629
<TOTAL-ASSETS> 76,050,067
<CURRENT-LIABILITIES> 16,100,564
<BONDS> 0
<COMMON> 14,183,493
0
0
<OTHER-SE> 13,483,362
<TOTAL-LIABILITY-AND-EQUITY> 76,050,067
<SALES> 92,327,527
<TOTAL-REVENUES> 92,327,527
<CGS> 73,484,090
<TOTAL-COSTS> 73,484,090
<OTHER-EXPENSES> 11,128,544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,284,481
<INCOME-PRETAX> 6,430,412
<INCOME-TAX> 2,622,625
<INCOME-CONTINUING> 3,807,787
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,807,787
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
</TABLE>
