<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from
COMMISSION FILE NUMBER: 0-12113
TIGERA GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 94-2691724
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
667 Madison Avenue, New York, New York 10021
(Address of principal executive offices)
(212) 644-8880
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: 22,261,301 shares of Common Stock, par
value, $.01 per share, outstanding as of August 12, 1996.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE> 2
TIGERA GROUP, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
PART I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Condensed Consolidated Balance Sheet (Unaudited)
as of June 30, 1996..................................................................3
Condensed Consolidated Income Statements
(Unaudited) for the Three Months Ended
June 30, 1996 and 1995 ..............................................................4
Condensed Consolidated Income Statements
(Unaudited) for the Six Months Ended
June 30, 1996 and 1995 ..............................................................5
Condensed Consolidated Statements of Cash
Flows (Unaudited) for the Six Months
Ended June 30, 1996 and 1995.........................................................6
Notes to Condensed Consolidated Financial
Statements (Unaudited)...............................................................7
Pro Forma Condensed Consolidated Income
Statements (Unaudited) for the Three Months
Months Ended June 30, 1996 and 1995 ................................................11
Pro Forma Condensed Consolidated Income
Statements (Unaudited) for the Six Months
Months Ended June 30, 1996 and 1995 ................................................12
Notes to Pro Forma Condensed Consolidated
Income Statements (Unaudited).......................................................13
Item 2. Management's Discussion and Analysis or Plan
of Operations.......................................................................15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................................II-1
Item 6. Exhibits and Reports on Form 8-K....................................................II-1
</TABLE>
2
<PAGE> 3
Tigera Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(Unaudited)
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
Current Assets
<S> <C>
Cash and cash equivalents $ 602,000
United States Treasury Bills 1,453,000
Restricted cash 1,000,000
Accounts receivable 16,350,000
Inventories, (primarily finished goods) 11,120,000
Prepaid expenses and other assets 209,000
-------------
Total current assets 30,734,000
Property, plant and equipment 6,885,000
Unallocated purchase price, including deferred tax asset 25,361,000
Other assets 352,000
-------------
Total assets $ 63,332,000
=============
LIABILITIES
Current Liabilities
Current portion of long term debt $ 1,860,000
Trade accounts payable 11,101,000
Accrued liabilities 2,746,000
-------------
Total current liabilities 15,707,000
Long term debt 35,140,000
-------------
Total liabilities 50,847,000
-------------
STOCKHOLDERS' EQUITY
Preferred stock - par value $.01 per share;
authorized 10,000,000 shares, none issued
Series B. Common Stock - par value $.01 per share;
authorized 750,000 shares, none issued
Common Stock - par value $.01;
authorized 40,000,000 shares,
outstanding 22,261,301 shares,
net of 826,405
shares held in treasury 223,000
Additional paid-in capital 109,337,000
Accumulated deficit (97,075,000)
-------------
Total stockholders' equity 12,485,000
-------------
Total liabilities' and stockholders' equity $ 63,332,000
=============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
TIGERA GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
For the Three Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net sales $ 7,947,000 $
Cost of goods sold 5,816,000
------------- -------------
Gross profit 2,131,000
Selling, general and administrative expenses 2,132,000 236,000
------------- -------------
Operating loss (1,000) (236,000)
Other income (expense):
Interest income 116,000 183,000
Interest expense (284,000)
Other (1,000)
------------- -------------
Net loss before income taxes and minority (170,000) (53,000)
interest
Income tax benefit (101,000)
------------- -------------
Net loss before minority interest (69,000) (53,000)
Minority interest in subsidiary (23,000)
------------- -------------
Net loss $ (92,000) $ (53,000)
============= =============
Primary and Fully Diluted Net Loss per Share ($0.00) ($0.00)
Weighted Average Number of Common
Shares and Common Share Equivalents:
Primary 24,773,161 21,469,388
Fully Diluted 24,875,016 21,469,388
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
TIGERA GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
For the Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net sales $ 7,947,000 $
Cost of goods sold 5,816,000
------------ -------------
Gross profit 2,131,000
Selling, general and administrative expenses 2,377,000 453,000
------------ -------------
Operating loss (246,000) (453,000)
Other income (expense):
Interest income 278,000 354,000
Interest expense (284,000)
Other (1,000)
------------ -------------
Net loss before income taxes and minority interest (253,000) (99,000)
Income tax benefit (101,000)
------------ -------------
Net loss before minority interest (152,000) (99,000)
Minority interest in subsidiary (23,000)
------------ -------------
Net loss $ (175,000) $ (99,000)
============ =============
Primary and Fully Diluted Net Loss per Share ($0.01) ($0.00)
Weighted Average Number of Common
Shares and Common Share Equivalents:
Primary 24,132,801 21,457,215
Fully Diluted 24,493,192 21,457,215
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
TIGERA GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (175,000) $ (99,000)
Adjustments to reconcile net loss to net
cash from (used in) operating activities:
Depreciation and amortization 123,000
Minority interest 23,000
Deferred taxes (101,000)
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable 84,000
Inventories 348,000
Prepaid and other current assets 126,000
Deposits and other assets (15,000) 112,000
Increase (decrease) in:
Accounts payable (967,000)
Accrued liabilites (313,000) (62,000)
----------- -----------
Net cash used in operations (867,000) (49,000)
----------- -----------
Cash flows from investing activities:
Purchases of property, plant, and equipment, net (85,000)
Sales of United States Treasury Bills 9,407,000 206,000
Purchase of 85% of the common stock of CPI,
net of cash acquired of $756,000 (7,234,000)
----------- -----------
Net cash provided by investing activities 2,088,000 206,000
----------- -----------
Cash flows from financing activities:
Repayment of debt (1,400,000)
Exercise of stock options and warrants 605,000
----------- -----------
Net cash provided by financing activities (795,000)
----------- -----------
Net increase in cash 426,000 157,000
Cash and cash equivalents, beginning of period 176,000 214,000
----------- -----------
Cash and cash equivalents, end of period $ 602,000 $ 371,000
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
6
<PAGE> 7
TIGERA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Condensed Consolidated Financial Statements:
The Condensed Consolidated Financial Statements included
herein have been prepared by Tigera Group, Inc. ("Tigera"), 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 the disclosures which are made are adequate to make the
information presented not misleading. Further, the Condensed Consolidated
Financial Statements have been prepared in accordance with generally accepted
accounting principles for interim financial information, the instructions to
Form 10-QSB and Regulation S-B (including Item 310(b) thereof) and reflect, in
the opinion of management, all adjustments necessary to present fairly the
financial position and results of operations as of and for the periods
indicated.
It is suggested that these Condensed Consolidated Financial
Statements be read in conjunction with the Consolidated Financial Statements and
the Notes thereto for the year ended December 31, 1995, included in the Tigera
Group, Inc. Form 10-KSB Annual Report to the Securities and Exchange Commission,
and with the Financial Statements of Connectivity Products Incorporated and the
Notes thereto for the year ended December 31, 1995, included in Amendment No. 1
to the Tigera Group, Inc. Current Report on Form 8-K dated May 31, 1996.
Note 2 - Nature of Operations and Basis of Presentation:
The 1996 condensed consolidated balance sheet as of June 30,
1996, includes the accounts of Tigera, its wholly-owned subsidiary, San Carlos
Insurance Ltd., and its 85% owned subsidiary, Connectivity Products Incorporated
("CPI") (collectively referred to as the "Company"). The 1996 condensed
consolidated statement of operations includes the results of operations of CPI
subsequent to May 31, 1996. All significant intercompany accounts and
transactions have been eliminated in consolidation.
The primary business of the Company is the distribution and
manufacture of wire and cable products. The Company's operations include the
distribution of a full line of wire and cable products for the computer
networking market and the security, signal and sound markets, as well as the
manufacture and assembly of wire and cable products. Principal manufacturing
markets include security, factory automation, signal and sound.
Note 3 - Acquisition of Connectivity Products Incorporated:
On May 31,1996, the Company acquired for $7.99 million 85% of
the outstanding common stock of CPI. Concurrent with the acquisition, CPI
redeemed 1,274 shares of its common stock for approximately $7.62 million in
cash, an aggregate of $6 million in subordinated notes, an aggregate of $3
million in subordinated contingent notes, and forgiveness of $2 million of
stockholder notes (see the Company's Current Report on Form 8-K dated May
31,1996, as amended by Form 8- K/A, for a further explanation of this
transaction).
7
<PAGE> 8
This transaction has been accounted for as a purchase, and the
assets and liabilities of CPI are stated at estimated fair value as of the May
31, 1996 acquisition date. The revaluing of the assets and liabilities resulted
in a write-up of net property, plant and equipment and unallocated purchase
price of approximately $25,361,000. The unallocated purchase price consists of
net operating loss tax carryforwards which will be benefitted, identifiable
intangible assets and goodwill. Goodwill will be amortized over 25 years and
other intangible assets (principally refinancing and acquisition costs and
amounts related to non compete agreements) will be amortized over approximately
5 years. The purchase price allocation is an estimate and will be finalized in
connection with the preparation of the Company's consolidated financial
statements for the year ended December 31, 1996.
Included in Item 1 of this Form 10-QSB are pro forma condensed
consolidated results of operations as if the acquisition had occurred on January
1, 1995.
Note 4 - Debt
Debt at June 30, 1996 (all of which was assumed as part of the Acquisition)
consists of the following:
<TABLE>
<CAPTION>
<S> <C>
Revolving credit (see below) $12,400,000
Term loan, due in quarterly installments of $697,500 to $930,000
through May 31, 2002 18,600,000
Subordinated note issued in connection with the stock redemption, interest
at 10 percent payable quarterly, due May 31, 2003 6,000,000
-----------
37,000,000
Less current portion 1,860,000
-----------
$35,140,000
===========
</TABLE>
In connection with the Acquisition, CPI refinanced its bank
borrowings with a revolving credit facility, a term loan and a line of credit
(collectively the "Bank Borrowings"). Interest on the Bank Borrowings is payable
at various intervals and accrues at the applicable LIBOR rate plus 2.75 percent.
CPI may elect to have all or a portion of the bank borrowings accrue interest at
the lender's base rate plus 1 percent. Under certain conditions, the 2.75
percent add-on will be reduced to 1.75 percent and the 1 percent add-on will be
reduced to zero. In addition CPI must pay a fee equal to .5 percent (to be
reduced to .375 percent in future years under certain conditions) of the average
unused balance under the revolving credit agreement. The Bank Borrowings are
collateralized by essentially all of the assets of CPI and are guaranteed by the
CPI stock held by Tigera.
The revolving credit facility matures on May 31, 2002, and
allows for maximum borrowings of $20 million. Amounts advanced under this
facility are based upon percentages of eligible accounts receivable and
inventory. The line of credit is for $7 million and is to be used for qualified
capital expenditures and acquisitions. Advances under the line of credit mature
on May 31, 1998, at which time (subject to certain conditions) advances may be
converted to a term loan. No amounts were outstanding under the line of credit
at June 30, 1996.
8
<PAGE> 9
The debt matures as follows:
<TABLE>
<CAPTION>
Year ended June 30:
<S> <C> <C>
1997 $ 1,860,000
1998 2,790,000
1999 2,790,000
2000 3,720,000
2001 3,720,000
Thereafter 22,120,000
-----------
$37,000,000
===========
</TABLE>
The Bank Borrowings contain various financial covenants
related, among other things, to maintenance of minimum consolidated net worth,
maintenance of a maximum ratio of senior debt (and overall debt) to EBITDA (as
defined) and maintenance of minimum interest and fixed charge (as defined)
coverage ratios.
Note 5 - Net Loss per Share:
Net loss per share is based on the weighted average number of
common shares and common share equivalents during each period.
Note 6 - Income Taxes:
The Company files a consolidated federal income tax return.
The Company recognizes certain expenses for income tax purposes in years
different from those in which they are provided for in financial reporting.
As of December 31, 1995, the Company has net operating loss
carryforwards of approximately $88,000,000, which are available to offset future
taxable income, expiring from 1996 through 2010. The Company also has available
investment and research and development credits of approximately $2,000,000
expiring in 1996 through 2000. The ability of the Company to utilize these
carryforwards in future years may be limited, or even eliminated.
Specifically, Section 382 of the Internal Revenue Code (the
"Code") contains certain limitations on the ability of a corporation to utilize
its net operating losses ("NOLs") in any one year if there has been a change of
ownership of more than 50% within a three-year period (an "ownership change"),
counting for purposes of measuring the ownership change generally only the value
of stock owned by a stockholder or certain groups of stockholders holding 5% or
more of the corporation's stock. An ownership change can result from issuances
of stock by Tigera, purchases of Tigera's stock by Tigera and events beyond the
control of the Company, such as the acquisition in the open market of Tigera's
stock by a current or new 5% stockholder. If an ownership change were to occur,
the Company's ability to use its NOLs to reduce the future taxable income of the
Company (and the corporations with which it files a consolidated federal income
tax return) could be severely curtailed and it is possible that a federal income
tax liability may be incurred that would otherwise have been avoidable had the
NOLs been fully available. The Company has determined that an ownership change
has not occurred through June 30, 1996, based on the information available to
it.
As of June 30, 1996, there is a deferred tax asset related to
the net operating loss carryforwards of approximately $35,000,000 and investment
and research and development credit
9
<PAGE> 10
carryforwards totaling approximately $1,000,000. A portion of these amounts are
included in the unallocated purchase price. The amounts not recorded as an asset
in connection with the Acquisition will represent a valuation reserve.
Note 7 - Derivative Lawsuit:
On December 3, 1991, Civil Action No. 12374, Smith vs.
Gilinski, et.al., was filed in the Court of Chancery of the State of Delaware
(the "Court") by a stockholder as a derivative action against eleven former
officers and directors of Tigera and Tigera as a nominal defendant. On July 30,
1996, the Court approved a settlement agreement pursuant to which, Tigera's
directors' and officers' outside insurance carrier will pay to Tigera $140,000
(the "Settlement Fund"). Plaintiff was awarded $55,000 in attorneys' fees and
expenses, which was paid out of the Settlement Fund. The resulting net proceeds
to Tigera from the Settlement Fund is $85,000. Since the litigation was filed,
Tigera has charged approximately $185,000 to operations for legal fees and
expenses. For further information regarding this action, please see item 3 of
the Tigera's Annual Reports on Form 10-KSB for the years ended December 31, 1995
and December 31, 1994.
10
<PAGE> 11
TIGERA GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
For the Three Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net sales $25,840,828 $22,285,458
Cost of goods sold 18,752,521 16,181,973
---------- ----------
Gross profit 7,088,307 6,103,485
Selling, general and administrative expenses 5,915,561 4,813,441
---------- ----------
Operating income 1,172,746 1,290,044
Other income (expense):
Interest income 19,080 26,888
Interest expense (767,152) (735,546)
Other (5,531) 52
---------- ----------
Income before income taxes and minority
interest 419,143 581,438
Provision for income taxes 188,614 261,647
---------- ----------
Income before minority interest 230,529 319,791
Minority interest in subsidiary (91,607) (77,871)
---------- ----------
Net Income $ 138,922 $ 241,920
=========== ===========
Primary and Fully Diluted Net Earnings per Share $0.01 $0.01
Weighted Average Number of Common
Shares and Common Share Equivalents:
Primary 24,773,161 21,469,388
Fully Diluted 24,875,016 21,469,388
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Income Statement
11
<PAGE> 12
TIGERA GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
For the Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net sales $48,513,543 $42,728,497
Cost of goods sold 35,171,805 31,036,883
----------- -----------
Gross profit 13,341,738 11,691,614
Selling, general and administrative expenses 11,461,871 9,444,154
----------- -----------
Operating income 1,879,867 2,247,460
Other income (expense):
Interest income 38,879 54,011
Interest expense (1,491,699) (1,468,299)
Other (5,526) 290
----------- -----------
Income before income taxes and
minority interest 421,521 833,462
Provision for income taxes 189,684 375,058
----------- -----------
Income before minority interest 231,837 458,404
Minority interest in subsidiary (122,448) (126,998)
----------- -----------
Net Income $ 109,389 $ 331,406
=========== ===========
Primary and Fully Diluted Net Earnings per Share $0.00 $0.02
Weighted Average Number of Common
Shares and Common Share Equivalents:
Primary 24,132,801 21,457,215
Fully Diluted 24,493,192 21,457,215
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Income Statement
12
<PAGE> 13
TIGERA GROUP, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
1. PRO FORMA FINANCIAL STATEMENTS
The unaudited pro forma consolidated statements of operations for the
three and six months ended June 30, 1996 and 1995 give effect to the
acquisition ("Acquisition") of 85% of the capital stock of Connectivity
Products Incorporated ("CPI") by Tigera Group, Inc. ("Tigera"). The
Acquisition, which will be accounted for as a purchase, as well as the
October 3, 1995 merger (see Note 1 to the audited 1995 financial
statements of CPI included in Amendment No. 1 in the Tigera Group, Inc.
Form 8-K dated May 31, 1996), are treated as if they had occurred on
January 1, 1995. It was assumed that the pro forma redemption price at
January 1, 1995 was approximately $3.2 million less than the actual
redemption price, reflecting lower working capital at January 1, 1995,
as compared to that used as a basis for the redemption.
The pro forma information is based on unaudited financial statements
after giving effect to adjustments related to the allocation of the
purchase price. Such adjustments are estimates and will differ from the
final amount allocated to the May 31, 1996 assets and liabilities. The
final purchase price allocation will be completed in connection with
the preparation of Tigera's financial statements for the year ended
December 31, 1996.
The unaudited pro forma consolidated income statements include all
adjustments, consisting of normal recurring accruals, which Tigera
considers necessary for a fair presentation of the results of
operations for the three and six months ended June 30, 1996 and 1995.
The unaudited pro forma consolidated income statements may not be
indicative of the results that actually would have been achieved if the
transaction had occurred on the date assumed and do not project
Tigera's results of operations at any future period then ended.
2. EMPLOYMENT AGREEMENTS
In connection with the Acquisition, the Company entered into three year
employment agreements with four of the stockholders. Under the terms of
the agreements, each stockholder will be paid a base salary of $175,000
per year plus an annual bonus (subject to a maximum amount equal to the
base salary) equal to 5% of the amount by which earnings before
interest, depreciation, taxes and amortization and after certain other
adjustments (Adjusted Bonus EBITDA as defined in the employment
agreements) exceeds Adjusted Bonus EBITDA for the prior year. Actual
compensation paid to the four stockholders exceeds the total base
salaries excluding any bonuses under this agreement by $116,667 and
$231,570 for the three months ended June 30, 1996 and 1995,
13
<PAGE> 14
respectively, and by $291,667 and $463,061 for the six months ended
June 30, 1996 and 1995, respectively. These amounts have not been
reflected as a decrease in expense on the pro forma statements of
income.
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION JUNE 30, 1996
The primary business of the Tigera Group, Inc. (the "Company", "Tigera", or the
"Registrant"), formerly named Fortune Systems Corporation, is the distribution
and manufacture of wire and cable products. Distribution operations include the
distribution of a full line of wire and cable products for the computer
networking market and the security, signal and sound markets. Principal
manufacturing markets include security, factory automation, signal and sound.
Before acquiring 85% of the common stock of Connectivity Products Incorporated
("CPI") as of May 31, 1996, the Company's principal activity consisted of
seeking and evaluating candidates for acquisition. The Company now intends to
focus its acquisition activity on companies in the wire and cable business
according to established strategic and financial criteria. The Company's goals
are to grow (i) internally through branch openings, capacity expansions and
product line extensions and (ii) externally through complementary acquisitions.
On May 31, 1996, the Company acquired for $7.99 million, 85% of the outstanding
stock of CPI. Concurrent with the acquisition, CPI redeemed shares of its
common stock and incurred additional indebtedness, including refinancing of its
existing debt. The acquisition and related financing are more fully described
in Notes 3 and 4 in the "Notes to Condensed Consolidated Financial Statements"
included in Item 1 of this Quarterly Report on Form 10-QSB.
COMPARISON OF ACTUAL RESULTS
The financial statements filed herewith include the operations of CPI from June
1, 1996 onward. Most significant changes in Tigera's results of operations are
a result of the CPI acquisition. To enable a clearer understanding of the
combined operations, pro forma consolidated financial statements covering
operations of Tigera and CPI are included with this Quarterly Report on Form
10-QSB for the three months and six months ended June 30, 1996 compared to the
like periods of 1995. These statements are prepared as if the companies had
been combined as of January 1, 1995, the beginning of the periods reported on.
A discussion on the pro forma results is also included in a separate section in
this Management's Discussion and Analysis or Plan of Operation.
Sales for the second quarter of 1996 of $7,947,000 and six months ended June
30, 1996 of $7,947,000 are due to CPI operations from date of acquisition. In
comparable 1995 periods, there were no sales.
Cost of goods sold for the second quarter of 1996 of $5,816,000 and six months
ended June 30, 1996 of $5,816,000 are due to CPI operations from date of
acquisition. In comparable 1995 periods, there were not any cost of goods sold.
Selling, general and administrative expenses were $2,132,000 for the second
quarter of 1996 and $2,377,000 for the six months ended June 30, 1996, compared
to $236,000 for the second quarter 1995 and $453,000 for the six months ended
June 30, 1995. The increases are primarily due to CPI operations and other
operating costs incurred in relation to the acquisition. Also, in the second
15
<PAGE> 16
quarter of 1996, the Company expensed $255,000 of one time consulting fees
related to acquisition reviews.
Interest income was $116,000 for the second quarter of 1996 and $278,000 for
the six months ended June 30, 1996. This compares to $183,000 for the second
quarter 1995 and $354,000 for the six months ended June 30, 1995. The
comparative decreases were primarily due to lower interest rates on the
Company's United States Treasury Bills and a decrease in the amount of Treasury
Bills subsequent to the acquisition of CPI on May 31, 1996.
Interest expense of $284,000 for the second quarter of 1996 relates to CPI
interest expense from the date of acquisition.
An income tax benefit is provided in the second quarter of 1996 on 1996
year-to-date operating losses whereas no benefits were provided in earlier
financial statements. The benefit provision, based on a current estimate of
effective tax rates is believed proper because of the ongoing profitable
operations of CPI. management believes ongoing earnings will offset
year-to-date operating losses.
COMPARISON OF PRO FORMA RESULTS
Pro forma income statements included with this Form 10-QSB are prepared as if
the companies had been combined since January 1, 1995. All explanations in this
section comparing pro forma results are based on the pro forma statements
included with the Quarterly Report on Form 10-QSB.
Sales for the three months ended June 30, 1996 increased 16.0% to $25,840,828
from $22,285,458 for the comparable year earlier period. For the six months
ended June 30, 1996, sales increased 13.5% to $48,513,543 versus $42,728,497
for the six months ended June 30, 1995. Sales increased in both distribution
and manufacturing mainly due to increased unit sales. In the second quarter of
1996, distribution sales increased by a slightly greater percentage than
manufacturing compared to 1995. For the first six months of 1996 manufacturing
sales increased at a more rapid rate than distribution. Prices in the 1996
periods were relatively stable versus the comparable periods in 1995 in
manufacturing but were down slightly in distribution.
Cost of goods sold for the three months ended June 30, 1996 was 72.6% or
$18,752,521 versus 72.6% of $16,181,973 for the comparable prior year period.
Cost of goods sold decreased to 72.5% of sales or $35,171,805 for the six
months ended June 30, 1996 compared to 72.6% or $31,036,883 for the six months
ended June 30, 1995. The slight decrease in the cost of goods sold percentage
for the six months ended June 30, 1996 compared to 1995 was primarily due to
volume increases and productivity improvements in the Company's Massachusetts
manufacturing operations which were offset by lower distribution gross margins
on high speed data wire and higher cost of goods sold at the Detroit
manufacturing operation. Comparisons for the second quarter of 1996 versus the
second quarter of 1995 reflect the same dynamics.
Selling and administrative expenses increased as a percentage of sales to 22.9%
or $5,915,561 for the three months ended June 30, 1996 compared to 21.6% of
sales or $4,813,441 for the year earlier period. For the six months ended June
30, 1996, selling and administrative expenses were 23.6% of
16
<PAGE> 17
sales or $11,461,871 versus 22.1% or $9,444,154 for the six months ended June
30, 1995. The increased percentage for the second quarter and six months ended
June 30, 1996 versus comparable 1995 periods was primarily due to additional
salaries and expenses for added infrastructure to support increased sales, and
additional costs indirectly related to the CPI acquisition. Comparisons for
both 1996 periods were also affected by a higher percentage of selling and
administrative expenses at the Detroit manufacturing operation due to a lower
sales volume. Additionally, in the 1996 second quarter, the company expensed
$255,000 of one time consulting fees related to acquisition reviews.
Interest income for the three months and six months ended June 30, 1996
decreased to $19,080 and $38,879, respectively, compared to $26,888 and $54,011
for the three months and six months ended June 30, 1995, respectively. The
decreases were primarily due to lower interest rates on the Company's United
States Treasury Bills.
Interest expense for the second quarter of 1996 of $767,152 and $1,491,699 for
the six months ended June 30, 1996 is approximately equal to similar 1995
periods of $735,546 for the second quarter 1995 and $1,468,299 for the six
months ended June 30, 1995. The slight decreases for both periods compared to
1995 are due to working capital requirements.
Income tax expense is provided on operating results at the tax rate estimated
to be effective for federal and state income taxes for the year. The estimated
effective rate is currently 45%, including goodwill amortization which is not
deductible. This rate is applied to pro forma net income before income taxes
and minority interest and is used for all pro forma periods presented.
FINANCIAL CONDITION AND LIQUIDITY
The Company's principal sources of cash are results of operations and existing
credit arrangements. During the six months ended June 30, 1996, $867,000 was
used for operations compared to $49,000 used for operations in the first six
months of 1995. The 1996 usage was a primarily a result of reductions in
accounts payable and accrued liabilities, partially offset by planned inventory
reductions. The Company's working capital at June 30, 1996 was $15,027,000,
including cash and cash equivalents and short-term investments of $2,055,000.
CPI has a senior credit facility providing for borrowings up to $45,000,000
subject to a borrowing base limitation. The credit facility consists of a
revolver, a line of credit and a term loan and is more fully described in "Note
4 -- Debt" to the financial statements included in the Quarterly Report on Form
10-QSB. At June 30, 1996, $31,000,000 was outstanding against these facilities
which are secured by CPI's assets as well as the Company's stock in CPI.
The Company believes that funds generated from operations along with existing
credit arrangements will be sufficient to support the short-term and long-term
liquidity requirements for operations. Acquisitions are intended to be financed
from operating cash flows, existing credit arrangements and possibly additional
equity which may be raised for acquisitions.
17
<PAGE> 18
INCOME TAX MATTERS
The Company has available approximately $88,000,000 of U.S. net operating loss
carryforwards ("NOLs") as of December 31, 1995 available to offset future U.S.
taxable income generated by the Company and its subsidiaries with which it
files a federal consolidated return (the "Consolidated Group"). The NOLs are
described in "Note 6 - Income Taxes" to the Condensed Consolidated Financial
Statements. If the NOLs are available (see "Note 6 - Income Taxes" to the
Condensed Consolidated Financial Statements), it is expected that the actual
cash outlay by the Consolidated Group for the next several years will be
limited to U.S. alternative minimum tax along with state income taxes and
foreign taxes, if any.
Section 382 of the Internal Revenue Code (the "Code") contains certain
limitations on the ability of a corporation to utilize its NOLs in any one year
if there has been a change in ownership of more than 50% within a three-year
period ("an ownership change"), counting for purposes of measuring the
ownership change only the value of stock owned by a stockholder or certain
groups of stockholders holding 5% or more of the corporation's stock. Tigera
does not believe that there has been an ownership change in the past three
years. However, future events, including events beyond the control of Tigera
such as the acquisition in the open market of shares of Tigera Common Stock by
a current or new 5% stockholder who was unaware of the possible negative
consequences of such acquisition, could result in an ownership change. If an
ownership change were to occur, Tigera's ability to use its NOLs to reduce the
future taxable income of Tigera (and the corporations with which it files a
consolidated federal income tax return) could be severely curtailed and it is
possible that a federal income tax liability may be incurred that would
otherwise have been avoidable had the NOLs been fully available.
A valuation reserve for the NOLs not benefitted will result in a reduction of
the deferred tax asset of the Company. At this time, the reserve is not
finalized and benefitted NOLs are included in the asset "Unallocated Purchase
Price". The valuation reserve will be finalized during preparation of the
Company's financial statements for the year ended December 31, 1996.
18
<PAGE> 19
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 3, 1991, Civil Action No. 12374, Smith vs. Gilinski, et. al.,
was filed in the Court of Chancery of the State of Delaware (the "Court") by a
stockholder as a derivative action against eleven former officers and directors
of the Registrant and the Registrant as a nominal defendant. On July 30, 1996,
the Court approved a settlement agreement pursuant to which, the Registrant's
directors' and officers' outside insurance carrier will pay to the Registrant
$140,000 (the "Settlement Fund"). Plaintiff was awarded $55,000 in attorneys'
fees and expenses, which was paid out of the Settlement Fund. The resulting net
proceeds to the Registrant from the Settlement Fund is $85,000. Since the
litigation was filed, the Registrant has charged approximately $185,000 to
operations for legal fees and expenses. For further information regarding this
action, please see Item 3 of the Registrant's Annual Reports on Form 10-KSB for
the years ended December 31, 1995 and December 31, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description of Document
<S> <C> <C>
10.1 -- Credit Agreement dated as of May 31, 1996, by and among NBD
Bank ("NBD") and The First National Bank of Boston ("FNBB"
and, together with NBD and the other lending institutions listed on
Schedule 1 thereto, the "Banks"), each individually and as Co-
Agent, and Connectivity Products Incorporated ("CPI").
10.2 -- $10,000,000 Revolving Credit Note dated as of May 31, 1996
executed by CPI in favor of NBD.
10.3 -- $10,000,000 Revolving Credit Note dated as of May 31, 1996
executed by CPI in favor of FNBB.
10.4 -- $3,500,000 Line of Credit Note dated as of May 31, 1996 executed
by CPI in favor of NBD.
10.5 -- $3,500,000 Line of Credit Note dated as of May 31, 1996 executed
by CPI in favor of FNBB.
10.6 -- $9,300,000 Term Loan A Note dated as of May 31, 1996 executed
by CPI in favor of NBD.
10.7 -- $9,300,000 Term Loan A Note dated as of May 31, 1996 executed
by CPI in favor of FNBB.
</TABLE>
II-1
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C> <C>
10.8 -- Subordination Agreement dated as of May 31, 1996, executed by
James S. Harrington, Duane A. Gawron, Trustee of the Living Trust
of Duane A. Gawron, Margo Gawron, John E. Pylak, Trustee of the
John E. Pylak Living Trust, Rebecca Pylak and Kurt Cieszkowski
(collectively, the "Sellers"), the Corporation and CPI in favor of
NBD, as administrative agent for the Banks (the "Agent").
10.9 -- Security Agreement dated as of October 5, 1995, by and between
CPI and the Agent.
10.9(a) -- First Amendment to the Security Agreement dated as of May 31,
1996, by and between CPI and the Agent.
10.10 -- Guaranty dated as of May 31, 1996 executed by the Corporation in
favor of the Agent.
10.11 -- Stock Pledge Agreement dated as of May 31, 1996, by and between
the Corporation and the Agent.
10.12 -- Note Pledge Agreement dated as of May 31, 1996, by and among
the Sellers and the Agent.
10.13 -- Form of Stock Option Agreement dated as of March 8, 1996, by
and between the Corporation and each of James S. Harrington,
Duane A. Gawron, John E. Pylak and Kurt Cieszkowski.
10.14 -- Employment Agreement dated as of July 9, 1996 between Gregory
C. Kowert and CPI.
11 -- Computation of Earnings Per Share
27 -- Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
On June 14, 1996, the Registrant filed a Current Report on Form 8-K (the
"Form 8-K") relating to (i) the purchase by the Registrant of 85% of the capital
stock of Connectivity Products Incorporated, a Delaware corporation (the "CPI
Transaction"), a privately held company in the wire and cable distribution,
manufacturing and assembly business, from James S. Harrington, Duane A. Gawron,
Trustee of the Living Trust of Duane A. Gawron, Margo Gawron, John E. Pylak,
Trustee of the John E. Pylak Living Trust, Rebecca Pylak and Kurt Cieszkowski
and (ii) the dismissal of BDO Seidman, LLP as the Registrant's independent
accountant and the appointment of Coopers & Lybrand LLP as the Registrant's
independent accountant. On August 14, 1996, the Registrant filed an amendment to
the Form 8-K on Form 8-K/A, inter alia, providing the financial statements and
pro forma financial information required by Item 7 of Form 8-K and further
clarifying, correcting and restating the description of the CPI Transaction.
II-2
<PAGE> 21
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TIGERA GROUP, INC.
Date: August 14, 1996 By /s/ James S. Harrington
-------------------------
James S. Harrington
President and Chief Executive Officer (as a
duly authorized officer of the registrant)
By /s/ Gregory C. Kowert
-------------------------
Gregory C. Kowert
Senior Vice President, Chief Financial
Officer and Secretary (as the principal
financial officer of the registrant)
II-3
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Document
<S> <C> <C>
10.1 -- Credit Agreement dated as of May 31, 1996, by and among NBD
Bank ("NBD") and The First National Bank of Boston ("FNBB"
and, together with NBD and the other lending institutions listed on
Schedule 1 thereto, the "Banks"), each individually and as Co-
Agent, and Connectivity Products Incorporated ("CPI").
10.2 -- $10,000,000 Revolving Credit Note dated as of May 31, 1996
executed by CPI in favor of NBD.
10.3 -- $10,000,000 Revolving Credit Note dated as of May 31, 1996
executed by CPI in favor of FNBB.
10.4 -- $3,500,000 Line of Credit Note dated as of May 31, 1996 executed
by CPI in favor of NBD.
10.5 -- $3,500,000 Line of Credit Note dated as of May 31, 1996 executed
by CPI in favor of FNBB.
10.6 -- $9,300,000 Term Loan A Note dated as of May 31, 1996 executed
by CPI in favor of NBD.
10.7 -- $9,300,000 Term Loan A Note dated as of May 31, 1996 executed
by CPI in favor of FNBB.
10.8 -- Subordination Agreement dated as of May 31, 1996, executed by
James S. Harrington, Duane A. Gawron, Trustee of the Living Trust
of Duane A. Gawron, Margo Gawron, John E. Pylak, Trustee of the
John E. Pylak Living Trust, Rebecca Pylak and Kurt Cieszkowski
(collectively, the "Sellers"), the Corporation and CPI in favor of
NBD, as administrative agent for the Banks (the "Agent").
10.9 -- Security Agreement dated as of October 5, 1995, by and between
CPI and the Agent.
10.9(a) -- First Amendment to the Security Agreement dated as of May 31,
1996, by and between CPI and the Agent.
10.10 -- Guaranty dated as of May 31, 1996 executed by the Corporation in
favor of the Agent.
10.11 -- Stock Pledge Agreement dated as of May 31, 1996, by and between
the Corporation and the Agent.
10.12 -- Note Pledge Agreement dated as of May 31, 1996, by and among
the Sellers and the Agent.
10.13 -- Form of Stock Option Agreement dated as of March 8, 1996, by
and between the Corporation and each of James S. Harrington,
Duane A. Gawron, John E. Pylak and Kurt Cieszkowski.
10.14 -- Employment Agreement dated as of July 9, 1996 between Gregory
C. Kowert and CPI.
11 -- Computation of Earnings Per Share
27 -- Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
Dated as of May 31, 1996
among
CONNECTIVITY PRODUCTS INCORPORATED
and
THE LENDING INSTITUTIONS LISTED ON SCHEDULE 1 HERETO
and
NBD BANK AND
THE FIRST NATIONAL BANK OF BOSTON,
as Co-Agents
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<C> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION. .......................................................1
1.1. Definitions. ........................................................................1
1.2. Rules of Interpretation. ............................................................18
2. REVOLVING CREDIT AND LINE OF CREDIT FACILITIES. ................................................19
2.1. Commitment to Lend....................................................................19
2.1.1. Revolving Credit Loans. ..................................................19
2.1.2. Line of Credit Loans. ....................................................19
2.2. Commitment Fee. .....................................................................20
2.3. Reduction of Total Commitment. ......................................................20
2.4. The Revolving Credit Notes and Line of Credit Notes. ................................21
2.4.1. The Revolving Credit Notes. ..............................................21
2.4.2. Line of Credit Notes. ....................................................21
2.5. Interest on Revolving Credit and Line of Credit Loans. ..............................21
2.6. Requests for Revolving Credit and Line of Credit Loans. .............................22
2.7. Conversion Options. .................................................................22
2.7.1. Conversion to Different Type of Revolving Credit or Line of Credit Loan. .22
2.7.2. Continuation of Type of Revolving Credit or Line of Credit Loan. .........23
2.7.3. LIBOR Rate Loans. ........................................................23
2.8. Funds for Revolving Credit and Line of Credit Loan. ................................23
2.8.1. Funding Procedures. ......................................................23
2.8.2. Advances by Administrative Agent. .........................................24
2.9. Change in Borrowing Base. ...........................................................24
3. REPAYMENT OF THE REVOLVING CREDIT LOANS. .......................................................25
3.1. Maturity. ...........................................................................25
3.2. Mandatory Repayments of Revolving Credit Loans. .....................................25
3.3. Optional Repayments of Revolving Credit Loans. ......................................25
4. THE TERM LOANS. ................................................................................26
4.1. Commitment to Lend Term Loan A. .....................................................26
4.2. Conversion of Line of Credit Loans to Term Loan B. ..................................26
4.3. The Term Notes. .....................................................................26
4.3.1. The Term Loan A Notes. ...................................................26
4.3.2. The Term Loan B Notes. ...................................................27
4.4. Mandatory Payments of Principal Term Loans. .........................................27
4.4.1. Term Loan A. .............................................................27
4.4.2. Term Loan B. .............................................................28
4.5. Excess Cash Flow Payments. ..........................................................28
4.6. Optional Prepayment of Term Loans. ..................................................28
4.7. Interest on Term Loans. .............................................................28
4.8. Notification By Borrower. ...........................................................29
4.9. Amounts, etc. .......................................................................29
5. LETTERS OF CREDIT. .............................................................................29
5.1. Letter of Credit Commitments..........................................................29
5.1.1. Commitment to Issue Letters of Credit. ...................................29
</TABLE>
<PAGE> 3
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<TABLE>
<C> <C>
5.1.2. Letter of Credit Applications. ...........................................30
5.1.3. Terms of Letters of Credit. ..............................................30
5.1.4. Reimbursement Obligations of Banks. ......................................30
5.1.5. Participations of Banks. .................................................30
5.2. Reimbursement Obligation of the Borrower. ...........................................30
5.3. Letter of Credit Payments. ..........................................................31
5.4. Obligations Absolute. ...............................................................32
5.5. Reliance by Issuer. .................................................................32
5.6. Letter of Credit Fee. ...............................................................32
6. CERTAIN GENERAL PROVISIONS. ....................................................................33
6.1. Closing Fee. ........................................................................33
6.2. Agents' Fee. ........................................................................33
6.3. Funds for Payments. .................................................................33
6.3.1. Payments to Administrative Agent. ........................................33
6.3.2. No Offset, etc. ..........................................................33
6.4. Computations. .......................................................................33
6.5.........................................................................................34
6.5. Inability to Determine LIBOR Rate. ..................................................34
6.6. Illegality. .........................................................................34
6.7. Additional Costs, etc. ..............................................................34
6.8. Capital Adequacy. ...................................................................37
6.9. Certificate. ........................................................................37
6.10. Indemnity. .........................................................................37
6.11. Interest After Default. ............................................................38
7. COLLATERAL SECURITY AND GUARANTIES. ............................................................38
7.1. Security of Borrower and Its Subsidiaries. ..........................................38
7.2. Guaranties and Security of Subsidiaries. ............................................38
7.3. Guaranty and Security of Tigera. ....................................................38
7.4. Pledge of Subordinated Notes. .......................................................38
8. REPRESENTATIONS AND WARRANTIES. ................................................................38
8.1. Corporate Authority. ................................................................38
8.1.1. Incorporation; Good Standing. ............................................38
8.1.2. Authorization. ...........................................................39
8.1.3. Enforceability. ..........................................................39
8.2. Governmental Approvals. .............................................................39
8.3. Title to Properties; Leases. ........................................................39
8.4. Financial Statements. ...............................................................39
8.5. No Material Changes, etc. ...........................................................40
(a).........................................................................................40
8.6. Franchises, Patents, Copyrights, etc. ...............................................41
8.7. Litigation. .........................................................................41
8.8. No Materially Adverse Contracts, etc. ...............................................41
8.9. Compliance with Other Instruments, Laws, etc. .......................................41
8.10. Tax Status. ........................................................................41
8.11. No Event of Default. ...............................................................42
8.12. Holding Company and Investment Company Acts. .......................................42
8.13. Absence of Financing Statements, etc. ..............................................42
8.14. Perfection of Security Interest. ...................................................42
</TABLE>
<PAGE> 4
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<TABLE>
<C> <C>
8.15. Certain Transactions. ..............................................................42
8.16. Employee Benefit Plans. ............................................................43
8.16.1. In General. .............................................................43
8.16.2. Terminability of Welfare Plans. .........................................43
8.16.3. Guaranteed Pension Plans. ...............................................43
8.16.4. Multiemployer Plans. ....................................................43
8.17. Regulations U and X. ...............................................................44
8.18. Environmental Compliance. ..........................................................44
8.19. Subsidiaries, etc. .................................................................46
8.20. Fiscal Year. .......................................................................46
8.21. No Amendments to Certain Documents. ................................................46
8.22. Disclosure .........................................................................46
8.23. Insurance. .........................................................................46
9. AFFIRMATIVE COVENANTS OF THE BORROWER. .........................................................46
9.1. Punctual Payment. ...................................................................46
9.2. Maintenance of Office. ..............................................................46
9.3. Records and Accounts. ...............................................................47
9.4. Financial Statements, Certificates and Information. .................................47
9.5. Notices. ............................................................................49
9.5.1. Defaults. ................................................................49
9.5.2. Environmental Events. ....................................................49
9.5.3. Notification of Claim against Collateral. ................................49
9.5.4. Notice of Litigation and Judgments. ......................................49
9.6. Corporate Existence; Maintenance of Properties. .....................................50
9.7. Insurance. ..........................................................................50
9.8. Taxes. ..............................................................................50
9.9. Inspection of Properties and Books, etc. ............................................51
9.9.1. General. .................................................................51
9.9.2. Commercial Finance Exams. ................................................51
9.9.3. Appraisals. ..............................................................51
9.9.4. Environmental Assessments. ...............................................51
9.9.5. Communications with Accountants. .........................................52
9.10. Compliance with Laws, Contracts, Licenses, and Permits. ............................52
9.11. Employee Benefit Plans. ............................................................52
9.12. Use of Proceeds. ...................................................................52
9.13. Further Assurances. ................................................................53
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. ...................................................53
10.1. Restrictions on Indebtedness. ......................................................53
10.2. Restrictions on Liens. .............................................................54
10.3. Restrictions on Investments. .......................................................55
10.4. Restricted Payments. ...............................................................56
10.5. Merger, Consolidation and Disposition of Assets. ...................................57
10.5.1. Mergers and Acquisitions. ...............................................57
10.5.2. Disposition of Assets. ..................................................58
10.6. Sale and Leaseback. ................................................................58
10.7. Compliance with Environmental Laws. ................................................58
10.8. Subordinated Debt. .................................................................58
10.9. Modification of Documents. .........................................................59
</TABLE>
<PAGE> 5
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<TABLE>
<C> <C>
10.10. Negative Pledges. .................................................................59
10.11. Transactions with Affiliates. .....................................................59
10.12. Upstream Limitations. .............................................................59
10.13. Employee Benefit Plans. ...........................................................59
11. FINANCIAL COVENANTS OF THE BORROWER. ..........................................................60
11.1. Consolidated Net Worth. ............................................................60
11.2. Senior Funded Debt to EBITDA. ......................................................60
11.3. Total Funded Debt to EBITDA. .......................................................61
11.4. Interest Coverage Ratio. ...........................................................61
11.5. Fixed Charge Coverage Ratio. .......................................................61
11.6. Capital Expenditures. ..............................................................62
12. CLOSING CONDITIONS. ...........................................................................62
12.1. Loan Documents. ....................................................................62
12.1.1. Loan Documents. .........................................................62
12.1.2. Subordinated Debt Documents. ............................................62
12.1.3. Acquisition Documents. ..................................................62
12.2. Certified Copies of Charter Documents. .............................................63
12.3. Corporate Action. ..................................................................63
12.4. Incumbency Certificate. ............................................................63
12.5. Validity of Liens. .................................................................63
12.6. Perfection Certificates and UCC Search Results. ....................................63
12.7. Landlord Consents. .................................................................63
12.8. Certificates of Insurance. .........................................................64
12.9. Borrowing Base Report. .............................................................64
12.10. Accounts Receivable Aging Report. .................................................64
12.11. Tax Documentation. ................................................................64
12.12. Solvency Certificate. .............................................................64
12.13. Opinion of Counsel. ...............................................................64
12.14. Payment of Fees and Other Arrangements. ...........................................64
12.15. Satisfaction of Conditions of Stock Redemption and Purchase Agreement. ............64
12.16. Completion of Acquisition. ........................................................65
12.17. Disbursement Instructions. ........................................................65
13. CONDITIONS TO ALL BORROWINGS. .................................................................65
13.1. Representations True; No Event of Default. .........................................65
13.2. No Legal Impediment. ...............................................................65
13.3. Governmental Regulation. ...........................................................65
13.4. Proceedings and Documents. .........................................................66
13.5. Borrowing Base Report. .............................................................66
14. EVENTS OF DEFAULT; ACCELERATION; ETC. .........................................................66
14.1. Events of Default and Acceleration. ................................................66
14.2. Termination of Commitments. ........................................................69
14.3. Remedies. ..........................................................................70
14.4. Distribution of Collateral Proceeds. ...............................................70
15. SETOFF. .......................................................................................71
16. THE ADMINISTRATIVE AGENT. .....................................................................72
16.1. Authorization. .....................................................................72
16.2. Employees and Co-Agents. ...........................................................72
</TABLE>
<PAGE> 6
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<TABLE>
<C> <C>
16.3. No Liability. ......................................................................72
16.4. No Representations. ................................................................73
16.5. Payments. ..........................................................................73
16.5.1. Payments to Administrative Agent. .......................................73
16.5.2. Distribution by Administrative Agent. ...................................73
16.5.3. Delinquent Banks. .......................................................74
16.6. Holders of Notes. ..................................................................74
16.7. Indemnity. .........................................................................74
16.8. Administrative Agent as Bank. ......................................................74
16.9. Resignation. .......................................................................75
16.10. Notification of Defaults and Events of Default. ...................................75
16.11. Duties in the Case of Enforcement. ................................................75
17. EXPENSES. .....................................................................................76
18. INDEMNIFICATION. ..............................................................................76
19. SURVIVAL OF COVENANTS, ETC. ...................................................................77
20. ASSIGNMENT AND PARTICIPATION. .................................................................77
20.1. Conditions to Assignment by Banks. .................................................77
20.2. Certain Representations and Warranties; Limitations; Covenants. ....................78
20.3. Register. ..........................................................................79
20.4. New Notes. .........................................................................79
20.5. Participations. ....................................................................80
20.6. Disclosure. ........................................................................80
20.7. Assignee or Participant Affiliated with the Borrower. ..............................80
20.8. Miscellaneous Assignment Provisions. ...............................................81
20.9. Assignment by Borrower. ............................................................81
21. NOTICES, ETC. .................................................................................81
22. GOVERNING LAW. ................................................................................82
23. HEADINGS. .....................................................................................82
24. COUNTERPARTS. .................................................................................82
25. ENTIRE AGREEMENT, ETC. ........................................................................83
26. WAIVER OF JURY TRIAL. .........................................................................83
27. CONSENTS, AMENDMENTS, WAIVERS, ETC. ...........................................................83
28. SEVERABILITY. .................................................................................84
29. TRANSITIONAL ARRANGEMENTS.......................................................................84
29.1. Original Agreement Superseded. .....................................................84
29.2. Return and Cancellation of Note. ...................................................84
29.3. Interest and Fees Under Superseded Agreement. ......................................84
</TABLE>
<PAGE> 7
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SCHEDULES
Schedule 1 Lending Institutions, Commitment, Percentages
Schedule 8.3 Title To Properties; Leases
Schedule 8.5 Distributions
Schedule 8.7 Litigation
Schedule 8.9 Compliance with Other Instruments, Laws, etc.
Schedule 8.10 Tax Status
Schedule 8.15 Certain Transactions
Schedule 8.18 Environmental Compliance
Schedule 8.23 Insurance
Schedule 10.1 Existing Indebtedness
Schedule 10.2 Existing Liens
Schedule 10.3 Existing Investments
EXHIBITS
Exhibit A Form of Borrowing Base Report
Exhibit B Form of Landlord Waiver and Consent
Exhibit C-1 Form of [Wholly-Owned] Subsidiary Guaranty
Exhibit C-2 Form of [Limited Investment] Subsidiary Guaranty
Exhibit D-1 Revolving Credit Note
Exhibit D-2 Line of Credit Note
Exhibit E Form of Loan Request
Exhibit F-1 Form of Term Loan A Note
Exhibit F-2 Form of Term Loan B Note
Exhibit G Form of Compliance Certificate
Exhibit H Form of Assignment and Acceptance
<PAGE> 8
AMENDED AND RESTATED REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT is
made as of May 31, 1996, by and among (i) CONNECTIVITY PRODUCTS INCORPORATED
(the "Borrower"), a Delaware corporation having its principal place of business
at 214 Nashua Street, Leominster, Massachusetts 01453, (ii) the lending
institutions listed on Schedule 1, and (iii) NBD BANK and THE FIRST NATIONAL
BANK OF BOSTON as Co-Agents for themselves and the other lending institutions.
The Borrower, NBD and FNBB (the "Original Banks") and NBD in its
capacity as agent for the Original Banks entered into a Revolving Credit
Agreement dated as of October 5, 1995 (as amended from to time prior to the date
hereof, the "Original Agreement"), pursuant to which NBD and FNBB made Loans (as
such term is defined in the Original Agreement) to the Borrower. The Borrower
has requested, and the Banks and the Co-Agents have agreed, to make certain
amendments to the Original Agreement. Accordingly, the parties hereto agree to
amend and restate the Original Agreement as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set
forth in this Section 1 or elsewhere in the provisions of this Credit Agreement
referred to below:
Accounts Receivable. All rights of the Borrower or any of its
Subsidiaries to payment for goods sold, leased or otherwise marketed in the
ordinary course of business and all rights of the Borrower or any of its
Subsidiaries to payment for services rendered in the ordinary course of business
and all sums of money or other proceeds due thereon pursuant to transactions
with account debtors, except for that portion of the sum of money or other
proceeds due thereon that relate to sales, use or property taxes in conjunction
with such transactions, recorded on books of account in accordance with
generally accepted accounting principles.
Acquisition. Any acquisition by the Borrower or any of its Subsidiaries
of a Person or the assets of such Person, provided that no more than sixty-five
percent (65%) of the purchase price thereof shall be allocated to the purchase
of fixed assets, Accounts Receivables and inventory.
Acquisition Closing Date. The first date on which the conditions set
forth in the Stock Purchase Agreement have been satisfied and the CPI
Acquisition has occurred.
Acquisition Documents. Collectively, the Stock Purchase Agreement, the
Redemption Notes, the Contingent Notes, the Escrow Agreement, the Stockholders'
<PAGE> 9
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Agreement (in each case, as defined in the Stock Purchase Agreement), and all
other agreements, the Employment Agreements and Tax Allocation Agreement and
documents required to be entered into or delivered in connection with the CPI
Acquisition, each in the form delivered to the Co-Agents on the Acquisition
Closing Date.
Additional Subordinated Notes. The 10% Subordinated Notes, each dated
as of the Acquisition Closing Date, or, if issued after the Acquisition Closing
Date, the date of issuance, issued by the Borrower to Tigera or the Sellers in
form and substance satisfactory to the Banks.
Adjusted EBITDA. During the period commencing on May 1, 1995 and ending
on the Closing Date, Consolidated EBITDA plus (i) the sum of that portion of the
compensation provided to each of James S. Harrington, Duane A. Gawron, John E.
Pylak and Kurt Cieszkowski by the Borrower during such period, in excess of, on
an annualized basis for such period, $175,000 per person plus (ii) actual merger
and acquisition expenses paid or accrued by the Borrower in connection with
mergers and acquisitions during such period, which mergers and acquisitions have
been approved by the Banks, plus (iii) those non-recurring expenses incurred by
the EEC and EEA divisions of the Borrower in the first fiscal quarter of 1996
and disclosed to the Banks in an aggregate amount not to exceed $105,545.
Adjustment Date. The first day of the fiscal quarter immediately
following the fiscal quarter in which a Compliance Certificate is to be
delivered by the Borrower pursuant to Section 9.4(c).
Administrative Agent. NBD acting as Administrative Agent for the Banks.
Administrative Agent's Head Office. The Administrative Agent's head
office is located at 611 Woodward Avenue, Detroit, Michigan 48226.
Affiliate. Any Person that would be considered to be an affiliate of
the Borrower under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the Applicable Margin for
the Type of Loan or with respect to the commitment fee as set forth below with
respect to the Borrower's Leverage Ratio, as determined for the Reference Period
ending as of the fiscal quarter end specified in the Compliance Certificate
delivered during the fiscal quarter immediately preceding the applicable Rate
Adjustment Period.
<PAGE> 10
-3-
<TABLE>
<CAPTION>
LIBOR
Base Rate Rate Commitment
Leverage Ratio Loans Loans Fee
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
(Less) 4.00 and
(Greater) 3.00:1.00 1.00% 2.75% .500%
- -------------------------------------------------------------------------------
(Less) 3.00 and
(Greater) 2.00:1.00 0.50% 2.25% .375%
- -------------------------------------------------------------------------------
(Less) 2.00:1.00 0.00% 1.75% .375%
- -------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing, (i) for Loans outstanding and commitment fees
payable during the period commencing on the Closing Date through the date
immediately preceding the first Adjustment Date to occur after the Closing Date,
and (ii) if the Borrower fails to deliver any Compliance Certificate when
required pursuant to Section 9.4(c) hereof then, for the period commencing on
the next Adjustment Date to occur subsequent to such failure through the date
immediately following the date on which such Compliance Certificate is
delivered, in each case the Applicable Margin shall be the highest Applicable
Margin set forth above for the Type of Loan(s) outstanding and with respect to
the commitment fee.
Assignment and Acceptance. See Section 20.1.
Balance Sheet Date. December 31, 1995.
Banks. FNBB, NBD and the other lending institutions satisfactory to the
Co-Agents and the Borrower listed on Schedule 1 hereto and any other Person who
becomes an assignee of any rights and obligations of a Bank pursuant to
Section 20.
Base Rate Loans. Revolver Base Rate Loans, Line of Credit Base Rate
Loans, and Term Base Rate Loans.
Base Rate. The higher of (i) the annual rate of interest announced from
time to time by the Administrative Agent as its "base or prime rate", and (ii)
one-half of one percent (1/2%) above the Federal Funds Effective Rate. For the
purposes of this definition, "Federal Funds Effective Rate" shall mean for any
day, the rate per annum equal to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
the Administrative Agent from three funds brokers of recognized standing
selected by the Administrative Agent.
Borrower. As defined in the preamble hereto.
<PAGE> 11
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Borrowing Base. At the relevant time of reference thereto, with respect
to the Revolving Credit Loans an amount determined by the Administrative Agent
by reference to the most recent Borrowing Base Report, which is equal to the sum
of:
(a) eighty-five percent (85%) of Eligible Accounts Receivable
for which invoices have been issued and are payable; plus
(b) fifty percent (50%) of the net book value (determined on a
first-in first-out basis at lower of cost or market) of Eligible
Inventory.
Borrowing Base Report. A Borrowing Base Report signed by the chief
financial officer of the Borrower and in substantially the form of Exhibit A
hereto.
Business Day. Any day on which banking institutions in Boston,
Massachusetts and Detroit, Michigan, are open for the transaction of banking
business and, in the case of LIBOR Rate Loans, also a day which is a LIBOR
Business Day.
CERCLA. See Section 8.18.
CPI Acquisition. Pursuant to the Stock Purchase Agreement, the
repurchase by the Borrower from the Sellers of certain of the shares of the
common stock of the Borrower and the subsequent purchase by Tigera on the
Acquisition Closing Date of eighty-five percent (85%) of the shares of the
common stock of the Borrower outstanding immediately following such repurchase.
Capital Assets. Fixed assets (such as land, buildings, fixtures,
machinery and equipment); provided that Capital Assets shall not include any
item customarily charged directly to expense or depreciated over a useful life
of twelve (12) months or less in accordance with generally accepted accounting
principles.
Capital Expenditures. Amounts paid or indebtedness incurred (without
duplication) by the Borrower or any of its Subsidiaries to purchase, lease,
refurbish, maintain or repair a Capital Asset that would be required to be
capitalized and shown on the consolidated balance sheet of such Person in
accordance with generally accepted accounting principles.
Capitalized Leases. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the consolidated
balance sheet of the lessee or obligor in accordance with generally accepted
accounting principles.
Closing Date. May 31, 1996.
Co-Agents' Special Counsel. Bingham, Dana & Gould LLP or such other
counsel as may be approved by the Co-Agents.
Co-Agents. The Administrative Agent and the Documentation Agent, each
in its capacity as agent for the Banks.
<PAGE> 12
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Code. The Internal Revenue Code of 1986.
Collateral. All of the property, rights and interests of the Borrower
and its Subsidiaries that are or are intended to be subject to the security
interests and mortgages created by the Security Documents.
Commitments. With respect to each Bank, the amount set forth on
Schedule 1 hereto as the amount of such Bank's commitments to make Loans to, and
to participate in the issuance, extension and renewal of Letters of Credit for
the account of, the Borrower, as the same may be reduced from time to time; or
if such commitments are terminated pursuant to the provisions hereof, zero.
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
Compliance Certificate. See Section 9.4(c).
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Cash Flow. With respect to any fiscal period, an amount
equal to Consolidated EBITDA for such period, minus Capital Expenditures made
during such period but not exceeding $1,750,000 in the aggregate, minus cash
income taxes paid during such period, all as determined on a consolidated basis
in accordance with generally accepted accounting principles.
Consolidated EBITDA. With respect to the Borrower and its Subsidiaries
and any particular fiscal period, EBITDA determined on a consolidated basis.
Consolidated Excess Cash Flow. With respect to the Borrower and its
Subsidiaries and any particular fiscal period, an amount equal to (i)
Consolidated Cash Flow for such period less (ii) the sum of (a) mandatory
scheduled principal payments of the Term Loan A and the Term Loan B paid or due
and payable during such period, (b) cash interest paid or accrued during such
period, and (c) to the extent not already deducted in the calculation of
Consolidated Cash Flow for such period, extraordinary non-recurring gains or
losses of the Borrower and its Subsidiaries during such period.
Consolidated Net Earnings Available for Interest Charges. For any
fiscal period, (i) Consolidated Net Income for such period plus (ii)
Consolidated Total Interest Expense for such period (excluding any interest
taken into account in the computation of Consolidated Net Earnings Available for
Interest Charges in any prior period).
Consolidated Net Income. With respect to any Person and its
Subsidiaries for any particular fiscal period, the consolidated net income (or
net loss) of such Person and its Subsidiaries, after deduction of all expenses,
taxes and other proper charges, determined in accordance with generally accepted
accounting principles, after
<PAGE> 13
-6-
excluding therefrom (i) dividends paid or payable to the extent deducted from
Consolidated Net Income, (ii) all debits and credits off-set among the Borrower
and its Subsidiaries, and (iii) without duplication, all non-recurring gains or
loses realized upon the sale of assets or the satisfaction of Indebtedness.
Consolidated Net Worth. The sum of stockholder's equity in the
Borrower, preferred stock of the Borrower, and minority interests held by the
Borrower less amounts due from Affiliates other than the Borrower or the
Guarantors as set forth in the Borrower's consolidated financial statements.
Consolidated Total Assets. All assets of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest required to be paid or accrued by the Borrower and its
Subsidiaries during such period on all Indebtedness of the Borrower and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of Capitalized
Leases and including commitment fees, agency fees, facility fees, balance
deficiency fees and similar fees or expenses in connection with the borrowing of
money.
Consolidated Total Liabilities. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and all Indebtedness of the Borrower and its
Subsidiaries, whether or not so classified.
Contingent Notes. The 10% Contingent Notes, dated as of May 31, 1996,
issued by the Borrower to the Sellers pursuant to the Stock Purchase Agreement
in the aggregate principal amount of $3,000,000.
Conversion Date. May 31, 1998.
Conversion Request. A notice given by the Borrower to the
Administrative Agent of the Borrower's election to convert or continue a Loan in
accordance with Section 2.7.
Credit Agreement. This Amended and Restated Revolving Credit and Term
Loan Agreement, including the Schedules and Exhibits hereto.
Default. See Section 14.1.
Distribution. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of a Person, other than
dividends payable solely in shares of common stock of such Person; the purchase,
redemption, or other retirement of any shares of any class of capital stock of
such Person, directly or indirectly through a Subsidiary or otherwise; the
return of capital by such Person to its shareholders as
<PAGE> 14
-7-
such; or any other distribution on or in respect of any shares of any class of
capital stock of such Person.
Documentation Agent. FNBB acting as Documentation Agent for the Banks.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank designated
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Base
Rate Loans and LIBOR Rate Loans.
Drawdown Date. The date on which any Revolving Credit Loan or the Term
Loans are made or are to be made, and the date on which any Revolving Credit
Loan is converted or continued in accordance with Section 2.7 or all or any
portion of any Term Loan is converted or continued in accordance with
Section 4.7.
Earnings Before Interest and Taxes. The consolidated earnings (or loss)
from the operations of the Borrower and its Subsidiaries for any fiscal period,
after all expenses and other proper charges but before payment or provision for
any income taxes or interest expense for such period (including payments, if
any, under hedge agreements that are designed to hedge against fluctuations in
interest rates or precious metal prices), determined in accordance with
generally accepted accounting principles.
EBITDA. For any period, an amount equal to the sum of (i) Earnings
Before Interest and Taxes, plus (ii) depreciation, amortization and all other
noncash charges for such period, determined in accordance with generally
accepted accounting principles.
Eligible Accounts Receivable. The aggregate of the unpaid portions of
Accounts Receivable of the Borrower and its Wholly-Owned Subsidiaries (net of
any credits, rebates, offsets, holdbacks or other adjustments or commissions
payable to third parties that are adjustments to such Accounts Receivable) (i)
that the Borrower or each Wholly-Owned Subsidiary reasonably and in good faith
determines to be collectible; (ii) that are with account debtors that (a) are
not Affiliates of the Borrower or such Subsidiary, (b) purchased the goods or
services giving rise to the relevant Account Receivable in an arm's length
transaction, (c) are not insolvent or involved in any case or proceeding,
whether voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation or similar
law of any jurisdiction and (d) are, in the Majority Banks' reasonable judgment,
creditworthy; (iii) that are in payment of obligations that have been fully
performed and are not subject to dispute or any other similar claims that would
reduce the cash amount payable therefor; (iv) that are not subject to any
pledge, restriction, security interest or other lien or encumbrance other than
those created by the Loan Documents; (v) in which the Administrative Agent has a
valid and perfected first priority security interest; (vi) that are not
outstanding for more than ninety (90) days past the date of the respective
invoices therefor; (vii) that are not due from an account
<PAGE> 15
-8-
debtor located in Minnesota or New Jersey unless the Borrower (a) has received a
certificate of authority to do business and is in good standing in such state or
(b) has filed a notice of business activities report with the appropriate office
or agency of such state for the current year; (viii) that are payable in
Dollars; (ix) that are not payable from an office outside of the United States,
Puerto Rico, the Virgin Islands and Canada; and (x) that are not secured by a
letter of credit unless the Administrative Agent has a prior, perfected security
interest in such letter of credit.
Eligible Assignee. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (ii)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; and (v) if, but only
if, any Event of Default has occurred and is continuing, any other bank,
insurance company, commercial finance company or other financial institution or
other Person approved by the Administrative Agent, such approval not to be
unreasonably withheld.
Eligible Inventory. With respect to the Borrower or any of its
Wholly-Owned Subsidiaries, finished goods, work in progress, supplies, packaging
materials and raw materials and component parts inventory owned by the Borrower
or such Subsidiary; provided that Eligible Inventory shall not include any
inventory (i) held on consignment, or not otherwise owned by Borrower or such
Subsidiary, or of a type no longer sold by the Borrower or such Subsidiary, (ii)
which has been returned by a customer (until an appropriate adjustment has been
made to the corresponding Account Receivable and so long as such inventory is
undamaged and in saleable condition) or is damaged or subject to any legal
encumbrance other than Permitted Liens, (iii) which is not in the possession of
the Borrower or such Subsidiary unless the Administrative Agent has received a
waiver from the party in possession of such inventory in form and substance
satisfactory to the Administrative Agent, (iv) which is held by the Borrower or
such Subsidiary on property leased by the Borrower or such Subsidiary, unless
the Administrative Agent has received a waiver from the lessor of such leased
property and, if any, sublessor thereof in form and substance satisfactory to
the Administrative Agent, (v) as to which appropriate Uniform Commercial Code
financing statements showing the Borrower or such Subsidiary as debtor and the
Administrative Agent as secured party have not been filed in the proper filing
office or offices in order to perfect the Administrative Agent's security
interest therein, (vi) which has been shipped to a customer of the Borrower
regardless of whether such shipment is on a consignment basis (unless, with
respect to any such inventory held on consignment by a third party, all relevant
provisions of Sections 2-326 and 9-114 of the Uniform Commercial Code have been
complied with and the Administrative Agent has a valid and perfected first
priority security interest therein), (vii) which is not located
<PAGE> 16
-9-
within the United States of America, or (viii) which the Majority Banks
reasonably deem to be obsolete or not marketable.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained of contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Environmental Laws. See Section 8.18(a).
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
ERISA. The Employee Retirement Income Security Act of 1974.
Eurocurrency Reserve Rate. For any day with respect to a LIBOR Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Event of Default. See Section 14.1.
Fee Letter. The fee letter dated on or prior to the Closing Date among
the Borrower and the Co-Agents, as the same may be amended, modified or
supplemented from time to time.
FNBB. The First National Bank of Boston, a national banking
association, in its individual capacity.
generally accepted accounting principles. (i) When used in Section 11,
whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided above,
means principles that are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (B) consistently applied with the December 31,
1995 financial statements of the Borrower adopting the same principles, provided
that in each case referred to in this definition of "generally accepted
accounting principles" a certified
<PAGE> 17
-10-
public accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting principles) as
to financial statements in which such principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guaranties. The Limited Investment Subsidiary Guaranties, the
Wholly-Owned Subsidiary Guaranties and the Tigera Guaranty.
Guarantors. The Subsidiaries of the Borrower and Tigera.
Hazardous Substances. See Section 8.18(b).
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made by footnotes thereto, including in any event and whether or not so
classified: (i) all debt and similar monetary obligations, whether direct or
indirect; (ii) all liabilities secured by any mortgage, pledge, security
interest, lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; and (iii) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the purpose of enabling the debtor to make payment of
the indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit.
Interest Payment Date. (i) As to any Base Rate Loan, the last day of
each calendar quarter including the calendar quarter which includes the Drawdown
Date thereof; and (ii) as to any LIBOR Rate Loan in respect of which the
Interest Period is (a) 3 months or less, the last day of such Interest Period
and (b) more than 3 months, at the end of each 3 month period (the first such
period commencing on the first day of such Interest Period) and, in addition, if
such Interest Period ends a day that is not the last day of one of the
above-described 3 month periods, the last day of such Interest Period.
Interest Period. With respect to each Loan, (i) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last
day of one of the periods set forth below, as selected by the Borrower in a Loan
Request (A) for any Base Rate Loan, the last day of the calendar quarter, and
(B) for any LIBOR Rate Loan, 1, 2, 3, 6 or, if applicable, 12 months; and (ii)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Loan and ending on the last
<PAGE> 18
-11-
day of one of the periods set forth above, as selected by the Borrower in a
Conversion Request; provided that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(a) if any Interest Period with respect to a LIBOR Rate Loan
would otherwise end on a day that is not a LIBOR Business Day, that
Interest Period shall be extended to the next succeeding LIBOR Business
Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding LIBOR Business Day;
(b) if any Interest Period with respect to a Base Rate Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in
Section 2.7, the Borrower shall be deemed to have requested a
conversion of the affected LIBOR Rate Loan to a Base Rate Loan and the
continuance of all Base Rate Loans as Base Rate Loans on the last day
of the then current Interest Period with respect thereto;
(d) any Interest Period relating to any LIBOR Rate Loan that
begins on the last LIBOR Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last LIBOR
Business Day of a calendar month; and
(e) any Interest Period relating to any LIBOR Rate Loan that
would otherwise extend beyond the Revolving Credit Loan Maturity Date,
the Line of Credit Maturity Date, the Term Loan A Maturity Date or the
Term Loan B Maturity Date, as the case may be, shall end on the
relevant Maturity Date.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (ii) may be
deducted when paid; and (v) there shall not
<PAGE> 19
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be deducted from the aggregate amount of Investments any decrease in the value
thereof.
Issuing Bank. NBD or FNBB
Landlord Consents and Waivers. The Landlord Consents and Waivers, dated
or to be dated on or prior the Closing Date, executed and delivered by each
lessor of the Real Estate leased by the Borrower or its Subsidiaries,
substantially in the form of Exhibit B hereto.
Letter of Credit Application. See Section 5.1.1.
Letter of Credit Participation. See Section 5.1.4.
Letter of Credit. See Section 5.1.1.
Leverage Ratio. As at any date of determination, the ratio of (i)
Senior Funded Debt of the Borrower and its Subsidiaries outstanding on such date
to (ii) Consolidated EBITDA for the Reference Period ended on such date.
LIBOR Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London.
Limited Investment Subsidiary. Any corporation, association trust, or
other business entity of which the designated parent shall at any time own
directly or indirectly through a Subsidiary or Subsidiaries at least a majority
(by number of votes) of the outstanding Voting Stock but less than 80% of such
Stock.
Limited Investment Subsidiary Guaranty. The Guaranty made by each
Limited Investment Subsidiary in favor of the Banks and the Co-Agents,
substantially in the form of Exhibit C-2 hereto.
LIBOR Rate. For any Interest Period with respect to a LIBOR Rate Loan,
the rate of interest equal to (i) the rate determined by the Administrative
Agent at which Dollar deposits for such Interest Period are offered based on
information presented on Telerate Page 3750 as of 11:00 a.m. London time on the
second LIBOR Business Day prior to the first day of such Interest Period,
divided by (ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if
applicable.
Line of Credit Base Rate Loans. Line of Credit Loans bearing interest
calculated by reference to the Base Rate.
Line of Credit Commitment. With respect to each Bank, the amount set
forth on Schedule 1 hereto as to the amount of such Banks commitment to make
Line of Credit Loans to the Borrower as the same may be reduced from time to
time; or if such commitment is terminated pursuant to the provision hereof,
zero.
<PAGE> 20
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Line of Credit Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate Line of Credit Commitment.
Line of Credit Loans. Revolving credit loans made or to be made by the
Banks to the Borrower pursuant to Section 2.1.2.
Line of Credit Maturity. May 31, 1998.
Line of Credit Note Record. A Record with respect to Line of Credit
Note.
Line of Credit Notes. See Section 2.4.2.
Line of Credit Usage. At the relevant date of reference to any Capital
Expenditure, Purchase or Acquisition:
(a) 80% of Capital Expenditures or Purchases; and
(b) 75% of Acquisitions.
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Subordination Agreement, the Security
Documents, and the Fee Letter.
Loan Request. See Section 2.6.
Loans. The Revolving Credit Loans, the Line of Credit Loans, Term Loan
A, and Term Loan B.
Majority Banks. As of any date, the Banks holding at least fifty-one
percent (51%) of the outstanding principal amount of the Notes on such date; and
if no such principal is outstanding, the Banks whose aggregate Commitments
constitutes at least fifty-one percent (51%) of the Total Commitment.
Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
NBD. NBD Bank, a Michigan banking corporation, in its individual
capacity.
Non-Discretionary Capital Expenditures: For any fiscal period, Capital
Expenditures equal to depreciation for such period.
<PAGE> 21
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Note Pledge Agreement. The Note Pledge Agreement, dated as of the date
hereof, among the Sellers, Tigera and the Administrative Agent, in the form and
substance satisfactory to the Banks.
Notes. The Revolving Credit Notes, the Line of Credit Notes, the Term
Loan A Notes and the Term Loan B Notes.
Obligations. All indebtedness, obligations and liabilities of the
Borrower and its Subsidiaries to any of the Banks and the Co-Agents,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents or in
respect of any of the Loans made or Reimbursement Obligations incurred or any of
the Notes, Letter of Credit Application, Letter of Credit or other instruments
at any time evidencing any thereof.
outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Perfection Certificates as defined in the
Security Agreements.
Permitted Acquisitions. See Section 10.5.1.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 10.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Purchases. Any purchase by the Borrower or any of its Subsidiaries of a
Person or the assets of such Person, provided that sixty five percent (65%) or
more of the purchase price thereof shall be allocated to the purchase of fixed
assets, Accounts Receivable or inventory.
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
<PAGE> 22
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Redemption Notes. The 10% Redemption Notes, each dated as of May 31,
1996, issued by the Borrower to the Sellers pursuant to the Stock Purchase
Agreement in the aggregate principal amount of $6,000,000.
Reference Banks. NBD and FNBB.
Reference Period. The period of four (4) consecutive fiscal quarters
(or such shorter period of one, two or three consecutive fiscal quarters as has
elapsed since the Closing Date).
Reimbursement Obligation. The Borrower's obligation to reimburse the
Administrative Agent and the Banks on account of any drawing under any Letter of
Credit as provided in Section 5.2.
Rental Obligations. All present or future obligations of the Borrower
or any of its Subsidiaries under any rental agreements or leases of real or
personal property, other than (i) obligations that can be terminated by the
giving of notice without liability to the Borrower or such Subsidiary in excess
of the liability for rent due as of the date on which such notice is given and
under which no penalty or premium is paid as a result of any such termination,
and (ii) obligations in respect of Capitalized Leases.
Restricted Payments. In relation to the Borrower and its Subsidiaries,
any (i) Distribution or (ii) any payment or prepayment by the Borrower or its
Subsidiaries to Tigera or to any other Affiliate of the Borrower or Tigera.
Revolver Base Rate Loans. Revolving Credit Loans bearing interest
calculated by reference to the Base Rate.
Revolving Credit Commitment. With respect to each Bank, the amount set
forth on Schedule 1 hereto as the amount of such Bank's commitment to make
Revolving Credit Loans to, and to participate in the issuance, extension and
renewal of Letters of Credit for the account of the Borrower, as the same may be
reduced from time to time; or if such commitment is terminated pursuant to the
provisions hereof, zero.
Revolving Credit Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate Revolving Credit Commitment.
Revolving Credit Loan Maturity Date. May 31, 2002.
Revolving Credit Loans. Revolving credit loans made or to be made by
the Banks to the Borrower pursuant to Section 2.1.1.
Revolving Credit Note Record. A Record with respect to a Revolving
Credit Note.
Revolving Credit Notes. See Section 2.4.1.
<PAGE> 23
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Security Agreements. The several Security Agreements, dated or to be
dated on or prior to the Closing Date, between the Borrower and its Subsidiaries
and the Administrative Agent and each in form and substance satisfactory to the
Banks and any Security Agreement entered into after date hereof, between any
Subsidiary of the Borrower and the Administrative Agent.
Security Documents. The Guarantees, the Security Agreements, the Stock
Pledge Agreement and the Note Pledge Agreement.
Sellers. James S. Harrington; Duane A. Gawron, Trustee of the Living
Trust of Duane A. Gawron; Margo Gawron; John E. Pylak, the Trustee of the John
E. Pylak Living Trust; Rebecca Pylak; and Kurt Cieszkowski.
Senior Funded Debt. At any time of determination, the sum of all
interest bearing Indebtedness of the Borrower and its Subsidiaries, including
without limitation, Capitalized Lease Obligations, but excluding Subordinated
Debt.
Stock Pledge Agreement. The Stock Pledge Agreement, dated or to be
dated on or prior to the Closing Date, between Tigera and the Administrative
Agent and in form and substance satisfactory to the Banks and the Co-Agents.
Stock Purchase Agreement. The Stock Redemption and Purchase Agreement
dated as of May 17, 1996, among the Sellers, the Borrower and Tigera.
Subordinated Debt. Indebtedness of the Borrower evidenced or incurred
under the Subordinated Debt Documents.
Subordination Agreement. The Subordination Agreement, dated or to be
dated on or prior to the Closing Date, among the Administrative Agent,
the Sellers, Tigera and the Borrower and in form and substance satisfactory to
the Banks.
Subordinated Debt Documents. The Subordination Agreement, the
Redemption Notes, the Contingent Notes and the Additional Subordinated Notes.
Subsidiary. A Limited Investment Subsidiary or Wholly-Owned Subsidiary.
Tax Allocation Agreement. The Tax Allocation and Indemnification
Agreement, dated on or prior to the Closing Date, by and between Tigera and the
Borrower and in the form delivered to the Co-Agents and the Banks on or prior to
the Closing Date.
Term Base Rate Loans. All or any portion of the Term Loans bearing
interest calculated by reference to the Base Rate.
Term Loan A. The term loan made or to be made by the Banks to the
Borrower on the Closing Date in the aggregate principal amount of $18,600,000
pursuant to Section 4.1.
Term Loan A Commitment. With respect to each Bank, the amount set forth
on Schedule 1 as to the amount of such Bank's commitment to make the Term Loan A
on the Closing Date.
<PAGE> 24
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Term Loan A Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate Term Loan A Commitment.
Term Loan A Note Record. A Record with respect to an Initial Term Note.
Term Loan A Notes. See Section 4.3.1
Term Loan A Maturity Date. May 31, 2002.
Term Loan B. The term loan made or to be made by the Banks to the
Borrower upon the conversion of the Line of Credit on the Conversion Date
pursuant to Section 4.2.
Term Loan B Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate principal amount of the Term Loan B as of the Conversion Date.
Term Loan B Maturity Date. May 31, 2002.
Term Loan B Notes. See Section 4.3.2.
Term Loans. Term Loan A and Term Loan B.
Term Notes. Term Loan A Notes and Term Loan B Notes.
Tigera. Tigera Group, Inc., a Delaware corporation, in its capacity as
limited Guarantor pursuant to the Tigera Guaranty.
Tigera Guaranty. The limited Guaranty of Tigera, dated or to be dated
on or prior to the Closing Date and in form and substance satisfactory to the
Banks which Guaranty shall be secured solely by a perfected first priority
security interest in, and recourse shall be limited to, all of the capital stock
of the Borrower owned by Tigera pursuant to the terms of the Stock Pledge
Agreement.
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time.
Total Funded Debt. At any time of determination, the sum of all
interest-bearing Indebtedness, including Capital Lease Obligations and
Subordinated Debt.
Total Line of Credit Commitment. The sum of the Line of Credit
commitments of the Banks, as in effect from time to time.
Total Revolving Credit Commitment. The sum of the Revolving Credit
Commitments of the Banks, as in effect from time to time.
<PAGE> 25
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Type. As to any Revolving Credit Loan, any Line of Credit Loan or all
or any portion of the Term Loan A or Term Loan B, its nature as a Base Rate Loan
or a LIBOR Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Co-Agents in the ordinary course of its business as a letter of credit
issuer and in effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
the Borrower does not reimburse the Co-Agents and the Banks on the date
specified in, and in accordance with, Section 5.2.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
Wholly-Owned Subsidiary. Any corporation, association, trust, or other
business entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries 80% or more of the outstanding
Voting Stock.
Wholly-Owned Subsidiary Guaranty. The Guaranty made by each Subsidiary
of the Borrower in favor of the Banks and the Co-Agents, substantially in the
form of Exhibit C-1 hereto.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
<PAGE> 26
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(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts,
have the meanings assigned to them therein, with the term "instrument"
being that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "Section" refers to that section
of this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to
any particular section or subdivision of this Credit Agreement.
2. REVOLVING CREDIT AND LINE OF CREDIT FACILITIES.
2.1. COMMITMENT TO LEND.
2.1.1. REVOLVING CREDIT LOANS. Subject to the terms and
conditions set forth in this Credit Agreement, each of the Banks
severally agrees to lend to the Borrower and the Borrower may borrow,
repay, and reborrow from time to time between the Closing Date and the
Revolving Credit Loan Maturity Date upon notice by the Borrower to the
Administrative Agent given in accordance with Section 2.6, such sums as
are requested by the Borrower up to a maximum aggregate amount
outstanding (after giving effect to all amounts requested) at any one
time equal to such Bank's Revolving Credit Commitment minus such Bank's
Revolving Credit Commitment Percentage of the sum of the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations, provided that
the sum of the outstanding amount of the Revolving Credit Loans (after
giving effect to all amounts requested) plus the Maximum Drawing Amount
and all Unpaid Reimbursement Obligations shall not at any time exceed
the lesser of (i) the Total Revolving Credit Commitment and (ii) the
Borrowing Base. The Revolving Credit Loans shall be made pro rata in
accordance with each Bank's Revolving Credit Commitment Percentage.
Each request for a Revolving Credit Loan hereunder shall constitute a
representation and warranty by the Borrower that the conditions set
forth in Section 12 and Section 13, in the case of the initial
Revolving Credit Loans to be made on the Closing Date, and Section 13,
in the case of all other Revolving Credit Loans, have been satisfied on
the date of such request.
2.1.2. LINE OF CREDIT LOANS. Subject to the terms and
conditions set forth in this Credit Agreement, each of the Banks
severally agrees to lend to the Borrower and the Borrower may borrow,
repay, and reborrow from time to time between the Closing Date and the
Line of Credit Maturity Date upon notice by the Borrower to the
Administrative Agent given in accordance with Section 2.6, such sums as
are requested by the Borrower up to a maximum aggregate amount
outstanding (after given effect to all amounts requested) at any one
time equal to such Bank's Line of Credit Commitment; provided that (i)
the sum of the outstanding amount of the Line of Credit Loans (after
giving effect to all amounts requested) shall not at any time exceed
the Total Line of Credit
<PAGE> 27
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Commitment, (ii) proceeds of the Line of Credit Loans used to make any
Capital Expenditure, Purchase or Acquisition shall not exceed the Line
of Credit Usage with respect thereto and (iii) notwithstanding the
foregoing, until such time as the Borrower hires a chief financial
officer, no proceeds of the Line of Credit Loans shall be used for
Acquisitions. The Line of Credit Loans shall be made pro rata in
accordance with each Bank's Line of Credit Commitment Percentage. Each
request for a Line of Credit Loan hereunder shall constitute a
representation and warranty by the Borrower that the conditions set
forth in Section 12 and Section 13, in the case of the initial Line of
Credit Loans to be made on the Closing Date, and Section 13, in the
case of all other Line of Credit Loans, have been satisfied on the date
of such request.
2.2. COMMITMENT FEE. The Borrower agrees to pay to the Administrative
Agent for the accounts of the Banks in accordance with the sum of their
respective Revolving Credit Commitment Percentages and Line of Credit Commitment
Percentages a commitment fee calculated at the annual rate equal to the
Applicable Margin on the average daily amount during each calendar quarter or
portion thereof from the Closing Date to the Revolving Credit Loan Maturity Date
by which the sum of (i) the Total Revolving Credit Commitment minus the sum of
the Maximum Drawing Amount and all Unpaid Reimbursement Obligations, plus (ii)
the Total Line of Credit Commitment, exceeds the outstanding amount of the sum
of (x) the Revolving Credit Loans plus (y) the Line of Credit Loans during such
calendar quarter. The commitment fee shall be payable quarterly in arrears on
the first day of each calendar quarter for the immediately preceding calendar
quarter commencing on the first such date following the date hereof, with a
final payment on the Revolving Credit Maturity Date or any earlier date on which
the Commitments shall terminate.
2.3. REDUCTION OF TOTAL COMMITMENT. The Borrower shall have the right
at any time and from time to time upon five (5) Business Days prior written
notice to the Administrative Agent to reduce by $100,000 or an integral multiple
thereof or terminate entirely (i) the Total Revolving Credit Commitment and/or
(ii) the Total Line of Credit Commitment, whereupon the Revolving Credit
Commitments and/or the Line of Credit Commitments, as the case may be, of the
Banks shall be reduced pro rata in accordance with their respective Revolving
Credit Commitment Percentages and/or Line of Credit Commitment Percentages of
the amount specified in such notice or, as the case may be, terminated. Promptly
after receiving any notice of the Borrower delivered pursuant to this Section
2.3, the Administrative Agent will notify the Banks of the substance thereof.
Upon the effective date of any such reduction or termination, the Borrower shall
pay to the Administrative Agent for the respective accounts of the Banks the
full amount of any commitment fee then accrued on the amount of the reduction.
No reduction or termination of such Commitments may be reinstated.
<PAGE> 28
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2.4. THE REVOLVING CREDIT NOTES AND LINE OF CREDIT NOTES.
2.4.1. THE REVOLVING CREDIT NOTES. The Revolving Credit
Loans shall be evidenced by separate promissory notes of the Borrower
in substantially the form of Exhibit D-1 hereto (each a "Revolving
Credit Note"), dated as of the Closing Date and completed with
appropriate insertions. One Revolving Credit Note shall be payable to
the order of each Bank in a principal amount equal to such Bank's
Revolving Credit Commitment or, if less, the outstanding amount of all
Revolving Credit Loans made by such Bank, plus interest accrued
thereon, as set forth below. The Borrower irrevocably authorizes each
Bank to make or cause to be made, at or about the time of the Drawdown
Date of any Revolving Credit Loan or at the time of receipt of any
payment of principal on such Bank's Revolving Credit Note, an
appropriate notation on such Bank's Revolving Credit Note Record
reflecting the making of such Revolving Credit Loan or (as the case may
be) the receipt of such payment. The outstanding amount of the
Revolving Credit Loans set forth on such Bank's Revolving Credit Note
Record shall be prima facie evidence of the principal amount thereof
owing and unpaid to such Bank, but the failure to record, or any error
in so recording, any such amount on such Bank's Revolving Credit Note
Record shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any Revolving Credit Note to make payments
of principal of or interest on any Revolving Credit Note when due.
2.4.2. LINE OF CREDIT NOTES. The Line of Credit Loans shall
be evidenced by separate promissory notes of the Borrower in
substantially the form of Exhibit D-2 hereto (each a "Line of Credit
Note"), dated as of the Closing Date and completed with appropriate
insertions. One Line of Credit Note shall be payable to the order of
each Bank in a principal amount equal to such Bank's Line of Credit
Commitment or, if less, the outstanding amount of all Line of Credit
Loans made by such Bank, plus interest accrued thereon, as set forth
below. The Borrower irrevocably authorizes each Bank to make or cause
to be made, at or about the time of the Drawdown Date of any Line of
Credit Loan or at the time of receipt of any payment of principal on
such Bank's Line of Credit Note, an appropriate notation on such Bank's
Line of Credit Note Record reflecting the making of such Line of Credit
Loan or (as the case may be) the receipt of such payment. The
outstanding amount of the Line of Credit Loans set forth on such Bank's
Line of Credit Note Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to such Bank, but the failure
to record, or any error in so recording, any such amount on such Bank's
Line of Credit Note Record shall not limit or otherwise affect the
obligations of the Borrower hereunder or under any Line of Credit Note
to make payments of principal of or interest on any Line of Credit Note
when due.
2.5. INTEREST ON REVOLVING CREDIT AND LINE OF CREDIT LOANS. Except as
otherwise provided in Section 6.11,
(a) Each Revolver Base Rate Loan and each Line of Credit Base
Rate Loan shall bear interest for the period commencing with the
Drawdown Date
<PAGE> 29
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thereof and ending on the last day of the Interest Period with respect
thereto at the Base Rate plus the Applicable Margin;
(b) Each Revolver LIBOR Rate Loan and each Line of Credit
LIBOR Rate Loan shall bear interest for the period commencing with the
Drawdown Date thereof and ending on the last day of the Interest Period
with respect thereto at the LIBOR Rate plus the Applicable Margin; and
(c) The Borrower promises to pay interest on each Revolving
Credit Loan and each Line of Credit Loan on each Interest Payment Date
with respect thereto.
2.6. REQUESTS FOR REVOLVING CREDIT AND LINE OF CREDIT LOANS. The
Borrower shall give to the Administrative Agent written notice in the form of
Exhibit E hereto (or telephonic notice confirmed in a writing in the form of
Exhibit E hereto) of each Revolving Credit Loan and each Line of Credit Loan
requested hereunder (a "Loan Request") (i) one (1) Business Day prior to the
proposed Drawdown Date of any Base Rate Loan, and (ii) three (3) Business Days
prior to the proposed Drawdown Date of any LIBOR Rate Loan. Each such notice
shall specify (a) the principal amount of the Revolving Credit Loan and/or Line
of Credit Loan requested, (b) the proposed Drawdown Date of each such Loan, (c)
the Interest Period for each such Loan and (d) the Type of each such Loan.
Promptly upon receipt of any such notice, the Administrative Agent shall notify
each of the Banks thereof. Each Loan Request shall be irrevocable and binding on
the Borrower and shall obligate the Borrower to accept the Revolving Credit Loan
and/or Line of Credit Loan, as the case may be, requested from the Banks on the
proposed Drawdown Date. Each Loan Request shall be in a minimum aggregate amount
of $500,000 or a whole multiple of $50,000 in excess thereof.
2.7. CONVERSION OPTIONS.
2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT OR
LINE OF CREDIT LOAN. The Borrower may elect from time to time to
convert any outstanding Revolving Credit Loan or Line of Credit Loan to
a Revolving Credit Loan or Line of Credit Loan of another Type,
provided that (i) with respect to any such conversion of a LIBOR Rate
Loan to a Base Rate Loan, the Borrower shall give the Administrative
Agent at least two (2) Business Days prior written notice of such
election, (ii) with respect to any such conversion of a Base Rate Loan
to a LIBOR Rate Loan, the Borrower shall give the Administrative Agent
at least three (3) LIBOR Business Days prior written notice of such
election, (iii) with respect to any such conversion of a LIBOR Rate
Loan into a Base Rate Loan, such conversion shall only be made on the
last day of the Interest Period with respect thereto, and (iv) no such
Loan may be converted into any other Type of Loan when any Default or
Event of Default has occurred and is continuing. On the date on which
such conversion is being made each Bank shall take such action as is
necessary to transfer its Revolving Credit Commitment Percentage of
such Revolving Credit Loans or, as the case may be, its Line of Credit
Commitment Percentage of such Line of Credit Loans to its
<PAGE> 30
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Domestic Lending Office or its LIBOR Lending Office, as the case may
be. All or any part of outstanding (i) Revolving Credit Loans of any
Type may be converted into a Revolving Credit Loan of another Type, and
(ii) Line of Credit Loans of any Type may be converted into a Line of
Credit Loan of another Type, in each case as provided herein, provided
that any partial conversion shall be in an aggregate principal amount
of $250,000 or a whole multiple of $50,000 in excess thereof. Each
Conversion Request relating to the conversion of a Revolving Credit
Loan or Line of Credit Loan from one Type to another shall be
irrevocable by the Borrower.
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT OR LINE OF
CREDIT LOAN. Any Revolving Credit Loan or Line of Credit Loan of any
Type may be continued as a Revolving Credit Loan or Line of Credit
Loan, as the case may be, of the same Type upon the expiration of an
Interest Period with respect thereto by compliance by the Borrower with
the notice provisions contained in Section 2.7.1; provided that no
LIBOR Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Loan on the last day of the first Interest
Period relating thereto ending during the continuance of any Default or
Event of Default of which officers of the Administrative Agent active
upon the Borrower's account have actual knowledge. In the event that
the Borrower fails to provide any such notice with respect to the
continuation of any LIBOR Rate Loan as such, then such LIBOR Rate Loan
shall be automatically converted to a Base Rate Loan on the last day of
the first Interest Period relating thereto. The Administrative Agent
shall notify the Banks promptly when any such automatic conversion
contemplated by this Section 2.7 is scheduled to occur.
2.7.3. LIBOR RATE LOANS. Any conversion to or from LIBOR
Rate Loans shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal
amount of all LIBOR Rate Loans having the same Interest Period shall
not be less than $1,000,000 or an integral multiple of $100,000 in
excess thereof.
2.8. FUNDS FOR REVOLVING CREDIT AND LINE OF CREDIT LOAN.
2.8.1. FUNDING PROCEDURES. Not later than 10:00 a.m.
(Detroit time) on the proposed Drawdown Date of any Revolving Credit
Loans or Line of Credit Loans, each of the Banks will make available to
the Administrative Agent, at the Administrative Agent's Head Office in
immediately available funds, the amount of such Bank's Revolving Credit
Commitment Percentage of the amount of the requested Revolving Credit
Loans and/or such Bank's Line of Credit Commitment Percentage of the
amount of the requested Line of Credit Loans. Upon receipt from each
Bank of such amount, and upon receipt of the documents required by
Sections 12 and 13 and the satisfaction of the other conditions set
forth therein, to the extent applicable, the Administrative Agent will
make available to the Borrower the aggregate amount of such Revolving
Credit Loans and/or Line of Credit Loans requested and made available
to the Administrative Agent by the Banks. The failure or refusal of any
Bank to make available to the
<PAGE> 31
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Administrative Agent at the aforesaid time and place on any Drawdown
Date the amount of its Revolving Credit Commitment Percentage and/or
Line of Credit Commitment Percentage, as the case may be, of the
requested Loans shall not relieve any other Bank from its several
obligation hereunder to make available to the Administrative Agent the
amount of such other Bank's Revolving Credit Commitment Percentage
and/or Line of Credit Commitment Percentage of any requested Revolving
Credit Loans and/or Line of Credit Loans.
2.8.2. ADVANCES BY ADMINISTRATIVE AGENT. The Administrative
Agent may, unless notified to the contrary by any Bank prior to a
Drawdown Date, assume that such Bank has made available to the
Administrative Agent on such Drawdown Date the amount of such Bank's
Revolving Credit Commitment Percentage and/or Line of Credit Commitment
Percentage of the Revolving Credit Loans and/or Line of Credit Loans
requested to be made on such Drawdown Date, and the Administrative
Agent may (but it shall not be required to), in reliance upon such
assumption, make available to the Borrower a corresponding amount. If
any Bank makes available to the Administrative Agent such amount on a
date after such Drawdown Date, such Bank shall pay to the
Administrative Agent on demand an amount equal to the product of (i)
the average computed for the period referred to in clause (iii) below,
of the weighted average interest rate paid by the Administrative Agent
for federal funds acquired by the Administrative Agent during each day
included in such period, times (ii) the amount of such Bank's Revolving
Credit Commitment Percentage of such Revolving Credit Loans or, as the
case may be, such Bank's Line of Credit Commitment Percentage of such
line of Credit Loans, times (iii) a fraction, the numerator of which is
the number of days that elapse from and including such Drawdown Date to
the date on which the amount of such Bank's Revolving Credit Commitment
Percentage of such Revolving Credit Loans or, as the case may be, such
Bank's Line of Credit Commitment Percentage of such Line of Credit
Loans shall become immediately available to the Administrative Agent,
and the denominator of which is 365. A statement of the Administrative
Agent submitted to such Bank with respect to any amounts owing under
this paragraph shall be prima facie evidence of the amount due and
owing to the Administrative Agent by such Bank. If the amount of such
Bank's Revolving Credit Commitment Percentage of such Revolving Credit
Loans or, as the case may be, such Bank's Line of Credit Commitment
Percentage of such Line of Credit Loans is not made available to the
Administrative Agent by such Bank within three (3) Business Days
following such Drawdown Date, the Administrative Agent shall be
entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Revolving
Credit Loans and/or Line of Credit Loans made on such Drawdown Date.
2.9. CHANGE IN BORROWING BASE. The Borrowing Base shall be determined
monthly (or at such other interval as may be specified pursuant to
Section 9.4(e)) by the Administrative Agent by reference to the Borrowing Base
Report delivered to the Banks and the Administrative Agent.
<PAGE> 32
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3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
3.1. MATURITY. The Borrower promises to pay on the Revolving Credit
Loan Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
3.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time
the sum of the outstanding amount of the Revolving Credit Loans, the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations exceeds the lesser of
(i) the Total Revolving Credit Commitment and (ii) the Borrowing Base, then the
Borrower shall immediately pay the amount of such excess to the Administrative
Agent for the respective accounts of the Banks for application: first, to any
Unpaid Reimbursement Obligations; second, to the Revolving Credit Loans; and
third, to provide to the Administrative Agent cash collateral for Reimbursement
Obligations as contemplated by Section 5.2(b) and (c). Each payment of any
Unpaid Reimbursement Obligations or prepayment of Revolving Credit Loans shall
be allocated among the Banks, in proportion, as nearly as practicable, to each
Reimbursement Obligation or (as the case may be) the respective unpaid principal
amount of each Bank's Revolving Credit Note, with adjustments to the extent
practicable to equalize any prior payments or repayments not exactly in
proportion. If an Event of Default shall have occurred and be continuing upon
the request of the Banks the Borrower shall establish a lockbox and blocked
account with the Administrative Agent into which account all Accounts Receivable
(whether received in cash, checks or otherwise) and all other repayments and
proceeds paid or to be paid to the Borrower shall be deposited. All such
amounts, when good funds, shall be applied first to the repayment of the
Revolving Credit Loans and second to the Line of Credit Loans. Such arrangements
shall be evidenced by an amendment to this Credit Agreement and such other
documentation as the Administrative and the Banks shall reasonably require to
effect the same, satisfactory to, and executed by, each party hereto.
3.3. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. The Borrower
shall have the right, at its election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, provided that any full or partial prepayment of the outstanding amount
of any LIBOR Rate Loans pursuant to this Section 3.3 may be made only on the
last day of the Interest Period relating thereto. The Borrower shall give the
Administrative Agent, no later than 10:00 a.m. (Detroit time) at least one (1)
Business Day prior written notice of any proposed prepayment pursuant to this
Section 3.3 of any Revolving Credit Loans, specifying the proposed date of
prepayment of Base Rate Loans and three (3) LIBOR Business Days notice of any
proposed prepayment pursuant to this Section 3.3 of the LIBOR Rate Loans, in
each case specifying to the proposed date of prepayment and the principal amount
to be prepaid. Each such partial prepayment of the Revolving Credit Loans shall
be in an integral multiple of $100,000, shall be applied, in the absence of
instruction by the Borrower, first to the principal of Base Rate Loans and then
to the principal of LIBOR Rate Loans. Each partial prepayment shall be allocated
among the Banks, in proportion, as nearly as practicable, to the respective
unpaid principal amount of each
<PAGE> 33
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Bank's Revolving Credit Note, with adjustments to the extent practicable to
equalize any prior repayments not exactly in proportion.
4. THE TERM LOANS.
4.1. COMMITMENT TO LEND TERM LOAN A. Subject to the terms and
conditions set forth in this Credit Agreement, each Bank agrees to lend to the
Borrower on the Closing Date the amount of its Term Loan A Commitment Percentage
of the principal amount of $18,600,000.
4.2. CONVERSION OF LINE OF CREDIT LOANS TO TERM LOAN B. Subject to
the terms and conditions hereinafter set forth, including, without limitation,
the satisfaction of the conditions set forth in Sections 12 and 13 hereof, on
the Conversion Date the aggregate outstanding Line of Credit Loans shall be
converted into the Term Loan B in an aggregate principal amount equal to the
aggregate outstanding principal balance of the Line of Credit Loans on that
date, held severally by the Banks in accordance with their Line of Credit
Commitment Percentages. On the Conversion Date the Borrower shall pay to the
Administrative Agent for the pro rata accounts of the Banks all interest accrued
to such date on the Line of Credit Loans, together with any commitment fees and
other fees payable to the Administrative Agent and the Banks hereunder, and, as
soon as reasonably practicable after such payment, each Bank shall surrender to
the Borrower its Line of Credit Notes against receipt of its Term Loan B Note
evidencing the amount of the outstanding Line of Credit Notes so converted.
4.3. THE TERM NOTES.
4.3.1. THE TERM LOAN A NOTES. The Term Loan A shall be
evidenced by separate promissory notes of the Borrower in substantially
the form of Exhibit F-1 hereto (each a "Term Loan A Note"), dated the
Closing Date and completed with appropriate insertions. One Term Loan A
Note shall be payable to the order of each Bank in a principal amount
equal to such Bank's Term Loan A Commitment Percentage of the Term Loan
A and representing the obligation of the Borrower to pay to such Bank
such principal amount or, if less, the outstanding amount of such
Bank's Term Loan A Commitment Percentage of the Term Loan A, plus
interest accrued thereon, as set forth below. The Borrower irrevocably
authorizes each Bank to make or cause to be made a notation on such
Bank's Term Loan A Note Record reflecting the original principal amount
of such Bank's Term Loan A Commitment Percentage of the Term Loan A
and, at or about the time of such Bank's receipt of any principal
payment on such Bank's Term Note A, an appropriate notation on such
Bank's Term Loan A Note Record reflecting such payment. The aggregate
unpaid amount set forth on such Bank's Term Note A Record shall be
prima facie evidence of the principal amount thereof owing and unpaid
to such Bank, but the failure to record, or any error in so recording,
any such amount on such Bank's Term Note A Record shall not affect the
obligations of the Borrower hereunder or under any Term Loan A Note to
make payments of principal of and interest on any Term Loan A Note when
due.
<PAGE> 34
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4.3.2. THE TERM LOAN B NOTES. The Term Loan B outstanding
immediately after conversion pursuant to Section 4.2 shall be evidenced
by separate promissory notes of the Borrower and in substantially the
form of Exhibit F-2 hereto (each a "Term Loan B Note"), dated as of the
Conversion Date and completed with appropriate insertions. One Term
Loan B Note shall be payable to the order of each Bank in a principal
amount equal to such Bank's Term Loan B Commitment Percentage of the
Term Loan B, plus interest accrued thereon, as set forth below. The
Borrower irrevocably authorizes each Bank to make or cause to be made a
notation on Term Loan B Note Record reflecting the original principal
amount of each Bank's Term Loan B Commitment Percentage of the Term
Loan B and, at or about the time of such Bank's receipt of any
principal payment on such Bank's Term Loan B Note, an appropriate
notation on such Bank's Term Loan B Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Term Loan
B Note Record shall be prima facie evidence of the principle amount
thereof owing and unpaid to such Bank, but the failure to record, or
any error in so recording, any such amount on the Term Loan B Note
Record shall not affect the obligations of the Borrower hereunder or
under any Term Loan B Note to make payments of principal of and
interest on an Term Loan B Note when due.
4.4. MANDATORY PAYMENTS OF PRINCIPAL TERM LOANS.
4.4.1. TERM LOAN A. The Borrower promises to pay to the
Administrative Agent for the account of the Banks the principal amount of the
Term Loan A in twenty two (22) consecutive quarterly installments, payable on
the last Business Day of each calendar year quarter ending within any period set
forth below in the amount set forth opposite such period, commencing on March
31, 1997 with a final payment on the Term Loan A Maturity Date in an amount
equal to the unpaid balance of the Term Loan A.
<TABLE>
<CAPTION>
Percentage of
Amount of Total Original Principal
Annual Installment Amount of Term Loan A
Period ------------------ ---------------------
------
<S> <C> <C>
01/01/97 - 03/31/97 $930,000 5%
04/01/97 - 06/30/97 $930,000 5%
07/01/97 - 06/30/98 $2,790,000 15%
07/01/98 - 06/30/99 $2,790,000 15%
07/01/99 - 06/30/00 $3,720,000 20%
07/01/00 - 06/30/01 $3,720,000 20%
07/01/01 - 03/31/02 $2,790,000 15%
April 2002 - Term Loan Maturity
Date $930,000 5%
</TABLE>
<PAGE> 35
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4.4.2. TERM LOAN B. The Borrower promises to pay to the
Administrative Agent for the account of the Banks the principal amount
of the Term Loan B in sixteen (16) equal consecutive quarterly
installments, payable on the last Business Day of each calendar quarter
commencing with the calendar quarter ended September 30, 1998, with the
final payment on the Term Loan B Maturity Date in an amount equal to
the unpaid balance of the Term Loan B.
4.5. EXCESS CASH FLOW PAYMENTS. For each twelve (12) month period
ending on or after June 30, 1997, the Borrower shall make a prepayment of
principal on the Term Loans in an amount equal to fifty percent (50%) of
Consolidated Excess Cash Flow, such mandatory prepayment to be due sixty (60)
days after the end of each applicable twelve (12) month period and to be applied
pro rata to each of the Term Loans based on the then outstanding amounts of each
of the Term Loans and applied against the scheduled installments of principal
due on the respective Term Loans in the inverse order of maturity.
4.6. OPTIONAL PREPAYMENT OF TERM LOANS. The Borrower shall have the
right at any time to prepay the Term Notes on or before the Term Loan A Maturity
Date or, as the case may be, the Term Loan B Maturity Date, as the case may be,
as a whole, or in part, upon not less than three (3) Business Days prior written
notice to the Administrative Agent, without premium or penalty, provided that
(i) each partial prepayment shall be in the principal amount of $250,000 or an
integral multiple in excess thereof, (ii) no portion of the Term Loans bearing
interest at the LIBOR Rate may be prepaid pursuant to this Section 4.6 except on
the last day of the Interest Period relating thereto, (iii) each partial
prepayment shall be allocated among the Banks, in proportion, as nearly as
practicable, to the respective outstanding amount of each Bank's Term Note, with
adjustments to the extent practicable to equalize any prior prepayments not
exactly in proportion, and (iv) each such prepayment shall be applied, at the
election of the Borrower, to either the outstanding principal amount of the Term
Loan A or Term Loan B, or any combination thereof. Any prepayment of principal
of the Term Loans shall include all interest accrued to the date of prepayment
and shall be applied against the scheduled installments of principal due on the
Term Loans in the order of maturity. No amount repaid with respect to the Term
Loans may be reborrowed.
4.7. INTEREST ON TERM LOANS. Except as otherwise provided in Section
6.11, the Term Loans shall bear interest during each Interest Period
relating to all or any portion of the Term Loans at the following
rates:
(a) to the extent that all or any portion of the Term
Loans bear interest during such Interest Period at the Base
Rate, the Term Loans or such portion shall bear interest
during such Interest Period at the rate per annum equal to the
Base Rate plus the Applicable Margin.
(b) To the extent that all or any portion of the Term
Loans bear interest during such Interest Period at the LIBOR
Rate, the Term Loans
<PAGE> 36
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or such portion shall bear interest during such Interest
Period at the rate per annum equal to the LIBOR Rate plus the
Applicable Margin.
The Borrower promises to pay interest on the Term Loans or any portion thereof
outstanding during each Interest Period in arrears on each Interest Payment Date
applicable to such Interest Period.
4.8. NOTIFICATION BY BORROWER. The Borrower shall notify the Agent,
such notice to be irrevocable, at least one (1) Business Day prior to the
Drawdown Date of the Term Loan A or Conversion Date of the Term Loan B if all or
any portion of the Term Loan A and/or Term Loan B is to bear interest at the
Base Rate and at least three (3) LIBOR Business Days prior to the Drawdown Date
of the Term Loan A or Conversion Date of the Term Loan B if all or any portion
of the Term Loan A and/or Term Loan B is to bear interest at the LIBOR Rate.
After each Term Loan has been made, the provisions of Section 2.7 shall apply
mutatis mutandis with respect to all or any portion of such Term Loan so that
the Borrower may have the same interest rate options with respect to all or any
portion of such Term Loan as it would be entitled to with respect to the
Revolving Credit Loans and the Line of Credit Loans, subject to the same
limitations as applied to Revolving Credit Loans and the Line of Credit Loans.
4.9. AMOUNTS, ETC. Any portion of the Term Loans bearing interest
at the LIBOR Rate relating to any Interest Period shall be in the amount of
$500,000 or a larger integral multiple of $100,000 in excess thereof. No
Interest Period relating to the Term Loans or any portion thereof bearing
interest at the LIBOR Rate shall extend beyond the date on which a regularly
scheduled installment payment of the principal of the Term Loans is to be made
unless a portion of the Term Loans at least equal to such installment payment
has an Interest Period ending on such date or is then bearing interest at the
Base Rate.
5. LETTERS OF CREDIT.
5.1. LETTER OF CREDIT COMMITMENTS.
5.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
terms and conditions hereof and the execution and delivery by the
Borrower of a letter of credit application on the Issuing Bank's
customary form (a "Letter of Credit Application"), the Issuing Bank on
behalf of the Banks and in reliance upon the agreement of the Banks set
forth in Section 5.1.4 and upon the representations and warranties of
the Borrower contained herein, agrees, each in its individual capacity,
to issue, extend and renew for the account of the Borrower one or more
standby or documentary letters of credit (individually, a "Letter of
Credit"), in such form as may be requested from time to time by the
Borrower and agreed to by the Issuing Bank; provided, however, that,
after giving effect to such request, the sum of (i) the Maximum Drawing
Amount of all Letters of Credit, (ii) all Unpaid Reimbursement
Obligations, and (iii) the amount of all Revolving Credit Loans
outstanding shall not exceed the lesser of (A) the Total Revolving
Credit Commitment and (B) the Borrowing Base.
<PAGE> 37
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5.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the satisfaction of the Issuing Bank.
In the event that any provision of any Letter of Credit Application
shall be inconsistent with any provision of this Credit Agreement, then
the provisions of this Credit Agreement shall, to the extent of any
such inconsistency, govern.
5.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit
issued, extended or renewed hereunder shall, among other things, (i)
provide for the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when accompanied by
the documents described therein, and (ii) have an expiry date no later
than the date which is fourteen (14) days (or, if the Letter of Credit
is confirmed by a confirmer or otherwise provides for one or more
nominated persons, forty-five (45) days) prior to the Revolving Credit
Loan Maturity Date. Each Letter of Credit so issued, extended or
renewed shall be subject to the Uniform Customs.
5.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank
severally agrees that it shall be absolutely liable, without regard to
the occurrence of any Default or Event of Default or any other
condition precedent whatsoever, to the extent of such Bank's Revolving
Credit Commitment Percentage, to reimburse the Issuing Bank on demand
for the amount of each draft paid by the Issuing Bank under each Letter
of Credit to the extent that such amount is not reimbursed by the
Borrower pursuant to Section 5.2 (such agreement for a Bank being
called herein the "Letter of Credit Participation" of such Bank).
5.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a
Bank shall be treated as the purchase by such Bank of a participating
interest in the Borrower's Reimbursement Obligation under Section 5.2
in an amount equal to such payment. Each Bank shall share in accordance
with its participating interest in any interest which accrues pursuant
to Section 5.2.
5.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce the
Issuing Bank to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Issuing Bank, for the account of the Issuing Bank or (as the case may be) the
Banks, with respect to each Letter of Credit issued, extended or renewed by the
Issuing Bank hereunder,
(a) except as otherwise expressly provided in Section 5.2(b)
and (c), on each date that any draft presented under such Letter of
Credit is honored by the Issuing Bank, or the Issuing Bank otherwise
makes a payment with respect thereto, (i) the amount paid by the
Issuing Bank under or with respect to such Letter of Credit, and (ii)
the amount of any taxes, fees, charges or other costs and expenses
whatsoever incurred by the Issuing Bank or any Bank in connection with
any payment made by the Issuing Bank or any Bank under, or with respect
to, such Letter of Credit,
<PAGE> 38
-31-
(b) upon the reduction (but not termination) of the Total
Revolving Credit Commitment to an amount less than the Maximum Drawing
Amount, an amount equal to such difference, which amount shall be held
by the Administrative Agent for the benefit of the Banks and the
Co-Agents as cash collateral for all Reimbursement Obligations, and
(c) upon the termination of the Total Revolving Credit
Commitment, or the acceleration of the Reimbursement Obligations with
respect to all Letters of Credit in accordance with Section 14, an
amount equal to the then Maximum Drawing Amount on all Letters of
Credit, which amount shall be held by the Administrative Agent for the
benefit of the Banks and the Co-Agents as cash collateral for all
Reimbursement Obligations.
Each such payment shall be made to the Administrative Agent at the
Administrative Agent's Head Office in immediately available funds. Interest on
any and all amounts remaining unpaid by the Borrower under this Section 5.2 at
any time from the date such amounts become due and payable (whether as stated in
this Section 5.2, by acceleration or otherwise) until payment in full (whether
before or after judgment) shall be payable to the Administrative Agent on demand
at the rate specified in Section 6.11 for overdue principal on the Loans.
5.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Issuing
Bank shall notify the Borrower of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. If the Borrower fails to reimburse the Issuing
Bank as provided in Section 5.2 on or before the date that such draft is paid or
other payment is made by the Issuing Bank, the Issuing Bank may at any time
thereafter notify the Banks of the amount of any such Unpaid Reimbursement
Obligation. No later than 2:00 p.m. (Detroit time) on the Business Day next
following the receipt of such notice, each Bank shall make available to the
Issuing Bank, at the Administrative Agent's Head Office, in immediately
available funds, such Bank's Revolving Credit Commitment Percentage of such
Unpaid Reimbursement Obligation, together with an amount equal to the product of
(i) the average, computed for the period referred to in clause (iii) below, of
the weighted average interest rate paid by the Issuing Bank for federal funds
acquired by the Issuing Bank during each day included in such period, times (ii)
the amount equal to such Bank's Revolving Credit Commitment Percentage of such
Unpaid Reimbursement Obligation, times (iii) a fraction, the numerator of which
is the number of days that elapse from and including the date the Issuing Bank
paid the draft presented for honor or otherwise made payment to the date on
which such Bank's Revolving Credit Commitment Percentage of such Unpaid
Reimbursement obligation shall become immediately available to the Issuing Bank,
and the denominator of which is 360. The responsibility of the Issuing Bank to
the Borrower and the Banks shall be only to determine that the documents
(including each draft) delivered under each Letter of Credit in connection with
such presentment shall be in conformity in all material respects with such
Letter of Credit.
<PAGE> 39
-32-
5.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Section 5 shall be absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Issuing Bank, any other Bank
or any beneficiary of a Letter of Credit absent the gross negligence or willful
misconduct of the Issuing Bank or any other Bank. The Borrower further agrees
with the Issuing Bank and the other Banks that the Issuing Bank and the other
Banks shall not be responsible for, and the Borrower's Reimbursement Obligations
under Section 5.2 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among the Borrower, the beneficiary of any Letter of
Credit or any financing institution or other party to which any Letter of Credit
may be transferred or any claims or defenses whatsoever of the Borrower against
the beneficiary of any Letter of Credit or any such transferee. The Issuing Bank
and the other Banks shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Borrower agrees that
any action taken or omitted by the Issuing Bank or any other Bank under or in
connection with each Letter of Credit and the related drafts and documents, if
done in good faith, shall be binding upon the Borrower and shall not result in
any liability on the part of the Issuing Bank or any other Bank to the Borrower.
5.5. RELIANCE BY ISSUER. To the extent not inconsistent with Section
5.4, the Issuing Bank shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Issuing Bank. The Issuing Bank shall be fully
justified in failing or refusing to take any action with respect to any Letter
of Credit unless it shall first have received such advice or concurrence of the
Majority Banks as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Issuing Bank shall in all cases be fully
protected in acting, or in refraining from acting, under this Credit Agreement
in accordance with a request of the Majority Banks, and such request and any
action taken or failure to act pursuant thereto shall be binding upon the Banks
and all future holders of the Revolving Credit Notes or of a Letter of Credit
Participation.
5.6. LETTER OF CREDIT FEE. The Borrower shall, on the date of
issuance or any extension or renewal of any Letter of Credit and at such other
time or times as such charges are customarily made by the Issuing Bank, pay a
fee (in each case, a "Letter of Credit Fee") to the Issuing Bank (i) in respect
of each standby Letter of Credit equal to the Applicable Margin for LIBOR Rate
Loans multiplied by the face amount of such standby Letter of Credit plus the
Issuing Bank's customary
<PAGE> 40
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issuance fee, and (ii) in respect of each documentary Letter of Credit equal to
(A) the Issuing Bank's customary issuance fee or amendment fee, as the case may
be, plus (B) the Issuing Bank's customary time negotiation fee per document
examination plus an amount which is based upon the face amount of such
documentary Letter of Credit to be determined by the Issuing Bank consistent
with its usual practices, such Letter of Credit Fee (but not such issuance,
amendment, negotiation or document examination fee) to be for the accounts of
the Banks in accordance with their respective Revolving Credit Commitment
Percentages.
6. CERTAIN GENERAL PROVISIONS.
6.1. CLOSING FEE. The Borrower agrees to pay to the Co-Agents on the
Closing Date a closing fee in the amount set forth in the Fee Letter.
6.2. AGENT'S FEE. The Borrower shall pay to the Administrative Agent
and/or the Documentation Agent an annual Agents' fee as set forth in the Fee
Letter of even date herewith.
6.3. FUNDS FOR PAYMENTS.
6.3.1. PAYMENTS TO ADMINISTRATIVE AGENT. All payments of
principal, interest, Reimbursement Obligations, commitment fees, Letter
of Credit Fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Administrative Agent, for the
respective accounts of the Banks and the Co-Agent's, at the
Administrative Agent's Head Office, in each case in immediately
available funds.
6.3.2. NO OFFSET, ETC. All payments by the Borrower
hereunder and under any of the other Loan Documents shall be made
without setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions
of any nature now or hereafter imposed or levied by any jurisdiction or
any political subdivision thereof or taxing or other authority therein
unless the Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the Borrower with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, the Borrower will pay to the Administrative Agent, for
the account of the Banks or (as the case may be) the Co-Agents, on the
date on which such amount is due and payable hereunder or under such
other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Co-Agents to receive the same net
amount which the Banks or the Co-Agents would have received on such due
date had no such obligation been imposed upon the Borrower. The
Borrower will deliver promptly to the Administrative Agent certificates
or other valid vouchers for all taxes or other charges deducted from or
paid with respect to payments made by the Borrower hereunder or under
such other Loan Document.
6.4. COMPUTATIONS. All computations of interest on the Loans and of
commitment fees, Letter of Credit Fees or other fees shall, unless otherwise
expressly
<PAGE> 41
-34-
provided herein, be based on a 360-day year and paid for the actual number of
days elapsed. Whenever a payment hereunder or under any of the other Loan
Documents becomes due on a day that is not a Business Day (or a LIBOR Business
Day, if applicable), the due date for such payment shall be extended to the next
succeeding Business Day (or LIBOR Business Day, if applicable), and interest
shall accrue during such extension. The outstanding amount of the Loans as
reflected on the respective Records from time to time shall be considered
correct and binding on the Borrower unless within five (5) Business Days after
receipt of any notice by the Administrative Agent or any of the Banks of such
outstanding amount, the Administrative Agent or such Bank shall notify the
Borrower to the contrary.
6.5. INABITLITY TO DETERMINE LIBOR RATE. In the event, prior to the
commencement of any Interest Period relating to any LIBOR Rate Loan, the
Administrative Agent shall determine or be notified by the Majority Banks that
adequate and reasonable methods do not exist for ascertaining the LIBOR Rate
that would otherwise determine the rate of interest to be applicable to any
LIBOR Rate Loan during any Interest Period, the Administrative Agent shall
forthwith give notice of such determination (which shall be conclusive and
binding on the Borrower and the Banks) to the Borrower and the Banks. In such
event (i) any Loan Request or Conversion Request with respect to LIBOR Rate
Loans shall be automatically withdrawn and shall be deemed a request for Base
Rate Loans, (ii) each LIBOR Rate Loan will automatically, on the last day of the
then current Interest Period relating thereto, become a Base Rate Loan, and
(iii) the obligations of the Banks to make LIBOR Rate Loans shall be suspended
until the Majority Banks determine that the circumstances giving rise to such
suspension no longer exist, whereupon the Administrative Agent upon the
instruction of the Majority Banks, shall so notify the Borrower and the Banks.
6.6. ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Bank to make or maintain
LIBOR Rate Loans, such Bank shall forthwith give notice of such circumstances to
the Borrower and the other Banks and thereupon (i) the commitment of such Bank
to make LIBOR Rate Loans or convert Base Rate Loans to LIBOR Rate Loans shall
forthwith be suspended and (ii) such Bank's Loans then outstanding as LIBOR Rate
Loans, if any, shall be converted automatically to Base Rate Loans on the last
day of each Interest Period applicable to such LIBOR Rate Loans or within such
earlier period as may be required by law. The Borrower hereby agrees promptly to
pay the Administrative Agent for the account of such Bank, upon demand by such
Bank, any additional amounts necessary to compensate such Bank for any costs
incurred by such Bank in making any conversion in accordance with this
Section 6.6, including any interest or fees payable by such Bank to lenders of
funds obtained by it in order to make or maintain its LIBOR Rate Loans
hereunder.
6.7. ADDITIONAL COSTS, ETC. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation
<PAGE> 42
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thereof and requests, directives, instructions and notices at any time or from
time to time hereafter made upon or otherwise issued to any Bank or the
Administrative Agent by any central bank or other fiscal, monetary or other
authority (whether or not having the force of law), shall:
(a) subject any Bank or the Administrative Agent to any tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature
with respect to this Credit Agreement, the other Loan Documents, any
Letters of Credit, such Bank's Commitments or the Loans (other than
taxes based upon or measured by the income or profits of such Bank or
the Administrative Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Loans or any other amounts payable
to any Bank or the Administrative Agent under this Credit Agreement or
any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy
or other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of an office of any
Bank, or
(d) impose on any Bank or the Administrative Agent any other
conditions or requirements with respect to this Credit Agreement, the
other Loan Documents, any Letters of Credit, the Loans, such Bank's
Commitments, or any class of loans, letters of credit or commitments of
which any of the Loans or such Bank's Commitments forms a part, and the
result of any of the foregoing is
(i) to increase the cost to any Bank of making,
funding, issuing, renewing, extending or maintaining any of
the Loans or such Bank's Commitments or any Letter of Credit,
or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Bank
or the Administrative Agent hereunder on account of such
Bank's Commitments, any Letter of Credit or any of the Loans,
or
(iii) to require such Bank or the Administrative
Agent to make any payment or to forego any interest or
Reimbursement Obligation or other sum payable hereunder, the
amount of which payment or foregone interest or Reimbursement
Obligation or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by such
Bank or the Administrative Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by such Bank or
(as the case may be) the Administrative Agent at any time and from time to time
and as often as the occasion therefor may arise, pay to such Bank or the
Administrative Agent
<PAGE> 43
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such additional amounts as will be sufficient to compensate such Bank or the
Administrative Agent for such additional cost, reduction, payment or foregone
interest or Reimbursement Obligation or other sum. On or before the date it
becomes a party to this Credit Agreement and from time to time thereafter upon
any change in status rendering any certificate or document previously delivered
pursuant to this Section 6.7 invalid or inaccurate, each Bank that is organized
under the laws of a jurisdiction outside the United States shall (but, with
respect to any renewal or change in status, if legally able to do so) deliver to
the Borrower such certificates, documents or other evidence, as required by the
Code or Treasury Regulations issued pursuant thereto, including Internal Revenue
Service Form 1001 or Form 4224 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-1, 1.1441-4 or
1.1441-6(c) or any subsequent version thereof or subsequent version thereto,
properly completed and duly executed by such Bank establishing that such payment
is (1) not subject to United States Federal withholding tax under the Code
because such payment is effectively connected with conduct by such Bank of a
trade or business in the United States or (2) totally exempt from United States
Federal withholding tax, or (other than in the case of such Bank on the date
such Bank became a party to this Credit Agreement), subject to a reduced rate of
such tax under a provision of an applicable tax treaty. The Borrower shall not
be required to pay any additional amounts to any Bank pursuant to Section 6.3 or
this Section 6.7 to the extent that the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank to comply with the
provisions of the preceding sentence.
Any Bank claiming any additional amounts payable pursuant to Section
6.3 or this Section 6.7 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document reasonably
requested in writing by the Borrower or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or substantially reduce the amount of any such additional amounts
which may thereafter accrue and would not, in the sole and absolute
determination of such Bank be otherwise disadvantageous to such Bank, which
determination by such Bank shall be conclusive.
If a Bank or the Administrative Agent shall become aware that it is
entitled to receive a refund in respect of taxes as to which it has been
indemnified by the Borrower pursuant to Section 6.3 or this Section 6.7, it
shall promptly notify the Borrower of the availability of such refund and shall,
within thirty (30) days after receipt of a request by the Borrower, apply for
such refund at the Borrower's expense. If any Bank or the Administrative Agent,
as applicable, receives a refund in respect of any taxes to which it has been
indemnified by the Borrower pursuant to Section 6.3 or this Section 6.7, it
shall promptly repay such refund to the Borrower (to the extent of amounts that
have been paid by the Borrower under Section 6.3 or this Section 6.7 with
respect to such refund), net of all out-of-pocket expenses (including taxes
imposed with respect to such refund) of such Bank or the Administrative Agent,
as applicable, and without interest; provided, however, that the Borrower, upon
the request of such Bank or the Administrative Agent, as applicable, agrees to
return such refund (plus penalties, interest or other charges) to such Bank or
the Administrative Agent in the event such Bank or the Administrative Agent is
required to repay such refund.
<PAGE> 44
6.8. CAPITAL ADEQUACY. If after the date hereof any Bank or the
Administrative Agent determines that (i) the adoption of or change in any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) regarding capital requirements for banks or bank
holding companies or any change in the interpretation or application thereof by
a court or governmental authority with appropriate jurisdiction, or (ii)
compliance by such Bank or the Administrative Agent or any corporation
controlling such Bank or the Administrative Agent with any law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) of any such entity regarding capital adequacy, has the effect of
reducing the return on such Bank's or the Administrative Agent's commitment with
respect to any Loans to a level below that which such Bank or the Administrative
Agent could have achieved but for such adoption, change or compliance (taking
into consideration such Bank's or the Administrative Agent's then existing
policies with respect to capital adequacy and assuming full utilization of such
entity's capital) by any amount deemed by such Bank or (as the case may be) the
Administrative Agents to be material, then such Bank or the Administrative
Agents may notify the Borrower of such fact. To the extent that the amount of
such reduction in the return on capital is not reflected in the Base Rate, the
Borrower and such Bank shall thereafter attempt to negotiate in good faith,
within thirty (30) days of the day on which the Borrower receives such notice,
an adjustment payable hereunder that will adequately compensate such Bank in
light of these circumstances. If the Borrower and such Bank are unable to agree
to such adjustment within thirty (30) days of the date on which the Borrower
receives such notice, then commencing on the date of such notice (but not
earlier than the effective date of any such increased capital requirement), the
fees payable hereunder shall increase by an amount that will, in such Bank's
reasonable determination, provide adequate compensation. Each Bank shall
allocate such cost increases among its customers in good faith and on an
equitable basis.
6.9. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Sections 6.7 or 6.8 and a brief explanation of such amounts
which are due, submitted by any Bank or the Administrative Agent to the
Borrower, shall be conclusive, absent manifest error, that such amounts are due
and owing.
6.10. INDEMNITY. The Borrower agrees to indemnify each Bank and to
hold each Bank harmless from and against any monetary loss, cost or expense
(including loss of anticipated profits) that such Bank may sustain or incur as a
consequence of (i) default by the Borrower in payment of the principal amount of
or any interest on any LIBOR Rate Loans as and when due and payable, including
any such loss or expense arising from interest or fees payable by such Bank to
lenders of funds obtained by it in order to maintain its LIBOR Rate Loans, (ii)
default by the Borrower in making a borrowing or conversion after the Borrower
has given (or is deemed to have given) a Loan Request, notice (in the case of
all or any portion of the Term Loans pursuant to Section 4.8) or a Conversion
Request relating thereto in accordance with Section 2.6 or Section 2.7 or
Section 4.8 or (iii) the making of any payment of a LIBOR Rate Loan or the
making of any conversion of any such Loan to a Base Rate Loan on a day that is
not the last day of the applicable Interest Period with respect thereto,
including interest or fees payable by such Bank to lenders of funds obtained by
it in order to maintain any such Loans.
<PAGE> 45
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6.11. INTEREST AFTER DEFAULT. Overdue principal and (to the extent
permitted by applicable law) interest on the Loans and all other overdue amounts
payable hereunder or under any of the other Loan Documents shall bear interest
compounded monthly and payable on demand at a rate per annum equal to two
percent (2%) above the rate of interest otherwise applicable to such Loans
pursuant to Sections 2.5 and 4.7 until such amount shall be paid in full (after
as well as before judgment).
7. COLLATERAL SECURITY AND GUARANTIES.
7.1. SECURITY OF BORROWER AND ITS SUBSIDIARIES. The Obligations shall
be secured by a perfected first priority security interest (subject only to
Permitted Liens entitled to priority under applicable law) in all of the assets
of the Borrower and each of its Subsidiaries, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents to which the Borrower
or such Subsidiary is a party.
7.2. GUARANTIES AND SECURITY OF SUBSIDIARIES. The Obligations shall
also be guaranteed pursuant to the terms of the Limited Investment Guaranties
and Wholly-Owned Subsidiary Guaranties. The obligations of the Borrower's
Subsidiaries under such Guaranties shall be in turn secured by a perfected first
priority security interest (subject only to Permitted Liens entitled to priority
under applicable law) in all of the assets of each such Subsidiary, whether now
owned or hereafter acquired, pursuant to the terms of the Security Documents to
which such Subsidiary is a party.
7.3. GUARANTY AND SECURITY OF TIGERA. The Obligations shall also be
guaranteed pursuant to the terms of the Tigera Guaranty. The obligations of
Tigera shall be in turn secured solely by a perfected first priority security
interest in, and recourse shall be limited to, all of the capital stock of the
Borrower owned by Tigera, pursuant to the terms of the Stock Pledge Agreement.
7.4. PLEDGE OF SUBORDINATED NOTES. The Obligations shall also be
secured by a perfected first priority security interest in all of the Redemption
Notes, Contingent Notes and Additional Subordinated Notes, pursuant to the terms
of the Note Pledge Agreement.
8. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the Co-Agents as
follows:
8.1. CORPORATE AUTHORITY.
8.1.1. INCORPORATION; GOOD STANDING. Each of the Borrower
and its Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation, (ii) has all requisite corporate power to own its
property and conduct its business as now conducted and as presently
contemplated, and (iii) is in good standing as a foreign corporation
and is duly authorized to do business in each jurisdiction where such
qualification is necessary except where a failure to be so qualified
would
<PAGE> 46
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not have a materially adverse effect on the business, assets or
financial condition of the Borrower or such Subsidiary.
8.1.2. AUTHORIZATION. The execution, delivery and
performance of this Credit Agreement and the other Loan Documents to
which the Borrower or any of its Subsidiaries is or is to become a
party and the transactions contemplated hereby and thereby (i) are
within the corporate authority of such Person, (ii) have been duly
authorized by all necessary corporate proceedings, (iii) do not
conflict with or result in any breach or contravention of any provision
of law, statute, rule or regulation to which the Borrower or any of its
Subsidiaries is subject or any judgment, order, writ, injunction,
license or permit applicable to the Borrower or any of its Subsidiaries
and (iv) do not conflict with any provision of the corporate charter or
bylaws of, or any material agreement or other instrument binding upon,
the Borrower and its Subsidiaries, taken as a whole.
8.1.3. ENFORCEABILITY. The execution and delivery of this
Credit Agreement and the other Loan Documents to which the Borrower or
any of its Subsidiaries is or is to become a party will result in valid
and legally binding obligations of such Person enforceable against it
in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent
that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
8.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance
by the Borrower and any of its Subsidiaries of this Credit Agreement and the
other Loan Documents and the Acquisition Documents to which the Borrower or any
of its Subsidiaries is or is to become a party and the transactions contemplated
hereby and thereby do not require the approval or consent of, or filing with,
any governmental agency or authority other than those already obtained.
8.3. TITLE TO PROPERTIES; LEASES. Except as indicated on Schedule 8.3
hereto, the Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Closing Date or acquired since that date (except property and assets sold or
otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances except
Permitted Liens.
8.4. FINANCIAL STATEMENTS. There has been furnished to each of the
Banks a consolidated balance sheet of the Borrower and its Subsidiaries as at
the Balance Sheet Date, and a consolidated statement of income of the Borrower
and its Subsidiaries for the fiscal year then ended, certified by Coopers &
Lybrand LLP. Such balance sheet and statement of income have been prepared in
accordance with generally accepted accounting principles and fairly present the
financial condition of
<PAGE> 47
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the Borrower as at the close of business on the date thereof and the results of
operations for the fiscal year then ended. There has been furnished to each of
the Banks a pro forma consolidated balance sheet of the Borrower and its
Subsidiaries as of the Closing Date, which properly gives effect to the Loans
and the CPI Acquisition. Such balance sheet fairly presents the financial
condition of the Borrower and its Subsidiaries as at the close of business on
the date thereof, but does not include footnotes, reserves or year-end
adjustments. In addition, the Borrower has delivered to the Banks copies of all
financial statements of Tigera and the "Predecessor Companies" received by the
Borrower pursuant to Section 5.06 of the Stock Purchase Agreement, and such
financial statements present fairly the financial position of Tigera and the
"Predecessor Companies" at the respective dates of such financial statements and
the results of operations of Tigera and the "Predecessor Companies" for the
periods covered by such financial statements, provided, however, any quarterly
and interim financial statements received pursuant to Section 5.06 of the Stock
Purchase Agreement do not include footnotes, reserves or year-end adjustments.
There are no contingent liabilities of the Borrower or any of its Subsidiaries
as of the respective date of each balance sheet delivered pursuant to this
Section 8.4.1 involving material amounts, which were not disclosed in such
balance sheet and the notes related thereto or in this Credit Agreement or in
the Stock Purchase Agreement or the schedules thereto. There are no contingent
liabilities of the Borrower or any of its Subsidiaries as of the respective date
of each balance sheet delivered pursuant to this Section 8.4.1 involving
material amounts, known to the officers of the Borrower, which were not
disclosed in such balance sheet and the notes related thereto.
8.5. NO MATERIAL CHANGES, ETC.
(a) Since the Balance Sheet Date and assuming all transactions
contemplated by the CPI Acquisition are consummated, there has occurred no
materially adverse change in the financial condition or business of the Borrower
and its Subsidiaries as shown on or reflected in the consolidated balance sheet
of the Borrower and its Subsidiaries as at the Balance Sheet Date, or the
consolidated statement of income for the fiscal year then ended, other than
changes in the ordinary course of business that have not had any materially
adverse effect on the business or financial condition of the Borrower or its
Subsidiaries, taken as a whole. Except as set forth on Schedule 8.5, since the
Balance Sheet Date, the Borrower has not made any Distribution.
(b) Since the Closing Date, there has occurred no material adverse
change in the financial condition or business of the Borrower and its
Subsidiaries as shown on or reflected in a consolidated balance sheet of the
Borrower and its Subsidiaries as at the Closing Date, other than changes in the
ordinary course of business that have not had any materially adverse effect
either individually or in the aggregate on the business or financial condition
of the Borrower and its Subsidiaries, taken as a whole.
(c) Each of the Borrower and each of its Subsidiaries (before and after
giving effect to the transactions contemplated by this Credit Agreement, the
other Loan Documents and the Acquisition Documents) (i) is solvent, (ii) has
assets having a fair value in excess of its liabilities, (iii) has assets having
a fair value in excess of the
<PAGE> 48
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amounts required to pay its liabilities on existing Indebtedness as such
Indebtedness became due, and (iv) has, and expects to have, access to adequate
capital for the conduct of its business and the ability to pay its Indebtedness
from time to time incurred in connection with the operation of its business as
such Indebtedness matures.
8.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrower and
its Subsidiaries possesses all franchises, patents, copyrights, trademarks,
trade names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of its business substantially as now conducted without
known conflict with any rights of others.
8.7. LITIGATION. Except as set forth in Schedule 8.7 hereto, there
are no actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower or any of its Subsidiaries before any court,
tribunal or administrative agency or board that, if adversely determined, might,
either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of the Borrower and its
Subsidiaries, taken as a whole, or materially impair the right of the Borrower
and its Subsidiaries, considered as a whole, to carry on business substantially
as now conducted by them, or result in any substantial liability not adequately
covered by insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Borrower and its Subsidiaries, or which
question the validity of this Credit Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.
8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor
any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower and its Subsidiaries, taken as a
whole. Neither the Borrower nor any of its Subsidiaries is a party to any
contract or agreement that has or is expected, in the judgment of the Borrower's
officers, to have any materially adverse effect on the business of the Borrower
and its Subsidiaries, taken as a whole.
8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Except as set
forth on Schedule 8.9 hereto, neither the Borrower nor any of its Subsidiaries
is in violation of any provision of its charter documents, bylaws, or any
agreement or instrument to which it may be subject or by which it or any of its
properties may be bound or any decree, order, judgment, statute, license, rule
or regulation, in any of the foregoing cases in a manner that could result in
the imposition of substantial penalties or materially and adversely affect the
financial condition, properties or business of the Borrower or its Subsidiaries,
taken as a whole.
8.10. TAX STATUS. Except as set forth on Schedule 8.10 hereto, the
Borrower and its Subsidiaries (i) have made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which any of them is subject, (ii) have paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those
<PAGE> 49
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being contested in good faith and by appropriate proceedings and (iii) have set
aside on their books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. Except as set forth on Schedule 8.10, there are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Borrower know of no basis for any such
claim.
8.11. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
8.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor is
it an "investment company", or an "affiliated company" or a "principal
underwriter" of an "investment company", as such terms are defined in the
Investment Company Act of 1940.
8.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of its Subsidiaries or any
rights relating thereto.
8.14. PERFECTION OF SECURITY INTEREST. All filings, assignments,
pledges and deposits of documents or instruments have been made and all other
actions have been taken that are necessary or advisable, under applicable law,
to establish and perfect the Administrative Agent's security interest in the
Collateral. The Collateral and the Administrative Agent's rights with respect to
the Collateral are not subject to any setoff, claims, withholdings or other
defenses. The Borrower or a Subsidiary of the Borrower as specified in the
Security Documents is the owner of the Collateral free from any lien, security
interest, encumbrance and any other claim or demand, except for Permitted Liens.
8.15. CERTAIN TRANSACTIONS. Except as set forth on Schedule 8.15
hereto and except for the transactions contemplated by the Acquisition Documents
and arm's length transactions pursuant to which the Borrower or any of its
Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Borrower or such Subsidiary could obtain from third
parties, none of the officers, directors, or employees of the Borrower or any of
its Subsidiaries is presently a party to any transaction with the Borrower or
any of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
<PAGE> 50
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8.16. EMPLOYEE BENEFIT PLANS.
8.16.1. IN GENERAL. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including
but not limited to the provisions thereunder respecting prohibited
transactions. The Borrower has heretofore delivered to the Co-Agents
the most recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted under
Section 103(d) of ERISA, with respect to each Guaranteed Pension Plan.
8.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the
meaning of Section 3(1) or Section 3(2)(B) of ERISA, no benefits are
due unless the event giving rise to the benefit entitlement occurs
prior to plan termination (except as required by Title I, Part 6 of
ERISA) . The Borrower or an ERISA Affiliate, as appropriate, may
terminate each such Plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) in the discretion of
the Borrower or such ERISA Affiliate without liability to any Person.
8.16.3. GUARANTEED PENSION PLANS. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the notice
or lien provisions of Section 302(f) of ERISA, or otherwise, has been
timely made. No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with respect to any
Guaranteed Pension Plan. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by
the Borrower or any ERISA Affiliate with respect to any Guaranteed
Pension Plan and there has not been any ERISA Reportable Event, or any
other event or condition which presents a material risk of termination
of any Guaranteed Pension Plan by the PBGC. Based on the latest
valuation of each Guaranteed Pension Plan (which in each case occurred
within twelve months of the date of this representation), and on the
actuarial methods and assumptions employed for that valuation, the
aggregate benefit liabilities of all such Guaranteed Pension Plans
within the meaning of Section 4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities by
more than $100,000.
8.16.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any
ERISA Affiliate has incurred any material liability (including
secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under
Section 4201 of ERISA or as a result of a sale of assets described in
Section 4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of Section 4241 or Section 4245
of ERISA or that any
<PAGE> 51
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Multiemployer Plan intends to terminate or has been terminated under
Section 4041A of ERISA.
8.17. REGULATIONS U AND X. The proceeds of the Revolving Credit Loans
shall be used, pursuant to the Stock Purchase Agreement for the repurchase by
the Borrower from the Sellers of certain of the shares of the common stock of
the Borrower, expenses incurred by the Borrower and Tigera in connection with
the CPI Acquisition and for working capital purposes; the proceeds of the Line
of Credit Loans shall be used to finance Permitted Acquisitions; and the
proceeds of Term Loan A shall be used to finance, in part, the redemption by the
Borrower of its commons stock from the Sellers. The Borrower will obtain Letters
of Credit solely for general corporate purposes. No portion of any Loan is to be
used, and no portion of any Letter of Credit is to be obtained, for the purpose
of purchasing or carrying any "margin security" or "margin stock" as such terms
are used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.
8.18. ENVIRONMENTAL COMPLIANCE. The Borrower has taken all necessary
steps to investigate the past and present condition and usage of the Real Estate
and the operations conducted thereon and, based upon such investigation, has
determined that to the best of the Borrower's knowledge, except as set forth on
Schedule 8.18 hereto:
(a) none of the Borrower, its Subsidiaries or any operator of
the Real Estate or any operations thereon is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act,
or any state or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment (hereinafter
"Environmental Laws"), the costs of remediation of which violation,
including any fines, penalties or fees in connection therewith, are in
excess of $10,000 in the aggregate and which violation would otherwise
have a material adverse effect on the environment or the business,
assets or financial condition of the Borrower or any of its
Subsidiaries;
(b) neither the Borrower nor any of its Subsidiaries has
received notice from any third party including, without limitation, any
federal, state or local governmental authority, (i) that any one of
them has been identified by the United States Environmental Protection
Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R.
Part 300 Appendix B; (ii) that any hazardous waste, as defined by 42
U.S.C. Section 6903(5), any hazardous substances as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33) and any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous
<PAGE> 52
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Substances") which any one of them has generated, transported or
disposed of has been found at any site at which a federal, state or
local agency or other third party has conducted or has ordered that any
Borrower or any of its Subsidiaries conduct a remedial investigation,
removal or other response action pursuant to any Environmental Law; or
(iii) that it is or shall be a named party to any claim, action, cause
of action, complaint, or legal or administrative proceeding (in each
case, contingent or otherwise) arising out of any third party's
incurrence of costs, expenses, losses or damages of any kind whatsoever
in connection with the release of Hazardous Substances, the costs
associated with any of the foregoing either individually or in the
aggregate is in the excess of $10,000 in the aggregate;
(c) (i) no portion of the Real Estate has been used for the
handling, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws; and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate; (ii) in the
course of any activities conducted by the Borrower, its Subsidiaries or
operators of its properties, no Hazardous Substances have been
generated or are being used on the Real Estate except in accordance
with applicable Environmental Laws; (iii) there have been no releases
(i.e. any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous Substances
on, upon, into or from the properties of the Borrower or its
Subsidiaries, which releases would have a material adverse effect on
the value of any of the Real Estate or adjacent properties or the
environment; (iv) there have been no releases on, upon, from or into
any real property in the vicinity of any of the Real Estate which,
through soil or groundwater contamination, may have come to be located
on, and which would have a material adverse effect on the value of, the
Real Estate; and (v) in addition, any Hazardous Substances that have
been generated on any of the Real Estate have been transported offsite
only by carriers having an identification number issued by the EPA,
treated or disposed of only by treatment or disposal facilities
maintaining valid permits as required under applicable Environmental
Laws, which transporters and facilities have been and are, to the best
of the Borrower's knowledge, operating in compliance with such permits
and applicable Environmental Laws; and
(d) none of the Borrower and its Subsidiaries or any of the
Real Estate is subject to any applicable environmental law requiring
the performance of Hazardous Substances site assessments, or the
removal or remediation of Hazardous Substances, or the giving of notice
to any governmental agency or the recording or delivery to other
Persons of an environmental disclosure document or statement by virtue
of the transactions set forth herein and contemplated hereby, or as a
condition to the recording of any Mortgage or to the effectiveness of
any other transactions contemplated hereby.
<PAGE> 53
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8.19. SUBSIDIARIES, ETC. As of the Closing Date, there are no
existing Subsidiaries of the Borrower. Neither the Borrower nor any Subsidiary
of the Borrower is engaged in any joint venture or partnership with any other
Person.
8.20. FISCAL YEAR. The Borrower's fiscal year is the twelve (12)
months ending on December 31 of each year.
8.21. NO AMENDMENTS TO CERTAIN DOCUMENTS. The Borrower has not
amended any of the Acquisition Documents in any material respect. Each of the
representations and warranties made by the Borrower in any of the Loan
Documents, Subordinated Debt Documents or the Acquisition Documents was true and
correct in all material respects when made and continues to be true and correct
in all material respects on the Closing Date, except to the extent that any of
such representations and warranties relate, by the express terms thereof, solely
to a date falling prior to the Closing Date, and except to the extent that any
of such representations and warranties may have been affected by the
consummation of the transactions contemplated and permitted or required by the
Loan Documents or the CPI Acquisition.
8.22. DISCLOSURE. No representation or warranty made by the Borrower
in this Credit Agreement or in any agreement, instrument, document, or
certificate furnished to the Co-Agents or any Bank by or on behalf of the
Borrower in connection with any of the transactions contemplated by any of the
Loan Documents and Stock Purchase Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which they are made.
8.23. INSURANCE. The Borrower and each of its Subsidiaries maintains
with financially sound and reputable insurers insurance with respect to its
properties and businesses against such casualties and contingencies as are in
accordance with sound business practices, with the details of such coverage
being more fully described on Schedule 8.23 hereto.
9. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans or the Issuing Bank has any obligation to
issue, extend or renew any Letters of Credit:
9.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Loans, all Reimbursement
Obligations, the Letter of Credit Fees, the commitment fees, the Administrative
Agent's fee and all other amounts provided for in this Credit Agreement and the
other Loan Documents to which the Borrower or any of its Subsidiaries is a
party, all in accordance with the terms of this Credit Agreement and such other
Loan Documents.
9.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief
executive office in Leominster, Massachusetts, or at such other place in the
United States of
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America as the Borrower shall designate upon written notice to the
Administrative Agent, where notices, presentations and demands to or upon the
Borrower in respect of the Loan Documents to which the Borrower is a party may
be given or made.
9.3. RECORDS AND ACCOUNTS. The Borrower will (i) keep, and cause each
of its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles and (ii) maintain adequate accounts and reserves
for all taxes (including income taxes), depreciation, depletion, obsolescence
and amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves.
9.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower
will deliver to each of the Banks:FORMATION.
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Borrower, (i)
the consolidated balance sheet of each of (A) Tigera and its
Subsidiaries, and (B) the Borrower and its Subsidiaries, in each case
as at the end of such year, and the related consolidated statements of
income and consolidated statements of cash flow for such year, each
setting forth in comparative form the figures for the previous fiscal
year and all such consolidated statements to be in reasonable detail,
prepared in accordance with generally accepted accounting principles,
and certified without qualification by Coopers & Lybrand LLP or by
other nationally recognized independent certified public accountants
satisfactory to the Administrative Agent, together with a written
statement from such accountants to the effect that they have read a
copy of this Credit Agreement, and that, in making the examination
necessary to said certification, they have obtained no knowledge of any
Event of Default with respect to any covenant set forth in Section 11,
or, if such accountants shall have obtained knowledge of any such then
existing Event of Default they shall disclose in such statement any
such Event of Default; provided that such accountants shall not be
liable to the Banks for failure to obtain knowledge of any such Event
of Default, and (ii) the unaudited consolidating balance sheets of each
of (A) Tigera and its Subsidiaries, and (B) the Borrower and its
Subsidiaries, in each case as at the end of such year, and the related
unaudited consolidating statements of income and unaudited
consolidating statements of cash flow for such year, each setting forth
in comparative form the figures for the previous fiscal year and all
such consolidating statements to be in reasonable detail, prepared by
management in accordance with the past financial practices of Tigera
and its Subsidiaries, or as the case may be, the Borrower and its
Subsidiaries and with a certification by the chief financial officer of
Tigera, or as the case may be, the Borrower that such financial
statements fairly present the financial condition of Tigera and its
Subsidiaries, or as the case may be, the Borrower and its Subsidiaries
on the date thereof and the results of operations of Tigera and its
Subsidiaries, or as the case may be, the Borrower and its Subsidiaries
for the period covered thereby;
<PAGE> 55
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(b) as soon as practicable, but in any event not later than forty-five
(45) days after the end of each of the fiscal quarters of the Borrower, copies
of the unaudited consolidated balance sheet of each of (i) Tigera and its
Subsidiaries, and (ii) the Borrower and its Subsidiaries and the unaudited
consolidating balance sheet of each of (i) Tigera and its Subsidiaries, and (ii)
the Borrower and its Subsidiaries, in each case as at the end of such quarter,
and the related consolidated statement of income and consolidated statement of
cash flow and consolidating statement of income and consolidating statement of
cash flow for the portion of Tigera's, or as the case may be, the Borrower's
fiscal year then elapsed, all in reasonable detail and prepared in accordance
with generally accepted accounting principles, together with a certification by
the chief financial officer of Tigera, or as the case may be, the Borrower that
the information contained in such financial statements fairly presents the
financial position of Tigera and its Subsidiaries, or as the case may be, the
Borrower and its Subsidiaries on the date thereof (subject to year-end
adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of the Borrower in substantially the
form of Exhibit G hereto (the "Compliance Certificate") and setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in Section 11 and (if applicable) reconciliations to reflect changes
in generally accepted accounting principles since the Balance Sheet Date;
(d) contemporaneously with the filing or mailing thereof, copies of all
material of a financial nature filed with the Securities and Exchange Commission
or sent to the stockholders of the Borrower or Tigera;
(e) fifteen (15) days after the end of each calendar month or at such
earlier time as the Administrative Agent may reasonably request, a Borrowing
Base Report setting forth the Borrowing Base as at the end of such calendar
month or other date so requested by the Administrative Agent;
(f) within fifteen (15) days after the end of each calendar month, an
Accounts Receivable aging report;
(g) within sixty (60) days after May 31, 1996, and each December 31 and
June 30 thereafter (other than June 30, 1996) or at such other interval as the
Administrative Agent may reasonably request, an inventory report based upon a
physical inventory of the Borrower as of May 31, 1996, and such December 31, or
as the case may be, June 30;
(h) contemporaneously with the delivery thereof, copies of all
accountants' management letters delivered to the Borrower or any of its
Subsidiaries; and
<PAGE> 56
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(i) from time to time such other financial data and information
(including accountants, management letters) as the Administrative Agent or any
Bank may reasonably request.
9.5 NOTICES.
9.5.1. DEFAULTS. The Borrower will promptly notify the Administrative
Agent and each of the Banks in writing of the occurrence of any Default or Event
of Default. If any Person shall give any notice or take any other action in
respect of a claimed default (whether or not constituting an Event of Default)
under this Credit Agreement or of a claimed default under any other note,
evidence of indebtedness, indenture or other obligation to which or with respect
to which the Borrower or any of its Subsidiaries is a party or obligor, whether
as principal, guarantor, surety or otherwise, and which would reasonably be
expected to have a materially adverse effect on the Borrower and its
Subsidiaries, taken as a whole, the Borrower shall forthwith give written notice
thereof to the Administrative Agent and each of the Banks, describing the notice
or action and the nature of the claimed default.
9.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give notice to
the Administrative Agent and each of the Banks (i) of any violation of any
Environmental Law that the Borrower or any of its Subsidiaries reports in
writing or is reportable by such Person in writing (or for which any written
report supplemental to any oral report is made) to any federal, state or local
environmental agency and (ii) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any agency
of potential environmental liability, of any federal, state or local
environmental agency or board, that has the potential to materially affect the
assets, liabilities, financial conditions or operations of the Borrower and its
Subsidiaries, taken as a whole, or the Administrative Agent's security interests
pursuant to the Security Documents.
9.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL. The Borrower will,
immediately upon becoming aware thereof, notify the Administrative Agent and
each of the Banks in writing of any setoff, claims (including, with respect to
the Real Estate, environmental claims), withholdings or other defenses to which
any of the Collateral, or the Administrative Agent's rights with respect to the
Collateral, are subject.
9.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will, and will
cause each of its Subsidiaries to, give notice to the Administrative Agent and
each of the Banks in writing within fifteen (15) days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting the Borrower or any of its Subsidiaries or to which the
Borrower or any of its Subsidiaries is or becomes a party involving an uninsured
claim against the Borrower or any of its Subsidiaries that could reasonably be
expected to have a materially adverse effect on the Borrower and its
Subsidiaries, taken as a whole, and stating the nature and status of such
<PAGE> 57
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litigation or proceedings. The Borrower will, and will cause each of
its Subsidiaries to, give notice to the Administrative Agent and each
of the Banks, in writing, in form and detail satisfactory to the
Administrative Agent, within ten (10) days of any judgment not covered
by insurance, final or otherwise, against the Borrower or any of its
Subsidiaries in an amount in excess of $250,000.
9.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries and will not, and will not cause or permit any of its Subsidiaries
to, convert to a limited liability company. The Borrower (i) will cause all of
its properties and those of its Subsidiaries used or useful in the conduct of
its business or the business of its Subsidiaries to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment, (ii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, and (iii)
will, and will cause each of its Subsidiaries to, continue to engage primarily
in the businesses now conducted by them and in related businesses; provided that
nothing in this 9.6 shall prevent the Borrower from discontinuing the operation
and maintenance of any of its properties or any of those of its Subsidiaries if
such discontinuance is, in the judgment of the Borrower, desirable in the
conduct of its or their business and that do not in the aggregate materially
adversely affect the business of the Borrower and its Subsidiaries on a
consolidated basis.
9.7. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent and in accordance with the terms of the Security
Agreements and Schedule 8.23.
9.8.TAXES. The Borrower will, and will cause each of its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; provided that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.
<PAGE> 58
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9.9 INSPECTION OF PROPERTIES AND BOOKS, ETC.
9.9.1. GENERAL. The Borrower shall permit the Banks, through the
Administrative Agent or any of the Banks' other designated representatives, to
visit and inspect any of the properties of the Borrower or any of its
Subsidiaries, to examine the books of account of the Borrower and its
Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss
the affairs, finances and accounts of the Borrower and its Subsidiaries with,
and to be advised as to the same by, its and their officers, all at such
reasonable times and intervals as the Administrative Agent or any Bank may
reasonably request.
9.9.2. COMMERCIAL FINANCE EXAMS. No more frequently than twice in each
calendar year, or more frequently as determined by the Administrative Agent if
an Event of Default shall have occurred and be continuing, either Co-Agent shall
conduct a commercial finance exam an estimate of the cost of which shall be
submitted by the Administrative Agent to the Borrower prior to conducting such
exam and which exam shall inter alia, indicate whether or not the information
set forth in the Borrowing Base Report most recently delivered is accurate and
complete in all material respects based upon a review of the Accounts Receivable
(including verification with respect to the amount, aging, identity and credit
of the respective account debtors and the billing practices of the Borrower or
its applicable Subsidiary) and inventory (including verification as to the
value, location and respective types). In addition to the foregoing, prior to
inclusion in the Borrowing Base of any assets acquired by the Borrower or any of
its Subsidiaries after the Closing Date, the Banks shall be permitted to conduct
a commercial finance exam with respect to such assets to determine their
eligibility. All such exams and reports shall be conducted and made at the
expense of the Borrower.
9.9.3 APPRAISALS. No more frequently than once each calendar year, or
more frequently as determined by the Administrative Agent if an Event of Default
shall have occurred and be continuing, upon the request of the Administrative
Agent, the Borrower will obtain and deliver to the Administrative Agent
appraisal reports in form and substance and from appraisers satisfactory to the
Administrative Agent, stating (i) the then current fair market, orderly
liquidation and forced liquidation values of all or any portion of the equipment
owned by the Borrower or any of its Subsidiaries and (ii) the then current
business value of each of the Borrower and its Subsidiaries. All such appraisals
shall be conducted and made at the expense of the Borrower.
9.9.4. ENVIRONMENTAL ASSESSMENTS. If an Event of Default with respect
to Section 8.18, or Section 9.10, (regarding Environment Laws), or Section 10.7
shall have occurred and be continuing, the Administrative Agent may obtain an
environmental assessment or audit of the Real Estate prepared by a
hydrogeologist, an independent engineer or other qualified consultant or expert
approved by the Administrative Agent to evaluate or confirm (i) whether any
Hazardous Materials are present in the soil or water at such Real Estate and
(ii) whether the use and operation of such Real Estate complies with all
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Environmental Laws. Environmental assessments may include without
limitation detailed visual inspections of such Real Estate including
any and all storage areas, storage tanks, drains, dry wells and
leaching areas, and the taking of soil samples, surface water samples
and ground water samples, as well as such other investigations or
analyses as the Administrative Agent deems appropriate. All such
environmental assessments shall be conducted and made at the expense of
the Borrower.
9.9.5. COMMUNICATIONS WITH ACCOUNTANTS. The Borrower authorizes the
Administrative Agent and, if accompanied by the Administrative Agent, the Banks
to communicate directly with the Borrower's independent certified public
accountants and authorizes such accountants to disclose to the Administrative
Agent and the Banks any and all financial statements and other supporting
financial documents and schedules including copies of any management letter with
respect to the business, financial condition and other affairs of the Borrower
or any of its Subsidiaries. At the request of the Administrative Agent, the
Borrower shall deliver a letter addressed to such accountants instructing them
to comply with the provisions of this 9.9.5
9.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The
Borrower will, and will cause each of its Subsidiaries to, comply with (i) the
applicable laws and regulations wherever its business is conducted, including
all Environmental Laws, (ii) the provisions of its charter documents and
by-laws, (iii) in all material respects, all agreements and instruments by which
it or any of its properties may be bound and (iv) all applicable decrees,
orders, and judgments. If any authorization, consent, approval, permit or
license from any officer, agency or instrumentality of any government shall
become necessary or required in order that the Borrower or any of its
Subsidiaries may fulfill any of its obligations hereunder or any of the other
Loan Documents to which the Borrower or such Subsidiary is a party, the Borrower
will, or (as the case may be) will cause such Subsidiary to, immediately take or
cause to be taken all reasonable steps within the power of the Borrower or such
Subsidiary to obtain such authorization, consent, approval, permit or license
and furnish the Co-Agents and the Banks with evidence thereof.
9.11. EMPLOYEE BENEFIT PLANS. The Borrower will (i) promptly upon
filing the same with the Department of Labor or Internal Revenue Service if
requested by the Administrative Agent, furnish to the Administrative Agent a
copy of the most recent actuarial statement required to be submitted under
Section 103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Administrative Agent any notice, report or
demand sent or received in respect of a Guaranteed Pension Plan under Sections
302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a
Multiemployer Plan, under Sections 4041A, 4202, 4219, 4242, or 4245 of ERISA.
9.12. USE OF PROCEEDS. The Borrower will use the proceeds of the Loans
and will obtain Letters of Credit solely for purposes set forth in Section 8.17.
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9.13. FURTHER ASSURANCES. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Banks and the Administrative Agent and
execute such further instruments and documents as the Banks or the
Administrative Agent shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Credit Agreement and the other Loan
Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans or the Issuing Bank has any obligations to
issue, extend or renew any Letters of Credit:
10.1 RESTRICTIONS ON INDEBTEDNESS. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Banks and the Co-Agents arising under
any of the Loan Documents;
(b) current liabilities of the Borrower or such Subsidiary
incurred in the ordinary course of business not incurred through (i)
the borrowing of money, or (ii) the obtaining of credit except for
credit on an open account basis customarily extended and in fact
extended in connection with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 9.8;
(d) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which
the Borrower or such Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which
a stay of execution shall have been obtained pending such appeal or
review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Subordinated Debt;
(g) obligations under Capitalized Leases;
(h) purchase money indebtedness incurred in connection with
the acquisition after the date hereof of any personal property by the
Borrower or such Subsidiary, provided that the aggregate principal
amount of such
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Indebtedness of the Borrower and its Subsidiaries shall not exceed the
aggregate amount of $300,000 at any one time;
(i) Indebtedness existing on the date hereof and listed and
described on Schedule 10.1 hereto; and
(j) subject to Section 11.3(e), Indebtedness of a Subsidiary
of the Borrower to the Borrower.
10.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not permit
any of its Subsidiaries to, (i) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (ii) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (iii) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (iv) suffer to
exist for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or (v) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; provided that the Borrower and any
Subsidiary of the Borrower may create or incur or suffer to be created or
incurred or to exist:
(a) liens in favor of the Borrower on all or part of the
assets of Subsidiaries of the Borrower securing Indebtedness owing by
Subsidiaries of the Borrower to the Borrower;
(b) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties
other than Mortgaged Properties to secure claims for labor, material or
supplies in respect of obligations not overdue;
(c) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 10.1(d);
(e) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties in existence less than
120 days from the date of creation thereof in respect of obligations
not overdue;
<PAGE> 62
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(f) encumbrances on Real Estate consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which the Borrower or a
Subsidiary of the Borrower is a party, and other minor liens or
encumbrances none of which in the opinion of the Borrower interferes
materially with the use of the property affected in the ordinary
conduct of the business of the Borrower and its Subsidiaries, which
defects do not individually or in the aggregate have a materially
adverse effect on the business of the Borrower individually or of the
Borrower and its Subsidiaries on a consolidated basis;
(g) liens existing on the date hereof and listed on Schedule
10.2 hereto;
(h) purchase money security interests in personal property
acquired after the date hereof to secure purchase money Indebtedness of
the type and amount permitted by Section 10.1(h), incurred in
connection with the acquisition of such property, which security
interests and cover only the real or personal property so acquired; and
(i) liens in favor of the Administrative Agent for the benefit
of the Banks and the Co-Agents under the Loan Documents.
10.3 RESTRICTIONS ON INVESTMENTS. The Borrower will not, and will not
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of
purchase by the Borrower;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total
assets in excess of $1,000,000,000;
(c) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase
have been rated and the ratings for which are not less than "P 1" if
rated by Moody's Investors Services, Inc., and not less than "A 1" if
rated by Standard and Poor's;
(d) Investments existing on the date hereof and listed on
Schedule 10.3 (including existing loans and advances to employees)
hereto;
(e) Investments with respect to Indebtedness permitted by
Section 10.1(j) and/or equity contributions by the Borrower in such
Subsidiary so long as (i) such entity remains a Subsidiary of the
Borrower and (ii) the aggregate amount of all such Indebtedness plus
equity contributions by the Borrower in all of its Subsidiaries shall
not exceed the amount equal to the aggregate cash purchase
<PAGE> 63
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price of preferred stock of the Borrower issued to and purchased by
Tigera from time to time, but in no event shall such amount exceed
$3,500,000;
(f) Investments consisting of the Guaranty or Investments by
the Borrower in Subsidiaries of the Borrower existing on the Closing
Date;
(g) Investments consisting of promissory notes received as
proceeds of asset dispositions permitted by Section 10.5.2;
(h) Investments consisting of loans and advances to employees
for moving, entertainment, travel and other similar expenses in the
ordinary course of business not to exceed $100,000 in the aggregate at
any time outstanding;
(i) Permitted Acquisitions pursuant to the terms of 10.5,
provided, however, to the extent that any such Investment is in a
Subsidiary of the Borrower, the aggregate amount of such investments
shall not exceed the limitation set forth in clause (e) of this
Section 10.3;
provided, however, that, with the exception of demand deposits referred to in
Section 10.3(b) and loans and advances to employees referred to in Section
10.3(d) and (h), such Investments will be considered Investments permitted by
this 10.3 only if all actions have been taken to the satisfaction of the
Administrative Agent to provide to the Administrative Agent, for the benefit
of the Banks and the Co-Agents, a first priority perfected security interest
in all of such Investments free of all encumbrances other than Permitted Liens.
10.4. RESTRICTED PAYMENTS. The Borrower will not make any Restricted
Payments, other than Distributions or payments:
(a) by the Borrower, pursuant to the Stock Pledge Agreement,
for the repurchase by the Borrower from the Sellers of certain of the
shares of the common stock of the Borrower;
(b) by the Borrower to Tigera required to be paid by the
Borrower under the Tax Allocation Agreement to permit Tigera to pay
income, franchise and other taxes and governmental levies attributable
to the Borrower and owed or payable by Tigera, provided such dividends
or payments shall not be made until a date which is not more than
fifteen (15) days prior to the date such payments are due and payable
pursuant to the Tax Allocation Agreement;
(c) by the Borrower to Tigera to pay costs, fees and expenses
on behalf of the Borrower so long as any such payments are included in
the calculation of Consolidated EBITDA; and
(d) by the Subsidiaries of the Borrower to the Borrower.
<PAGE> 64
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10.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
10.5.1 MERGERS AND ACQUISITIONS. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock acquisition
(other than the acquisition of assets in the ordinary course of business
consistent with past practices) except the merger or consolidation of one or
more of the Subsidiaries of the Borrower with and into the Borrower, or so long
as no Default or Event of Default has occurred and is continuing, or would exist
after giving effect thereto, (i) the merger or consolidation of two or more
Subsidiaries of the Borrower, and provided that the Borrower has taken or caused
to be taken all action necessary to grant to the Administrative Agent a first
perfected priority security interest in all of the Borrower's Collateral after
such merger, and (ii) other asset or stock Acquisitions or Purchases of Persons
in the same or a similar line of business as the Borrower (each a "Permitted
Acquisition") where (a) the Borrower has provided the Agent with five (5)
Business Days prior written notice of such Permitted Acquisition, which notice
shall include a reasonably detailed description of such Permitted Acquisition;
(b) the business to be acquired would not subject the Co-Agents or the Banks to
regulatory or third party approvals in connection with the exercise of its
rights and remedies under this Credit Agreement or any other Loan Document; (c)
the business and assets so acquired in such Permitted Acquisition shall be
acquired by the Borrower free and clear of all liens (other than Permitted
Liens) and all Indebtedness (other than Indebtedness permitted under Section
10.1); (d) no contingent obligations or liabilities will be incurred or
assumed in connection with such Permitted Acquisition which could be expected
to have a material adverse effect on the business, assets or financial
condition of the Borrower and its Subsidiaries; (e) the Borrower has provided
the Administrative Agent with such other information as was reasonably
requested by the Administrative Agent; (f) the Borrower has taken or caused to
be taken all necessary actions to grant to the Administrative Agent a first
priority perfected lien in all assets and stock to be acquired in connection
with such Permitted Acquisition; (g) the Borrower has demonstrated to the
reasonable satisfaction of the Administrative Agent, based on a pro forma
Compliance Certificate, compliance with 11 on a pro forma basis immediately
prior to and after giving effect to such Permitted Acquisition; (h) the
aggregate purchase price for any Permitted Acquisition does not exceed
$5,000,000; (i) the Borrower has delivered to the Administrative Agent a
certificate of the chief financial officer of the Borrower to the effect that
(1) the Borrower will be solvent upon the consummation of the Permitted
Acquisition, (2) the pro forma Compliance Certificate fairly presents the
financial condition of the Borrower and its Subsidiaries as of the date
thereof and after giving effect to such Permitted Acquisition, and (3) no
Default or Event of Default then exists or would result after giving effect to
the Permitted Acquisition. Accounts Receivable and inventory acquired in
connection with a Permitted Acquisition may be funded with proceeds of the
Revolving Credit Loans or by a Guarantor, and up to fifteen (15%) of Eligible
Accounts Receivable and fifty percent (50%) of Eligible Inventory so acquired
may be funded with proceeds of the Line of Credit Loans.
<PAGE> 65
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In the event that the aggregate purchase price of any Permitted
Acquisition is (i) greater than four (4) times EBITDA of the Person being
acquired (that portion in excess of four (4) times EBITDA herein referred to as
"Excess Purchase Price"), no more than fifty percent (50%) of Excess Purchase
Price shall be allocated to intangible assets acquired in connection with such
Permitted Acquisition, and (ii) less than four (4) times EBITDA of the Person
being acquired there shall be no limitation on the allocation of the purchase
price to intangible assets acquired in connection with such Permitted
Acquisition.
In the event any new Subsidiary is formed as a result of or in
connection with any acquisition, the Loan Documents shall be amended and/or
supplemented as necessary to make the terms and conditions of the Loan Documents
applicable to such Subsidiary. In the case of the Borrower forming such
Subsidiary, such Subsidiary shall become a Guarantor hereunder.
10.5.2. DISPOSITION OF ASSETS. The Borrower will not, and will
not permit any of its Subsidiaries to, become a party to or agree to or
effect any disposition of assets, other than the disposition of assets
in the ordinary course of business, consistent with past practices.
10.6 SALE AND LEASEBACK. The Borrower will not, and will not permit any
of its Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Borrower or any Subsidiary of the Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrower or any Subsidiary of the Borrower intends
to use for substantially the same purpose as the property being sold or
transferred.
10.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
Schedule 8.18 hereto, the Borrower will not, and will not permit any of its
Subsidiaries to, take any of the following actions in a manner that would
violate any Environmental Law or bring any Real Estate in violation of any
Environmental Law: (i) use any of the Real Estate or any portion thereof for the
handling, processing, storage or disposal of Hazardous Substances, (ii) cause or
permit to be located on any of the Real Estate any underground tank or other
underground storage receptacle for Hazardous Substances, (iii) generate any
Hazardous Substances on any of the Real Estate, (iv) conduct any activity at any
Real Estate or use any Real Estate in any manner so as to cause a release (i.e.
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping) or threatened release of
Hazardous Substances on, upon or into the Real Estate, or (v) otherwise conduct
any activity at any Real Estate or use any Real Estate in any manner that would
violate any Environmental Law or bring such Real Estate in violation of any
Environmental Law.
10.8. SUBORDINATED DEBT. The Borrower will not, and will not permit any
of its Subsidiaries to, (i) amend, supplement or otherwise modify the terms of
any of the Subordinated Debt or prepay (except as expressly provided in Section
2 of the Subordination Agreement), redeem or repurchase or make any payment in
defeasance of any of the
<PAGE> 66
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Subordinated Debt or send any notice of redemption, prepayment, repurchase or
defeasance with respect to any of the Subordinated Debt or (ii) amend,
supplement or otherwise modify the terms of the Stockholders' Agreement if such
amendment, supplement or modification of the Stockholders' Agreement could
reasonably be expected to adversely affect the Agent's or the Banks' rights or
interests or impact the Borrower's abilities to fulfill its obligations under
the Loan Documents.
10.9. MODIFICATION OF DOCUMENTS. The Borrower will not consent to or
agree to any amendment, supplement or other modification to the Tax Allocation
Agreement which affects, in a manner adverse to the Borrower, the amount or
timing of payments required to be made by the Borrower thereunder, or if such
amendment, supplement or modification could reasonably be expected to adversely
affect the Administrative Agent's or any Banks' rights or interests or impact
the Borrower's abilities to fulfill their obligations under the Loan Documents.
10.10 NEGATIVE PLEDGES. The Borrower will not enter into any agreement
(other than this Credit Agreement and the Loan Documents) prohibiting the
creation or assumption of any lien upon its properties, revenues or assets or
those of any of its Subsidiaries, whether now owned or hereafter acquired other
than agreements with Persons prohibiting any such lien on assets in which such
Person has a prior security interest which is permitted by Section 10.2.
10.11 TRANSACTIONS WITH AFFILIATES. Except for the transactions
contemplated by the Acquisition Documents, the Borrower will not, nor will the
Borrower permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist (i) any arrangement or contract with any of its other Affiliates
of a nature customarily entered into by Persons which are Affiliates of each
other (including management or similar contracts or arrangements relating to the
allocation of revenues, taxes and expenses or otherwise) requiring any payments
to be made by the Borrower or any of its Subsidiaries to any Affiliate unless
such arrangement is fair and equitable to the Borrower or such Subsidiary; or
(ii) any other transaction, arrangement, contract with any of their other
Affiliates which would not be entered into by a prudent Person in the position
of the Borrower or such Subsidiary with, or which is on terms which are less
favorable than are obtainable from, any Person which is not one of its
Affiliates, provided, however, nothing contained in this Section 10.11 shall
prohibit the Borrower from restricting payments otherwise permitted by Section
10.4 hereof.
10.12 UPSTREAM LIMITATIONS. The Borrower will not, nor will the
Borrower permit any of its Subsidiaries to enter into any agreement, contract or
arrangement (other than the Credit Agreement and the other Loan Documents)
restricting the ability of any Subsidiary to pay or make dividends or
distributions in cash or kind, to make loans, advances or other payments of any
nature whatsoever or to make transfers or distributions of all or any part of
its assets to the Borrower or to any Subsidiary of such Subsidiary.
10.13. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA
Affiliate will:
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(a) engage in any "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code which could
result in a material liability for the Borrower or any of its
Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in Section
302 of ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Borrower or any of its Subsidiaries pursuant to Section
302(f) or Section 4068 of ERISA; or
(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of 4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the aggregate
assets of such Plans, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of
benefit liabilities, by more than the amount set forth in Section
8.16.3.
11. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans or the Issuing Bank have any obligation to
issue, extend or renew any Letters of Credit:
11.1 CONSOLIDATED NET WORTH. The Borrower will not permit Consolidated
Net Worth commencing with the fiscal quarter ended June 30, 1996 to be less than
a positive number equal to (85%) of Consolidated Net Worth as of June 30, 1996,
plus 75% of Consolidated Net Income on a cumulative basis as at each fiscal
quarter end as set forth in the Compliance Certificate delivered pursuant to
Section 9.4(c).
11.2. SENIOR FUNDED DEBT TO EBITDA. The Borrower will not:
(a) permit the ratio of Senior Funded Debt as of the Closing
Date to Adjusted EBITDA as at the end of the twelve (12) month period
ended April 30, 1996, to exceed 4.00:1.00.
(b) permit the ratio of Senior Funded Debt at any time during
any Reference Period ending during any period described in the table
set forth below to Consolidated EBITDA as at the end of such Reference
Period to exceed the ratio set forth opposite such period in such
table:
<PAGE> 68
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<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date to 12/31/97 4.00:1.00
01/01/98 to 12/31/98 3.25:1.00
Thereafter 2.50:1.00
</TABLE>
11.3. TOTAL FUNDED DEBT TO EBITDA.
The Borrower will not:
(a) permit the ratio of Total Funded Debt as of the Closing
Date to Adjusted EBITDA as at the end of the twelve (12) month period
ended April 30, 1996, to exceed 5.25:1.00.
(b) permit the ratio of Total Funded Debt at any time during
any Reference Period ending during any period described in the table
set forth below to Consolidated EBITDA as at the end of such Reference
Period to exceed the ratio set forth opposite such period in such
table.
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date to 12/31/97 5.25:1.00
01/01/98 to 12/31/98 4.25:1.00
Thereafter 3.50:1.00
</TABLE>
For the purpose of the definition of Leverage Ratio contained in Section 1.1
and Sections 11.2(b) and 11.3(b), (i) EBITDA shall be calculated for the
Reference Period ending on (a) June 30, 1996, based on Adjusted EBITDA for the
first three (3) fiscal quarters of such period and Consolidated EBITDA for the
fourth fiscal quarter of such period, (b) September 30, 1996, based on
Adjusted EBITDA for the first two (2) fiscal quarters of such period and
Consolidated EBITDA for the third and fourth fiscal quarters of such period,
and (c) December 31, 1996, based on Adjusted EBITDA for the first fiscal
quarter of such period and Consolidated EBITDA for the last three (3) fiscal
quarters of such period, and (ii) with respect to each Reference Period which
includes the fiscal quarter ending on June 30, 1996, EBITDA shall be
calculated for such fiscal quarter based on Adjusted EBITDA the first two (2)
months of such fiscal quarter and Consolidated EBITDA for the remaining one
month of such fiscal quarter.
11.4. INTEREST COVERAGE RATIO. The Borrower will not, as of the end of
any Reference Period, permit the ratio of (i) Consolidated EBITDA to (ii)
Consolidated Total Interest Expense for such Reference Period, to be less than
2.50:1.00.
11.5. FIXED CHARGE COVERAGE RATIO. The Borrower will not, as at the end
of any Reference Period ending during any period described in the table set
forth below, permit the ratio of (i) the sum of (A) Consolidated EBITDA, plus
(B) Rental Obligations with respect to all operating leases for equipment of the
Borrower and its Subsidiaries made during such period, minus (C) all cash
payments for income taxes made during
<PAGE> 69
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such period, minus (D) Non-Discretionary Capital Expenditures made during such
period, minus (E) Distributions solely for the payment of the Borrower's tax
obligation permitted pursuant to Section 10.4 made during such period to (ii)
the sum of (A) Consolidated Total Interest Expense for such period, plus (B)
all mandatory scheduled payments of the Term Loan A and the Term Loan B, plus
(C) Rental Obligations with respect to all operating leases of the Borrower
and its Subsidiaries made during such period, plus (D) all cash taxes and
dividends made during such period, to be less than the ratio set forth
opposite such period in such table:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
07/01/96 to 12/31/96 1.30:1.00
01/01/97 to 12/31/97 1.15:1.00
Thereafter 1.30:1.00
</TABLE>
11.6. CAPITAL EXPENDITURES. The Borrower will not make, or permit any
Subsidiary of the Borrower to make, Capital Expenditures (other than Capital
Expenditures in connection with Acquisitions or Purchases or, if and to the
extent such Capital Expenditures are funded by Tigera) which exceed $2,500,000
in the aggregate during any fiscal year of the Borrower; provided, however, from
and after the date of receipt by the Banks of a Compliance Certificate
demonstrating to the satisfaction of the Banks that the ratio of Total Funded
Debt to Consolidated EBITDA is equal to or less than 3.5:1.00 as of such fiscal
quarter end specified in such Compliance Certificate, there shall be no
limitation on the amount of Capital Expenditures made.
12. CLOSING CONDITIONS.
The obligations of the Banks to make the initial Revolving Credit
Loans, the initial Line of Credit Loans and the Term Loan A and of the Issuing
Bank to issue any initial Letters of Credit shall be subject to the satisfaction
of the following conditions precedent on or prior to May 31, 1996.
12.1. LOAN DOCUMENTS.
12.1.1. LOAN DOCUMENTS. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto,
shall be in full force and effect and shall be in form and substance
satisfactory to each of the Banks. Each Bank shall have received a
fully executed copy of each such document.
12.1.2. SUBORDINATED DEBT DOCUMENTS. Each of the Subordinated
Debt Documents shall have been duly executed and delivered by the
respective parties thereto, shall be in full force and effect and shall
be in form and substance satisfactory to each of the Banks. Each Bank
shall have received a fully executed copy of each such document.
12.1.3. ACQUISITION DOCUMENTS. Each of the Acquisition
Documents shall have been duly executed and delivered by the respective
parties thereto, shall be in full force and effect and shall be in form
and substance satisfactory
<PAGE> 70
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to each of the Banks. A fully executed copy of each such documents
shall have been delivered to the Administrative Agent.
12.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Banks shall
have received from the Borrower and each of its Subsidiaries a copy, certified
by a duly authorized officer of such Person to be true and complete on the
Closing Date, of each of (i) its charter or other incorporation documents as in
effect on such date of certification, and (ii) its by-laws as in effect on such
date.
12.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Borrower and each of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Banks shall have been provided to each of the Banks.
12.4. INCUMBENCY CERTIFICATE. Each of the Banks shall have received
from the Borrower and each of its Subsidiaries an incumbency certificate, dated
as of the Closing Date, signed by a duly authorized officer of the Borrower or
such Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (i) to sign, in the name and on behalf of
each of the Borrower of such Subsidiary, each of the Loan Documents and
Subordinated Debt Documents to which the Borrower or such Subsidiary is or is to
become a party; (ii) in the case of the Borrower, to make Loan Requests and
Conversion Requests and to apply for Letters of Credit; and (iii) to give
notices and to take other action on its behalf under the Loan Documents.
12.5. VALIDITY OF LIENS. The Security Documents shall be effective to
create in favor of the Administrative Agent a legal, valid and enforceable first
(except for Permitted Liens entitled to priority under applicable law) security
interest in and lien upon the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Administrative Agent to protect and preserve such security interests shall have
been duly effected. The Administrative Agent shall have received evidence
thereof in form and substance satisfactory to the Administrative Agent.
12.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The
Administrative Agent shall have received from the Borrower a completed and fully
executed Amended and Restated Perfection Certificate and from each of the
Borrower's Subsidiaries a completed and fully executed Perfection Certificate,
and the results of UCC searches with respect to the Collateral, indicating no
liens other than Permitted Liens and otherwise in form and substance
satisfactory to the Administrative Agent.
12.7. LANDLORD CONSENTS. The Borrower and its Subsidiaries shall have
delivered to the Administrative Agent all Landlord Consents and Waivers with
respect to any lease entered into by the Borrower or any of its Subsidiaries
subsequent to January 1, 1996.
<PAGE> 71
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12.8. CERTIFICATES OF INSURANCE. The Administrative Agent shall have
received a certificate of insurance from an independent insurance broker dated
as of the Closing Date, identifying insurers, types of insurance, insurance
limits, and policy terms, and otherwise describing the insurance obtained in
accordance with the provisions of this Credit Agreement and the Security
Agreements.
12.9. BORROWING BASE REPORT. The Administrative Agent shall have
received from the Borrower a Borrowing Base Report as of a date which is not
more than thirty (30) days prior to the Closing Date.
12.10 ACCOUNTS RECEIVABLE AGING REPORT. The Banks shall have received
from the Borrower the most recent Accounts Receivable aging report of the
Borrower and its Subsidiaries dated as of a date which shall be no more than
fifteen (15) days prior to the Closing Date and the Borrower shall have notified
the Banks in writing on the Closing Date of any material deviation from the
Accounts Receivable values reflected in such Accounts Receivable aging report
and shall have provided the Banks with such supplementary documentation as the
Banks may reasonably request.
12.11 TAX DOCUMENTATION. The Banks shall have received documentation
satisfactory in from and substance to the Banks regarding the efficacy of the
Borrower's utilization of the net operating loss carry-forward of Tigera.
12.12. SOLVENCY CERTIFICATE. Each of the Banks shall have received an
officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of the Borrower and its Subsidiaries following the consummation of the
transactions contemplated herein and in form and substance satisfactory to the
Banks.
12.13. OPINION OF COUNSEL. Each of the Banks and the Co-Agents shall
have received a favorable legal opinion addressed to the Banks and the
Co-Agents, dated as of the Closing Date, in form and substance satisfactory to
the Banks and the Co-Agents, from:
(a) Palmer & Dodge, counsel to the Borrower and its
Subsidiaries;
(b) Zimet, Haines, Friedman & Kaplan, counsel to Tigera;
(c) Davis Polk & Wardwell, special counsel to Tigera; and
(d) Morris, Nichols, Arsht & Tunnell, special Delaware counsel
to Tigera.
12.14. PAYMENT OF FEES AND OTHER ARRANGEMENTS. The Borrower shall have
paid to the Banks or the Administrative Agent, as appropriate, the closing fee
and the Administrative Agent's fee and complied with all other arrangements set
forth in the Fee Letter and the commitment letter among NBD, FNBB and the
Borrower.
12.15. SATISFACTION OF CONDITIONS OF STOCK REDEMPTION AND PURCHASE
AGREEMENT. The Administrative Agent shall have received evidence that all of the
closing conditions in the Stock Purchase Agreement have been satisfied without
<PAGE> 72
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recourse to any provision permitting the waiver by any party thereto of any
condition, obligation, covenant or other requirement.
12.16. COMPLETION OF ACQUISITION. The CPI Acquisition shall have been
completed pursuant to the Stock Purchase Agreement and otherwise on terms and
conditions that are satisfactory to the Administrative Agent in all respects.
12.17. DISBURSEMENT INSTRUCTIONS. The Administrative Agent shall have
received disbursement instructions from the Borrower with respect to the
proceeds of the Term Loan A, the Revolving Credit Loans and the Line of Credit
Loans requested as of the Closing Date.
13. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, including the Revolving
Credit Loans, the Line of Credit Loans, the Term Loan A and Term Loan B, and of
the Issuing Bank to issue, extend or renew any Letter of Credit, in each case
whether on or after the Closing Date, shall also be subject to the satisfaction
of the following conditions precedent:
13.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of any of the Borrower and its Subsidiaries
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Loan or the issuance, extension or
renewal of such Letter of Credit, with the same effect as if made at and as of
that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing. The
Administrative Agent shall have received a certificate of the Borrower signed by
an authorized officer of the Borrower to such effect.
13.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Issuing Bank would make it illegal for the Issuing
Bank to issue, extend or renew such Letter of Credit.
13.3. GOVERNMENTAL REGULATION. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
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13.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Administrative Agent and the Co-Agents' Special
Counsel, and the Banks, the Administrative Agent and such counsel shall have
received all information and such counterpart originals or certified or other
copies of such documents as the Administrative Agent may reasonably request.
13.5. BORROWING BASE REPORT. The Administrative Agent shall have
received the most recent Borrowing Base Report required to be delivered to the
Administrative Agent in accordance with Section 9.4(e) and, if requested by the
Administrative Agent, a Borrowing Base Report dated within five (5) days of the
Drawdown Date of such Revolving Credit Loan or of the date of issuance,
extension or renewal of such Letter of Credit.
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
14.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any principal of the Loans
or any Reimbursement Obligation when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date
of maturity or at any other date fixed for payment;
(b) the Borrower or any of its Subsidiaries shall fail to pay
within five (5) business days of the due date therefore (i) any
interest on the Loans, or (ii) the commitment fee, any Letter of Credit
Fee, the Administrative Agent's Fee, or other sums due hereunder or
under any of the other Loan Documents (other than payments described in
clause (a) above), when the same shall become due and payable, in each
case whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment;
(c) the Borrower shall fail to comply, within any applicable
grace period set forth in this Section 14 or in the applicable
covenant, with any of its covenants contained in Sections 9.1, 9.4(a)
through (g) and (j), Sections 9.5.1, 9.5.3, the first sentence of
Section 9.6, Sections 9.7 through 9.12, 10 or 11;
(d) the Borrower or any of its Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified elsewhere in this
Section 14.1) for thirty (30) days after written notice of such failure
has been given to the Borrower by the Administrative Agent;
(e) any representation or warranty of the Borrower or any of
its Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with
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this Credit Agreement shall prove to have been false in any material
respect upon the date when made or deemed to have been made or
repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay
at maturity, or within any applicable period of grace, any obligation
for borrowed money or credit received or in respect of any Capitalized
Leases in an aggregate amount greater than $100,000, or fail to observe
or perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing borrowed money
or credit received or in respect of any Capitalized Leases in an
aggregate amount greater than $100,000 for such period of time as would
permit (assuming the giving of appropriate notice if required) the
holder or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof;
(g) the Borrower or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of the Borrower or any of
its Subsidiaries or of any substantial part of the assets of the
Borrower or any of its Subsidiaries or shall commence any case or other
proceeding relating to the Borrower or any of its Subsidiaries under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law of any jurisdiction,
now or hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall
be commenced against the Borrower or any of its Subsidiaries and the
Borrower or any of its Subsidiaries shall indicate its approval
thereof, consent thereto or acquiescence therein or such petition or
application shall not have been dismissed within forty-five (45) days
following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any
of its Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of the Borrower or any Subsidiary of the Borrower in
an involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive,
any final judgment against the Borrower or any of its Subsidiaries
that, with other outstanding final judgments, undischarged, against the
Borrower or any of its Subsidiaries exceeds in the aggregate $250,000
and the Borrower shall have failed to provide evidence satisfactory to
the Banks that such judgment or award is fully covered by independent
third-party insurance;
(j) the holders of all or any part of the Subordinated Debt
shall accelerate the maturity of all or any part of the Subordinated
Debt or the
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Subordinated Debt shall be prepaid, redeemed or repurchased in whole or
in part;
(k) if (i) any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded or the Administrative Agent security
interests, mortgages or liens in a substantial portion of the
Collateral shall cease to be perfected, or shall cease to have the
priority contemplated by the Security Documents, in each case otherwise
than in accordance with the terms thereof or with the express prior
written agreement, consent or approval of the Banks, or (ii) any action
at law, suit or in equity or other legal proceeding to cancel, revoke
or rescind any of the Loan Documents shall be commenced by or on behalf
of the Borrower or any of its Subsidiaries party thereto or any of
their respective stockholders, or (iii) any court or any other
governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment,
order, decree or ruling to the effect that, (A) any one or more of the
Loan Documents is illegal, invalid or unenforceable in accordance with
the terms thereof or (B) the CPI Acquisition or any of the transactions
contemplated thereby is illegal or invalid;
(l) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of the Borrower or any of its
Subsidiaries to the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $250,000 and such event in the circumstances
occurring reasonably could constitute grounds for the termination of
such Guaranteed Pension Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer
such Guaranteed Pension Plan; or a trustee shall have been appointed by
the United States District Court to administer such Plan; or the PBGC
shall have instituted proceedings to terminate such Guaranteed Pension
Plan;
(m) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part
of its business and such order shall continue in effect for more than
thirty (30) days;
(n) there shall occur any material damage to, or loss, theft
or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or
public enemy, or other casualty, which in any such case causes, for
more than thirty (30) consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of the
Borrower or any of its Subsidiaries if such event or circumstance is
not covered by business interruption insurance and would have a
materially adverse effect on the business or financial condition of the
Borrower and its Subsidiaries, taken as a whole;
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(o) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by the Borrower or any of its Subsidiaries if such loss,
suspension, revocation or failure to renew would have a material
adverse effect on the business or financial condition of the Borrower
and its Subsidiaries, taken as a whole;
(p) the Borrower or any of its Subsidiaries shall be indicted
for a state or federal crime, or any civil or criminal action shall
otherwise have been brought against the Borrower or any of its
Subsidiaries, a punishment for which in any such case could include the
forfeiture of any assets of the Borrower or such Subsidiary included in
the Borrowing Base or any assets of the Borrower or such Subsidiary not
included in the Borrowing Base but having a fair market value in excess
of $250,000; or
(q) any of the Guaranties shall be cancelled, terminated,
revoked or rescinded; or
(r) Tigera shall at any time, legally or beneficially own less
than fifty-one percent (51%) of the capital stock of the Borrower, as
adjusted pursuant to any stock split, stock dividend or
recapitalization or reclassification of the capital of the Borrower;
then, and in any such event, so long as the same may be continuing, (i) the
Administrative Agent may, and upon the request of the Majority Banks shall, by
notice in writing to the Borrower declare all amounts owing with respect to this
Credit Agreement, the Notes and the other Loan Documents and all Reimbursement
Obligations, or (ii) any Bank, with respect to all amounts owing to such Bank
following at least forty-five (45) days prior written notice to the other Banks
of its intent to accelerate the Obligations owing to such Bank may, in either
case declare such amounts owing to such Bank with respect to this Credit
Agreement, the Notes and the other Loan Documents, to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower; provided that in the event of any Event of Default
specified in Sections 14.1(g), 14.1(h) or 14.1(j), all such amounts shall become
immediately due and payable automatically and without any requirement of notice
from the Co-Agents or any Bank.
14.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in Sections 14.1(g), 14.1(h) or 14.1(j) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of
the Banks shall be relieved of all further obligations to make Loans to the
Borrower and the Issuing Bank shall be relieved of all further obligations to
issue, extend or renew Letters of Credit. If any other Event of Default shall
have occurred and be continuing, the Administrative Agent may and, upon the
request of the Majority Banks, shall, by notice to the Borrower, terminate the
unused portion of the credit hereunder, and upon such notice being given such
unused portion of the credit hereunder shall terminate immediately and each of
the Banks shall be relieved of all further obligations to make Loans and
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the Issuing Bank shall be relieved of all further obligations to issue, extend
or renew Letters of Credit. No termination of the credit hereunder shall relieve
the Borrower or any of its Subsidiaries of any of the Obligations.
14.3. REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Loans pursuant to Section 14.1, each Bank, if
owed any amount with respect to the Loans or the Reimbursement Obligations,
may proceed to protect and enforce its rights by suit in equity, action at law
or other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank are
evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Administrative Agent or the holder of any Note or purchaser of any Letter
of Credit Participation is intended to be exclusive of any other remedy and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.
14.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that following
the occurrence or during the continuance of any Default or Event of Default, the
Administrative Agent or any Bank, as the case may be, receives any monies in
connection with the enforcement of any the Security Documents, or otherwise with
respect to the realization upon any of the Collateral, such monies shall be
distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent for or in respect of all
reasonable costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Administrative Agent in connection
with the collection of such monies by the Administrative Agent, for the
exercise, protection or enforcement by the Administrative Agent of all
or any of the rights, remedies, powers and privileges of the
Administrative Agent under this Credit Agreement or any of the other
Loan Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Administrative Agent against any
taxes or liens which by law shall have, or may have, priority over the
rights of the Administrative Agent to such monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Banks may determine; provided, however, that
distributions in respect of such obligations shall be made (i) pari
passu among Obligations with respect to the Administrative Agent's fee
payable pursuant to Section 6.2 and all other Obligations and (ii)
Obligations owing to the Banks with respect to each type of
Obligation such as interest, principal, fees and expenses, shall be
made among the Banks pro rata; and provided, further, that the
Administrative Agent may in
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its discretion make proper allowance to take into account any
Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Banks and the
Administrative Agent of all of the Obligations, to the payment of any
obligations required to be paid pursuant to Section 9-504(1)(c) of the
Uniform Commercial Code of the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the
Borrower or to such other Persons as are entitled thereto.
15. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any securities or other property of the Borrower
in the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (i) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Notes held by such Bank or constituting Reimbursement Obligations owed to
such Bank, such amount shall be applied ratably to such other Indebtedness and
to the Indebtedness evidenced by all such Notes held by such Bank or
constituting Reimbursement Obligations owed to such Bank, and (ii) if such Bank
shall receive from the Borrower, whether by voluntary payment, exercise of the
right of setoff, counterclaim, cross action, enforcement of the claim evidenced
by the Notes held by, or constituting Reimbursement Obligations owed to, such
Bank by proceedings against the Borrower at law or in equity or by proof thereof
in bankruptcy, reorganization, liquidation, receivership or similar proceedings,
or otherwise, and shall retain and apply to the payment of the Note or Notes
held by, or Reimbursement Obligations owed to, such Bank any amount in excess of
its ratable portion of the payments received by all of the Banks with respect to
the Notes held by, and Reimbursement Obligations owed to, all of the Banks, such
Bank will make such disposition and arrangements with the other Banks with
respect to such excess, either by way of distribution, pro tanto assignment of
claims, subrogation or otherwise as shall result in each Bank receiving in
respect of the Notes held by it or Reimbursement obligations owed it, its
proportionate payment as contemplated by this Credit Agreement; provided that if
all or any part of such excess payment is thereafter recovered from such Bank,
such disposition and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.
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16. THE ADMINISTRATIVE AGENT.
16.1. AUTHORIZATION.
(a) The Administrative Agent is authorized to take such action
on behalf of each of the Banks and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related
documents delegated to the Administrative Agent, together with such
powers as are reasonably incident thereto, provided that no duties or
responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by the Administrative Agent.
(b) The relationship between the Administrative Agent and each
of the Banks is that of an independent contractor. The use of the term
"Administrative Agent" is for convenience only and is used to describe,
as a form of convention, the independent contractual relationship
between the Administrative Agent and each of the Banks. Nothing
contained in this Credit Agreement nor the other Loan Documents shall
be construed to create an agency, trust or other fiduciary relationship
between the Administrative Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Administrative Agent
is nevertheless "representative" of the Banks, as that term is defined
in Article 1 of the Uniform Commercial Code, for purposes of actions
for the benefit of the Banks and the Administrative Agent with respect
to all collateral security and guaranties contemplated by the Loan
Documents. Such actions include the designation of the Administrative
Agent as "secured party", "mortgagee" or the like on all financing
statements and other documents and instruments, whether recorded or
otherwise, relating to the attachment, perfection, priority or
enforcement of any security interests, mortgages or deeds of trust in
collateral security intended to secure the payment or performance of
any of the Obligations, all for the benefit of the Banks and the
Co-Agents.
16.2. EMPLOYEES AND CO-AGENTS. The Administrative Agent may exercise
its powers and execute its duties by or through employees of the Co-Agents and
shall be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Credit Agreement and the
other Loan Documents. The Administrative Agent may utilize the services of such
other Persons as the Administrative Agent in its sole discretion may reasonably
determine, and all reasonable fees and expenses of any such Persons shall be
paid by the Borrower.
16.3. NO LIABILITY. Neither the Administrative Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor the Administrative Agent or employee thereof, shall be
liable for any waiver, consent or approval given or any action taken, or omitted
to be taken, in good faith by it or them hereunder or under any of the other
Loan Documents, or in connection herewith or therewith, or be responsible for
the consequences of any
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oversight or error of judgment whatsoever, except that an Administrative Agent
or such other Person, as the case may be, may be liable for losses due to its
willful misconduct or gross negligence.
16.4. NO REPRESENTATIONS. The Administrative Agent shall not be
responsible for the execution or validity or enforceability of this Credit
Agreement, the Notes, the Letters of Credit, any of the other Loan Documents or
any instrument at any time constituting, or intended to constitute, collateral
security for the Notes, or for the value of any such collateral security or for
the validity, enforceability or collectability of any such amounts owing with
respect to the Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Borrower or any of its Subsidiaries, or be bound to ascertain or inquire as to
the performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or intended to
constitute, collateral security for the Notes or to inspect any of the
properties, books or records of the Borrower or any of its Subsidiaries. The
Administrative Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by the Borrower or any holder of any
of the Notes shall have been duly authorized or is true, accurate and complete.
The Administrative Agent has not made nor do they now make any representations
or warranties, express or implied, nor do they assume any liability to the
Banks, with respect to the credit worthiness or financial conditions of the
Borrower or any of its Subsidiaries. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this Credit
Agreement.
16.5. PAYMENTS.
16.5.1. PAYMENTS TO ADMINISTRATIVE AGENT. A payment by the Borrower to
the Administrative Agent hereunder or any of the other Loan Documents for the
account of any Bank shall constitute a payment to such Bank. The Administrative
Agent agrees promptly to distribute to each Bank such Bank's pro rata share of
payments received by the Administrative Agent for the account of the Banks
except as otherwise expressly provided herein or in any of the other Loan
Documents.
16.5.2. DISTRIBUTION BY ADMINISTRATIVE AGENT. If in the opinion of the
Administrative Agent the distribution of any amount received by them in such
capacity hereunder, under the Notes or under any of the other Loan Documents
might involve the Administrative Agent in liability, the Administrative Agent
may refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and distributed by
the Administrative Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Administrative Agent
its proportionate share of the amount so adjudged
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to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.
16.5.3. DELINQUENT BANKS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (i) to make available to the
Administrative Agent its pro rata share of any Loan or to purchase any
Letter of Credit Participation or (ii) to comply with the provisions of
Section 16 with respect to making dispositions and arrangements with
the other Banks, where such Bank's share of any payment received,
whether by setoff or otherwise, is in excess of its pro rata share of
such payments due and payable to all of the Banks, in each case as,
when and to the full extent required by the provisions of this Credit
Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall
be deemed a Delinquent Bank until such time as such delinquency is
satisfied. A Delinquent Bank shall be deemed to have assigned any and
all payments due to it from the Borrower, whether on account of
outstanding Loans, Unpaid Reimbursement Obligations, interest, fees or
otherwise, to the remaining nondelinquent Banks for application to, and
reduction of, their respective pro rata shares of all outstanding Loans
and Unpaid Reimbursement Obligations. The Delinquent Bank hereby
authorizes the Administrative Agent to distribute such payments to the
nondelinquent Banks in proportion to their respective pro rata shares
of all outstanding Loans and Unpaid Reimbursement Obligations. A
Delinquent Bank shall be deemed to have satisfied in full a delinquency
when and if, as a result of application of the assigned payments to all
outstanding Loans and Unpaid Reimbursement Obligations of the
nondelinquent Banks, the Banks' respective pro rata shares of all
outstanding Loans and Unpaid Reimbursement Obligations have returned to
those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.
16.6. HOLDERS OF NOTES. The Administrative Agent may deem and treat the
payee of any Note or the purchaser of any Letter of Credit Participation as the
absolute owner or purchaser thereof for all purposes hereof until it shall have
been furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.
16.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Administrative Agent from and against any and all claims, actions
and suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Co-Agents have not been reimbursed by the
Borrower as required by Section 18), and liabilities of every nature and
character arising out of or related to this Credit Agreement, the Notes, or any
of the other Loan Documents or the transactions contemplated or evidenced hereby
or thereby, or the Co-Agents' actions taken hereunder or thereunder, except to
the extent that any of the same shall be directly caused by the Administrative
Agent's willful misconduct or gross negligence.
16.8. ADMINISTRATIVE AGENT AS BANK. In its individual capacity, NBD
shall have the same obligations and the same rights, powers and privileges in
respect to its Commitments and the Loans made by them, and as the holder of any
of the Notes and
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as the purchaser of any Letter of Credit Participations, as it would have were
it not also the Administrative Agent.
16.9. RESIGNATION. The Administrative Agent may resign at any time by
giving sixty (60) days prior written notice thereof to the Banks and the
Borrower. Upon any such resignation, the Majority Banks shall have the right to
appoint successor Administrative Agent. Unless a Default or Event of Default
shall have occurred and be continuing, such successor Administrative Agent shall
be reasonably acceptable to the Borrower. If no successor Administrative Agent
shall have been so appointed by the Majority Banks and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
giving of notice of resignation, then the retiring Administrative Agent may, on
behalf of the Banks, appoint successor Administrative Agent, which shall be a
financial institution having a rating of not less than A or its equivalent by
Standard & Poor's Corporation. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After any retiring Administrative Agent's
resignation, the provisions of this Credit Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by they while it was acting as Administrative
Agent.
16.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Administrative Agent thereof. The Administrative
Agent hereby agrees that upon receipt of any notice under this Section 16.10 it
shall promptly notify the other Banks of the existence of such Default or Event
of Default.
16.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one or more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Administrative Agent shall, if (i)
so requested by the Majority Banks and (ii) the Banks have provided to the
Administrative Agent such additional indemnities and assurances against expenses
and liabilities as the Administrative Agent may reasonably request, proceed to
enforce the provisions of the Security Documents authorizing the sale or other
disposition of all or any part of the Collateral and exercise all or any such
other legal and equitable and other rights or remedies as it may have in respect
of such Collateral. The Majority Banks may direct the Administrative Agent in
writing as to the method and the extent of any such sale or other disposition,
the Banks hereby agreeing to indemnify and hold the Administrative Agent,
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Administrative
Agent need not comply with any such direction to the extent that the
Administrative Agent reasonably believes the Administrative Agent's compliance
with such direction to be unlawful or commercially unreasonable in any
applicable jurisdiction.
<PAGE> 83
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17. EXPENSES.
The Borrower agrees to pay (i) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein; (ii) any taxes (including any
interest and penalties in respect thereto) payable by the Administrative Agent
or any of the Banks (other than taxes based upon the Administrative Agent's or
any Bank's net income) on or with respect to the transactions contemplated by
this Credit Agreement (the Borrower hereby agreeing to indemnify the
Administrative Agent and each Bank with respect thereto); (iii) the reasonable
fees, expenses and disbursements of the Co-Agents' Special Counsel or any local
counsel to the Co-Agents incurred in connection with the preparation,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, each closing hereunder, and amendments, modifications,
approvals, consents or waivers hereto or hereunder; (iv) the reasonable fees,
expenses and disbursements of the Administrative Agent incurred by the Co-Agents
in connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including all title insurance
premiums and surveyor, engineering and appraisal charges; (v) any reasonable
fees, costs, expenses and bank charges, including bank charges for returned
checks, incurred by the Co-Agents in establishing, maintaining or handling
agency accounts, lock box accounts and other accounts for the collection of any
of the Collateral; (vi) all reasonable out-of-pocket expenses (including without
limitation reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Co-Agents, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or the Co-Agents in connection with (A) the enforcement of
or preservation of rights under any of the Loan Documents against the Borrower
or any of its Subsidiaries or the administration thereof after the occurrence of
a Default or Event of Default, and (B) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related to any Bank's or the
Co-Agents' relationship with the Borrower or any of its Subsidiaries, and (vii)
all reasonable fees, expenses and disbursements of the Co-Agents incurred in
connection with (A) any reasonable syndication expenses, (B) commercial
financial examination expenses, if necessary, and (C) UCC searches, UCC filings
or mortgage recordings. The covenants of this Section 17 shall survive payment
or satisfaction of all other Obligations.
18. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Co-Agents and
the Banks from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Credit
Agreement or any of the other Loan Documents or the transactions contemplated
hereby including, without limitation, (i) any actual or proposed use by the
Borrower or any of its Subsidiaries of the proceeds of any of the Loans or
Letters of Credit, (ii) the reversal or withdrawal of any provisional credits
granted by the Administrative Agent upon the transfer of funds from bank agency
or lock box accounts or in connection with the provisional honoring of checks or
other items, (iii) the Borrower or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan Documents or (iv) with
<PAGE> 84
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respect to the Borrower and its Subsidiaries and their respective properties and
assets, the violation of any Environmental Law, the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release or threatened release
of any Hazardous Substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous Substances (including, but
not limited to, claims with respect to wrongful death, personal injury or damage
to property), in each case including, without limitation, the reasonable fees
and disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding. In
litigation, or the preparation therefor, the Banks and the Administrative Agent
shall be entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrower
under this Section 18 are unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The covenants contained
in this Section 18 shall survive payment or satisfaction in full of all other
Obligations.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Banks and the
Administrative Agent, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making by the Banks of any of the
Loans and the issuance, extension or renewal of any Letters of Credit, as herein
contemplated, and shall continue in full force and effect so long as any Letter
of Credit or any amount due under this Credit Agreement or the Notes or any of
the other Loan Documents remains outstanding or any Bank has any obligation to
make any Loans or the Administrative Agent has any obligation to issue, extend
or renew any Letter of Credit, and for such further time as may be otherwise
expressly specified in this Credit Agreement.
20. ASSIGNMENT AND PARTICIPATION.
20.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Loans at the time owing to it, the Notes held by it and its participating
interest in the risk relating to any Letters of Credit); provided that (i) the
Co-Agents shall retain in the aggregate fifty-one percent (51%) of the Total
Commitments, (ii) after giving effect to all such assignments the number of
Banks shall not exceed five (5), and (iii) other than with respect to
assignments by any Bank to Affiliates of such Bank, that the Borrower shall have
given its prior written consent to such assignment, which consent will not be
unreasonably withheld, and the parties to such assignment shall execute and
deliver to the Administrative Agent, for recording in the Register (as
hereinafter defined), an Assignment and Acceptance, substantially in the form of
Exhibit H hereto (an "Assignment and Acceptance"), together with any Notes
subject to such assignment.
<PAGE> 85
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Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (i) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder,
and (ii) the assigning Bank shall, to the extent provided in such assignment and
upon payment to the Administrative Agent of the registration fee referred to in
Section 20.3, be released from its obligations under this Credit Agreement.
20.2. CERTAIN REPRESENTATIONS AND WARRANTIES: LIMITATIONS; COVENANTS.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or
mortgage,
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Borrower and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the
performance or observance by the Borrower and its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations of any of their obligations under this Credit Agreement or
any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in Section 8.4 and Section 9.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without reliance upon
the assigning Bank, the Administrative Agent or any other Bank and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not
taking action under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
<PAGE> 86
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(f) such assignee appoints and authorizes the Administrative
Agent to take such action as Administrative Agent on its behalf and to
exercise such powers under this Credit Agreement and the other Loan
Documents as are delegated to the Administrative Agent by the terms
hereof or thereof, together with such powers as are reasonably
incidental thereto;
(g) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements
with the assigning Bank satisfactory to such assignee with respect to
its pro rata share of Letter of Credit Fees in respect of outstanding
Letters of Credit.
20.3. REGISTER. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the Banks and the
Commitment Percentage of, and principal amount of the Revolving Credit Loans
owing to and Letter of Credit Participations purchased by, the Banks from time
to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Administrative Agent and the Banks may
treat each Person whose name is recorded in the Register as a Bank hereunder for
all purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrower and the Banks at any reasonable time and from time to
time upon reasonable prior notice. Upon each such recordation, the assigning
Bank agrees to pay to the Administrative Agent a registration fee in the sum of
$2,500.
20.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Administrative Agent shall (i) record the information
contained therein in the Register, and (ii) give prompt notice thereof to the
Borrower and the Banks (other than the assigning Bank). Within five (5) Business
Days after receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent, in exchange for each
surrendered Note, a new Note to the order of such Eligible Assignee in an amount
equal to the amount assumed by such Eligible Assignee pursuant to such
Assignment and Acceptance and, if the assigning Bank has retained some portion
of its obligations hereunder, a new Note to the order of the assigning Bank in
an amount equal to the amount retained by it hereunder. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such in Assignment and
Acceptance and shall otherwise be substantially the form of the assigned Notes.
Within five (5) days of issuance of any new Notes pursuant to this Section 20.4,
the Borrower shall deliver an opinion of counsel, addressed to the Banks and the
Administrative Agent, relating to the due authorization, execution and delivery
of such new Notes and the legality, validity and
<PAGE> 87
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binding effect thereof, in form and substance satisfactory to the Banks. The
surrendered Notes shall be cancelled and returned to the Borrower.
20.5. PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (i) each such participation shall be in an amount of not less than
$500,000, (ii) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (iii) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would reduce the
principal of or the interest rate on any Loans, extend the term or increase the
amount of the Commitment of such Bank as it relates to such participant, reduce
the amount of any commitment fees or Letter of Credit Fees to which such
participant is entitled or extend any regularly scheduled payment date for
principal or interest. In connection with the initial syndication by the
Administrative Agent, the Borrower shall assist the Co-Agents in providing to
prospective lenders information describing the Borrower, and representatives of
the Borrower shall be available to meet prospective lenders at reasonable times.
20.6. DISCLOSURE. The Borrower agrees that in addition to disclosures
made in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree (i) to treat in confidence such information unless such
information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process, (iii)
not to make use of such information for purposes of transactions unrelated to
such contemplated assignment or participation, and (iv) to return such
information if the potential assignee or participant does not become an assignee
or participant.
20.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Administrative Agent pursuant to Section
14.1 or Section 14.2, and the determination of the Majority Banks shall for all
purposes of this Agreement and the other Loan Documents be made without regard
to such assignee Bank's interest in any of the Loans. If any Bank sells a
participating interest in any of the Loans or Reimbursement Obligations to a
participant, and such participant is the Borrower or an Affiliate of the
Borrower, then such transferor Bank shall promptly notify the Administrative
Agent of the sale of such participation. A transferor Bank shall have no right
to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Administrative Agent pursuant to Section 14.1 or Section
14.2 to the extent that such participation is beneficially owned by
<PAGE> 88
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the Borrower or any Affiliate of the Borrower, and the determination of the
Majority Banks shall for all purposes of this Agreement and the other Loan
Documents be made without regard to the interest of such transferor Bank in the
Loans to the extent of such participation.
20.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
retain its rights to be indemnified pursuant to Section 18 with respect to any
claims or actions arising prior to the date of such assignment. If any assignee
Bank is not incorporated under the laws of the United States of America or any
state thereof, it shall, prior to the date on which any interest or fees are
payable hereunder or under any of the other Loan Documents for its account,
deliver to the Borrower and the Administrative Agent certification as to its
exemption from deduction or withholding of any United States federal income
taxes. If any Reference Bank transfers all of its interest, rights and
obligations under this Credit Agreement, the Administrative Agent shall, in
consultation with the Borrower and with the consent of the Borrower and the
Majority Banks, appoint another Bank to act as a Reference Bank hereunder.
Anything contained in this Section 20 to the contrary notwithstanding, any Bank
may at any time pledge all or any portion of its interest and rights under this
Credit Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve
Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof shall
release the pledgor Bank from its obligations hereunder or under any of the
other Loan Documents.
20.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
21. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail, postage prepaid, sent by overnight courier, or sent
by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier
or postal service, addressed as follows:
(a) if to the Borrower, at 214 Nashua Street, Leominster,
Massachusetts 01453, Attention: President, or at such other address for
notice as the Borrower shall last have furnished in writing to the
Person giving the notice;
(b) if to Tigera, at 667 Madison Avenue, Suite 2500, New York,
New York 10021-8029; Attention Donald T. Pascal, Chairman, or such
other address as Tigera shall last have furnished in writing to the
Person giving the notice;
(c) if to the Administrative Agent, at 611 Woodward Avenue,
Detroit, Michigan 48226, Attention: Erik W. Bakker, Vice President, or
such other address for notice as the Administrative Agent shall last
have furnished in writing to the Person giving the notice.
<PAGE> 89
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(d) if to the Documentation Agent, at 100 Front Street,
Worcester, Massachusetts 01608-1438, USA, Attention: G. Christopher
Miller, Vice President, or such other address for notice as the
Documentation Agent shall last have furnished in writing to the Person
giving the notice; and
(e) if to any Bank, at such Bank's address set forth on
Schedule 1 hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
22. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
23. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
24. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce
<PAGE> 90
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or account for more than one such counterpart signed by the party against whom
enforcement is sought.
25. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 27.
26. WAIVER OF JURY TRIAL.
The Borrower hereby waives its right to a jury trial with respect to
any action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, the Borrower hereby waives any right
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (i)
certifies that no representative, Administrative Agent or attorney of any Bank
or the Administrative Agent has represented, expressly or otherwise, that such
Bank or the Administrative Agent would not, in the event of litigation, seek to
enforce the foregoing waivers and (ii) acknowledges that the Administrative
Agent and the Banks have been induced to enter into this Credit Agreement, the
other Loan Documents to which it is a party and the Subordinated Debt Documents
to which it is a party by, among other things, the waivers and certifications
contained herein.
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement
to be given by all of the Banks may be given, and any term of this Credit
Agreement, the other Loan Documents or any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by the
Borrower or any of its Subsidiaries of any terms of this Credit Agreement, the
other Loan Documents or such other instrument or the continuance of any Default
or Event of Default may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the written
consent of the Borrower and the written consent of the Majority Banks.
Notwithstanding the foregoing, the rate of interest on the Notes (other than
interest accruing pursuant to Section 6.11 following the effective date of any
waiver by the Majority Banks oF THE Default or Event of Default relating
thereto), the term of the Notes, the amount of the Commitments of the Banks, and
the amount of commitment fee or Letter of Credit Fees hereunder may not be
changed without the written consent of the Borrower and the written consent of
each Bank affected thereby; the definition of Majority Banks may not be amended,
and none of the Guaranties nor all or substantially all of the assets of the
Borrower or any of its Subsidiaries may be released, without the written consent
of all of the Banks; the amount of the Agents' fee and Section 16 may not be
amended without the written consent of the Administrative Agent; and any Letter
of CREDIT Fees payable for the Issuing Bank's account may not be
<PAGE> 91
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amended without the written consent of the Issuing Bank. No waiver shall extend
to or affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the
Administrative Agent or any Bank in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.
28. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
29. TRANSITIONAL ARRANGEMENTS.
29.1. ORIGINAL AGREEMENT SUPERSEDED. This Credit Agreement shall
supersede the Original Agreement in its entirety, except as provided in this
Section 29. On the Closing Date, the rights and obligations of the parties under
the Original Agreement and the "NOTES" as defined therein shall be subsumed
within and be governed by this Credit Agreement and the Revolving Credit Notes
as defined herein; provided, however, that each of the "Revolving Credit Loans"
(as such term is defined in the Original Agreement) outstanding under the
Original Agreement on the Closing Date shall, for purposes of this Agreement, be
Revolving Credit Loans.
29.2. RETURN AND CANCELLATION OF NOTE. Upon its receipt of its
Revolving Credit Note hereunder on the Closing Date, each of NBD and FNBB
shall promptly return to the Borrower, marked "Substituted," any note of the
Borrower held by NBD or FNBB pursuant to the Original Agreement.
29.3. INTEREST AND FEES UNDER SUPERSEDED AGREEMENT. All interest and
all commitment and other fees and expenses owing or accruing under or in respect
of the Original Agreement shall be calculated as of the Closing Date (prorated
in the case of any fractional periods), and shall be paid on the Closing Date in
accordance with the method specified in the Original Agreement, as if the
Original Agreement were still in effect.
<PAGE> 92
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IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
CONNECTIVITYPRODUCTS INCORPORATED
By: /s/ James S. Harrington
--------------------------------------
Name: James S. Harrington
Title: President
NBD BANK, individually and as
Administrative Agent
By: /s/ Erik W. Bakker
--------------------------------------
Name: Erik W. Bakker
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON, individually and as Documentation
Agent
By: /s/ G. Christopher Miller
--------------------------------------
Name: G. Christopher Miller
Title: Vice President
<PAGE> 93
SCHEDULE 1
Commitments, Commitment Percentages
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Revolving
Revolving Credit Line of Credit Term Loan A Term Loan B
Credit Commitment Line of Credit Commitment Term Loan A Commitment Commitment
Bank Commitment Percentage Commitment Percentage Commitment Percentage Percentage
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
The First National Bank $10,000,000 50% $3,500,000 50% $9,300,000 50%
of Boston
Domestic Lending Office
One Federal Street
Boston, MA 02110
LIBOR Lending Office
Same as Above
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NBD Bank $10,000,000 50% $3,500,000 50% $9,300,000 50%
Domestic Lending Office
Michigan Banking
Division
611 Woodward Avenue
Detroit, Michigan 48226
LIBOR Lending Office
Same as Above
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.2
REVOLVING CREDIT NOTE
$10,000,000.00 May 31, 1996
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS INCORPORATED, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
NBD Bank, a Michigan banking corporation (the "Bank") at the Bank's head office
at 611 Woodward Avenue, Detroit, Michigan 01608:
(a) prior to or on May 31, 2002 the principal amount of TEN MILLION
AND NO/100 DOLLARS ($10,000,000.00) or, if less, the aggregate unpaid
principal amount of the Revolving Credit Loans advanced by the Bank to the
Borrower pursuant to the Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of May 31, 1996 (as amended and in effect from
time to time, the "Credit Agreement"), among the Borrower, the Bank and
other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Revolving Credit Note is one of the Revolving Credit Notes issued
pursuant to Section 2.4.1 of the Credit Agreement and evidences borrowings
under, and has been issued by the Borrower in accordance with the terms of, the
Credit Agreement. The Bank and any holder hereof is entitled to the benefits of
the Credit Agreement, the Security Documents and the other Loan Documents, and
may enforce the agreements of the Borrower contained therein, and any holder
hereof may exercise the respective remedies provided for thereby or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. All capitalized terms used in this Revolving Credit Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Revolving Credit Loan or at the
time of receipt of any payment of principal of this Revolving Credit Note, an
appropriate notation on the grid attached to this Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, reflecting the making of such Revolving Credit Loan or (as the case may
be) the receipt of such payment. The outstanding amount of the Revolving Credit
Loans set forth on the grid attached to this Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by the Bank with respect to any Revolving Credit
<PAGE> 2
-2-
Loans shall be prima facie evidence of the principal amount thereof owing and
unpaid to the Bank, but the failure to record, or any error in so recording, any
such amount on any such grid, continuation or other record shall not limit or
otherwise affect the obligation of the Borrower hereunder or under the Credit
Agreement to make payments of principal of and interest on this Revolving Credit
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Revolving Credit Note on the terms and conditions specified in the
Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Revolving Credit Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Revolving Credit Note
or the obligation represented hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Revolving Credit Note, and assents
to any extension or postponement of the time of payment or any other indulgence,
to any substitution, exchange or release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
THIS REVOLVING CREDIT NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER
SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS
OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
REVOLVING CREDIT NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN 21 OF THE
CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
<PAGE> 3
-3-
This Revolving Credit Note shall be deemed to take effect as a sealed
instrument under the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit Note
to be signed in its corporate name and its corporate seal to be impressed
thereon by its duly authorized officer as of the day and year first above
written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
---------------------------------
James S. Harrington, President
<PAGE> 4
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Amount of Amount of Balance of
Revolving Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.3
REVOLVING CREDIT NOTE
$10,000,000.00 May 31, 1996
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS INCORPORATED, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
The First National Bank of Boston, a national banking association (the "Bank")
at the Bank's head office at 100 Federal Street, Boston, Massachusetts 02110:
(a) prior to or on May 31, 2002 the principal amount of TEN MILLION
AND NO/100 DOLLARS ($10,000,000.00) or, if less, the aggregate unpaid
principal amount of the Revolving Credit Loans advanced by the Bank to the
Borrower pursuant to the Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of May 31, 1996 (as amended and in effect from
time to time, the "Credit Agreement"), among the Borrower, the Bank and
other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Revolving Credit Note is one of the Revolving Credit Notes issued
pursuant to Section 2.4.1 of the Credit Agreement and evidences borrowings
under, and has been issued by the Borrower in accordance with the terms of, the
Credit Agreement. The Bank and any holder hereof is entitled to the benefits of
the Credit Agreement, the Security Documents and the other Loan Documents, and
may enforce the agreements of the Borrower contained therein, and any holder
hereof may exercise the respective remedies provided for thereby or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. All capitalized terms used in this Revolving Credit Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Revolving Credit Loan or at the
time of receipt of any payment of principal of this Revolving Credit Note, an
appropriate notation on the grid attached to this Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, reflecting the making of such Revolving Credit Loan or (as the case may
be) the receipt of such payment. The outstanding amount of the Revolving Credit
Loans set forth on the grid attached to this Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by the Bank with respect to any Revolving Credit
<PAGE> 2
-2-
Loans shall be prima facie evidence of the principal amount thereof owing and
unpaid to the Bank, but the failure to record, or any error in so recording, any
such amount on any such grid, continuation or other record shall not limit or
otherwise affect the obligation of the Borrower hereunder or under the Credit
Agreement to make payments of principal of and interest on this Revolving Credit
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Revolving Credit Note on the terms and conditions specified in the
Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Revolving Credit Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Revolving Credit Note
or the obligation represented hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Revolving Credit Note, and assents
to any extension or postponement of the time of payment or any other indulgence,
to any substitution, exchange or release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
THIS REVOLVING CREDIT NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER
SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS
OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
REVOLVING CREDIT NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION
21 OF THE CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
<PAGE> 3
-3-
This Revolving Credit Note shall be deemed to take effect as a sealed
instrument under the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit Note
to be signed in its corporate name and its corporate seal to be impressed
thereon by its duly authorized officer as of the day and year first above
written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
---------------------------------
James S. Harrington, President
<PAGE> 4
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Amount of Amount of Balance of
Revolving Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.4
LINE OF CREDIT NOTE
$3,500,000.00 May 31, 1996
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS INCORPORATED, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
NBD Bank, a Michigan banking corporation (the "Bank") at the Bank's head office
at 611 Woodward Avenue, Detroit, Michigan
01608:
(a) prior to or on May 31, 1998 the principal amount of THREE MILLION
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($3,500,000.00) or, if less, the
aggregate unpaid principal amount of the Line of Credit Loans advanced by
the Bank to the Borrower pursuant to the Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of May 31, 1996 (as amended and in
effect from time to time, the "Credit Agreement"), among the Borrower, the
Bank and other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Line of Credit Note is one of the Line of Credit Notes issued pursuant
to Section 2.4.2 of the Credit Agreement and evidences borrowings under, and has
been issued by the Borrower in accordance with the terms of, the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Line of Credit Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Line of Credit Loan or at the
time of receipt of any payment of principal of this Line of Credit Note, an
appropriate notation on the grid attached to this Line of Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, reflecting the making of such Line of Credit Loan or (as the case may
be) the receipt of such payment. The outstanding amount of the Line of Credit
Loans set forth on the grid attached to this Line of Credit Note, or the
continuation of such grid, or any other similar record, including computer
<PAGE> 2
-2-
records, maintained by the Bank with respect to any Line of Credit Loans shall
be prima facie evidence of the principal amount thereof owing and unpaid to the
Bank, but the failure to record, or any error in so recording, any such amount
on any such grid, continuation or other record shall not limit or otherwise
affect the obligation of the Borrower hereunder or under the Credit Agreement to
make payments of principal of and interest on this Line of Credit Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Line of Credit Note on the terms and conditions specified in the Credit
Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Line of Credit Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Line of Credit Note
or the obligation represented hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Line of Credit Note, and assents to
any extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
THIS LINE OF CREDIT NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER
SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS
OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
LINE OF CREDIT NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION
21 OF THE CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
<PAGE> 3
-3-
This Line of Credit Note shall be deemed to take effect as a sealed
instrument under the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Line of Credit Note to
be signed in its corporate name and its corporate seal to be impressed thereon
by its duly authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
---------------------------------
James S. Harrington, President
<PAGE> 4
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Amount Amount of Balance of
of Line of Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.5
LINE OF CREDIT NOTE
$3,500,000.00 May 31, 1996
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS INCORPORATED, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
The First National Bank of Boston, a national banking association (the "Bank")
at the Bank's head office at 100 Federal Street, Boston, Massachusetts 02110:
(a) prior to or on May 31, 1998 the principal amount of THREE MILLION
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($3,500,000.00) or, if less, the
aggregate unpaid principal amount of the Line of Credit Loans advanced by
the Bank to the Borrower pursuant to the Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of May 31, 1996 (as amended and in
effect from time to time, the "Credit Agreement"), among the Borrower, the
Bank and other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Line of Credit Note is one of the Line of Credit Notes issued pursuant
to Section 2.4.2 of the Credit Agreement and evidences borrowings under, and has
been issued by the Borrower in accordance with the terms of, the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Line of Credit Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Line of Credit Loan or at the
time of receipt of any payment of principal of this Line of Credit Note, an
appropriate notation on the grid attached to this Line of Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, reflecting the making of such Line of Credit Loan or (as the case may
be) the receipt of such payment. The outstanding amount of the Line of Credit
Loans set forth on the grid attached to this Line of Credit Note, or the
<PAGE> 2
-2-
continuation of such grid, or any other similar record, including computer
records, maintained by the Bank with respect to any Line of Credit Loans shall
be prima facie evidence of the principal amount thereof owing and unpaid to the
Bank, but the failure to record, or any error in so recording, any such amount
on any such grid, continuation or other record shall not limit or otherwise
affect the obligation of the Borrower hereunder or under the Credit Agreement to
make payments of principal of and interest on this Line of Credit Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Line of Credit Note on the terms and conditions specified in the Credit
Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Line of Credit Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Line of Credit Note
or the obligation represented hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Line of Credit Note, and assents to
any extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
THIS LINE OF CREDIT NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER
SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS
OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
LINE OF CREDIT NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21
OF THE CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT
SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
<PAGE> 3
-3-
This Line of Credit Note shall be deemed to take effect as a sealed
instrument under the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Line of Credit Note to
be signed in its corporate name and its corporate seal to be impressed thereon
by its duly authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
---------------------------------
James S. Harrington, President
<PAGE> 4
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Amount Amount of Balance of
of Line of Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.6
TERM LOAN A NOTE
$9,300,000.00 May 31, 1996
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS INCORPORATED, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
NBD Bank, a Michigan banking corporation (the "Bank") at the Bank's head office
at 611 Woodward Avenue, Detroit, Michigan 01608:
(a) prior to or on May 31, 2002 the principal amount of NINE MILLION
THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($9,300,000.00) or, if less, the
aggregate unpaid principal amount of the Term Loan A advanced by the Bank
to the Borrower pursuant to the Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of May 31, 1996 (as amended and in effect
from time to time, the "Credit Agreement"), among the Borrower, the Bank
and other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Term Loan A Note is one of the Term Loan A Notes issued pursuant to
Section 4.3.1 of the Credit Agreement and evidences borrowings under, and has
been issued by the Borrower in accordance with the terms of, the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Term Loan A Note and not otherwise defined herein
shall have the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of the Term Loan A or at the time of
receipt of any payment of principal of this Term Loan A Note, an appropriate
notation on the grid attached to this Term Loan A Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the making of such Term Loan A or (as the case may be) the receipt of such
payment. The outstanding amount of the Term Loan A set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Bank with
<PAGE> 2
-2-
respect to the Term Loan A shall be prima facie evidence of the principal amount
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Term Loan A Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Term Loan A Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Term Loan A Note or
the obligation represented hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Term Loan A Note, and assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS TERM LOAN A NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL
FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
TERM LOAN A NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN 21 OF THE
CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
<PAGE> 3
-3-
This Term Loan A Note shall be deemed to take effect as a sealed instrument
under the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Term Loan A Note to be
signed in its corporate name and its corporate seal to be impressed thereon by
its duly authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
---------------------------------
James S. Harrington, President
<PAGE> 4
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Amount Amount of Balance of
of Term Loan Principal Paid Principal Notation
Date A or Prepaid Unpaid Made By:
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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<PAGE> 1
EXHIBIT 10.7
TERM LOAN A NOTE
$9,300,000.00 May 31, 1996
FOR VALUE RECEIVED, the undersigned CONNECTIVITY PRODUCTS INCORPORATED, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
The First National Bank of Boston, a national banking association (the "Bank")
at the Bank's head office at 100 Federal Street, Boston, Massachusetts 02110:
(a) prior to or on May 31, 2002 the principal amount of NINE MILLION
THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($9,300,000.00) or, if less, the
aggregate unpaid principal amount of the Term Loan A advanced by the Bank
to the Borrower pursuant to the Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of May 31, 1996 (as amended and in effect
from time to time, the "Credit Agreement"), among the Borrower, the Bank
and other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Term Loan A Note is one of the Term Loan A Notes issued pursuant to
Section 4.3.1 of the Credit Agreement and evidences borrowings under, and has
been issued by the Borrower in accordance with the terms of, the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Term Loan A Note and not otherwise defined herein
shall have the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of the Term Loan A or at the time of
receipt of any payment of principal of this Term Loan A Note, an appropriate
notation on the grid attached to this Term Loan A Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the making of such Term Loan A or (as the case may be) the receipt of such
payment. The outstanding amount of the Term Loan A set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Bank with
<PAGE> 2
-2-
respect to the Term Loan A shall be prima facie evidence of the principal amount
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Term Loan A Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Term Loan A Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Term Loan A Note or
the obligation represented hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Term Loan A Note, and assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS TERM LOAN A NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL
FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
TERM LOAN A NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN 21 OF THE
CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
<PAGE> 3
-3-
This Term Loan A Note shall be deemed to take effect as a sealed instrument
under the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Term Loan A Note to be
signed in its corporate name and its corporate seal to be impressed thereon by
its duly authorized officer as of the day and year first above written.
[Corporate Seal]
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
---------------------------------
James S. Harrington, President
<PAGE> 4
<TABLE>
<CAPTION>
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Amount Amount of Balance of
of Term Loan Principal Paid Principal Notation
Date A or Prepaid Unpaid Made By:
<S> <C> <C> <C> <C>
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<PAGE> 1
EXHIBIT 10.8
SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT (this "Agreement"), dated as of May 31, 1996, among
NBD BANK, a Michigan banking corporation having its head office at 611 Woodward
Avenue, Detroit, Michigan 98226, in its capacity as administrative agent (the
"Agent") for itself, The First National Bank of Boston, individually and in its
capacity as documentation agent (together with the Agent, the "Co-Agents"), and
the other banking institutions which are or may become parties to the Credit
Agreement (the "Banks"), those Persons listed on Schedule 1 attached hereto (the
"Subordinating Creditors"), and CONNECTIVITY PRODUCTS INCORPORATED, a Delaware
corporation having its head office at 214 Nashua Street, Leominster,
Massachusetts 01453 (the "Borrower").
WHEREAS, pursuant to an Amended and Restated Revolving Credit and Term Loan
Agreement dated as of May 31, 1996 (as amended and in effect from time to time,
including any replacement agreement therefor, the "Credit Agreement"), among the
Banks, the Co-Agents and the Borrower, the Banks have agreed, upon the terms and
subject to the conditions contained therein, to make loans and otherwise to
extend credit to the Borrower; and
WHEREAS, the Subordinating Creditors have extended or agreed to extend
credit to the Borrower pursuant to the Subordinated Notes (as hereinafter
defined), each dated as of May 31, 1996 (as amended with the consent of the
Agent as provided herein and in effect from time to time); and
WHEREAS, it is a condition precedent to the Banks' willingness to make
loans and otherwise to extend credit to the Borrower pursuant to the Credit
Agreement that the Borrower and the Subordinating Creditor enter into this
Agreement with the Agent; and
WHEREAS, in order to induce the Banks to make loans and otherwise extend
credit to the Borrower pursuant to the Credit Agreement, the Borrower and the
Subordinating Creditor have agreed to enter into this Agreement with the
Agent;
NOW, THEREFORE, in consideration of the foregoing, the mutual agreements
herein contained and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. DEFINITIONS. Terms not otherwise defined herein have the same
respective meanings given to them in the Credit Agreement. In addition, the
following terms shall have the following meanings:
<PAGE> 2
-2-
Material Default or Event of Default: Any Default or Event of Default
(under and as defined in the Credit Agreement) as a result of the Borrower's
failure to comply with any of Sections 9.1, 9.4, 9.6 through 9.8, 9.10, 9.12,
10 or 11 of the Credit Agreement or a Default or Event of Default arising
under Section 14.1(e) through (h), (i) (which for the purpose of this
definition, the amount of "$1,000,000" shall be substituted for the amount of
"$250,000" contained in such clause (i)), (j) through (o), (q) and (r).
Senior Debt. All principal, interest, fees, costs, enforcement expenses
(including legal fees and disbursements), collateral protection expenses and
other reimbursement or indemnity obligations created or evidenced by the Credit
Agreement or any of the other Loan Documents or any prior, concurrent, or
subsequent notes, instruments or agreements of indebtedness, liabilities or
obligations of any type or form whatsoever relating thereto in favor of the
Agent or any of the Banks. Senior Debt shall expressly include any and all
interest accruing or out of pocket costs or expenses incurred after the date of
any filing by or against the Borrower of any petition under the federal
Bankruptcy Code or any other bankruptcy, insolvency or reorganization act
regardless of whether the Agent's or any Bank's claim therefor is allowed or
allowable in the case or proceeding relating thereto.
Subordinated Debt. All principal, interest, fees, costs, enforcement
expenses (including legal fees and disbursements), collateral protection
expenses and other reimbursement and indemnity obligations created or evidenced
by the Subordinated Notes or any prior, concurrent or subsequent notes,
instruments or agreements of indebtedness, liabilities or obligations of any
type or form whatsoever relating thereto in favor of the Subordinating
Creditors.
Subordinated Debt Documents. Collectively, the Subordinated Notes, any
other promissory notes executed in connection therewith and any and all
guaranties and security interests, mortgages and other liens directly or
indirectly guarantying or securing any of the Subordinated Debt, and any and all
other documents or instruments evidencing or further guarantying or securing
directly or indirectly any of the Subordinated Debt, whether now existing or
hereafter created.
Subordinated Notes. Collectively, the Redemption Notes and the Contingent
Notes (as such terms are defined in the Stock Redemption and Purchase
Agreement), dated as of May 31, 1996 among the Borrower, the Subordinated
Creditors, and Tigera Group, Inc., and the Additional Subordinated Notes.
2. GENERAL. The Subordinated Debt and any and all Subordinated Debt
Documents shall be and hereby are subordinated and the payment thereof is
deferred until the full and final payment in cash of the Senior Debt, whether
now or hereafter incurred or owed by the Borrower. Notwithstanding the
immediately preceding sentence, the Borrower shall be permitted to pay, and the
Subordinating Creditor shall be permitted to receive, (a) so long as no
<PAGE> 3
-3-
Material Default or Event of Default has occurred and is continuing under the
Credit Agreement or would occur after giving effect thereto, any regularly
scheduled payment of interest on the Subordinated Notes (other than the
Additional Subordinated Notes), (b) so long as no Default or Event of Default
has occurred and is continuing under the Credit Agreement or would occur after
giving effect thereto, any regularly scheduled payments of principal on the
Subordinated Notes (other than the Additional Subordinated Notes) following
indefeasible payment in full in cash of Term Loan A, (c) so long as no Material
Default or Event of Default has occurred and is continuing under the Credit
Agreement or would occur after giving effect thereto, any regularly scheduled
payment of interest on the Additional Subordinated Notes, and (d) so long as no
Default or Event of Default has occurred and is continuing under the Credit
Agreement or would occur after giving effect thereto, any regularly scheduled
payment of principal on the Additional Subordinated Notes.
3. ENFORCEMENT. The Subordinating Creditors will not take or omit to take
any action or assert any claim with respect to the Subordinated Debt or
otherwise which is inconsistent with the provisions of this Agreement. Without
limiting the foregoing, the Subordinating Creditors will not assert, collect or
enforce the Subordinated Debt or any part thereof or take any action to
foreclose or realize upon the Subordinated Debt or any part thereof or enforce
any of the Subordinated Debt Documents except (a) in each such case as
necessary, so long as no Default or Event of Default has occurred and is then
continuing under the Credit Agreement or would occur after giving effect
thereto, to collect any sums expressly permitted to be paid by the Borrower
pursuant to Section 2, or (b) to the extent (but only to such extent) that the
commencement of a legal action may be required to toll the running of any
applicable statute of limitation. Until the Senior Debt has been finally paid in
full in cash, the Subordinating Creditors shall not have any right of
subrogation, reimbursement, restitution, contribution or indemnity whatsoever
from any assets of the Borrower or any guarantor of or provider of collateral
security for the Senior Debt. Each of the Subordinating Creditors further waives
any and all rights with respect to marshalling.
4. PAYMENTS HELD IN TRUST. The Subordinating Creditors will hold in trust
and immediately pay over to the Agent for the account of the Banks and the
Co-Agents, in the same form of payment received, with appropriate endorsements,
for application to the Senior Debt any cash amount that the Borrower pays to the
Subordinating Creditors with respect to the Subordinated Debt, or as collateral
for the Senior Debt any other assets of the Borrower that the Subordinating
Creditors may receive with respect to the Subordinated Debt, in each case except
with respect to payments expressly permitted pursuant to Section 2.
5. DEFENSE TO ENFORCEMENT. If any of the Subordinating Creditors, in
contravention of the terms of this Agreement, shall commence, prosecute or
participate in any suit, action or proceeding against the Borrower, then the
Borrower may interpose as a defense or plea the making of this Agreement, and
the Agent or any Bank may intervene and interpose such defense or plea in its
<PAGE> 4
-4-
name or in the name of the Borrower. If any of the Subordinating Creditors, in
contravention of the terms of this Agreement, shall attempt to collect any of
the Subordinated Debt or enforce any of the Subordinated Debt Documents, then
the Agent, any Bank or the Borrower may, by virtue of this Agreement, restrain
the enforcement thereof in the name of the Agent or such Bank or in the name of
the Borrower. If any of the Subordinating Creditors, in contravention of the
terms of this Agreement, obtains any cash or other assets of the Borrower as a
result of any administrative, legal or equitable actions, or otherwise, each
such Subordinating Creditor agrees forthwith to pay, deliver and assign to the
Agent, for the account of the Banks and the Co-Agents, with appropriate
endorsements, any such cash for application to the Senior Debt and any such
other assets as collateral for the Senior Debt.
6. BANKRUPTCY, ETC.
6.1. PAYMENTS RELATING TO SUBORDINATED DEBT. At any meeting of
creditors of the Borrower or in the event of any case or proceeding,
voluntary or involuntary, for the distribution, division or application of
all or part of the assets of the Borrower or the proceeds thereof, whether
such case or proceeding be for the liquidation, dissolution or winding up
of the Borrower or its business, a receivership, insolvency or bankruptcy
case or proceeding, an assignment for the benefit of creditors or a
proceeding by or against the Borrower for relief under the federal
Bankruptcy Code or any other bankruptcy, reorganization or insolvency law
or any other law relating to the relief of debtors, readjustment of
indebtedness, reorganization, arrangement, composition or extension or
marshalling of assets or otherwise, the Agent is hereby irrevocably
authorized at any such meeting or in any such proceeding to receive or
collect for the benefit of the Banks and the Co-Agents any cash or other
assets of the Borrower distributed, divided or applied by way of dividend
or payment, or any securities issued on account of any Subordinated Debt,
and apply such cash to or to hold such other assets or securities as
collateral for the Senior Debt, and to apply to the Senior Debt any cash
proceeds of any realization upon such other assets or securities that the
Agent in its discretion elects to effect, until all of the Senior Debt
shall have been paid in full in cash, rendering to the Subordinating
Creditors any surplus to which the Subordinating Creditors are then
entitled.
6.2. SUBORDINATED DEBT VOTING RIGHTS. At any such meeting of creditors
or in the event of any such case or proceeding, the Subordinating Creditors
shall retain the right to vote and otherwise act with respect to the
Subordinated Debt (including, without limitation, the right to vote to
accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension), provided that the
Subordinating Creditors shall not vote with respect to any such plan or
take any other action in any way so as to contest (i) the validity of any
Senior Debt or any collateral therefor or guaranties thereof, (ii) the
relative rights and duties of any holders of any Senior Debt established in
any instruments or agreements creating or
<PAGE> 5
-5-
evidencing any of the Senior Debt with respect to any of such collateral or
guaranties or (iii) the Subordinating Creditors' obligations and agreements
set forth in this Agreement.
7. FURTHER ASSURANCES. Each of the Subordinating Creditors hereby agrees,
upon request of the Agent at any time and from time to time, to execute such
other documents or instruments as may be requested by the Agent further to
evidence of public record or otherwise the senior priority of the Senior Debt as
contemplated hereby.
8. BANKS' FREEDOM OF DEALING. Each of the Subordinating Creditors agrees,
with respect to the Senior Debt and any and all collateral therefor or
guaranties thereof, that the Borrower and the Banks may agree to increase the
amount of the Senior Debt or otherwise modify the terms of any of the Senior
Debt, and the Banks may grant extensions of the time of payment or performance
to and make compromises, including releases of collateral or guaranties, and
settlements with the Borrower and all other persons, in each case without the
consent of the Subordinating Creditors or the Borrower and without affecting the
agreements of the Subordinating Creditors or the Borrower contained in this
Agreement; provided, however, that nothing contained in this Section 8 shall
constitute a waiver of the right of the Borrower itself to agree or consent to a
settlement or compromise of a claim which the Agent or any Bank may have against
the Borrower.
9. MODIFICATION OR SALE OF THE SUBORDINATED DEBT. The Subordinating
Creditors will not, at any time while this Agreement is in effect, modify any of
the terms of any of the Subordinated Debt or any of the Subordinated Debt
Documents; nor will the Subordinating Creditors sell, transfer, pledge, assign,
hypothecate or otherwise dispose of any or all of the Subordinated Debt to any
person other than a person who agrees in a writing, satisfactory in form and
substance to the Agent, to become a party hereto and to succeed to the rights
and to bound by all of the obligations of the Subordinating Creditor hereunder.
In the case of any such disposition by the Subordinating Creditor, the
Subordinating Creditor will notify the Agent at least 10 days prior to the date
of any of such intended disposition.
10. BORROWER'S OBLIGATIONS ABSOLUTE. Nothing contained in this Agreement
shall impair, as between the Borrower and the Subordinating Creditor, the
obligation of the Borrower to pay to the Subordinating Creditor all amounts
payable in respect of the Subordinated Debt as and when the same shall become
due and payable in accordance with the terms thereof, or prevent the
Subordinating Creditor (except as expressly otherwise provided in Section 3 or
Section 6) from exercising all rights, powers and remedies otherwise permitted
by Subordinated Debt Documents and by applicable law upon a default in the
payment of the Subordinated Debt or under any Subordinated Debt Document, all,
however, subject to the rights of the Agent and the Banks as set forth in this
Agreement.
<PAGE> 6
-6-
11. TERMINATION OF SUBORDINATION. This Agreement shall continue in full
force and effect, and the obligations and agreements of the Subordinating
Creditors and the Borrower hereunder shall continue to be fully operative, until
all of the Senior Debt shall have been paid and satisfied in full in cash and
such full payment and satisfaction shall be final and not avoidable. To the
extent that the Borrower or any guarantor of or provider of collateral for the
Senior Debt makes any payment on the Senior Debt that is subsequently
invalidated, declared to be fraudulent or preferential or set aside or is
required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or reorganization act, state or federal law, common law
or equitable cause (such payment being hereinafter referred to as a "Voided
Payment"), then to the extent of such Voided Payment, that portion of the Senior
Debt that had been previously satisfied by such Voided Payment shall be revived
and continue in full force and effect as if such Voided Payment had never been
made. In the event that a Voided Payment is recovered from the Agent or any
Bank, an Event of Default shall be deemed to have existed and to be continuing
under the Credit Agreement from the date of the Agent's or such Bank's initial
receipt of such Voided Payment until the full amount of such Voided Payment is
restored to the Agent or such Bank. During any continuance of any such Event of
Default, this Agreement shall be in full force and effect with respect to the
Subordinated Debt. To the extent that any Subordinating Creditor has received
any payments with respect to the Subordinated Debt subsequent to the date of the
Agent's or any Bank's initial receipt of such Voided Payment and such payments
have not been invalidated, declared to be fraudulent or preferential or set
aside or are required to be repaid to a trustee, receiver, or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
each such Subordinating Creditor shall be obligated and hereby agrees that any
such payment so made or received shall be deemed to have been received in trust
for the benefit of the Co-Agents or such Bank, and each such Subordinating
Creditor hereby agrees to pay to the Agent for the benefit of the Co-Agents or
(as the case may be) such Bank, upon demand, the full amount so received by each
such Subordinating Creditor during such period of time to the extent necessary
fully to restore to the Agent or such Bank the amount of such Voided Payment.
Upon the payment and satisfaction in full in cash of all of the Senior Debt,
which payment shall be final and not avoidable, this Agreement will
automatically terminate without any additional action by any party hereto.
12. NOTICES. All notices and other communications which are required and
may be given pursuant to the terms of this Agreement shall be in writing and
shall be sufficient and effective in all respects if given in writing or
telecopied, delivered or mailed by registered or certified mail, postage
prepaid, as follows:
If to the Agent: NBD Bank
Michigan Banking Division
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Erik W. Bakker, Vice President
<PAGE> 7
-7-
with a copy to: Linda J. Groves, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
If to the Subordinating Creditors: James S. Harrington, as Sellers'
Agent
214 Nashua Street
Leominster, Massachusetts 01453
Tigera Group, Inc.
667 Madison Avenue, Suite 2500
New York, NY 10021-8029
Attention: Donald T. Pascal, Chairman
If to the Borrower: Connectivity Products Incorporated
d/b/a BSCC Corporation
214 Nashua Street
Leominster, Massachusetts 01453
Attention: James S. Harrington
or such other address or addresses as any party hereto shall have designated by
written notice to the other parties hereto. Notices shall be deemed given and
effective upon the earlier to occur of (i) the third day following deposit
thereof in the U.S. mail or (ii) receipt by the party to whom such notice is
directed.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL BE A
SEALED INSTRUMENT UNDER SUCH LAWS.
14. WAIVER OF JURY TRIAL. EACH OF THE SUBORDINATING CREDITORS AND THE
BORROWER EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH OF THE SUBORDINATING CREDITORS
AND THE BORROWER HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER
IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. EACH OF THE SUBORDINATING CREDITORS AND THE BORROWER (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR ANY BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE,
<PAGE> 8
-8-
THAT THE AGENT OR ANY BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE AGENT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
15. MISCELLANEOUS. This Agreement may be executed in several counterparts
and by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall constitute one
instrument. In proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against which
enforcement is sought. The Agent, acting upon the instructions of the requisite
Banks as set forth in the Credit Agreement, may, in their sole and absolute
discretion, waive any provisions of this Agreement benefiting the Co-Agents and
the Banks; provided, however, that such waiver shall be effective only if in
writing and signed by the Agent and shall be limited to the specific provision
or provisions expressly so waived. This Agreement shall be binding upon the
successors and assigns of the Subordinating Creditors and the Borrower and shall
inure to the benefit of the Co-Agents and the Banks, the Co-Agents' and the
Banks' respective successors and assigns, any lender or lenders refunding or
refinancing any of the Senior Debt and their respective successors and assigns,
but shall not otherwise create any rights or benefits for any third party. In
the event that any lender or lenders refund or refinance any of the Senior Debt,
the terms "Credit Agreement", "Loan Documents", "Event of Default" and the like
shall refer mutatis mutandis to the agreements and instruments in favor of such
lender or lenders and to the related definitions contained therein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AGENT: NBD BANK, As Agent
By: /s/ Erik W. Bakker
--------------------------------------
Erik W. Bakker, Vice President
SUBORDINATING CREDITORS:
By: /s/ James S. Harrington
--------------------------------------
James S. Harrington, Individually
By: /s/ Duane A. Gawron
--------------------------------------
Duane A. Gawron, Trustee of the Living
Trust of Duane A. Gawron dated March
16, 1987
<PAGE> 9
-9-
By: /s/ Margo Gawron by Duane A.
--------------------------------------
Gawron as Attorney-in-Fact
-----------------------------------------
Margo Gawron, Individually
By: /s/ John E. Pylak
--------------------------------------
John E. Pylak, Trustee of the John E.
Pylak Living Trust dated September 3,
1987
By: /s/ Rebecca Pylak by John E. Pylak
--------------------------------------
as Attorney-in-Fact
-----------------------------------------
Rebecca Pylak, Individually
By: /s/ Kurt Cieszkowski
--------------------------------------
Kurt Cieszkowski, Individually
TIGERA GROUP, INC.
By: /s/ Donald T. Pascal
--------------------------------------
Donald T. Pascal, President
BORROWER: CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
--------------------------------------
James S. Harrington, President
<PAGE> 10
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COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May ____, 1996
Before me, the undersigned, a Notary Public in and for the county
aforesaid, personally appeared JAMES S. HARRINGTON, who acknowledged the
foregoing instrument to be his free act and deed.
------------------------------------
Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May ____, 1996
Before me, the undersigned, a Notary Public in and for the county
aforesaid, personally appeared DUANE A. GAWRON, TRUSTEE OF THE LIVING TRUST OF
DUANE A. GAWRON DATED MARCH 16, 1987, who acknowledged that the foregoing
instrument was signed and sealed on behalf of said living trust with appropriate
authority and that said instrument was the free act and deed of the trustee, as
aforesaid.
Before me,
------------------------------------
Notary Public
My Commission expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May ____, 1996
Before me, the undersigned, a Notary Public in and for the county
aforesaid, personally appeared MARGO GAWRON by DUANE A. GAWRON AS
ATTORNEY-IN-FACT, who acknowledged the foregoing instrument to be her free act
and deed.
------------------------------------
Notary Public
My Commission Expires:
<PAGE> 11
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COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May ____, 1996
Before me, the undersigned, a Notary Public in and for the county
aforesaid, personally appeared JOHN E. PYLAK, TRUSTEE OF THE JOHN E. PYLAK
LIVING TRUST DATED SEPTEMBER 3, 1987, who acknowledged that the foregoing
instrument was signed and sealed on behalf of said living trust with appropriate
authority and that said instrument was the free act and deed of the trustee, as
aforesaid.
Before me,
------------------------------------
Notary Public
My Commission expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May ____, 1996
Before me, the undersigned, a Notary Public in and for the county
aforesaid, personally appeared REBECCA PYLAK by JOHN E. PYLAK AS
ATTORNEY-IN-FACT, who acknowledged the foregoing instrument to be her free act
and deed.
------------------------------------
Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May ____, 1996
Before me, the undersigned, a Notary Public in and for the county
aforesaid, personally appeared KURT CIESZKOWSKI, who acknowledged the foregoing
instrument to be his free act and deed.
------------------------------------
Notary Public
My Commission Expires:
<PAGE> 12
-12-
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May ____, 1996
Before me, the undersigned, a Notary Public in and for the county
aforesaid, personally appeared Donald T. Pascal, President, who acknowledged
that he is the President of TIGERA GROUP, INC., that the foregoing instrument
was signed and sealed on behalf of said corporation with appropriate authority
and that said instrument was the free act and deed of said corporation.
------------------------------------
Notary Public
My Commission expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May ____, 1996
Before me, the undersigned, a Notary Public in and for the county
aforesaid, personally appeared James S. Harrington, who acknowledged that he is
the President of CONNECTIVITY PRODUCTS INCORPORATED, that the foregoing
instrument was signed and sealed on behalf of said corporation with appropriate
authority and that said instrument was the free act and deed of said
corporation.
------------------------------------
Notary Public
My Commission Expires:
<PAGE> 13
SCHEDULE 1
to
Subordination Agreement
Subordinating Creditors:
1. James S. Harrington, a resident of Ashburnham, Massachusetts.
2. Duane A. Gawron, Trustee of the Living Trust of Duane A. Gawron, dated
March 16, 1987, a resident of Orlando, Florida.
3. Margo Gawron, a resident of Orlando, Florida.
4. John E. Pylak, Trustee of the John E. Pylak Living Trust dated September 3,
1987, and a resident of Clarkston, Michigan.
5. Rebecca Pylak, a resident of Clarkston, Michigan.
6. Kurt Ciezkowski, a resident of Gross Pointe Woods, Michigan.
7. Tigera Group, Inc., a Delaware corporation.
<PAGE> 1
EXHIBIT 10.9
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of October 5, 1995, between CONNECTIVITY
PRODUCTS INCORPORATED, a Delaware corporation (the "Company"), and NBD BANK, as
agent (hereinafter, in such capacity, the "Agent") for itself and other banking
institutions (hereinafter, collectively, the "Banks") which are or may become
parties to a Revolving Credit Agreement dated as of October 5, 1995 (as amended
and in effect from time to time, the "Credit Agreement"), among the Company, the
Banks and the Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Company under the Credit Agreement that the
Company execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a security agreement in substantially the form hereof; and
WHEREAS, the Company wishes to grant security interests in favor of the
Agent, for the benefit of the Banks and the Agent, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definitions
shall have the respective meanings provided therefor in the Credit Agreement.
2. GRANT OF SECURITY INTEREST.
2.1. COLLATERAL GRANTED. The Company hereby grants to the
Agent, for the benefit of the Banks and the Agent, to secure the
payment and performance in full of all of the Obligations, a security
interest in and so pledges and assigns to the Agent, for the benefit of
the Banks and the Agent, the following properties, assets and rights of
the Company, wherever located, whether now owned or hereafter acquired
or arising, and all proceeds and products thereof (all of the same
being hereinafter called the "Collateral"):
<PAGE> 2
-2-
All personal and fixture property of every kind and
nature including without limitation all furniture, fixtures,
equipment, raw materials, inventory, goods, accounts, cash,
contract rights, rights to the payment of money, insurance
refund claims and all other insurance claims and proceeds,
tort claims, chattel paper, documents, instruments (including
certificated securities), deposit accounts and all general
intangibles including, without limitation, all uncertificated
securities, tax refund claims, license fees, patents, patent
applications, trademarks, trademark applications, trade names,
copyrights, copyright applications, rights to sue and recover
for past infringement of patents, trademarks and copyrights,
computer programs, computer software, engineering drawings,
service marks, customer lists, goodwill, and all licenses,
permits, agreements of any kind or nature pursuant to which
the Company possesses, uses or has authority to possess or use
property (whether tangible or intangible) of others or others
possess, use or have authority to possess or use property
(whether tangible or intangible) of the Company, and all
recorded data of any kind or nature, regardless of the medium
of recording including, without limitation, all software,
writings, plans, specifications and schematics.
The Company acknowledges and agrees that, in applying the law of any
jurisdiction that has now enacted or hereafter enacts all or
substantially all of the uniform revision of Article 8 of the Uniform
Commercial Code, with new provisions added to Article 9 contemplated by
such revision, all as approved in 1994 by the American Law Institute
and the National Conference of Commissioners on Uniform State Laws, the
foregoing description of Collateral shall be deemed to include
"investment property" as defined in such new provisions of Article 9,
it being the intention of the Company that such property be included in
the foregoing description of Collateral, whether prior to or after the
effectiveness of such revision in such jurisdiction.
2.2. DELIVERY OF INSTRUMENTS, ETC. Pursuant to the terms
hereof, the Company has endorsed, assigned and delivered to the Agent
all negotiable or non-negotiable instruments (including certificated
securities) and chattel paper pledged by it hereunder, together with
instruments of transfer or assignment duly executed in blank as the
Agent may have specified. In the event that the Company shall, after
the date of this Agreement, acquire any other
<PAGE> 3
-3-
negotiable or non-negotiable instruments (including certificated
securities) or chattel paper to be pledged by it hereunder, the Company
shall forthwith endorse, assign and deliver the same to the Agent,
accompanied by such instruments of transfer or assignment duly executed
in blank as the Agent may from time to time specify. To the extent that
any securities are uncertificated, appropriate book-entry transfers
reflecting the pledge of such securities created hereby have been or,
in the case of uncertificated securities hereafter acquired by the
Company, will at the time of such acquisition be, duly made for the
account of the Agent or one or more nominees of the Agent with the
issuer of such securities or other appropriate book-entry facility or
financial intermediary, with the Agent having at all times the right to
obtain definitive certificates (in the Agent's name or in the name of
one or more nominees of the Agent) where the issuer customarily or
otherwise issues certificates, all to be held as Collateral hereunder.
The Company hereby acknowledges that the Agent may, in its discretion,
appoint one or more financial institutions to act as the Agent's agent
in holding in custodial account instruments or other financial assets
in which the Agent is granted a security interest hereunder, including,
without limitation, certificates of deposit and other instruments
evidencing short term obligations.
2.3. EXCLUDED COLLATERAL. Notwithstanding the foregoing
provisions of this Section 2, such grant of security interest shall not
extend to, and the term "Collateral" shall not include, any chattel
paper and general intangibles which are now or hereafter held by the
Company as licensee, lessee or otherwise, to the extent that (i) such
chattel paper and general intangibles are not assignable or capable of
being encumbered as a matter of law or under the terms of the license,
lease or other agreement applicable thereto (but solely to the extent
that any such restriction shall be enforceable under applicable law),
without the consent of the licensor or lessor thereof or other
applicable party thereto and (ii) such consent has not been obtained;
provided, however, that the foregoing grant of security interest shall
extend to, and the term "Collateral" shall include, (A) any and all
proceeds of such chattel paper and general intangibles to the extent
that the assignment or encumbering of such proceeds is not so
restricted and (B) upon any such licensor, lessor or other applicable
party consent with respect to any such otherwise excluded chattel paper
or general intangibles being obtained, thereafter such chattel paper or
general intangibles as well as any and all proceeds thereof that might
have theretofore have been
<PAGE> 4
-4-
excluded from such grant of a security interest and the term
"Collateral".
3. TITLE TO COLLATERAL, ETC. The Company is the owner of the
Collateral free from any adverse lien, security interest or other encumbrance,
except for the security interest created by this Agreement and other liens
permitted by the Credit Agreement. None of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in Section 9-109(3) of the Uniform
Commercial Code of the Commonwealth of Massachusetts. None of the account
debtors in respect of any accounts, chattel paper or general intangibles and
none of the obligors in respect of any instruments included in the Collateral is
a governmental authority subject to the Federal Assignment of Claims Act.
4. CONTINUOUS PERFECTION. The Company's place of business or, if more
than one, chief executive office is indicated on the Perfection Certificate
delivered to the Agent herewith (the "Perfection Certificate"). The Company will
not change the same, or the name, identity or corporate structure of the Company
in any manner, without providing at least 30 days prior written notice to the
Agent. The Collateral, to the extent not delivered to the Agent pursuant to
Section 2.2, will be kept at those locations listed on the Perfection
Certificate and the Company will not remove the Collateral from such locations,
without providing at least 30 days prior written notice to the Agent.
5. NO LIENS. Except for the security interest herein granted and
liens permitted by the Credit Agreement, the Company shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and the
Company shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the Agent or any
of the Banks. The Company shall not pledge, mortgage or create, or suffer to
exist a security interest in the Collateral in favor of any person other than
the Agent, for the benefit of the Banks and the Agent, except for liens
permitted by the Credit Agreement.
6. NO TRANSFERS. The Company will not sell or offer to sell or
otherwise transfer the Collateral or any interest therein except for (i) sales
of inventory in the ordinary course of business and (ii) sales or other
dispositions of obsolete items of equipment in the ordinary course of business
consistent with past practices.
<PAGE> 5
-5-
7. INSURANCE.
7.1. MAINTENANCE OF INSURANCE. The Company will maintain
with financially sound and reputable insurers insurance with respect to
its properties and business against such casualties and contingencies
as shall be in accordance with general practices of businesses engaged
in similar activities in similar geographic areas. Such insurance shall
be in such minimum amounts that the Company will not be deemed a
co-insurer under applicable insurance laws, regulations and policies
and otherwise shall be in such amounts, contain such terms, be in such
forms and be for such periods as may be reasonably satisfactory to the
Agent. In addition, all such insurance shall be payable to the Agent as
loss payee under a "standard" or "New York" loss payee clause for the
benefit of the Banks and the Agent and shall name the Agent as an
additional insured. Without limiting the foregoing, the Company will
(i) keep all of its physical property insured with casualty or physical
hazard insurance on an "all risks" basis, with broad form flood and
earthquake coverages, to the extent appropriate based on the location
of the property, and electronic data processing coverage, with a full
replacement cost endorsement and an "agreed amount" clause in an amount
equal to 100% of the full replacement cost of such property, (ii)
maintain all such workers' compensation or similar insurance as may be
required by law and (iii) maintain, in amounts and with deductibles
equal to those generally maintained by businesses engaged in similar
activities in similar geographic areas, general public liability
insurance against claims of bodily injury, death or property damage
occurring, on, in or about the properties of the Company; business
interruption insurance; and product liability insurance.
7.2. INSURANCE PROCEEDS. The proceeds of any casualty
insurance in respect of any casualty loss of any of the Collateral
shall, subject to the rights, if any, of other parties with a prior
interest in the property covered thereby, (i) so long as no Default or
Event of Default has occurred and is continuing and to the extent that
the amount of such proceeds is less than $100,000, be disbursed to the
Company for direct application by the Company solely to the repair or
replacement of the Company's property so damaged or destroyed and (ii)
in all other circumstances, be held by the Agent as cash collateral for
the Obligations. The Agent may, at its sole option, disburse from time
to time all or any part of such proceeds so held as cash collateral,
upon such terms and conditions as the Agent may reasonably prescribe,
for direct application by the
<PAGE> 6
-6-
Company solely to the repair or replacement of the Company's property
so damaged or destroyed, or the Agent may apply all or any part of such
proceeds to the Obligations with the Total Commitment (if not then
terminated) being reduced by the amount so applied to the Obligations.
7.3. NOTICE OF CANCELLATION, ETC. All policies of insurance
shall provide for at least thirty (30) days prior written cancellation
notice to the Agent. In the event of failure by the Company to provide
and maintain insurance as herein provided, the Agent may, at its
option, provide such insurance and charge the amount thereof to the
Company. The Company shall furnish the Agent with certificates of
insurance and policies evidencing compliance with the foregoing
insurance provision.
8. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. The Company will
keep the Collateral in good order and repair and will not use the same in
violation of law or any policy of insurance thereon. The Agent, or its designee,
may inspect the Collateral at any reasonable time, wherever located. The Company
will pay promptly when due all taxes, assessments, governmental charges and
levies upon the Collateral or incurred in connection with the use or operation
of such Collateral or incurred in connection with this Agreement. The Company
has at all times operated, and the Company will continue to operate, its
business in compliance in all material respects with all applicable provisions
of the federal Fair Labor Standards Act, as amended, and with all applicable
provisions of federal, state and local statutes and ordinances dealing with the
control, shipment, storage or disposal of hazardous materials or substances.
9. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
9.1. EXPENSES INCURRED BY AGENT. In its discretion, the
Agent may discharge taxes and other encumbrances at any time levied or
placed on any of the Collateral, make repairs thereto and pay any
necessary filing fees. The Company agrees to reimburse the Agent on
demand for any and all expenditures so made. The Agent shall have no
obligation to the Company to make any such expenditures, nor shall the
making thereof relieve the Company of any Default or Event of Default.
9.2. AGENT'S OBLIGATIONS AND DUTIES. Anything herein to the
contrary notwithstanding, the Company shall remain liable under each
contract or agreement comprised in the Collateral to be
<PAGE> 7
-7-
observed or performed by the Company thereunder. Neither the Agent nor
any Bank shall have any obligation or liability under any such contract
or agreement by reason of or arising out of this Agreement or the
receipt by the Agent or any Bank of any payment relating to any of the
Collateral, nor shall the Agent or any Bank be obligated in any manner
to perform any of the obligations of the Company under or pursuant to
any such contract or agreement, to make inquiry as to the nature or
sufficiency of any payment received by the Agent or any Bank in respect
of the Collateral or as to the sufficiency of any performance by any
party under any such contract or agreement, to present or file any
claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to the Agent or to
which the Agent or any Bank may be entitled at any time or times. The
Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under
Section 9-207 of the Uniform Commercial Code of the Commonwealth of
Massachusetts or otherwise, shall be to deal with such Collateral in
the same manner as the Agent deals with similar property for its own
account.
10. SECURITIES AND DEPOSITS. Following the occurrence of an Event of
Default, the Agent may at any time, at its option, transfer to itself or any
nominee any securities constituting Collateral, receive any income thereon and
hold such income as additional Collateral or apply it to the Obligations. Upon
the occurrence and during the continuance of an Event of Default, the Agent may
demand, sue for, collect, or make any settlement or compromise which it deems
desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Agent or any Bank to the Company may at
any time be applied to or set off against any of the Obligations.
11. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If an Event
of Default shall have occurred and be continuing, the Company shall, at the
request of the Agent, notify account debtors on accounts, chattel paper and
general intangibles of the Company and obligors on instruments for which the
Company is an obligee of the security interest of the Agent in any account,
chattel paper, general intangible or instrument and that payment thereof is to
be made directly to the Agent or to any financial institution designated by the
Agent as the Agent's agent therefor, and the Agent may itself, if an Event of
Default shall have occurred and be continuing, without notice to or demand upon
the Company, so notify account debtors and obligors. After the making of
<PAGE> 8
-8-
such a request or the giving of any such notification, the Company shall hold
any proceeds of collection of accounts, chattel paper, general intangibles and
instruments received by the Company as trustee for the Agent, for the benefit of
the Banks and the Agent, without commingling the same with other funds of the
Company and shall turn the same over to the Agent in the identical form
received, together with any necessary endorsements or assignments. The Agent
shall apply the proceeds of collection of accounts, chattel paper, general
intangibles and instruments received by the Agent to the Obligations, such
proceeds to be immediately entered after final payment in cash or solvent
credits of the items giving rise to them.
12. FURTHER ASSURANCES. The Company, at its own expense, shall do,
make, execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as the Agent may reasonably require more completely
to vest in and assure to the Agent and the Banks their respective rights
hereunder or in any of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
continuation statements under the Uniform Commercial Code, (ii) obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party
referred to in Section 2.3, (iii) obtaining waivers from mortgagees and
landlords and (iv) taking all actions required by Sections 8-313 and 8-321 of
the Uniform Commercial Code, as applicable in each relevant jurisdiction, with
respect to certificated and uncertificated securities.
13. POWER OF ATTORNEY.
13.1. APPOINTMENT AND POWERS OF AGENT. The Company hereby
irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the
place and stead of the Company or in the Agent's own name, for the
purpose of carrying out the terms of this Agreement, to take any and
all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the
purposes of this Agreement, provided that prior to the occurrence of an
Event of Default, the Agent shall not exercise the foregoing unless the
Company after reasonable notice fails to take the action requested by
the Agent or the Banks which the Company is required to take hereunder
and, without limiting the generality of the foregoing, hereby gives
said attorneys
<PAGE> 9
-9-
the power and right, on behalf of the Company, without notice to or
assent by the Company, to do the following:
(a) upon the occurrence and during the continuance of
an Event of Default, generally to sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of
the Collateral in such manner as is consistent with the
Uniform Commercial Code of the Commonwealth of Massachusetts
and as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do at the
Company' expense, at any time, or from time to time, all acts
and things which the Agent deems necessary to protect,
preserve or realize upon the Collateral and the Agent's
security interest therein, in order to effect the intent of
this Agreement, all as fully and effectively as the Company
might do, including, without limitation, (i) the filing and
prosecuting of registration and transfer applications with the
appropriate federal or local agencies or authorities with
respect to trademarks, copyrights and patentable inventions
and processes, (ii) upon written notice to the Company, the
exercise of voting rights with respect to voting securities,
which rights may be exercised, if the Agent so elects, with a
view to causing the liquidation in a commercially reasonable
manner of assets of the issuer of any such securities and
(iii) the execution, delivery and recording, in connection
with any sale or other disposition of any Collateral, of the
endorsements, assignments or other instruments of conveyance
or transfer with respect to such Collateral; and
(b) to file such financing statements with respect
hereto, with or without the Company's signature, or a
photocopy of this Agreement in substitution for a financing
statement, as the Agent may reasonably deem appropriate and to
execute in the Company's name such financing statements and
amendments thereto and continuation statements which may
require the Company's signature.
13.2. RATIFICATION BY COMPANY. To the extent permitted by
law, the Company hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and shall be irrevocable.
<PAGE> 10
-10-
13.3. NO DUTY ON AGENT. The powers conferred on the Agent
hereunder are solely to protect the interests of the Agent and the
Banks in the Collateral and shall not impose any duty upon the Agent to
exercise any such powers. The Agent shall be accountable only for the
amounts that it actually receives as a result of the exercise of such
powers and neither it nor any of its officers, directors, employees or
agents shall be responsible to the Company for any act or failure to
act, except for the Agent's own gross negligence or willful misconduct.
14. REMEDIES. If an Event of Default shall have occurred and be
continuing, the Agent may, without notice to or demand upon the Company, declare
this Agreement to be in default, and the Agent shall thereafter have in any
jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Agent may, so far as the
Company can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Agent may in its
discretion require the Company to assemble all or any part of the Collateral at
such location or locations within the state(s) of the Company's principal
office(s) or at such other locations as the Agent may designate. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Agent shall give to the
Company at least five Business Days prior written notice of the time and place
of any public sale of Collateral or of the time after which any private sale or
any other intended disposition is to be made. The Company hereby acknowledges
that five Business Days prior written notice of such sale or sales shall be
reasonable notice. In addition, the Company waives any and all rights that it
may have to a judicial hearing in advance of the enforcement of any of the
Agent's rights hereunder, including, without limitation, its right following an
Event of Default to take immediate possession of the Collateral and to exercise
its rights with respect thereto.
15. NO WAIVER, ETC. The Company waives demand, notice, protest,
notice of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect to both the
Obligations and the Collateral, the Company assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial
<PAGE> 11
-11-
payment thereon and the settlement, compromising or adjusting of any thereof,
all in such manner and at such time or times as the Agent may deem advisable.
The Agent shall have no duty as to the collection or protection of the
Collateral or any income thereon, nor as to the preservation of rights against
prior parties, nor as to the preservation of any rights pertaining thereto
beyond the safe custody thereof as set forth in Section 9.2. The Agent shall not
be deemed to have waived any of its rights upon or under the Obligations or the
Collateral unless such waiver shall be in writing and signed by the Agent with
the consent of the Majority Banks. No delay or omission on the part of the Agent
in exercising any right shall operate as a waiver of such right or any other
right. A waiver on any one occasion shall not be construed as a bar to or waiver
of any right on any future occasion. All rights and remedies of the Agent with
respect to the Obligations or the Collateral, whether evidenced hereby or by any
other instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the
Agent deems expedient.
16. MARSHALLING. Neither the Agent nor any Bank shall be required to
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Company hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Company hereby irrevocably waives the benefits of all such laws.
17. PROCEEDS OF DISPOSITIONS; EXPENSES. The Company shall pay to the
Agent on demand any and all reasonable expenses, including reasonable attorneys'
fees and disbursements, incurred or paid by the Agent in protecting, preserving
or enforcing the Agent's rights under or in respect of any of the Obligations or
any of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as the Agent may determine or in such order or
preference as is provided in
<PAGE> 12
-12-
the Credit Agreement, proper allowance and provision being made for any
Obligations not then due. Upon the final payment and satisfaction in full of all
of the Obligations and after making any payments required by Section 9-504(1)(c)
of the Uniform Commercial Code of the Commonwealth of Massachusetts, any excess
shall be returned to the Company, and the Company shall remain liable for any
deficiency in the payment of the Obligations.
18. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
Company hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The
Company agrees that any suit for the enforcement of this Agreement may be
brought in the courts of the Commonwealth of Massachusetts or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service of process in any such suit being made upon the Company by mail at
the address specified in Section 20 of the Credit Agreement. The Company hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
20. WAIVER OF JURY TRIAL. THE COMPANY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Company waives any right which it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. The Company (i) certifies that neither the Agent or any Bank nor any
representative, agent or attorney of the Agent or any Bank has represented,
expressly or otherwise, that the Agent or any Bank would not, in the event of
litigation, seek to enforce the foregoing waivers and (ii) acknowledges that, in
entering into the Credit Agreement and the other Loan Documents to which the
Agent or any Bank is a party, the Agent and the Banks are relying upon, among
other things, the waivers and certifications contained in this Section 20.
<PAGE> 13
-13-
21. MISCELLANEOUS. The headings of each section of this Agreement are
for convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Company and its respective successors and assigns, and shall inure to the
benefit of the Agent, the Banks and their respective successors and assigns. If
any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Company acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Company has
caused this Agreement to be duly executed as of the date first above written.
CONNECTIVITY PRODUCTS INCORPORATED
By: /s/ James S. Harrington
-------------------------------
Name: James S. Harrington
Title: President
Accepted:
NBD BANK,
as Agent
By: /s/ Erik W. Bakker
------------------
Erik W. Bakker,
Vice President
<PAGE> 14
-14-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF SUFFOLK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of October, 1995, personally appeared
_____________________to me known personally, and who, being by me duly sworn,
deposes and says that he is the _____________ of CONNECTIVITY PRODUCTS
INCORPORATED, and that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors, and said __________________
acknowledged said instrument to be the free act and deed of said corporation.
-------------------------------
Notary Public
My commission expires: _________
<PAGE> 1
EXHIBIT 10.9 (a)
FIRST AMENDMENT TO SECURITY AGREEMENT
This FIRST AMENDMENT TO SECURITY AGREEMENT (this "Agreement"), dated as
of May 31, 1996 (the "Amendment"), is made by and between CONNECTIVITY PRODUCTS
INCORPORATED, a Delaware corporation (the "Borrower") and NBD BANK, a national
banking association, as administrative agent for the Banks and the Co-Agents
(each as defined below) (in such capacity, the "Agent").
WHEREAS, the Borrower, NBD Bank, as agent, and the Banks entered into a
Revolving Credit Agreement, dated as of October 5, 1995, (as amended prior to
the date hereof, the "Original Agreement"), and;
WHEREAS, the Borrower, the Agent and the Banks have agreed to amend and
restate the Original Agreement pursuant to an Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of the date hereof, by and among the
Borrower, the Agent, The First National Bank of Boston, as Documentation Agent
(and together with the Agent, the "Co-Agents"), and the lending institutions
from time to time listed on Schedule 1 thereto (the "Banks") (as further amended
and in effect from time to time, the "Credit Agreement"); and
WHEREAS, the Borrower and the Agent are parties to a Security
Agreement, dated as of October 5, 1995 (as further amended and in effect from
time to time, the "Security Agreement");
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement that the Borrower enter into this Amendment amending the terms of the
Security Agreement (as is in effect prior to the effectiveness hereof, the
"Existing Security Agreement");
NOW, THEREFORE, in consideration of the foregoing premises, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. CREDIT AGREEMENT REFERENCES. The parties hereto acknowledge and
agree that each reference to the Original Agreement, however so defined, in the
Existing Security Agreement includes the Original Agreement as amended and
restated pursuant to the Credit Agreement and agree that the Existing Security
Agreement shall be amended by (a) substituting a reference to the Credit
Agreement as herein defined in place of each reference to the Original Agreement
(whether referred to by the full name of the Original Agreement or by any other
name which refers thereto by definition); (b) substituting for all references to
specific sections of the Original Agreement references to the sections of the
Credit Agreement which contain the condition precedent, covenant, notice,
default or event of default, as amended, as applicable, included in such section
of the Original Agreement; and (c) substituting for the definition of each
capitalized term defined
<PAGE> 2
-2-
by reference to the Original Agreement the definition of such capitalized term
set forth in the Credit Agreement, including without limitation the definition
of the term "Obligations". The parties hereto further acknowledge and agree that
each reference to the "Agent" in the Existing Security Agreement shall be a
reference to the Agent as defined in the preamble hereto.
2. SECURITY AGREEMENT. The parties hereto acknowledge and agree that
wherever the term "Perfection Certificate" is used in the Security Agreement it
shall refer to the Amended and Restated Perfection Certificate, dated as of the
date hereof, and delivered to the Agent pursuant to the Credit Agreement.
3. CONTINUED VALIDITY OF SECURITY AGREEMENT. Except as specifically
amended by this Amendment, the Existing Security Agreement shall remain in full
force and effect, and the Borrower reaffirms the continued validity of the
Existing Security Agreement as amended on the date hereof. The Existing Security
Agreement and this Amendment shall be read and construed as a single agreement.
All references in the Existing Security Agreement or any related agreement or
instrument to the Existing Security Agreement shall hereafter refer to the
Existing Security Agreement as amended hereby.
4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants
that all the representations and warranties as set forth in the Existing
Security Agreement are true and correct in all material respects on and as of
the date hereof. All such representations and warranties are hereby ratified,
affirmed and incorporated herein by reference, with the same force and effect as
though set forth herein in their entirety.
5. DEFINITIONS. Each capitalized term used herein without specific
definition shall have the same meaning herein as in the Credit Agreement.
6. NO WAIVER. Nothing contained herein shall constitute a waiver of,
impair or otherwise affect any Obligations, any other obligation of the Borrower
or any right of the Agent or any Banks consequent thereon.
7. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT
REFERENCE TO CONFLICT OF LAWS).
9. EFFECTIVENESS OF AMENDMENT. This Amendment shall become effective as
of the date hereof upon receipt by the Agent of counterparts of this Amendment
duly executed by each of the Borrower and the Agent and the occurrence of the
Closing Date under the Credit Agreement.
<PAGE> 3
-3-
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Security Agreement to be executed by their duly authorized officers as a
document under seal as of the date first set forth above.
CONNECTIVITY PRODUCTS
INCORPORATED
By: /s/ James S. Harrington
------------------------------
James S. Harrington, President
NBD BANK,
as Agent
By: /s/ Erik W. Bakker
------------------------------
Erik W. Bakker, Vice President
<PAGE> 4
-4-
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May ____, 1996
Before me, the undersigned, a Notary Public in and for the county
aforesaid, personally appeared James S. Harrington, who acknowledged that he is
the President of CONNECTIVITY PRODUCTS INCORPORATED, that the foregoing
instrument was signed and sealed on behalf of said corporation with appropriate
authority, and that said instrument was the free act and deed of said
corporation.
----------------------------------------
Notary Public
My Commission expires:
<PAGE> 5
-5-
STATE OF MICHIGAN )
) ss.
County of Wayne )
On this ______ day of May, 1996, before me personally appeared Erik W.
Bakker, a Vice President of NBD Bank, to me known to be the person described in
and who executed the foregoing instrument, and who acknowledged that he executed
the same as his free act and deed for the said Bank.
---------------------------
Notary Public
My commission expires: ____________, 19
<PAGE> 1
EXHIBIT 10.10
TIGERA GROUP, INC.
GUARANTY
GUARANTY, dated as of May 31, 1996, by TIGERA GROUP, INC., a Delaware
corporation (the "Guarantor") in favor of (i) NBD BANK, a Michigan banking
corporation, as administrative agent (hereinafter, in such capacity, the
"Agent") for itself, The First National Bank of Boston, individually and as
documentation agent (together with the Agent, the "Co-Agents") and the other
banking institutions (hereinafter, collectively, the "Banks") which are or may
become parties to the Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of May 31, 1996 (as amended and in effect from time to time,
the "Credit Agreement"), among Connectivity Products Incorporated, a Delaware
corporation (the "Company"), the Banks and the Co-Agents and (ii) each of the
Banks.
WHEREAS, the Company and the Guarantor are members of a group of
related corporations, the success of either any one of which is dependent in
part on the success of the other members of such group;
WHEREAS, the Guarantor expects to receive substantial direct and
indirect benefits from the extensions of credit to the Company by the Banks
pursuant to the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Company under the Credit Agreement that the
Guarantor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a guaranty substantially in the form hereof; and
WHEREAS, the Guarantor wishes to guaranty the Company's obligations to
the Banks and the Agent under or in respect of the Credit Agreement as provided
herein;
NOW, THEREFORE, the Guarantor hereby agrees with the Banks and the
Co-Agents as follows:
1. DEFINITIONS. The term "Obligations" and all other capitalized terms
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement.
2. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantor hereby guarantees
to the Banks and the Co-Agents the full, and punctual payment when due (whether
at stated maturity, by required pre-payment, by acceleration or otherwise), as
well as the performance, of all of the Obligations including all such which
would become due but for the operation of the automatic stay pursuant to Section
362(a) of the Federal Bankruptcy Code and the operation of Sections 502(b) and
506(b) of the Federal Bankruptcy Code. This Guaranty is an absolute,
unconditional and continuing guaranty of the full and punctual
<PAGE> 2
-2-
payment and performance of all of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Agent or any Bank first attempt to collect any of the Obligations from the
Company or resort to any collateral security or other means of obtaining
payment. Should the Company default in the payment or performance of any of the
Obligations, the obligations of the Guarantor hereunder with respect to such
Obligations in default shall, upon demand by the Agent, become immediately due
and payable to the Agent, for the benefit of the Banks and the Co-Agents,
without demand or notice of any nature, all of which are expressly waived by the
Guarantor. Payments by the Guarantor hereunder may be required by the Agent on
any number of occasions. All payments by the Guarantor hereunder shall be made
to the Agent, in the manner and at the place of payment specified therefor in
the Credit Agreement, for the account of the Banks and the Agent.
Notwithstanding any other term or provision of this Guaranty (other than the
provisions of Section 3 regarding the costs and expenses incurred or expended by
the Agent or any Bank in connection with the enforcement of this Guaranty and
the Stock Pledge Agreement), the Agent's sole recourse under this Guaranty shall
be limited to the Stock Collateral (under and as defined in the Stock Pledge
Agreement) and all rights and remedies of the Agent or any Bank under the Stock
Pledge Agreement.
3. GUARANTOR'S AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. The Guarantor
further agrees, as the principal obligor and not as a guarantor only, to pay to
the Agent, on demand, all costs and expenses (including court costs and legal
expenses) incurred or expended by the Agent or any Bank in connection with this
Guaranty, the Stock Pledge Agreement and the enforcement thereof, together with
interest on amounts recoverable under this Section 3 from the time when such
amounts become due until payment, whether before or after judgment, at the rate
of interest for overdue principal set forth in the Credit Agreement, provided
that if such interest exceeds the maximum amount permitted to be paid under
applicable law, then such interest shall be reduced to such maximum permitted
amount.
4. WAIVERS BY GUARANTOR; BANK'S FREEDOM TO ACT. The Guarantor agrees
that the Obligations will be paid and performed strictly in accordance with
their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or any Bank with respect thereto. The Guarantor waives
promptness, diligences, presentment, demand, protest, notice of acceptance,
notice of any Obligations incurred and all other notices of any kind, all
defenses which may be available by virtue of any valuation, stay, moratorium law
or other similar law now or hereafter in effect, any right to require the
marshalling of assets of the Company or any other entity or other person
primarily or secondarily liable with respect to any of the Obligations, and all
suretyship defenses generally. Without limiting the generality of the foregoing,
the Guarantor agrees to the provisions of any instrument evidencing, securing or
otherwise executed in connection with any Obligation and agrees that the
obligations of the Guarantor hereunder shall not be released or discharged, in
whole or in part, or otherwise
<PAGE> 3
-3-
affected by (i) the failure of the Agent or any Bank to assert any claim or
demand or to enforce any right or remedy against the Company or any other entity
or other person primarily or secondarily liable with respect to any of the
Obligations; (ii) any extensions, compromise, refinancing, consolidation or
renewals of any Obligation; (iii) any change in the time, place or manner of
payment of any of the Obligations or any rescissions, waivers, compromise,
refinancing, consolidation or other amendments or modifications of any of the
terms or provisions of the Credit Agreement, the Notes, the other Loan Documents
or any other agreement evidencing, securing or otherwise executed in connection
with any of the Obligations, (iv) the addition, substitution or release of any
entity or other person primarily or secondarily liable for any Obligation; (v)
the adequacy of any rights which the Agent or any Bank may have against any
collateral security or other means of obtaining repayment of any of the
Obligations; (vi) the impairment of any collateral securing any of the
Obligations, including without limitation the failure to perfect or preserve any
rights which the Agent or any Bank might have in such collateral security or the
substitution, exchange, surrender, release, loss or destruction of any such
collateral security; or (vii) any other act or omission which might in any
manner or to any extent vary the risk of the Guarantor or otherwise operate as a
release or discharge of the Guarantor, all of which may be done without notice
to the Guarantor. To the fullest extent permitted by law, the Guarantor hereby
expressly waives any and all rights or defenses arising by reason of (A) any
"one action" or "anti-deficiency" law which would otherwise prevent the Agent or
any Bank from bringing any action, including any claim for a deficiency, or
exercising any other right or remedy against the Guarantor before or after the
Agent's or such Bank's commencement or completion of any foreclosure action,
whether judicially, by exercise of power of sale or otherwise, or (B) any other
law which in any other way would otherwise require any election of remedies by
the Agent or any Bank.
5. UNENFORCEABILITY OF OBLIGATIONS AGAINS COMPANY. If for any reason
the Company has no legal existence or is under no legal obligation to discharge
any of the Obligations, or if any of the Obligations have become irrecoverable
from the Company by reason of the Company's insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on the Guarantor to the same extent as if
the Guarantor at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for payment of any of
the Obligations is stayed upon the insolvency, bankruptcy or reorganization of
the Company, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, the Notes, the other Loan
Documents or any other agreement evidencing, securing or otherwise executed in
connection with any Obligation shall be immediately due and payable by the
Guarantor.
<PAGE> 4
-4-
6. SUBROGATION; SUBORDINATION.
6.1. WAIVER OF RIGHTS AGAINST COMPANY. Until the final
payment and performance in full of all of the Obligations, the
Guarantor shall not exercise and hereby waives any rights against the
Company arising as a result of payment by the Guarantor hereunder, by
way of subrogation, reimbursement, restitution, contribution or
otherwise, and will not prove any claim in competition with the Agent
or any Bank in respect of any payment hereunder in any bankruptcy,
insolvency or reorganization case or proceedings of any nature; the
Guarantor will not claim any setoff, recoupment or counterclaim against
the Company in respect of any liability of the Guarantor to the
Company; and the Guarantor waives any benefit of and any right to
participate in any collateral security which may be held by the Agent
or any Bank.
6.2. SUBORDINATION. The payment of any amounts due with
respect to any indebtedness of the Company for money borrowed or credit
received now or hereafter owed to the Guarantor is hereby subordinated
to the prior payment in full of all of the Obligations. The Guarantor
agrees that, after the occurrence of any default in the payment or
performance of any of the Obligations, the Guarantor will not demand,
sue for or otherwise attempt to collect any such indebtedness of the
Company to the Guarantor until all of the Obligations shall have been
paid in full. If, notwithstanding the foregoing sentence, the Guarantor
shall collect, enforce or receive any amounts in respect of such
indebtedness while any Obligations are still outstanding (other than
payments expressly permitted and paid under Section 2 of the
Subordination Agreement), such amounts shall be collected, enforced and
received by the Guarantor as trustee for the Banks and the Agent and be
paid over to the Agent, for the benefit of the Banks and the Co-Agents,
on account of the Obligations without affecting in any manner the
liability of the Guarantor under the other provisions of this Guaranty.
6.3. PROVISIONS SUPPLEMENTAL. The provisions of this Section
6 shall be supplemental to and not in derogation of any rights and
remedies of the Banks and the Agent under any separate subordination
agreement which the Agent may at any time and from time to time enter
into with the Guarantor for the benefit of the Banks and the Co-Agents.
7. SECURITY. The Guarantor grants to each of the Co-Agents and the
Banks, as security for the full and punctual payment and performance of all of
the Guarantor's obligations hereunder, a continuing lien on and security
interest in all securities or other property belonging to the Guarantor now or
hereafter held by the Agent or such Bank and in all deposits (general or
special, time or demand, provisional or final) and other sums credited by or due
from the Agent or such Bank to the Guarantor or subject to withdrawal by the
Guarantor.
<PAGE> 5
-5-
8. FURTHER ASSURANCES. The Guarantor agrees that it will from time to
time, at the request of the Agent, do all such things and execute all such
documents as the Agent may consider necessary or desirable to give full effect
to this Guaranty and to perfect and preserve the rights and powers of the Banks
and the Agent hereunder. The Guarantor acknowledges and confirms that the
Guarantor itself has established its own adequate means of obtaining from the
Company on a continuing basis all information desired by the Guarantor
concerning the financial condition of the Company and that the Guarantor will
look to the Company and not to the Agent or any Bank in order for the Guarantor
to keep adequately informed of changes in the Company's financial condition.
9. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force
and effect until the Agent is given written notice of the Guarantor's intention
to discontinue this Guaranty, notwithstanding any intermediate or temporary
payment or settlement of the whole or any part of the Obligations. No such
notice shall be effective unless received and acknowledged by an officer of the
Agent at the address of the Agent for notices set forth in Section 21 of the
Credit Agreement. No such notice shall affect any rights of the Agent or any
Bank hereunder, including without limitation the rights set forth in Sections 4
and 6, with respect to any Obligations incurred or accrued prior to the receipt
of such notice or any Obligations incurred or accrued pursuant to any contract
or commitment in existence prior to such receipt. This Guaranty shall continue
to be effective or be reinstated, notwithstanding any such notice, if at any
time any payment made or value received with respect to any Obligation is
rescinded or must otherwise be returned by the Agent or any Bank upon the
insolvency, bankruptcy or reorganization of the Company, or otherwise, all as
though such payment had not been made or value received.
10. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
Guarantor, its successors and assigns, and shall inure to the benefit of the
Co-Agents and the Banks and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing sentence, each Bank
may assign or otherwise transfer the Credit Agreement, the Notes, the other Loan
Documents or any other agreement or note held by it evidencing, securing or
otherwise executed in connection with the Obligations, or sell participations in
any interest therein, to any other entity or other person, and such other entity
or other person shall thereupon become vested, to the extent set forth in the
agreement evidencing such assignment, transfer or participation, with all the
rights in respect thereof granted to such Bank herein, all in accordance with
Section 20 of the Credit Agreement. The Guarantor may not assign any of its
obligations hereunder.
11. COVENANT. Notwithstanding any provision of the Tax Allocation
Agreement to the contrary, the Guarantor covenants and agrees that its net
operating loss or capital loss carryover or carryback may be utilized solely by
the Borrower, any Wholly-Owned Subsidiary of the Borrower and Tigera in
determining their respective tax liabilities and no other member of the
<PAGE> 6
-6-
Consolidated Group (as such term is defined in the Tax Allocation Agreement)
shall utilize such carryover or carryback in the determination of its tax
liability.
12. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Agent with the
consent of the Majority Banks. No failure on the part of the Agent or any Bank
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
13. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class, postage prepaid, or, in the case of telegraphic or telexed notice,
when transmitted, answer back received, addressed as follows: if to the
Guarantor, at the address set forth beneath its signature hereto, and if to the
Agent, at the address for notices to the Agent set forth in Section 21 of the
Credit Agreement, or at such address as either party may designate in writing to
the other.
14. GOVERNING LAW; CONSENT TO JURISDICTION. THIS GUARANTY IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The
Guarantor agrees that any suit for the enforcement of this Guaranty may be
brought in the courts of the Commonwealth of Massachusetts or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Guarantor
by mail at the address specified by reference in Section 12. The Guarantor
hereby waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit was brought in an inconvenient
court.
15. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
the Guarantor hereby waives any right which it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Guarantor (i) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the
<PAGE> 7
-7-
Banks are relying upon, among other things, the waivers and certifications
contained in this Section 14.
16. MISCELLANEOUS. This Guaranty constitutes the entire agreement of
the Guarantor with respect to the matters set forth herein. The rights and
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition
to any other guaranty of or collateral security for any of the Obligations. The
invalidity or unenforceability of any one or more sections of this Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this Guaranty
shall be equally applicable to the singular and plural forms of the terms
defined.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
TIGERA GROUP, INC.
By: /s/ Donald T. Pascal
------------------------------
Donald T. Pascal, President
Address:
667 Madison Avenue, Suite 2500
New York, New York 10021-8029
<PAGE> 1
EXHIBIT 10.11
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT is made as of May 31, 1996, by and between
TIGERA GROUP, INC., a Delaware corporation (the "Pledgor"), and NBD BANK, a
Michigan banking corporation, as administrative agent (hereinafter, in such
capacity, the "Agent") for itself, The First National Bank of Boston,
individually and in its capacity as documentation agent (together with the
Agent, the "Co-Agents") and the other banking institutions (hereinafter,
collectively, the "Banks") which are or may become parties to an Amended and
Restated Revolving Credit and Term Loan Agreement dated as of May 31, 1996 (as
amended and in effect from time to time, the "Credit Agreement"), among
Connectivity Products Incorporated, a Delaware corporation (the "Borrower"), the
Banks, and the Co-Agents.
WHEREAS, the Pledgor is the direct legal and beneficial owner of 85%
the issued and outstanding shares of each class of the capital stock of the
Borrower described on Annex A hereto; and
WHEREAS, the Pledgor has entered into a Guaranty in favor of the Agent,
dated as of the date hereof (as amended and in effect from time to time, the
"Tigera Guaranty") pursuant to which the Pledgor has guaranteed all of the
Obligations thereunder; and
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Pledgor execute and deliver to the Agent, for the benefit of the Banks and the
Co-Agents, a pledge agreement in substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges and security interests in
favor of the Agent, for the benefit of the Banks and the Co-Agents, as herein
provided to secure its obligations under the Tigera Guaranty;
NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. PLEDGE OF STOCK, ETC.
1.1. PLEDGE OF STOCK. The Pledgor hereby pledges, assigns, grants
a security interest in, and delivers to the Agent, for the benefit of
the Banks and the Agent, all of the shares of capital stock of the
Borrower, as more fully described on Annex A hereto, to be held by the
Agent, for the benefit of the Banks and the Agent, subject to the terms
and conditions hereinafter set forth. The certificates for such shares,
accompanied by stock powers or other appropriate instruments of
assignment thereof duly executed in blank by the Pledgor, have been
delivered to the Agent.
<PAGE> 2
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1.2. ADDITIONAL STOCK. In case the Pledgor shall acquire any
additional shares of the capital stock of the Borrower, any Subsidiary
of the Borrower or any corporation which is the successor of the
Borrower or any Subsidiary of the Borrower, or any securities
exchangeable for or convertible into shares of such capital stock of
any class of the Borrower or any Subsidiary of the Borrower, by
purchase, stock dividend, stock split or otherwise, then the Pledgor
shall forthwith deliver to and pledge such shares or other securities
to the Agent, for the benefit of the Banks and the Co-Agents, under
this Agreement and shall deliver to the Agent forthwith any
certificates therefor, accompanied by stock powers or other appropriate
instruments of assignment duly executed by the Pledgor in blank. The
Pledgor agrees that the Agent may from time to time attach as Annex A
hereto an updated list of the shares of capital stock or securities at
the time pledged with the Agent hereunder.
1.3. PLEDGE OF CASH COLLATERAL ACCOUNT. The Pledgor also hereby
pledges, assigns, grants a security interest in, and delivers to the
Agent, for the benefit of the Banks and the Co-Agents, the Cash
Collateral Account and all of the Cash Collateral as such terms are
hereinafter defined.
2. DEFINITIONS. The term "Obligations" and all other capitalized terms
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement. Terms used herein and not defined in the
Credit Agreement or otherwise defined herein that are defined in the
Massachusetts Uniform Commercial Code have such defined meanings herein, unless
the context otherwise indicated or requires, and the following terms shall have
the following meanings:
Cash Collateral. See Section 4.
Cash Collateral Account. See Section 4.
Material Default or Event of Default: Any Default or Event of Default
(under and as defined in the Credit Agreement) as a result of the Borrower's
failure to comply with any of Sections 9.1, 9.4, 9.6 through 9.8, 9.10, 9.12, 10
or 11 of the Credit Agreement or a Default or Event of Default arising under
Section 14.1(e) through (h), (i) (which for the purpose of this definition, the
amount of "$1,000,000" shall be substituted for the amount of "$250,000"
contained in such clause (i)), (j) through (o), (q) and (r).
Stock. Includes the shares of stock described in Annex A attached
hereto and any additional shares of stock at the time pledged with the Agent
hereunder.
Stock Collateral. The property at any time pledged to the Agent
hereunder (whether described herein or not) and all income therefrom, increases
therein and proceeds thereof, including without limitation that included in Cash
<PAGE> 3
-3-
Collateral, but excluding from the definition of "Stock Collateral" any income,
increases or proceeds received by the Pledgor to the extent expressly permitted
by Section 6.
Time Deposits. See Section 4.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security interest
in and pledge of the Stock Collateral hereunder are made with and granted to the
Agent, for the benefit of the Banks and the Co-Agents, as security for the
payment and performance in full of all the Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC.
4.1. DISTRIBUTIONS PAID TO AGENT. Any sums or other property paid
or distributed upon or with respect to any of the Stock, whether by
dividend or redemption or upon the liquidation or dissolution of the
issuer thereof or otherwise, shall, except to the limited extent
provided in Section6, be paid over and delivered to the Agent to be
held by the Agent, for the benefit of the Banks and the Co-Agents, as
security for the payment and performance in full of all of the
Obligations. In case, pursuant to the recapitalization or
reclassification of the capital of the issuer thereof or pursuant to
the reorganization thereof, any distribution of capital shall be made
on or in respect of any of the Stock or any property shall be
distributed upon or with respect to any of the Stock, the property so
distributed shall be delivered to the Agent, for the benefit of the
Banks and the Co-Agents, to be held by it as security for the
Obligations. Except to the limited extent provided in Section6, all
sums of money and property paid or distributed in respect of the Stock,
whether as a dividend or upon such a liquidation, dissolution,
recapitalization or reclassification or otherwise, that are received by
the Pledgor shall, until paid or delivered to the Agent, be held in
trust for the Agent, for the benefit of the Banks and the Co-Agents, as
security for the payment and performance in full of all of the
Obligations.
4.2. CASH COLLATERAL ACCOUNT. All sums of money that are
delivered to the Agent pursuant to this Section 4 shall be deposited
into an interest bearing account with the Agent (the "Cash Collateral
Account"). Some or all of the funds from time to time in the Cash
Collateral Account may be invested in time deposits, including, without
limitation, certificates of deposit issued by the Agent (such
certificates of deposit or other time deposits being hereinafter
referred to, collectively, as "Time Deposits"), that are satisfactory
to the Agent after consultation with the Pledgor, provided, that, in
each such case, arrangements satisfactory to the Agent are made and are
in place to perfect and to insure the first priority of the Agent's
security interest therein. Interest earned on the Cash Collateral
Account and on the Time Deposits, and the principal of the Time
Deposits at maturity that is not invested in new Time Deposits, shall
be deposited in the Cash Collateral Account. The Cash Collateral
<PAGE> 4
-4-
Account, all sums from time to time standing to the credit of the Cash
Collateral Account, any and all Time Deposits, any and all instruments
or other writings evidencing Time Deposits and any and all proceeds or
any thereof are hereinafter referred to as the "Cash Collateral."
4.3. PLEDGOR'S RIGHTS TO CASH COLLATERAL, ETC. Except as
otherwise expressly provided in Section 15, the Pledgor shall have no
right to withdraw sums from the Cash Collateral Account, to receive any
of the Cash Collateral or to require the Agent to part with the Agent's
possession of any instruments or other writings evidencing any Time
Deposits.
5. WARRANTY OF TITLE; AUTHORITY. The Pledgor hereby represents and
warrants that: (i) the Pledgor has good and marketable title to, and is the sole
record and beneficial owner of, the Stock described in Section 1, subject to no
pledges, liens, security interests, charges, options, restrictions or other
encumbrances except the pledge and security interest created by this Agreement,
(ii) all of the Stock described in Section1 is validly issued, fully paid and
non-assessable, (iii) the Pledgor has full power, authority and legal right to
execute, deliver and perform its obligations under this Agreement and to pledge
and grant a security interest in all of the Stock Collateral pursuant to this
Agreement, and the execution, delivery and performance hereof and the pledge of
and granting of a security interest in the Stock Collateral hereunder have been
duly authorized by all necessary corporate or other action and do not contravene
any law, rule or regulation or any provision of the Pledgor's charter documents
or by-laws or of any judgment, decree or order of any tribunal or of any
agreement or instrument to which the Pledgor is a party or by which it or any of
its property is bound or affected or constitute a default thereunder, and (iv)
the information set forth in Annex A hereto relating to the Stock is true,
correct and complete in all respects. The Pledgor covenants that it will defend
the rights of the Banks and the Agent and security interest of the Agent, for
the benefit of the Banks and the Co- Agents, in such Stock against the claims
and demands of all other persons whomsoever. The Pledgor further covenants that
it will have the like title to and right to pledge and grant a security interest
in the Stock Collateral hereafter pledged or in which a security interest is
granted to the Agent hereunder and will likewise defend the rights, pledge and
security interest thereof and therein of the Banks and the Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no Material
Default or Event of Default shall have occurred and be continuing, the Pledgor
shall be entitled to receive all cash dividends paid in respect of the Stock, to
vote the Stock and to give consents, waivers and ratifications in respect of the
Stock; provided, however, that no vote shall be cast or consent, waiver or
ratification given by the Pledgor if the effect thereof would, in the reasonable
judgment of the Majority Banks, impair any of the Stock Collateral or be
inconsistent with or result in any violation of any of the provisions of the
Credit Agreement, the Notes or any of the other Loan Documents. All such rights
of the Pledgor to receive cash dividends shall cease in case a Material Default
or an Event of
<PAGE> 5
-5-
Default shall have occurred and be continuing. All such rights of the Pledgor to
vote and give consents, waivers and ratifications with respect to the Stock
shall, at the Agent's option, as evidenced by the Agent's notifying the Pledgor
of such election, cease in case a Material Default or an Event of Default shall
have occurred and be continuing.
7. REMEDIES.
7.1. IN GENERAL. If a Material Default or Event of Default shall
have occurred and be continuing, the Agent shall thereafter (except,
(i) with respect to any Event of Default under Section 14.1(a) or (b)
of the Credit Agreement, following the fifth Business Day after the
date any applicable payment shall have become due and payable (after
taking into account any other applicable grace period), (ii) with
respect to any Default or Event of Default under Section 9.4(e) through
(i), Section 9.6 (other than the first sentence thereof), Sections 9.7,
9.8, 9.10, 9.12, 10.7 and 10.13 of the Credit Agreement, following the
fifteenth day after the stated time of compliance set forth in the
Credit Agreement therefore, and (iii) with respect to any Event of
Default as a result of the Borrower's failure to comply with any
provision of Section 11 of the Credit Agreement, following the
specified date for delivery of the Compliance Certificate required by
Section 9.4(c) of the Credit Agreement) have the following rights and
remedies (to the extent permitted by applicable law) in addition to
the rights and remedies of a secured party under the Massachusetts
Uniform Commercial Code, all such rights and remedies being
cumulative, not exclusive, and enforceable alternatively, successively
or concurrently, at such time or times as the Agent deems expedient:
(a) if the Agent so elects and gives notice of such election
to the Pledgor, the Agent may vote any or all shares of the Stock
(whether or not the same shall have been transferred into its
name or the name of its nominee or nominees) for any lawful
purpose, including, without limitation, if the Agent so elects,
for the liquidation of the assets of the issuer thereof, and give
all consents, waivers and ratifications in respect of the Stock
and otherwise act with respect thereto as though it were the
outright owner thereof (the Pledgor hereby irrevocably
constituting and appointing the Agent the proxy and
attorney-in-fact of the Pledgor, with full power of substitution,
to do so);
(b) the Agent may demand, sue for, collect or make any
compromise or settlement the Agent deems suitable in respect of
any Stock Collateral;
(c) the Agent may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Stock Collateral, for cash
or credit or both and upon such terms at such place or places, at
such
<PAGE> 6
-6-
time or times and to such entities or other persons as the Agent
thinks expedient, all without demand for performance by the
Pledgor or any notice or advertisement whatsoever except as
expressly provided herein or as may otherwise be required by law;
(d) the Agent may cause all or any part of the Stock held by
it to be transferred into its name or the name of its nominee or
nominees; and
(e) the Agent may set off against the Obligations any and
all sums deposited with it or held by it, including without
limitation, any sums standing to the credit of the Cash
Collateral Account and any Time Deposits issued by the Agent.
7.2. SALE OF STOCK COLLATERAL. In the event of any disposition of
the Stock Collateral as provided in clause (c) of Section 7.1, the
Agent shall give to the Pledgor at least ten (10) Business Days prior
written notice of the time and place of any public sale of the Stock
Collateral or of the time after which any private sale or any other
intended disposition is to be made. The Pledgor hereby acknowledges
that ten (10) Business Days prior written notice of such sale or sales
shall be reasonable notice. The Agent may enforce its rights hereunder
without any other notice and without compliance with any other
condition precedent now or hereunder imposed by statute, rule of law or
otherwise (all of which are hereby expressly waived by the Pledgor, to
the fullest extent permitted by law). The Agent may buy any part or all
of the Stock Collateral at any public sale and if any part or all of
the Stock Collateral is of a type customarily sold in a recognized
market or is of the type which is the subject of widely-distributed
standard price quotations, the Agent may buy at private sale and may
make payments thereof by any means. The Agent may apply the cash
proceeds actually received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for sale, selling
and the like, to reasonable attorneys' fees, travel and all other
expenses which may be incurred by the Agent in attempting to collect
the Obligations or to enforce this Agreement or in the prosecution or
defense of any action or proceeding related to the subject matter of
this Agreement, and then to the Obligations pursuant to Section 14.4 of
the Credit Agreement.
7.3. REGISTRATION OF STOCK. If the Agent shall determine to
exercise its right to sell any or all of the Stock pursuant to this
Section 7, and if in the opinion of counsel for the Agent it is
necessary, or if in the reasonable opinion of the Agent it is
advisable, to have the Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), the Pledgor agrees to use its best
efforts to cause the issuer or issuers of the Stock contemplated to be
sold, to execute and deliver, and cause the directors and officers of
such issuer to execute and deliver, all at the Pledgor's
<PAGE> 7
-7-
expense, all such instruments and documents, and to do or cause to be
done all such other acts and things as may be necessary or, in the
reasonable opinion of the Agent, advisable to register such Stock under
the provisions of the Securities Act and to cause the registration
statement relating thereto to become effective and to remain effective
for a period of nine (9) months from the date such registration
statement became effective, and to make all amendments thereto or to
the related prospectus or both that, in the reasonable opinion of the
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Pledgor
agrees to use its best efforts to cause such issuer or issuers to
comply with the provisions of the securities or "Blue Sky" laws of any
jurisdiction which the Agent shall designate and to cause such issuer
or issuers to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which
will satisfy the provisions of Section 11(a) of the Securities Act.
7.4. PRIVATE SALES. The Pledgor recognizes that the Agent may be
unable to effect a public sale of the Stock by reason of certain
prohibitions contained in the Securities Act, federal banking laws, and
other applicable laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers. The Pledgor
agrees that any such private sales may be at prices and other terms
less favorable to the seller than if sold at public sales and that such
private sales shall not by reason thereof be deemed not to have been
made in a commercially reasonable manner. The Agent shall be under no
obligation to delay a sale of any of the Stock for the period of time
necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act, or such other
federal banking or other applicable laws, even if the issuer would
agree to do so. Subject to the foregoing, the Agent agrees that any
sale of the Stock shall be made in a commercially reasonable manner,
and the Pledgor agrees to use its best efforts to cause the issuer or
issuers of the Stock contemplated to be sold, to execute and deliver,
and cause the directors and officers of such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and
documents, and to do or cause to be done all such other acts and things
as may be necessary or, in the reasonable opinion of the Agent,
advisable to exempt such Stock from registration under the provisions
of the Securities Act, and to make all amendments to such instruments
and documents which, in the opinion of the Agent, are necessary or
advisable, all in conformity with the requirements of the Securities
Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. The Pledgor further agrees to use its
best efforts to cause such issuer or issuers to comply with the
provisions of the securities or "Blue Sky" laws of any jurisdiction
which the Agent shall designate and, if required, to cause such issuer
or issuers to make
<PAGE> 8
-8-
available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.
7.5. PLEDGOR'S AGREEMENTS, ETC. The Pledgor further agrees to do
or cause to be done all such other acts and things as may be reasonably
necessary to make any sales of any portion or all of the Stock pursuant
to this Section 7 valid and binding and in compliance with any and all
applicable laws (including, without limitation, the Securities Act, the
Securities Exchange Act of 1934, as amended, the rules and regulations
of the Securities and Exchange Commission applicable thereto and all
applicable state securities or "Blue Sky" laws), regulations, orders,
writs, injunctions, decrees or awards of any and all courts,
arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at the Pledgor's
expense. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 7 will cause irreparable injury to
the Agent and the Banks, that the Agent and the Banks have no adequate
remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section 7 shall be
specifically enforceable against the Pledgor by the Agent and the
Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants.
8. MARSHALLING. Neither the Agent nor any Lender shall be required to
marshal any present or future collateral security for (including but not limited
to this Agreement and the Stock Collateral), or other assurances of payment of,
the Obligations or any of them, or to resort to such collateral security or
other assurances of payment in any particular order. All of the Agent's rights
hereunder and of the Banks and the Agent in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Pledgor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Agent's rights under this Agreement or under any other instrument evidencing
any of the Obligations or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may the Pledgor hereby irrevocably
waives the benefits of all such laws.
9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (i) any exercise or nonexercise, or any waiver, by the Agent or
any Lender of any right, remedy, power or privilege under or in respect of any
of the Obligations or any security thereof (including this Agreement); (ii) any
amendment to or modification of the Credit Agreement, the other Loan Documents
or any of the Obligations; (iii) any amendment to or modification of any
instrument (other than this Agreement) securing any of the Obligations,
including, without limitation, any of the Security Documents; or (iv) the taking
<PAGE> 9
-9-
of additional security for, or any other assurances of payment of, any of the
Obligations or the release or discharge or termination of any security or other
assurances of payment or performance for any of the Obligations; whether or not
the Pledgor shall have notice or knowledge of any of the foregoing.
10. TRANSFER, ETC., BY PLEDGOR. Without the prior written consent of
the Agent, the Pledgor will not sell, assign, transfer or otherwise dispose of,
grant any option with respect to, or pledge or grant any security interest in or
otherwise encumber or restrict any of the Stock Collateral or any interest
therein, except for the pledge thereof and security interest therein provided
for in this Agreement.
11. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
furnish to the Agent all such financing statements, certificates, legal opinions
and other documents and will obtain all such governmental consents and corporate
approvals and will do or cause to be done all such other things as the Agent may
reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Banks and the Agent hereunder, all
without any cost or expense to the Agent or any Lender. If the Agent so elects,
a photocopy of this Agreement may at any time and from time to time be filed by
the Agent as a financing statement in any recording office in any jurisdiction.
12. AGENT'S EXONERATION. Under no circumstances shall the Agent be
deemed to assume any responsibility for or obligation or duty with respect to
any part or all of the Stock Collateral of any nature or kind or any matter or
proceedings arising out of or relating thereto, other than (i) to exercise
reasonable care in the physical custody of the Stock Collateral and (ii) after a
Default or an Event of Default shall have occurred and be continuing to act in a
commercially reasonable manner. Neither the Agent nor any Lender shall be
required to take any action of any kind to collect, preserve or protect its or
the Pledgor's rights in the Stock Collateral or against other parties thereto.
The Agent's prior recourse to any part or all of the Stock Collateral shall not
constitute a condition of any demand, suit or proceeding for payment or
collection of any of the Obligations.
13. NO WAIVER, ETC. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the Agent, with the consent of the Majority Banks, and
the Pledgor. No act, failure or delay by the Agent shall constitute a waiver of
its rights and remedies hereunder or otherwise. No single or partial waiver by
the Agent of any default or right or remedy that it may have shall operate as a
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion. The Pledgor hereby waives presentment, notice of
dishonor and protest of all instruments, included in or evidencing any of the
Obligations or the Stock Collateral, and any and all other notices and demands
whatsoever (except as expressly provided herein or in the Credit Agreement).
<PAGE> 10
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14. NOTICE, ETC. All notices, requests and other communications
hereunder shall be made in the manner set forth in Section21 of the Credit
Agreement.
15. TERMINATION. Upon final payment and performance in full of the
Obligations, this Agreement shall terminate and the Agent shall, at the
Pledgor's request and expense, return such Stock Collateral in the possession or
control of the Agent as has not theretofore been disposed of pursuant to the
provisions hereof, together with any moneys and other property at the time held
by the Agent hereunder.
<PAGE> 11
-11-
16. OVERDUE AMOUNTS. UNTIL PAID, ALL AMOUNTS DUE AND PAYABLE BY THE
PLEDGOR HEREUNDER SHALL BE A DEBT SECURED BY THE STOCK COLLATERAL AND SHALL
BEAR, WHETHER BEFORE OR AFTER JUDGMENT, INTEREST AT THE RATE OF INTEREST FOR
OVERDUE PRINCIPAL SET FORTH IN THE CREDIT AGREEMENT.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Pledgor
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Pledgor by mail at the address
specified in Section* of the Credit Agreement. The Pledgor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
18. WAIVER OF JURY TRIAL. THE PLEDGOR WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Pledgor waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. The Pledgor (i)
certifies that neither the Agent, the Borrower or any Lender nor any
representative, agent or attorney of the Agent, the Borrower or any Lender has
represented, expressly or otherwise, that the Agent or any Lender would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent is a party, the Agent and the Banks are relying
upon, among other things, the waivers and certifications contained in this
Section 18.
19. MISCELLANEOUS. The headings of each section of this Agreement are
for convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Pledgor and its respective successors and assigns, and shall inure to the
benefit of the Co-Agents and the Banks and their respective successors and
assigns. If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall be in no way
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Pledgor acknowledges receipt of a copy of this Agreement.
<PAGE> 12
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IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the
Agent have caused this Agreement to be executed as of the date first above
written.
TIGERA GROUP, INC.
By: /s/ Donald T. Pascal
------------------------------
Donald T. Pascal, President
NBD BANK, as Agent
By: /s/ Erik W. Bakker
------------------------------
Erik W. Bakker, Vice President
<PAGE> 13
ANNEX A TO PLEDGE AGREEMENT
None of the issuers has any authorized, issued or outstanding shares of
its capital stock of any class or any commitments to issue any shares of its
capital stock of any class or any securities convertible into or exchangeable
for any shares of its capital stock of any class except as otherwise stated in
this Annex A.
<TABLE>
<CAPTION>
Number
of
Record Class of Number of Issued Number of
Issuer Owner Shares Authorized Shares Outstanding Par Value
------ ------ -------- ---------- ------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Borrower Pledgor Common 3,000 2040.0 766.0 $.01
Series A
Borrower Pledgor Preferred 500 135.0 135.0 $.01
</TABLE>
<PAGE> 1
EXHIBIT 10.12
NOTE PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is entered into as of May 31, 1996, among (i) (a)
James S. Harrington, a resident of Ashburnham, Massachusetts, (b) Duane A.
Gawron, Trustee of the Living Trust of Duane A. Gawron dated March 16, 1987, a
resident of Orlando, Florida, (c) Margo Gawron, a resident of Orlando, Florida,
(d) John E. Pylak, Trustee of the John E. Pylak Living Trust dated September 3,
1987, a resident of Clarkston, Michigan, (e) Rebecca Pylak, a resident of
Clarkston, Michigan, and (f) Kurt Cieszkowski, a resident of Grosse Point Woods,
Michigan (collectively, the "Seller Pledgors"), and (g) Tigera Group, Inc., a
Delaware corporation ("Tigera," and together with the Seller Pledgors, the
"Pledgors"), and (ii) NBD Bank, a Michigan banking corporation, as
administrative agent (in such capacity, the "Agent") for itself, The First
National Bank of Boston, individually and as documentation agent (together with
the Agent, the "Co-Agents"), and the other banking institutions (collectively,
the "Banks") which are or may become a party to the Amended and Restated
Revolving Credit and Term Loan Agreement (as amended and in effect from time to
time, the "Credit Agreement"), dated as of May 31, 1996, among Connectivity
Products Incorporated (the "Company"), the Banks and the Co-Agents.
RECITALS
A. Pursuant to the Credit Agreement, the Banks have extended
commitments to make loans to the Borrower (the "Loans").
B. Pursuant to the Stock Redemption and Purchase Agreement (the "Stock
Purchase Agreement"), dated as of May 17, 1996, among the Pledgors and the
Company, the Company shall issue to each of the Pledgors certain notes, which
notes the Pledgors have agreed to pledge to the Agent, for the benefit of the
Banks and the Co-Agents, as security for the Obligations (as defined in the
Credit Agreement).
C. Each of the Pledgors expects to receive substantial direct and
indirect benefits from the Loans provided by the Banks to the Company pursuant
to the Credit Agreement (which benefits are hereby acknowledged by each of the
Pledgors).
D. It is a condition precedent to the making of the Loans that the
Pledgors execute and deliver to the Agent a pledge agreement substantially in
the form hereof.
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. Terms not otherwise defined herein have
the same respective meanings given to them in the Credit Agreement. In addition,
the following terms shall have the following meanings:
<PAGE> 2
-2-
Additional Subordinated Notes. The 10% Subordinated Notes, each dated
as of the Acquisition Closing Date, or, if issued after the Acquisition Closing
Date, the date of issuance, issued by the Company to certain of the Pledgors in
form and substance satisfactory to the Banks.
Contingent Notes. The 10% Contingent Notes, each dated as of May 31,
1996, issued by the Company to the Seller Pledgors pursuant to the Stock
Purchase Agreement in the aggregate principal amount of $3,000,000.
Material Default or Event of Default. Any Default or Event of Default
(under and as defined in the Credit Agreement) as a result of the Borrower's
failure to comply with any of Sections 9.1, 9.4, 9.6 through 9.8, 9.10, 9.12, 10
or 11 of the Credit Agreement or a Default or Event of Default arising under
Section 14.1(e) through (h), (i) (which for the purpose of this definition, the
amount of "$1,000,000" shall be substituted for the amount of "$250,000"
contained in such clause (i)), (j) through (o), (q) and (r).
Notes. Collectively, the Additional Subordinated Notes, the Contingent
Notes and the Redemption Notes.
Pledged Collateral. See Section 2.1.
Redemption Notes. The 10% Redemption Notes, each dated as of May 31,
1996, issued by the Company to the Seller Pledgors pursuant to the Stock
Purchase Agreement in the aggregate principal amount of $6,000,000.
U.C.C. The Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts.
SECTION 1.2. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement with such meanings.
SECTION 1.3. General Provisions Relating to Definitions. Terms for
which meanings are defined in this Agreement shall apply equally to the singular
and plural forms of the term defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The term "including" means including, without limiting the generality of any
description preceding such term. Each reference herein to any Person shall
include a reference to such Person's successors and assigns. References to any
agreement, certificate or instrument defined in this Agreement refer to such
agreement, certificate or instrument as originally executed or, if subsequently
varied, replaced or supplemented from time to time, as so varied, replaced or
supplemented and in effect at the relevant time of reference thereto.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest and Pledge. Each of the
Pledgors hereby pledges, assigns, charges and mortgages to the Agent, for the
benefit of the Banks and the Co-Agents, and hereby grants to the Agent, for the
benefit of the Banks and the Co-Agents, a continuing pledge and security
<PAGE> 3
-3-
interest in and to, each of the Pledgor's right, title and interest in, to and
under the Notes issued to such Pledgor (with respect to each Pledgor,
hereinafter referred to as "its Notes") and all proceeds thereof (together with
the Notes, the "Pledged Collateral"):
SECTION 2.2. Security for Obligations. This Agreement (and the Pledged
Collateral) secures the prompt payment in full and performance when due of all
of the Obligations. In addition, all advances, charges, costs and expenses,
including reasonable attorney's fees, incurred or paid by the Agent in
exercising any right, power or remedy conferred by this Agreement, or in the
enforcement hereof, shall, to the extent lawful, become a part of the
Obligations secured hereby.
SECTION 2.3. Pledgor Remains Liable. Anything herein to the contrary
notwithstanding:
(a) each of the Pledgors shall remain liable under all of its
Notes and to the extent set forth therein to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had
not been executed;
(b) the exercise by the Agent of any rights hereunder shall
not release any of the Pledgors from any of its duties or obligations
under any of its Notes; and
(c) the Agent shall not have any obligation or liability under
any of the Notes by reason of this Agreement, nor shall the Agent be
obligated to perform any of the obligations or duties of the Pledgors
thereunder or to take any action to collect or enforce any claim for
payment assigned thereunder.
SECTION 2.4. Pledge and Delivery of Pledged Collateral. All Notes to be
delivered on the date hereof or hereafter shall be:
(a) delivered to and held by or on behalf of the Agent
pursuant hereto; and
(b) accompanied by all necessary instruments of transfer
or assignment, duly executed and all in form and substance satisfactory to the
Agent.
Each of the Pledgors shall deliver all of its Notes to the Agent on or prior to
the date hereof. From and after the date hereof, each Pledgor shall, immediately
upon receipt thereof, deliver or cause to be delivered to the Agent in pledge
hereunder any and all additional Notes issued to such Pledgor. Each of the
Pledgors shall take all other action from time to time requested by the Agent to
grant to the Agent a first priority, perfected security interest in all of the
Pledged Collateral.
SECTION 2.5. Security Interest Absolute. All rights and security
interests of the Agent granted hereunder, and all obligations of each of the
Pledgors hereunder, shall be absolute and unconditional, irrespective of, and
shall not be impaired or affected by:
(a) any lack of validity or enforceability of the Credit
Agreement or any other Loan Document or any document, agreement or
instrument relating to any thereof or to any of the Obligations;
(b) the bankruptcy or insolvency of any Pledgor or any
resulting release or discharge of any Obligation;
(c) the failure of the Agent or any Bank
<PAGE> 4
-4-
(i) to assert any claim or demand or to enforce any
right or remedy against the Company or any other Person under
the provisions of the Credit Agreement or any other Loan
Document to which it is a party or under any applicable law,
or
(ii) to exercise any right or remedy against any
Collateral;
(d) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations or any other
amendment to, rescission, waiver or other modification of, or any
consent to any departure from, the Credit Agreement or any other Loan
Document;
(e) any increase, reduction, limitation, impairment or
termination of the Obligations for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and any defense
or set-off, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, ungenuineness, irregularity,
compromise, or unenforceability of, or any other event or occurrence
affecting, any of the Obligations (and each of the Pledgors hereby
waives any right to or claim of any such defense or set-off,
counterclaim, recoupment or termination);
(f) any sale, exchange, release, surrender or non-perfection
of any of the Pledged Collateral or any other Collateral, or any
release of or amendment or waiver of or consent to departure from, any
guaranty held by the Pledgor or the Company securing or guaranteeing
all or any of the Obligations;
(g) any defense, set-off (other than in connection with the
provisions of Section 13.06 of the Purchase Agreement) or counterclaim
which may at any time be available to or be asserted by any Pledgor or
the Company; or
(h) any other circumstances which might otherwise constitute a
suretyship or other defense available to, or a legal or equitable
discharge of, any Pledgor or the Company.
SECTION 2.6. Attorney-in-Fact. Each of the Pledgors hereby irrevocably
appoints the Agent, and any officer or agent thereof, such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time in the Agent's
reasonable discretion whenever an Event of Default is continuing, with respect
to those actions specified in clauses (a), (b), (c) and (e) below, and in the
Agent's reasonable discretion at any time, with respect to those actions
specified in clause (d) below, to take any and all action and to execute any
document, instrument or other assurance which the Agent may deem reasonably
necessary or advisable to accomplish the purposes of this Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Pledged Collateral of each
Pledgor;
(b) to receive, endorse and collect any drafts in connection
with clause (a);
(c) to execute and do all such assurances, acts and things
which such Pledgor is required to do under the covenants and provisions
of this Agreement;
(d) to take any and all actions as the Agent may reasonably
determine to be necessary or advisable for the purpose of maintaining,
preserving or protecting the security constituted by this Agreement or
any of the rights, remedies, powers or privileges of the Agent under
this Agreement; and
<PAGE> 5
-5-
(e) generally, in the name of such Pledgor or in the name of
the Agent, to exercise all or any of the powers, authorities and
discretions conferred on or reserved to the Agent pursuant to this
Agreement.
To the extent permitted by applicable law, each of the Pledgors hereby ratifies
and confirms, and hereby agrees to ratify and confirm, whatever the Agent shall
do or purport to do in the exercise of the power of attorney granted to the
Agent pursuant to this Section 2.6, which power of attorney, being given for
security, is irrevocable.
SECTION 2.7. Agent Has No Duty. The powers conferred on the Agent
hereunder are solely to protect its interest (on behalf of the Banks and
Co-Agents) in the Pledged Collateral and shall not impose any duty on it to
exercise any such powers. Except for duties imposed by the U.C.C. upon secured
creditors (unless otherwise modified hereby), the Agent shall have no duty as to
any Pledged Collateral or responsibility for taking any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Collateral.
SECTION 2.8. Continuing Security Interest; Transfer of Obligations.
This Agreement has created and shall create a continuing security interest in
the Pledged Collateral and shall:
(a) remain in full force and effect until payment in full of
all the Obligations in accordance with the Loan Documents;
(b) be binding upon each of the Pledgors and its successors
and assigns (provided that the Pledgor may not assign any of its
obligations hereunder (i) without the prior written consent of the
Agent or (ii) unless, for the purposes of estate planning, such
assignment is to the spouse or children of the Pledgor, or a trust for
the benefit thereof, in which case such assignee shall execute, and
deliver to the Agent, a written agreement to be bound by the terms of
this Agreement and the related documents, in form and substance
satisfactory to the Agent); and
(c) inure to the benefit of the Banks and the Co-Agents.
Without limiting the generality of the foregoing clause (c), any Bank may assign
or otherwise transfer (in whole or in part) any Loan or other Obligation held by
it to any other Person or entity in accordance with the terms of the Credit
Agreement, and such other Person or entity shall thereupon become vested with
all the benefits in respect thereof granted in this Agreement or otherwise. Upon
the payment in full of all the Obligations in accordance with the Loan
Documents, the security interest granted hereby shall terminate and all rights
to the Pledged Collateral shall revert to the respective Pledgors.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Pledgors represents and warrants to the Agent, for the
benefit of each of the Banks and the Co-Agents, as set forth in this Article.
SECTION 3.1. Ownership, No Liens. Each Pledgor is the sole legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) all Pledged Collateral purported to be
pledged by such Pledgor to the Agent hereunder, free and clear of all liens and
security interests.
<PAGE> 6
-6-
SECTION 3.2. Valid Security Interest. The execution and delivery of
this Agreement, and the delivery of the Pledged Collateral is effective to
create, in favor of the Agent for the benefit of the Banks and the Co-Agents, a
valid, perfected, first-priority security interest in such Pledged Collateral,
and no filing, action or other approval or consent is or will be necessary to
perfect, protect or enforce such security interest.
SECTION 3.3. Authorization, Approval, etc. No authorization, consent,
approval or other action by any creditor of any Pledgor or any other Person has
been or will be required either:
(a) for the pledge by such Pledgor of any Pledged Collateral
required to be pledged under the terms of this Agreement, for the
execution, delivery or performance of this Agreement by the Pledgor, or
for the validity or enforceability of any such pledge or this
Agreement; or
(b) for the exercise by the Agent of any remedies in respect
of the Pledged Collateral pursuant to this Agreement.
SECTION 3.4. No Conflict. The execution, delivery and performance of
this Agreement by each Pledgor will not conflict with, result in any violation
of, or constitute any default under (a) any contractual obligation of such
Pledgor, or (b) any applicable law.
SECTION 3.5. Validity, etc.. This Agreement has been duly executed and
delivered by each Pledgor and is in full force and effect, and the agreements
and obligations of such Pledgor contained in this Agreement constitute the
legal, valid and binding obligations of such Pledgor, enforceable against such
Pledgor in accordance with their terms. The enforceability of this Agreement
against such Pledgor shall be subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws at the time in effect affecting the enforceability of
the rights of creditors generally.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Affirmative Covenants of Each Pledgor. Each of the
Pledgors covenants and agrees with the Agent, for the benefit of each of the
Banks and the Co-Agents, and warrants that, until all the Obligations have been
paid in full in accordance with the Loan Documents, such Pledgor will:
SECTION 4.1.1. Further Assurances Generally. Defend the right and title
herein granted unto the Agent in and to the Pledged Collateral (and all right,
title and interest represented or evidenced by the Pledged Collateral) against
the claims and demands of any other Person; promptly execute and deliver all
further documents and other assurances, and take, or cause to be taken, all
further action, at the expense of such Pledgor, that may be reasonably necessary
or desirable, or that the Agent may reasonably request, in order to perfect or
protect any security interest purported to be granted under this Agreement or to
enable the Agent to exercise or enforce its rights and remedies hereunder with
respect to any Pledged Collateral.
SECTION 4.2. No Other Liens. Each of the Pledgors agrees with the
Agent, for the benefit of each of the Banks and the Co-Agents, and warrants
that, until all the Obligations are paid in full in accordance with the Loan
Documents, such Pledgor will not sell, assign, transfer, pledge, hypothecate or
<PAGE> 7
-7-
otherwise encumber or permit to exist any liens on any of the Pledged Collateral
(except in favor of the Agent pursuant to the terms hereof or as otherwise
permitted by the Loan Agreement).
SECTION 4.3. No Modification of Notes. Each of the Pledgors agrees
such Pledgor:
(a) will not consent to any modifications of or amendment
or supplement to its Notes or waive any rights or benefits under its
Notes; and
(b) will not consent to the cancellation, termination or
rescission of its Notes, or the waiver, release or discharge of any
obligations under the Notes.
ARTICLE V
REMEDIES
SECTION 5.1. Actions upon Material Default or Event of Default under
the Credit Agreement.
(a) If any Material Default or Event of Default shall
have occurred and be continuing, the Agent may exercise in respect of
the Pledged Collateral, (i) in addition to all other rights and
remedies provided for herein or otherwise available to it, all rights
and remedies of a secured party upon default under the U.C.C. (whether
or not the U.C.C. applies to the affected Pledged Collateral) or other
applicable law, and (ii) without notice, sell the Pledged Collateral or
any part thereof at public or private sales, at any one of the Agent's
offices or elsewhere, for cash or credit or for future delivery, and
upon such other terms as the Agent may deem commercially reasonable.
Each of the Pledgors agrees that, to the extent notice of sale shall be
required by applicable law, at least five (5) Business Days' notice to
such Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned. Without limitation of the above, the Agent may, whenever
any Material Default or Event of Default is continuing, without prior
notice to the Pledgor, take all or any of the following actions:
(i) take in the name of the Agent or in the name of
such Pledgor such action as the Agent may determine to be
necessary or advisable to protect or enforce any of the
rights, powers, privileges or remedies of such Pledgor under
its Notes;
(ii) transfer all or any part of the Pledged
Collateral into the name of the Agent or its nominee;
(iii) enforce collection of any of the Pledged
Collateral by suit or otherwise, and surrender, release or
exchange all or any part thereof, or compromise or extend or
renew for any period (whether or not longer than the original
period) any obligations of any nature of any party with
respect thereto;
(iv) endorse any checks, drafts or other writings in
such Pledgor's name to allow collection of the Pledged
Collateral;
(v) take control of any proceeds of the Pledged
Collateral;
<PAGE> 8
-8-
(vi) execute (in the name, place and stead of such
Pledgor) endorsements, assignments, and other instruments of
conveyance or transfer with respect to all or any of the
Pledged Collateral; and
(vii) generally, do all such other acts and things as
may be considered incidental or conducive to any of the
matters or powers mentioned in the foregoing provisions of
this paragraph (a) and which the Agent may or can do lawfully
and to use the name of such Pledgor for such purposes and in
any proceedings arising therefrom.
(b) Each of the Pledgors recognizes that the Agent may be
unable to effect a public sale of the Pledged Collateral by reason of
certain prohibitions under applicable laws, but may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers. Each of the Pledgors agrees that any such private sales may
be at prices and upon other terms less favorable to the seller than if
sold at public sales and that such private sales shall not by reason
thereof be deemed not to have been made in a commercially reasonable
manner.
(c) Notwithstanding the foregoing provisions of (i) this
Section 5.1, any sale of the Pledged Collateral shall be part of and in
conjunction with the sale, transfer or disposition by the Agent or any
Bank of (A) the capital stock of the Company pledged to the Agent for
the benefit of the Banks and the Co-Agents or (B) substantially all of
the assets of the Company in which the Agent has a security interest or
(ii) Section 5.5, the Agent shall not resort to the Pledged Collateral
prior to exercising its rights and remedies under the other Loan
Documents with respect to, substantially all of the other Collateral.
SECTION 5.2. Application of Proceeds. All cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon, all
or any part of the Pledged Collateral shall be applied by the Agent in
accordance with the provisions of Section 14.4 of the Credit Agreement.
SECTION 5.3. Interest and Principal. Each Pledgor shall be permitted to
receive, and the Company shall be permitted to pay to each Pledgor, to the
extent permitted by Section 2 of the Subordination Agreement, interest and
principal under each of its Notes.
SECTION 5.4. No Waiver; Remedies Cumulative. No delay, act or omission
on the part of the Agent of any of its rights hereunder shall be deemed a waiver
of any rights hereunder unless also contained in a writing signed by the Agent,
nor shall any single or partial exercise of, or any failure to exercise, any
right, power or privilege preclude any other or further or initial exercise
thereof or of any other right, power or privilege. The rights and remedies
provided herein are cumulative, and not exclusive of rights and remedies which
may be granted or provided by applicable law.
SECTION 5.5. Marshalling. Neither the Agent nor any Bank shall be
required to marshal any present or future collateral security (including this
Agreement and the Pledged Collateral) for, or other assurances of payment of,
the Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and the Agent or any Bank in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, each of
the Pledgors hereby agrees that it will not invoke any applicable law relating
to the marshalling of collateral or assurances of payment which might cause
delay in or impede the enforcement of the Agent's rights under this Agreement or
under any of the Loan Documents creating or
<PAGE> 9
-9-
evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or payment thereof is
otherwise assured, and, to the extent that they lawfully may, such Pledgor
hereby irrevocably waives the benefits of all such laws.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. Amendments, etc. No amendment to any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by the Agent and each of the Pledgors. No waiver of any provision of
this Agreement nor consent to any departure by the Pledgors herefrom shall in
any event be effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.
SECTION 6.2. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing or by facsimile
transmission and, if to any Pledgor or the Agent, addressed or delivered to it
at the address set forth therefor in Section 21 of the Credit Agreement or, as
the case may be, the Stock Purchase Agreement, or as to any party at such other
address as shall be designated by such party in a written notice to the other
parties complying as to delivery with the terms of this Section. Any such
notices and other communications, if mailed and properly addressed with postage
prepaid or transmitted by facsimile transmission, shall be deemed given when
received.
SECTION 6.3. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 6.4. CONSENT TO JURISDICTION. EACH OF THE PLEDGORS BY ITS
EXECUTION HEREOF (A) HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND TO THE
NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF MASSACHUSETTS FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
OUT OF OR BASED UPON THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF, AND (B) HEREBY WAIVES TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, IN ANY SUCH PROCEEDING, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY
TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR
IMMUNE FROM ATTACHMENT OR EXECUTION, THAT ANY SUCH PROCEEDING BROUGHT IN ONE OF
THE ABOVE-NAMED COURTS IS IMPROPER, OR THAT THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR THE SUBJECT MATTER HEREOF OR THEREOF MAY NOT BE ENFORCED IN OR BY
SUCH COURT. EACH OF THE PLEDGORS HEREBY CONSENTS TO SERVICE OF PROCESS IN ANY
SUCH PROCEEDING IN ANY MANNER PERMITTED BY CHAPTER 223A OF THE GENERAL LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS, AND AGREES THAT SERVICE OF PROCESS BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS
<PAGE> 10
-10-
SPECIFIED IN OR PURSUANT TO SECTION 6.4 IS REASONABLY CALCULATED TO GIVE ACTUAL
NOTICE.
SECTION 6.5. GOVERNING LAW. THIS AGREEMENT HAS BEEN EXECUTED AND
DELIVERED IN THE COMMONWEALTH OF MASSACHUSETTS AND SHALL IN ALL RESPECTS BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF SUCH STATE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 6.6. Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SECTION 6.7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PLEDGORS HEREBY WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR
ANY OBLIGATION OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE AGENT OR SUCH PLEDGOR IN CONNECTION WITH ANY OF THE ABOVE, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR
TORT OR OTHERWISE. EACH OF THE PLEDGORS ACKNOWLEDGES THAT THE PROVISIONS OF THIS
SECTION 6.7 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE AGENT IS RELYING AND
WILL RELY IN ENTERING INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed or have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
AGENT: NBD BANK,
as Administrative Agent
By: /s/ Erik W. Bakker
---------------------------------------
Erik W. Bakker, Vice President
SUBORDINATING CREDITORS:
By: /s/ James S. Harrington
---------------------------------------
James S. Harrington, Individually
By: /s/ Duane A. Gawron
---------------------------------------
Duane A. Gawron, Trustee of the Living Trust
of Duane A. Gawron dated March 16, 1987
<PAGE> 11
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By: /s/ Margo Gawron by Duane A. Gawron as Attorney-in-Fact
------------------------------------------------------
Margo Gawron, Individually
By: /s/ John E. Pylak
------------------------------------------------------
John E. Pylak, Trustee of the John E. Pylak Living Trust
dated September 3, 1987
By: /s/ Rebecca Pylak by John E. Pylak as Attorney-in-Fact
------------------------------------------------------
Rebecca Pylak, Individually
By: /s/ Kurt Cieszkowski
------------------------------------------------------
Kurt Cieszkowski, Individually
TIGERA GROUP, INC.
By: /s/ Donald T. Pascal
------------------------------------------------------
Donald T. Pascal, President
<PAGE> 12
ATTACHMENT 1
(TO THE PLEDGE AGREEMENT)
NOTES:
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL PRINCIPAL
PRINCIPAL PRINCIPAL AMOUNT OF
AMOUNT OF AMOUNT OF ADDITIONAL
ORIGINAL REDEMPTION CONTINGENT SUBORDINATED
PLEDGOR ISSUER NOTE NOTE NOTE
- ------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
James S. Harrington Company 1,764,600 882,300 N/A
Duane A. Gawron, Trustee Company 1,088,400 544,200 N/A
Margo Gawron Company 588,000 294,000 N/A
John E. Pylak, Trustee Company 1,088,400 544,200 N/A
Rebecca Pylak Company 588,000 294,000 N/A
Kurt Cieszkowski Company 882,600 441,300 N/A
Tigera Group, Inc. Company N/A N/A 400,000
</TABLE>
<PAGE> 1
Exhibit 10.13
TIGERA GROUP, INC.
Agreement Relating to Nonqualified Stock Options
Pursuant to the 1996 Stock Incentive Plan
--------------------------
Option granted as of March 8, 1996 (hereinafter referred to as
the "Date of Grant"), by TIGERA GROUP, INC. (the "Corporation") to
_________________ (the "Grantee"):
1. DEFINITIONS. The following terms, as used herein, shall
have the meanings set forth below:
(a) "Cause" shall mean by reason of any of the
following: (1) proven or admitted: (i) embezzlement, or (ii) material dishonest
misuse of Corporation funds or assets; (2) an admitted or proven act
constituting a felony or misdemeanor (other than minor offenses such as traffic
violations) or conviction for such act; (3) deliberate and unwarranted
disclosure of Corporation confidential information; (4) violation of any
non-competition or confidentiality covenants contained in any agreement between
the Grantee and the Corporation or any of its Subsidiaries; (5) continued
conduct materially adverse to the interests of the Corporation which does not
cease within thirty (30) days of written notice from the Board of Directors of
the Corporation; (6) repeated material failure by the Grantee, after written
warning by the Board of Directors, to perform the duties of his employment
(including without limitation material failure to follow or comply with the
reasonable and lawful written directives of the Board of Directors of the
Corporation); or (7) breach of any statutory or common law fiduciary duty of
loyalty to the Corporation which is not cured within thirty (30) days of written
notice from the Board of Directors of the Corporation.
(b) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(c) "Committee" shall mean the committee established
by the Board of Directors of the Corporation pursuant to the Plan to administer
the Plan.
(d) "Fair Market Value" shall have the meaning set
forth in the Plan.
(e) "Incentive Stock Option" shall mean an option
that is intended to qualify for special federal income tax treatment under
Section 421 and 422 of the Code.
<PAGE> 2
(f) "Nonqualified Stock Option" shall mean an option
that is not an Incentive Stock Option.
(g) "Notice" shall have the meaning set forth in
Section 4(c) hereof.
(h) "Option" shall have the meaning set forth in
Section 2 hereof.
(i) "Option Period" shall have the meaning set forth
in Section 4(a) hereof.
(j) "Option Price" shall have the meaning set forth
in Section 3 hereof.
(k) "Plan" shall mean the Corporation's 1996 Stock
Incentive Plan.
(l) "Securities Act" shall mean the Securities Act of
1933, as amended.
(m) "Shares" shall mean shares of the Common Stock,
par value $0.01 per share, of the Corporation.
(n) "Subsidiary" shall mean any direct or indirect
majority-owned subsidiary of the Corporation.
2. THE OPTION.
(a) The Corporation hereby grants to the Grantee,
effective on the Date of Grant, a stock option (the "Option") to purchase, on
the terms and conditions herein set forth, up to _______ of the Corporation's
fully paid, non-assessable Shares at the option exercise price set forth in
Section 3 below.
(b) The Option is granted pursuant to the Plan, and
is subject in all respects to the approval of the Plan by the stockholders of
the Corporation. A copy of the Plan is delivered herewith by the Corporation and
receipt thereof is acknowledged by the Grantee. The Option and this Option
Agreement are subject in all respects to the terms and conditions of the Plan,
which terms and conditions are incorporated herein by reference and which the
Grantee is by acceptance of the Option deemed to accept. Notwithstanding
anything in this Option Agreement to the contrary, unless and until the Plan has
been approved by the stockholders of the Corporation the Option shall not be
exercisable and the Grantee shall have no rights hereunder.
(c) The Option is an Nonqualified Stock Option.
(d) Notwithstanding anything to the contrary
contained herein, in the event Connectivity Products Incorporated, a Delaware
corporation ("CPI"), neither is on December 8, 1996, nor had at any time prior
to December 8, 1996
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<PAGE> 3
been, a Subsidiary of the Corporation, then this Option (or any unexercisable
portion thereof) shall expire on such date and shall cease to be exercisable.
3. THE PURCHASE PRICE. The purchase price of the
Shares shall be $2.03 per share, the Fair Market Value in the
Date of Grant (the "Option Price").
4. EXERCISE OF OPTION.
(a) Except as otherwise provided in the Plan and this
Option Agreement, the Option is exercisable over a period of ten years from the
Date of Grant (the "Option Period") in accordance with the following schedule
(the "Vesting Schedule"):
PERCENT OF SHARES SUBJECT
DATE TO OPTION PURCHASABLE (THE
"VESTED PORTION")
From July 8, 1996 to sixteen (16)
months after the Date of Grant. 33.3%
From sixteen (16) months after the
Date of Grant to twenty-eight (28)
months after the Date of Grant. 66.7%
From twenty-eight (28) months
after the Date of Grant to the
expiration of the Option. 100%
Except as otherwise provided herein, the Option may be exercised from time to
time during the Option Period as to the Vested Portion of this Option, or any
lesser amount thereof, as long as the Grantee performs services as an officer,
director, employee or consultant for the Corporation or any of its Subsidiaries.
Notwithstanding anything to the contrary contained herein, except as provided by
subsection 4(f), the Option may not be exercised, in whole or in part, prior to
July 8, 1999. If the Grantee's services to the Corporation or any Subsidiary are
terminated for any reason other than (i) the Grantee's death or disability, (ii)
the Grantee's termination for Cause or (iii) Grantee's resignation from his
positions with the Corporation, then this entire Option may be exercised,
without regard to the Vesting Schedule, during the period of ninety (90) days
(unless the Committee, in its discretion, shall specify a longer period)
commencing on the later of (i) the date of such termination or (ii) July 8,
1999, so long as the Option Period has not expired. If the Grantee shall die or
become disabled within the meaning of Section 22(e)(3) of the Code while still
performing such services for the Corporation or any of its Subsidiaries, this
entire Option shall be exercisable, without regard to the Vesting Schedule, and
may be exercised during the period commencing on
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<PAGE> 4
the later of (i) the date of the Grantee's death or the date he or she first
becomes disabled, as the case may be, and (ii) July 8, 1999, and ending on the
earlier of the first anniversary of such date and the expiration of the Option
Period, after which period this Option shall expire and shall cease to be
exercisable. In the event of the death of the Grantee, this Option may be
exercised by the person or persons entitled to do so under the Grantee's will (a
"legatee"), or, if the Grantee shall fail to make testamentary disposition of
this Option, or shall die intestate, by the Grantee's legal representative (a
"legal representative"). In the event that (i) the Grantee's services to the
Corporation or any Subsidiary are terminated for Cause or (ii) the Grantee
resigns from his positions with the Corporation (each, a "Cessation Date"), then
the Vested Portion of this Option may be exercised during the period of ninety
(90) days (unless the Committee, in its discretion, shall specify a longer
period) after the later of (i) the date such performance ceases or (ii) July 8,
1999, so long as the Option Period has not expired. Notwithstanding anything to
the contrary contained herein, in the event that (i) the Grantee's services to
the Corporation or any Subsidiary are terminated by the Company for any reason
prior to July 8, 1996 and (ii) on the date of such termination, CPI is or has at
any time been a Subsidiary of the Corporation, then such termination shall for
purposes of this Option Agreement be deemed to have occurred on July 8, 1996.
(b) If this Option shall extend to 100 or more
Shares, then this Option may not be exercised for less than 100 Shares at any
one time, and if this Option shall extend to less than 100 Shares, then this
Option must be exercised for all such Shares at one time.
(c) Not less than five days nor more than thirty days
prior to the date upon which all or any portion of the Option is to be
exercised, the person entitled to exercise the Option shall deliver to the
Corporation written notice in substantially the form attached as an Exhibit
hereto (the "Notice") of his election to exercise all or a part of the Option,
which Notice shall specify the date for the exercise of the Option and the
number of Shares in respect of which the Option is to be exercised. The date
specified in the Notice shall be a business day of the Corporation.
(d) On the date specified in the Notice, the person
entitled to exercise the Option shall pay to the Corporation the Option Price of
the Shares in respect of which the Option is exercised and the amount of any
applicable Federal and/or state withholding tax or employment tax. The Option
Price shall be paid in full at the time of purchase, (i) in cash or by certified
check (ii) with shares of the Common Stock of the Corporation which have been
owned by the Grantee for at least six months prior to the exercise of the Option
or (iii) if and to the extent the Corporation may lawfully do so, by delivery of
a promissory note for same or all of that portion of the Option Price exceeding
the amount determined to be capital pursuant to
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<PAGE> 5
Section 145 of the Delaware General Corporation Law, the terms of which note
shall be determined by the Committee. The value of any shares of Common Stock
delivered by the Grantee in payment of the Option Price shall be the Fair Market
Value of such shares. If the Option is exercised in accordance with the
provisions of the Plan and this Option Agreement, the Corporation shall deliver
to such person certificates representing the number of Shares in respect of
which the Option is being exercised which Shares or other securities shall be
registered in his or her name.
(e) This Option is not exercisable after the
expiration of ten years from the Date of Grant.
(f) Notwithstanding the provisions of subsection
4(a), in the event that at any time during the term hereof (but only if after
CPI becomes a subsidiary of the Corporation): (i) CPI sells or otherwise
disposes of all or substantially all of its assets, or (ii) there is a change in
control of the Corporation such that a majority of the outstanding voting
capital stock of the Corporation is owned by a person or entity or "group" (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) that is not on the date hereof a holder of 5% or more of the
outstanding shares of the Corporation's common stock, or (iii) the Corporation
is merged into or consolidated with any other person (other than a direct or
indirect subsidiary of or corporation or other entity controlled by the
Corporation) or any other person (other than a direct or indirect subsidiary of
or corporation or other entity controlled by the Corporation) is merged into or
consolidated with the Corporation, or (iv) the Corporation sells or otherwise
disposes of all or substantially all of its assets, or (v) the Corporation is
liquidated or dissolved, then in any such event, the Option shall become
immediately exercisable at the election of the Grantee as to all or any part of
the Shares not theretofore issued and sold hereunder. The Corporation shall
provide the Grantee with at least 30 days' notice prior to the consummation of
any of the events referred to in the preceding sentence, during which period the
Grantee may so exercise the Option. If not so exercised, this Option shall
expire and terminate at the end of such 30-day period.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GRANTEE.
(a) The Grantee represents and warrants that he is
acquiring this Option and, in the event this Option is exercised, the Shares
(unless the Shares are subject to a then effective registration statement under
the Securities Act), for investment, for his or her own account and not with a
view to the distribution thereof, and that he or she has no present intention of
disposing of this Option or the Shares (unless the Shares are subject to a then
effective registration statement under the Securities Act) or any interest
therein or sharing ownership thereof with any other person or entity.
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<PAGE> 6
(b) The Grantee agrees that he or she will not offer,
sell, hypothecate, transfer or otherwise dispose of any of the Shares unless
either:
(i) A registration statement covering the Shares
which are to be so offered has been filed with the Securities
and Exchange Commission (the "Commission") pursuant to the
Securities Act and such sale, transfer or other disposition is
accompanied by a prospectus relating to a registration statement
which is in effect under the Securities Act covering the Shares
which are to be sold, transferred or otherwise disposed of and
meeting the requirements of Section 10 of the Securities Act; or
(ii) Counsel satisfactory to the Corporation renders
a reasoned opinion in writing and addressed to the Corporation,
satisfactory in form and substance to the Corporation and its
counsel, that in the opinion of such counsel such proposed sale,
offer, transfer or other disposition of the Shares is exempt
from the provisions of Section 5 of the Securities Act in view
of the circumstances of such proposed offer, sale, transfer or
other disposition.
(c) The Grantee acknowledges that (i) the Shares and
this Option constitute "securities" under the Securities Act and/or the Exchange
Act, and/or the Rules and Regulations promulgated under said acts; (ii) the
Shares may not be transferred until such Shares are subsequently registered
under the Securities Act or an exemption from such registration is available;
and (iii) except as provided in Section 10, the Corporation is not under any
obligation with respect to the registration of the Shares.
(d) The Grantee acknowledges and agrees that the
certificate or certificates representing the Shares shall have an appropriate
legend referring to the terms of this Option.
(e) The Grantee acknowledges and agrees that he or
she, or his or her legatee or legal representative, as the case may be and as
defined above, may be required to make an appropriate representation at the time
of any exercise of this Option in form and substance similar to the
representations contained herein, relating to the Shares then being purchased.
(f) The Grantee acknowledges that, in the event he
ceases to perform services for the Corporation or its Subsidiaries, his or her
rights to exercise this Option are restricted as set forth in Section 4(a)
above.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
CORPORATION.
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<PAGE> 7
(a) The Corporation represents and warrants that this Option
has been duly granted by the Committee, subject to approval of the Plan by the
stockholders of the Corporation.
(b) The Corporation represents and warrants that, upon the
approval of the Plan by the stockholders of the Corporation, the Shares will be
reserved for issuance upon the exercise of this Option.
(c) The Corporation represents and warrants that it is
currently eligible to file registration statements on Form S-3 and Form S-8
under the Securities Act.
7. SUCCESSORS AND ASSIGNS. This Option Agreement shall be
binding upon and shall inure to the benefit of any successor or assign of the
Corporation and, to the extent herein provided, shall be binding upon and inure
to the benefit of the Grantee's legatee or legal representative, as defined
above.
8. ADJUSTMENT OF OPTIONS.
(a) The number of Shares issuable upon exercise of
this Option, or the amount and kind of other securities issuable in addition
thereto or in lieu thereof upon the occurrence of the events specified in
Section 1.5 of the Plan, shall be determined and subject to adjustment, as the
case may be, in accordance with the procedures therein specified.
(b) Fractional shares resulting from any adjustment
in options pursuant to this Section may be settled in cash or otherwise as the
Committee shall determine. Notice of any adjustment in this Option shall be
given by the Corporation to the holder of this Option and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
9. EXERCISE AND TRANSFERABILITY OF OPTION. During the lifetime
of the Grantee, this Option is exercisable only by him or her and shall not be
assignable or transferable by him or her and no other person shall acquire any
rights therein. If the Grantee, while still employed by the Corporation or any
of its Subsidiaries, shall die within the Option Period, his or her legatee or
legal representative shall have the rights provided in Section 4(a) above.
10. REGISTRATION OF REGISTRABLE SHARES.
(a) As soon as practicable following approval of the
Plan by the stockholders of the Corporation, if the Corporation is then eligible
to file a Registration Statement on Form S-8 and there is no legal impediment to
it doing so, the Corporation
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<PAGE> 8
shall effect the registration on Form S-8 of the Shares issuable upon exercise
of the Option (the "Registrable Shares"). The Corporation shall use its best
efforts to effect, not later than the third anniversary of the date on which CPI
becomes a Subsidiary of the Corporation, the registration on Form S-3 or any
successor form thereto (or such other form as may be deemed appropriate by the
Corporation) (each, a "Registration Statement") of the Registrable Shares;
provided, however, that except as hereinafter provided, the Corporation shall
not be required to register any Registrable Shares pursuant to this Section 10
if the only available form of Registration Statement at such time is a Form S-1
or SB-2. If the Corporation has not registered the Registrable Shares prior to
the third anniversary of the date on which CPI becomes a Subsidiary of the
Corporation, unless such failure is a result of action or failure to act on the
part of Grantee, then, upon the written request of the holders of a majority of
the Shares issued or issuable under the stock options granted by the Corporation
on the date hereof, the Corporation shall use its best efforts to register such
Shares on such form, including without limitation Form S-1 or SB-2, as the
Corporation may determine; provided, however, that in no event shall the
Corporation be required to file more than one such registration statement on
Form S-1 or SB-2. The Corporation shall have the right to include in any
Registration Statement filed pursuant to this Section 10 other securities of the
Corporation then proposed to be registered. The Corporation shall use its best
efforts to cause such Registration Statement, other than any Registration
Statement on Form S-1 or SB-2, to remain effective for two years following the
initial effectiveness thereof or, if longer, for so long as any other
registration statement filed by Corporation with respect to its common stock and
that is effective during such two year period remains effective.
(b) The Corporation shall not be required to include
any of the Registrable Shares in any Registration Statement unless the Grantee
shall furnish such information and sign such documents as may be required by the
Commission or reasonably requested by the Corporation in accordance with
generally accepted practices, in connection with such registration, including,
without limitation, and subject to customary terms and conditions, Grantee's
agreement to indemnify the Corporation against any liabilities or losses arising
from any misrepresentation or omission related to information provided to the
Corporation by Grantee for inclusion in such Registration Statement.
11. GENERAL PROVISIONS. Nothing contained in this Option
Agreement shall confer upon the Grantee any right to continue in the employ of
the Corporation or shall in any way affect the right and power of the
Corporation to dismiss or otherwise terminate the employment of the Grantee at
any time for any reason with or without cause. This Option Agreement shall be
governed and construed in accordance with the laws of the State
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<PAGE> 9
of New York applicable to contracts entered into and to be performed wholly
within such state.
If the foregoing is in accordance with the Grantee's
understanding and accepted and agreed by the Grantee, the Grantee may so confirm
by signing and returning the duplicate of this Option Agreement provided for
that purpose.
TIGERA GROUP, INC.
By___________________________________________
Name:
Title:
The foregoing is in accordance with my understanding and is hereby confirmed and
agreed to as of the Date of Grant.
_____________________________________________
Name:
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<PAGE> 10
EXHIBIT
NOTICE OF EXERCISE
DATE
The undersigned hereby gives notice to Tigera Group, Inc., a
Delaware corporation (the "Corporation"), of his intention to exercise his right
to purchase the number of Shares set forth below of the Common Stock of the
Corporation, at the exercise price and on the date set forth below, pursuant to
the Nonqualified Stock Option (the "Option") granted to the undersigned on March
8, 1996, and to pay the purchase price thereof, plus any applicable federal or
state withholding or employment taxes, by means of [the undersigned's check]
[other method of payment] which the undersigned is delivering to the Corporation
herewith pursuant to the terms of the Option.
Print Name:__________________________________
Date of Exercise:____________________________
Number of Shares
to be Purchased:__________________________
Exercise Price Per Share:____________________
Aggregate Exercise Price:____________________
_____________________________________________
(Signature)
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<PAGE> 1
Exhibit 10.14
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into this 9th day of July, 1996, by
and between CONNECTIVITY PRODUCTS INCORPORATED, a Delaware corporation
(hereinafter referred to as the "Company") and GREGORY C. KOWERT (hereinafter
referred to as "the Employee").
WHEREBY, it is agreed as follows:
1. The Company shall employ the Employee, and Employee agrees
to perform services for the Company as Senior Vice President and Chief Financial
Officer of the Company, or such other executive duties and in executive
positions as may be directed from time to time by the Chief Executive Officer or
Board of Directors of the Company, for the period from the date hereof through
the eighteen month anniversary date of the date hereof (the "Term of
Employment").
2. During the Term of Employment, Employee shall at all times
be subject to the direction of the Board of Directors of the Company. Employee
shall devote substantially all of his business time and his best efforts,
attention and energies to the Company's business, and the Employee shall not
during the Term of Employment be engaged in any other substantial business
activity,
<PAGE> 2
whether or not such business activity is pursued for gain, profit, or any
pecuniary advantage; provided, however, that the Company may consent in writing
to Employee engaging in other business activities; and provided further, that,
except as restricted by Paragraph 3, Employee may invest his assets in such form
or manner as will not require his services in the operation of the affairs of
the companies in which such investments are made.
3. (a) Employee acknowledges that in and as a result of his
employment by the Company he will be making use of, acquiring, and/or adding to
confidential information of a special and unique nature and value relating to
such matters as the Company's patents, copyrights, proprietary information,
trade secrets, systems, procedures, manuals, confidential reports, pricing
structures, compensation structures, marketing strategies, and lists and
identities of customers, as well as the nature and type of services rendered by
the Company, the products, the equipment, and methods used and preferred by the
Company's customers, and the prices and fees paid by them (all of which are
deemed for all purposes confidential and proprietary information). The Employee
hereby agrees that it is reasonable and necessary for the protection of the
Company that the Employee agree, and as a material inducement to the Company to
enter into this Agreement and to pay to Employee the compensation herein stated,
Employee hereby covenants and agrees that the Employee
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<PAGE> 3
will not (nor will any member of Employee's immediate family that resides with
Employee), directly or indirectly, except for the benefit of the Company or its
affiliates (which for purposes of this Agreement shall mean any person or entity
directly or indirectly controlling, controlled by or under common control with
the Company), or with the prior written consent of the Company's Board of
Directors, which consent may be granted or withheld at the Board's sole
discretion:
(i) during the Noncompetition Period (as hereinafter
defined), become an officer, director, stockholder, partner,
associate, employee, owner, agent, creditor, independent
contractor, co-venturer, consultant or otherwise, or have a
financial interest in or be associated with any other person,
corporation, firm or business that is a customer of or
supplier to the Company or that is engaged in the wire and
cable product manufacturing, distributing or assembling
businesses anywhere in the United States or in any business
directly or indirectly competitive with that of the Company or
its affiliates, as then constituted, or himself engage in such
business; provided, however, (A) that nothing herein shall be
construed to prohibit the Employee from owning not more than
5% of any class of securities issued by an entity which is
subject to the reporting requirements of the Securities
Exchange
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<PAGE> 4
Act of 1934; and (B) that nothing herein shall be construed to
prohibit the Employee, following the termination for any
reason of his employment with the Company, from becoming an
officer, director, stockholder, partner, associate, employee,
owner, agent, creditor, independent contractor, co-venturer or
consultant of, or from having a financial interest in or being
otherwise associated with, any other person, corporation, firm
or business that derives less than ten percent (10%) of its
revenue from the wire and cable product manufacturing,
distributing and assembling businesses and/or from any other
business operations directly or indirectly competitive with
that of the Company or its affiliates, as then constituted,
provided that the Employee does not participate in the
management or operation of such wire and cable product
manufacturing, distributing and assembling businesses and/or
such other competing business operations; and (C) that the
foregoing restrictions with respect to customers and suppliers
of the Company (other than customers or suppliers that are
themselves otherwise engaged in the wire and cable product
manufacturing, distributing or assembling business) shall
apply only so long as the Employee continues to be employed by
or engaged as a consultant to the Company; or
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<PAGE> 5
(ii) during the Noncompetition Period, solicit, cause
or authorize, directly or indirectly, to be solicited for or
on behalf of the Employee or third parties, from parties who
were customers of the Company or its "affiliates" (which for
purposes of this Paragraph 3 shall mean Tigera Group, Inc.
("Tigera") and each of Tigera's affiliates that are directly
or indirectly controlled by Tigera), any business similar to
the business transacted by or with such customer by the
Company or its affiliates; or
(iii) during the Noncompetition Period, accept or
cause or authorize, directly or indirectly, to be accepted for
or on behalf of the Employee or for third parties, any such
business from any such customers of the Company or its
affiliates; or
(iv) from and after the date hereof, use, publish,
disseminate or otherwise disclose, directly or indirectly, any
information heretofore or hereafter acquired, developed or
used by the Company or any of its affiliates, relating to the
business of the Company or any of its affiliates or the
operations, employees or customers of the Company or its
affiliates which constitutes proprietary or confidential
information of the Company such affiliates ("Confidential
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<PAGE> 6
Information"), including without limitation any Confidential
Information contained in any customer lists, mailing lists and
sources thereof, statistical data and compilations,
trademarks, patents, inventions, formulae, methods, processes,
agreements, contracts, manuals or any other documents, but
excluding any information to the extent expressly set forth in
the Company's press releases or in publicly available
documents filed with the Securities and Exchange Commission by
the Company; provided, however, that this clause (iv) shall
not be applicable to the extent that the Employee is required
to testify in a judicial or regulatory proceeding pursuant to
the order of a judge or administrative law judge after the
Employee requests that the confidentiality of such
Confidential Information be preserved; and provided further,
that this clause (iv) shall not prohibit the Employee from
disclosing Confidential Information to his accounting and
legal advisors to the extent such advisors have agreed to
preserve the confidentiality of such Confidential Information;
or
(v) during the Noncompetition Period,
(A) solicit, entice, persuade or induce,
directly or indirectly, any employee (or person
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<PAGE> 7
who within the preceding 90 days was an employee) of
the Company or its affiliates or any other person who
is under contract with or rendering services to the
Company or its affiliates, to terminate his or her
employment by, or contractual relationship with, the
Company or such affiliate or to refrain from
extending or renewing the same (upon the same or new
terms) or to refrain from rendering services to or
for the Company or such affiliate or to become
employed by or to enter into contractual relations
with any person or entity other than the Company or
such affiliate or to enter into a relationship with a
competitor of the Company or its affiliates, or
(B) authorize or assist in the taking of any
such actions by any person other than the Company or
its affiliates.
(b) All lists, records files, and documents of
any type whatsoever (including but not limited to computer disks, cards
(including, but not limited to, business cards, address cards and "rolodex"
cards), magnetic tapes, or film), relating to the Company's business or the
business of any of the Company's affiliates, licensees or customers, which
Employee shall prepare, use, or come into contact with, shall be and remain
solely and
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<PAGE> 8
exclusively the proprietary property of the Company and shall, at the
termination of Employee's employment with the Company, be delivered to the
Company, and Employee shall retain no excerpts, notes, photographs, photocopies,
reproductions, samples, prototype models or copies thereof without the prior
written approval of the Company. As used in this Paragraph 3, "licensees" and
"customers" shall include, in addition to those licensees and customers of the
Company then existing, those prospective licensees or customers which the
Company shall have solicited for the transaction of business or conducted
business with during the term hereof.
(c) For purposes of this Agreement, the term "Noncompetition
Period" shall mean the period commencing on the date hereof and ending on the
first anniversary of the date that the Employee ceases to be an employee of or
consultant to the Company (whether pursuant to this Agreement or otherwise).
(d) The invalidity or non-enforceability of this Paragraph 3
in any respect shall not affect the validity or enforceability of this Paragraph
3 in any other respect or of any other provisions of this Agreement. In the
event that any provision of this Paragraph 3 shall be held invalid or
unenforceable by a court of competent jurisdiction by reason of the geographic
or business scope or the duration thereof, such invalidity or unenforceability
shall attach only to the scope or
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<PAGE> 9
duration of such provision and shall not affect or render invalid or
unenforceable any other provision of this Agreement, and, to the fullest extent
permitted by law, this Agreement shall be construed as if the geographic or
business scope or the duration of such provision had been more narrowly drafted
so as not to be invalid or unenforceable.
(e) The Employee acknowledges that the Company would suffer
irreparable harm if the Employee were to breach the provisions of this Paragraph
3 and that the Company's remedy at law for any such breach is and will be
insufficient and inadequate and that in the event of such breach (or a
threatened breach) of the provisions of this Paragraph 3, the Company shall be
entitled to equitable relief, including by way of temporary and permanent
injunction, in addition to any remedies the Company may have at law.
4. (a) During the Term of Employment, the Employee shall be
paid by way of remuneration for his services a base salary at the rate of One
Hundred Sixty Thousand Dollars ($160,000.00) per annum, payable in equal
installments on normal paydays of salaried employees of the Company.
(b) In addition to base salary, the Employee shall be
eligible for a discretionary cash bonus (the "Annual Bonus") after 12 months
employment by the Company in an amount,
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<PAGE> 10
up to a maximum of $60,000, determined by the Board of Directors, which
determination shall be based on the factors set forth on Schedule A hereto and
such other factors as may be deemed relevant by the Board of Directors.
(c) The Employee shall be granted options to purchase
100,000 shares of the common stock of the Company at a price equal to the market
price of such common stock on the date of grant. Such stock options shall be
subject to a three-year vesting schedule (25% immediately vested; 25% vesting on
each of the first three anniversaries of the date of grant) but shall not be
exercisable prior to the third anniversary of the date hereof.
(d) During the Term of Employment the Employee shall
also be entitled to three (3) weeks of paid vacation per annum, to be taken at
such times as are mutually agreed by the Company and the Employee. During the
Term of Employment, the Company will provide Employee with life insurance,
hospital and medical insurance, major medical insurance, and sickness and
accident disability insurance, and include Employee in employee benefit plans,
all in such amounts of coverage and under policies and plans equal to the
benefits afforded other elected officers of the Company.
(e) During the Term of Employment, the Company shall,
consistent with the Company's policies as in effect from
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<PAGE> 11
time to time, provide the Employee with a Company-owned or leased automobile for
the Employee's use. In addition, the Employee shall be reimbursed for his
reasonable and legitimate expenses (including travel and entertainment but
excluding automobile expenses other than as described above) in the performance
of the duties required of him for the Company upon presentation of proper
itemized accounts.
(f) The Company shall upon presentation of proper
itemized accounts, reimburse the Employee for his reasonable and legitimate
moving expenses incurred by the Employee in connection with the Employee's
(including Employee's family's) move from Joplin, Missouri to Massachusetts.
Such expenses may include (i) the rental of a furnished apartment in
Massachusetts for up to 120 days, with a maximum rent of $1,200 per month, (ii)
a reasonable number of trips between Missouri and Massachusetts to locate
housing, (iii) the cost of transporting the Employee's furniture and other
household goods from Missouri to Massachusetts and (iv) reasonable closing costs
incurred in connection with the sale of the Employee's house in Missouri and the
purchase of a house by the Employee in Massachusetts, with a cap of $10,000 (but
excluding the purchase price of such house and any "points" or other costs
(except reasonable legal fees) relating to the financing of any such house
purchased by the Employee. In addition, the Company shall reimburse the Employee
for the ordinary and customary real estate broker's commission,
-11-
<PAGE> 12
if any, incurred by Employee in connection with the sale of the Employee's house
in Joplin, Missouri, with a cap of $32,000. To the extent that any amounts
reimbursed by the Company to the Employee pursuant to this Paragraph 4(f) are
subject to income tax and the expenses so reimbursed are not deductible by the
Employee for income tax purposes, the Company shall pay to the Employee such
additional amounts as may be necessary to "gross up" such reimbursed amounts.
5. In the event that Employee shall be unable to perform, in
the opinion of the Board of Directors of the Company, his required duties by
reason of illness or incapacity ("Disability"), the Employee's base salary shall
continue in full for the Term of Employment. In the event of such Disability,
coverage under any insurance programs provided by the Company for the benefit of
the Employee with regard to life insurance, sickness and accident disability,
hospitalization and medical services, including major medical coverage, and
income protection (hereinafter "benefit programs"), whether insured or paid by
the Company, will to the extent permitted on commercially reasonable terms under
the Company's then existing policies, be continued by the Company (to the
maximum extent also maintained from time-to-time for elected officers of the
Company) during such illness or incapacity, but not longer than the Term of
Employment. In the event that Employee is unable to perform his required duties
for the Company, but does perform services for any other person,
-12-
<PAGE> 13
firm, corporation, association or other entity, his disability shall be deemed
to have terminated and the Company may forthwith terminate all compensation and
insurance coverage.
6. In the event that during the Term of Employment the
Employee is discharged by the Company for cause, as defined hereunder, or the
Employee for any reason resigns his employment, then all compensation, benefits
and benefit programs of every kind provided by the Company shall cease at the
time of such discharge or resignation and no Annual Bonus shall be paid or
deemed to be earned for the calendar year in which such discharge occurs;
however, such termination shall not terminate or otherwise impair the provisions
of this Agreement (including without limitation Paragraph 3 hereof) that, by
their terms, are to survive the termination of the Term of Employment. Discharge
for cause may be immediate and without prior notice. "Discharge for Cause" for
purposes of this Agreement shall mean: 1) proven or admitted; a) embezzlement,
or b) material dishonest misuse of Company funds or assets; 2) an admitted or
proven act constituting a felony or misdemeanor (other than minor offenses such
as traffic violations) or conviction for such act; 3) violation of the
provisions of Paragraph 3 of this Agreement; 4) continued conduct materially
adverse to the interests of the Company which does not cease within thirty (30)
days of written notice from the Board of Directors of the Company; 5) repeated
material failure by the Employee, after written warning by the
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<PAGE> 14
Board of Directors, to perform the duties of his employment to the reasonable
satisfaction of the Board of Directors (including without limitation material
failure to follow or comply with the reasonable and lawful written directives of
the Board of Directors of the Company); or 6) breach of any statutory or common
law fiduciary duty of loyalty to the Company which is not cured within thirty
(30) days of written notice from the Board of Directors of the Company.
7. In the event that prior to the termination of the Term of
Employment the Employee is discharged by the Company other than for cause, death
or disability, the Employee's base salary shall continue in full for the Term of
Employment; however, no Annual Bonus shall be paid or deemed to be earned for
the year in which such discharge occurs. In the event of such discharge,
coverage under any benefit plans and insurance programs provided by the Company
for the benefit of the Employee, whether insured or paid by the Company, will to
the extent permitted on commercially reasonable terms under the Company's then
existing policies, be continued by the Company (to the maximum extent also
maintained from time-to-time for elected officers of the Company) for the entire
Term of Employment. If the Company so discharges the Employee prior to the
termination of the Term of Employment, other than for cause, death or
disability, and if within twelve months of such termination the Employee moves
out of his house in Massachusetts and relocates
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<PAGE> 15
out of Massachusetts, then the Company shall pay to the employee an amount equal
to the moving expenses (not including any commission paid in connection with the
Employee's house) paid to the employee pursuant to Paragraph 4(f)(ii), (iii) and
(iv) above.
8. In the event of the Employee's death during the Term of
Employment, the Employee's base salary shall continue to be paid in full for the
Term of Employment.
9. In the event that at any time during the Term of
Employment: (i) the Company or Tigera sells or otherwise disposes of all or
substantially all of its respective assets, or (ii) there is a change in control
of the Company or of Tigera such that a majority of the outstanding voting
capital stock of the Company or Tigera, as the case may be, is owned by a person
or entity or "group" (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) that is not on the date hereof a
holder of 5% or more of the outstanding shares of the Company's or Tigera's
common stock, or (iii) Tigera is merged into or consolidated with any other
person (other than a direct or indirect subsidiary of or corporation or other
entity controlled by Tigera) or any other person (other than a direct or
indirect subsidiary of or corporation or other entity controlled by Tigera) is
merged into or consolidated with
-15-
<PAGE> 16
Tigera, or (iv) the Company or Tigera is liquidated or dissolved, then in any
such event (each, a "Change of Control"):
(1) the stock options granted to the Employee
pursuant to this Agreement shall become immediately
exercisable as to all or any part of the shares of common
stock not theretofore issued and sold thereunder; and
(2) if the Employee is within twelve (12) months
following such Change of Control discharged other than for
cause, death or disability, or if within twelve (12) months
following such Change of Control the Employee resigns his
employment by reason of a material change in the Employee's
duties or responsibilities following such Change of Control
(including without limitation the Employee's ceasing to be the
chief financial officer of a publicly traded company), then in
either such case the Company shall continue to pay to the
Employee his base salary as herein provided for a period of
twelve (12) months following such Change of Control; provided,
that the amount of such base salary paid by the Company shall
be reduced by the amount of any salary or other compensation
(other than investment or other "personal" income) earned by
the Employee
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<PAGE> 17
during such twelve month period from any source other than the
Company.
10. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon its successors
and assigns. This Agreement shall be binding upon the heirs and personal
representatives of Employee, but the rights and obligations of Employee are
personal and may not be assigned except with respect to such benefits as may
inure to Employee's estate by specific provision herein.
11. If any provision or part of this Agreement shall be held
invalid or unenforceable for any reason, such invalidity or unenforceability
shall not affect any other provision or part hereof which can be given effect
without such invalid or unenforceable provision or part.
12. This writing constitutes the whole Agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
other agreements, discussions and understandings with respect thereto, and there
are no representations or warranties, express or implied, with respect thereto
outside of this writing. This Agreement may be altered or amended only in
writing executed by the parties hereto.
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<PAGE> 18
13. The applicable law of the Commonwealth of Massachusetts
shall be controlling with respect to all matters of enforcement and
interpretation of this Agreement.
14. Any notices or other communications required or permitted to
be sent hereunder shall be in writing and shall be duly given if personally
delivered or sent postage pre-paid by certified or registered mail, return
receipt requested, if to the Employee, to his address as set forth on the
signature page hereof; and if to the Company, to:
Mr. James S. Harrington
President
Connectivity Products Incorporated
214 Nashua Street
Leominster, Massachusetts 01453
with a copy to:
Mr. Donald T. Pascal
Chairman of the Board
667 Madison Avenue
Suite 2500
New York, NY 10021-8029
Either party may change his or its address for the sending of notice to such
party by written notice to the other party sent in accordance with the
provisions hereof.
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<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands the day and year first above written.
CONNECTIVITY PRODUCTS INCORPORATED
By:/s/ James S. Harrington
------------------------------------------
Its:President
---------------------------------
EMPLOYEE
/s/ Gregory C. Kowert
---------------------------------------------
GREGORY C. KOWERT
Address: 1020 Rustic Ridge
Joplin, MO 64804
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<PAGE> 20
SCHEDULE A
Factors to be considered in determining Annual Bonus
(a) Corporate and SEC financial reporting - accuracy and
timeliness.
(b) BSCC systems installation.
(c) Development, accuracy and usefulness of internal
financial reports for management decision making.
(d) Bring in house and optimize BSCC accounting function,
integrate with overall numbers.
(e) Forecast and manage working capital, capital
expenditures, and components of cash flow, including
debt covenants.
(f) Learn distribution economics and add value.
(g) Build working relationships with management, banks,
Board members and public investors. Set up in-house
investor relations procedures.
-20-
<PAGE> 1
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
Earnings per common share were computed as follows:
<TABLE>
<CAPTION>
Six Months ended Three Months ended
------------------------- -----------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net loss applicable to common shares: ($175,000) ($99,000) ($92,000) ($53,000)
========= ======== ======== ========
Weighted average number of common
shares and of common share equivalents:
Weighted average common shares 21,919,218 21,286,301 22,156,301 21,286,301
Common share equivalents pursuant
to APB 15 2,213,583 170,914 2,616,860 183,087
---------- ---------- ---------- ----------
Total primary weighted average number
of common shares and common share
equivalents 24,132,801 21,457,215 24,773,161 21,469,388
Additional shares for full dilution
pursuant to APB 15 360,391 0 101,855 0
---------- ---------- ---------- ----------
Total fully diluted average number of
common shares and common share
equivalents 24,493,192 21,457,215 24,875,016 21,469,388
========= ======== ======== ========
Net loss per share:
Primary ($0.01) ($0.00) ($0.00) ($0.00)
========= ======== ======== ========
Fully diluted ($0.01) ($0.00) ($0.00) ($0.00)
========= ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,000,000
<SECURITIES> 1,453,000
<RECEIVABLES> 16,350,000
<ALLOWANCES> 0
<INVENTORY> 11,120,000
<CURRENT-ASSETS> 30,734,000
<PP&E> 6,885,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 63,332,000
<CURRENT-LIABILITIES> 15,707,000
<BONDS> 0
0
0
<COMMON> 223,000
<OTHER-SE> 12,262,000
<TOTAL-LIABILITY-AND-EQUITY> 63,332,000
<SALES> 7,947,000
<TOTAL-REVENUES> 7,947,000
<CGS> 5,816,000
<TOTAL-COSTS> 8,193,000
<OTHER-EXPENSES> 1,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 284,000
<INCOME-PRETAX> (253,000)
<INCOME-TAX> (101,000)
<INCOME-CONTINUING> (152,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (175,000)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
