<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
and
AMENDMENT NO. 1
TO STATEMENT ON
SCHEDULE 13D
Under the Securities Exchange Act of 1934
------------------------
VERTEX COMMUNICATIONS CORPORATION
(Name of Subject Company)
SIGNAL ACQUISITION CORPORATION
TRIPOINT GLOBAL COMMUNICATIONS INC.
TBG HOLDINGS NV
(Bidders)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
925320-10-3
(CUSIP Number of Class of Securities)
STEPHEN GREEN, ESQ.
TRIPOINT GLOBAL COMMUNICATIONS INC.
565 FIFTH AVENUE, 17TH FLOOR
NEW YORK, NY 10017
(212) 850-8500
(Name, Address and Telephone Number of Persons Authorized
to Receive Notices and Communications on Behalf of Bidders)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
FAIZA J. SAEED, ESQ. WILLIAM F. PYNE, ESQ.
CRAVATH, SWAINE & MOORE THOMPSON & KNIGHT L.L.P.
WORLDWIDE PLAZA 1700 PACIFIC AVENUE
825 EIGHTH AVENUE SUITE 3300
NEW YORK, NY 10019 DALLAS, TX 75201
TELEPHONE: (212) 474-1454 TELEPHONE: (214) 969-1700
</TABLE>
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$128,018,902 $25,604
</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes
the purchase of 5,819,041 shares of Common Stock, par value $.10 per share,
of Vertex Communications Corporation (the "Company"). Such number of shares
represents all the shares of Common Stock outstanding as of November 11,
1999 plus the number of shares of Common Stock issuable upon the exercise of
outstanding options to purchase 702,727 shares of Common Stock, in each case
as represented by the Company.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C>
Amount previously paid: Filing party: N/A
None
Form or registration Date filed: N/A
no.: N/A
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. 925320-10-3
<TABLE>
<C> <S>
- ---------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SIGNAL ACQUISITION CORPORATION (I.R.S. IDENTIFICATION NO.
APPLIED FOR)
- ---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A)(X)
(B)( )
- ---------------------------------------------------------------------
(3) SEC USE ONLY
- ---------------------------------------------------------------------
(4) SOURCE OF FUNDS
AF
- ---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) ( )
- ---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <C> <S>
(7) SOLE VOTING POWER
NUMBER OF
- --------------------------------------------------------------------------------
SHARES
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 705,913
- --------------------------------------------------------------------------------
REPORTING
PERSON (9) SOLE DISPOSITIVE POWER
- --------------------------------------------------------------------------------
WITH
(10) SHARED DISPOSITIVE POWER
705,913
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
- ---------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
705,913
- ---------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES ( )
(SEE INSTRUCTIONS)
- ---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
APPROXIMATELY 13.1% OF THE COMMON STOCK OUTSTANDING
- ---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
CO
- ---------------------------------------------------------------------
</TABLE>
2
<PAGE>
CUSIP No. 925320-10-3
<TABLE>
<C> <S>
- ---------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TRIPOINT GLOBAL COMMUNICATIONS INC. (I.R.S. IDENTIFICATION
NO. 56-1871899)
- ---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A)(X)
(B)( )
- ---------------------------------------------------------------------
(3) SEC USE ONLY
- ---------------------------------------------------------------------
(4) SOURCE OF FUNDS
BK, WC
- ---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO
ITEMS 2(D) OR 2(E) ( )
- ---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <C> <S>
(7) SOLE VOTING POWER
NUMBER OF
- --------------------------------------------------------------------------------
SHARES
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 705,913
- --------------------------------------------------------------------------------
REPORTING
PERSON (9) SOLE DISPOSITIVE POWER
- --------------------------------------------------------------------------------
WITH
(10) SHARED DISPOSITIVE POWER
705,913
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
- ---------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
705,913
- ---------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES ( )
(SEE INSTRUCTIONS)
- ---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
APPROXIMATELY 13.1% OF THE COMMON STOCK OUTSTANDING
- ---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
CO
- ---------------------------------------------------------------------
</TABLE>
3
<PAGE>
CUSIP No. 925320-10-3
<TABLE>
<C> <S>
- ---------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TBG HOLDINGS NV
- ---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A)(X)
(B)( )
- ---------------------------------------------------------------------
(3) SEC USE ONLY
- ---------------------------------------------------------------------
(4) SOURCE OF FUNDS
N/A
- ---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO
ITEMS 2(D) OR 2(E) ( )
- ---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
NETHERLANDS ANTILLES
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <C> <S>
(7) SOLE VOTING POWER
NUMBER OF
- --------------------------------------------------------------------------------
SHARES
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 863,013
- --------------------------------------------------------------------------------
REPORTING
PERSON (9) SOLE DISPOSITIVE POWER
- --------------------------------------------------------------------------------
WITH
(10) SHARED DISPOSITIVE POWER
863,013
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
- ---------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
863,013
- ---------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES ( )
(SEE INSTRUCTIONS)
- ---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
APPROXIMATELY 16.1% OF THE COMMON STOCK OUTSTANDING
- ---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
HC
- ---------------------------------------------------------------------
</TABLE>
4
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Vertex Communications Corporation, a
Texas corporation (the "Company"), and the address of its principal executive
offices is 2600 North Longview Street, Kilgore, Texas 75662.
(b) This Schedule 14D-1 relates to the offer by Signal Acquisition
Corporation (the "Purchaser") to purchase all outstanding shares of Common
Stock, par value $.10 per share (the "Shares"), of the Company at a price of
$22.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated November 18, 1999 (the
"Offer to Purchase") and in the related Letter of Transmittal (which, together
with any amendments and supplements thereto, collectively constitute the
"Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively. Information concerning the number of outstanding Shares is set
forth under the caption "Introduction" in the Offer to Purchase and is
incorporated herein by reference.
(c) Information concerning the principal markets in which the Shares are
traded, and the high and low last sales prices of the Shares for each quarterly
period during the past two years is set forth in Section 6 ("Price Range of the
Shares; Dividends on the Shares") of the Offer to Purchase and is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 14D-1 is being filed by the Purchaser, a Texas corporation and
a wholly owned subsidiary of TriPoint Global Communications Inc., a Delaware
corporation ("Parent"), which is an 80% indirect subsidiary of TBG Holdings NV,
a Netherlands Antilles corporation ("TBG Holdings"). Information concerning the
principal business and the address of the principal offices of the Purchaser,
Parent and TBG Holdings is set forth in Section 9 ("Certain Information
Concerning the Purchaser, Parent and TBG Holdings") of the Offer to Purchase and
is incorporated herein by reference. The name, citizenship, business address,
present principal occupation or employment and five-year employment history of
each of the directors and executive officers of the Purchaser, Parent and TBG
Holdings are set forth in Schedule I to the Offer to Purchase, which is
incorporated herein by reference.
During the last five years, none of the Purchaser, Parent or TBG Holdings,
or, to the best knowledge of the Purchaser, Parent and TBG Holdings, any of
their respective executive officers or directors, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), nor
has any of them been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) The information set forth in Section 11 ("Contacts and Transactions with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
the Merger Agreement; the Shareholder Agreement; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference.
(b) The information set forth in Section 11 ("Contacts and Transactions with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
the Merger Agreement; the Shareholder Agreement; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
5
<PAGE>
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer; the
Merger Agreement; the Shareholder Agreement; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Continued Listing on the NYSE; Exchange Act
Registration; Margin Regulations") of the Offer to Purchase is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) and (b) The information set forth under the caption "Introduction," and
in Section 9 ("Certain Information Concerning the Purchaser, Parent and TBG
Holdings"), Section 11 ("Contacts and Transactions with the Company; Background
of the Offer") and Section 12 ("Purpose of the Offer; the Merger Agreement; the
Shareholder Agreement; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth under the caption "Introduction" and in Section 9
("Certain Information Concerning the Purchaser, Parent and TBG Holdings"),
Section 11 ("Contacts and Transactions with the Company; Background of the
Offer") and Section 12 ("Purpose of the Offer; the Merger Agreement; the
Shareholder Agreement; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth under the caption "Introduction" and in
Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein
by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Because the only consideration in the Offer and Merger (as defined in the
Offer to Purchase) is cash, and in view of the amount of consideration payable
in relation to the financial capability of Parent and its affiliates, the
Purchaser and Parent believe the financial condition of Parent and its
affiliates is not material to a decision by a holder of Shares whether to sell,
tender or hold Shares pursuant to the Offer.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in Section 12 ("Purpose of the Offer; the
Merger Agreement; the Shareholder Agreement; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Continued Listing on the NYSE; Exchange Act Registration;
Margin Regulations") of the Offer to Purchase is incorporated herein by
reference.
(e) None.
6
<PAGE>
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of November 11, 1999
among the Purchaser, Parent and the Company (the "Merger Agreement") and the
Company Shareholder Agreement dated as of November 11, 1999 among the Purchaser,
Parent and certain shareholders of the Company, copies of which are attached
hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2), respectively, is
incorporated herein by reference. The Merger Agreement provides that the
Purchaser may assign any or all of its rights and obligations (including the
right to purchase Shares in the Offer) to Parent or any wholly owned subsidiary
of Parent, but no such assignment shall relieve the Purchaser of its obligations
under the Merger Agreement.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Text of Press Release dated November 12, 1999, issued by
Parent and the Company.
(a)(8) Summary Advertisement.
(b) Credit Facility dated June 25, 1998, among Parent (under its
former name, Prodelin Holding Corporation), certain of its
subsidiaries, First Union National Bank and certain other
financial institutions.
(c)(1) Agreement and Plan of Merger dated as of November
November 11, 1999, among the Purchaser, Parent and the
Company.
(c)(2) Company Shareholder Agreement dated as of November
November 11, 1999, among the Purchaser, Parent and certain
shareholders of the Company.
(c)(3) Confidentiality Agreement dated September 28, 1999, between
Parent and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
<TABLE>
<S> <C> <C>
Signal Acquisition Corporation,
By /s/ JACK HAEGELE
-----------------------------------------
Name: Jack Haegele
Title: Chief Executive Officer
TriPoint Global Communications Inc.,
By /s/ JACK HAEGELE
-----------------------------------------
Name: Jack Haegele
Title: Chief Executive Officer
TBG HOLDINGS NV,
By /s/ PETER H. FRANK
-----------------------------------------
Name: Peter H. Frank
Title: Senior Vice President and
Corporate Secretary
By /s/ MICHAEL VON STAUDT
-----------------------------------------
Name: Michael von Staudt
Title: Executive Vice President
</TABLE>
Dated: November 18, 1999
8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
- --------------------- ------------ ------
<S> <C> <C>
(a)(1) Offer to Purchase...........................................
(a)(2) Letter of Transmittal.......................................
(a)(3) Notice of Guaranteed Delivery...............................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees....................................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees................................
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9...............................
(a)(7) Text of Press Release dated November 12, 1999, issued by
Parent and the Company......................................
(a)(8) Summary Advertisement.......................................
(b) Credit Facility dated June 25, 1998, among Parent (under its
former name, Prodelin Holding Corporation), certain of its
subsidiaries, First Union National Bank and certain other
financial institutions......................................
(c)(1) Agreement and Plan of Merger dated as of November 11, 1999,
among the Purchaser, Parent and the Company.................
(c)(2) Company Shareholder Agreement dated as of November 11, 1999,
among the Purchaser, Parent and certain shareholders of the
Company.....................................................
(c)(3) Confidentiality Agreement dated September 28, 1999, between
Parent and the Company......................................
(d) None........................................................
(e) Not applicable..............................................
(f) None........................................................
</TABLE>
9
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
VERTEX COMMUNICATIONS CORPORATION
AT
$22.00 PER SHARE
BY
SIGNAL ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
TRIPOINT GLOBAL COMMUNICATIONS INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, DECEMBER 16, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF VERTEX COMMUNICATIONS CORPORATION (THE "COMPANY")
HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY'S SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
THE SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS DEFINED HEREIN).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL OUTSTANDING SHARES ON A
FULLY DILUTED BASIS.
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (including shares issuable upon exercise of Company Stock Options) should
either (i) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal, have such
shareholder's signature thereon guaranteed if required by Instruction 1 to the
Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile), or, in the case of a book-entry transfer effected pursuant to the
procedure set forth in Section 2, an Agent's Message (as defined herein), and
any other required documents to the Depositary (as defined herein) and either
deliver the certificates for such Shares to the Depositary along with the Letter
of Transmittal (or a facsimile thereof) or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (ii) request such
shareholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such shareholder. A shareholder having Shares registered in the
name of a broker, dealer, bank, trust company or other nominee must contact such
broker, dealer, bank, trust company or other nominee if such shareholder desires
to tender such Shares.
If a shareholder desires to tender Shares and such shareholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the expiration of
the Offer, such shareholder's tender may be effected by following the procedure
for guaranteed delivery set forth in Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
THE DEALER MANAGER FOR THE OFFER IS:
FIRST UNION SECURITIES, INC.
November 18, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<C> <S> <C>
INTRODUCTION......................................................... 1
1. Terms of the Offer.......................................... 3
2. Procedure for Tendering Shares.............................. 4
3. Withdrawal Rights........................................... 8
4. Acceptance for Payment and Payment.......................... 8
5. Certain Federal Income Tax Consequences..................... 9
6. Price Range of the Shares; Dividends on the Shares.......... 10
7. Effect of the Offer on the Market for the Shares; Continued
Listing on the NYSE; Exchange Act Registration; Margin
Regulations................................................. 11
8. Certain Information Concerning the Company.................. 12
9. Certain Information Concerning the Purchaser, Parent and TBG
Holdings.................................................... 14
10. Source and Amount of Funds.................................. 15
11. Contacts and Transactions with the Company; Background of
the Offer................................................... 15
12. Purpose of the Offer, the Merger Agreement; the Shareholder
Agreement; Plans for the Company............................ 16
13. Dividends and Distributions................................. 27
14. Certain Conditions of the Offer............................. 27
15. Certain Legal Matters....................................... 29
16. Fees and Expenses........................................... 31
17. Miscellaneous............................................... 32
Schedule I--Directors and Executive Officers
</TABLE>
<PAGE>
To the Holders of Shares of
Vertex Communications Corporation:
INTRODUCTION
Signal Acquisition Corporation, a Texas corporation (the "Purchaser") and a
wholly owned subsidiary of TriPoint Global Communications Inc., a Delaware
corporation ("Parent"), hereby offers to purchase all outstanding shares of
Common Stock (the "Common Stock"), par value $.10 per share (the "Shares"), of
Vertex Communications Corporation, a Texas corporation (the "Company"), at
$22.00 per Share (the "Offer Price"), net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements hereto or thereto, collectively constitute the
"Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of November 11, 1999 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, as soon as practicable following the
consummation of the Offer and the satisfaction or waiver of certain conditions,
the Purchaser will be merged with and into the Company (the "Merger"), with the
Company surviving the Merger as a wholly owned subsidiary of Parent (the
"Surviving Corporation"). At the effective time of the Merger (the "Effective
Time"), each outstanding Share (other than Shares held by shareholders who
perfect their dissent rights under Texas law, Shares owned by the Company as
treasury stock, and Shares owned by Parent or any direct or any indirect wholly
owned subsidiary of Parent or of the Company) will be converted into the right
to receive the Offer Price in cash (the "Per Share Merger Consideration"),
without interest thereon. The Merger Agreement provides that the Purchaser may
assign any or all of its rights and obligations (including the right to purchase
Shares in the Offer) to Parent or any wholly-owned subsidiary of Parent, but no
such assignment shall relieve the Purchaser of its obligations under the Merger
Agreement. The Merger is subject to a number of conditions, including the
approval of the Merger Agreement by shareholders of the Company (the "Company
Shareholder Approval") if required by applicable law. In the event the Purchaser
acquires 90% or more of the outstanding Shares pursuant to the Offer or
otherwise, the Purchaser would be able to effect the Merger pursuant to the
short-form merger provisions of the Texas Business Corporation Act (the "TBCA"),
without prior notice to, or any action by, any other shareholder of the Company.
In such event, the Purchaser could, and intends to, effect the Merger without
prior notice to, or any action by, any other shareholder of the Company. See
Section 12.
Simultaneously with entering into the Merger Agreement, Parent and the
Purchaser entered into a Company Shareholder Agreement (the "Shareholder
Agreement") with each member of the Board of Directors of the Company (the
"Board") and William L. Anton (collectively the "Principal Shareholders"),
pursuant to which each Principal Shareholder has agreed, among other things, to
tender all the Shares that he beneficially owns (including Shares issuable upon
the exercise of Company Stock Options (as defined below)) at a price per Share
equal to the Offer Price. If the Principal Shareholders fail to tender their
Shares pursuant to the Offer, or withdraw their Shares prior to expiration of
the Offer, Parent will have the option to purchase such Shares at the Offer
Price following consummation of the Offer. The Principal Shareholders
collectively own approximately 13.1% of all outstanding Shares (assuming the
exercise of all Company Stock Options held by the Principal Shareholders).
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Shareholders who hold their Shares through their broker or bank should consult
with such institution as to whether there are any fees applicable to a tender of
Shares. Parent will pay all fees and expenses of First Union Securities, Inc.,
which is acting as Dealer Manager (the "Dealer Manager" or "First Union
Securities"), First Union National Bank, which is acting as the Depositary (the
"Depositary"), and D.F. King & Co., Inc., which is acting as Information Agent
(the "Information Agent"), incurred in connection with the Offer. See
Section 16.
1
<PAGE>
The Board has unanimously approved the Offer and the Merger and determined
that the terms of the Offer and the Merger are fair to, and in the best
interests of, the Company's shareholders and unanimously recommends that the
Company's shareholders accept the Offer and tender their Shares pursuant to the
Offer. The factors considered by the Board in arriving at its decision to
approve the Offer and the Merger and to recommend that shareholders of the
Company accept the Offer and tender their Shares are described in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which also is being mailed to shareholders of the Company.
The Company's financial advisor, Frost Securities, Inc. ("Frost
Securities"), has delivered its opinion to the Board dated November 11, 1999
that, as of such date, and subject to the conditions and limitations set forth
therein, the consideration to be received by holders of Shares in the Offer and
the Merger is fair, from a financial point of view. Such opinion is set forth in
full as an exhibit to the Schedule 14D-9.
The Offer is conditioned upon, among other things, (a) there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which would represent at least a majority of all outstanding Shares on a
fully diluted basis (the "Minimum Tender Condition"), (b) any waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), applicable to the purchase of Shares pursuant to the Offer having
expired or been terminated (the "HSR Act Condition") and (c) the period of time
for any applicable review process by the Committee on Foreign Investment in the
United States ("CFIUS") under Section 721(a) of the Defense Production Act of
1950, as amended (the "Exon-Florio Act") having expired and CFIUS not having
taken any action or made any recommendation to the President of the United
States to block or to prevent consummation of the Offer or the Merger (the
"Exon-Florio Act Condition"). The Purchaser reserves the right (subject to the
applicable rules and regulations of the Securities and Exchange Commission (the
"SEC")) to waive or reduce the Minimum Tender Condition and to elect to
purchase, pursuant to the Offer, fewer than the minimum number of Shares
necessary to satisfy the Minimum Tender Condition in the event that either
(a) the Company provides the Purchaser with prior written consent to do so or
(b) the failure of the Minimum Tender Condition to be satisfied results from the
failure of the Principal Shareholders to validly tender their Shares prior to
the expiration of the Offer or from the withdrawal of any of their Shares prior
to the expiration of the Offer. As used herein, Shares on a fully diluted basis
means all outstanding securities entitled generally to vote in the election of
directors of the Company on a fully diluted basis, after giving effect to the
exercise or conversion of all options, rights and securities exercisable or
convertible into such voting securities. See Sections 1 and 14.
The Company has informed the Purchaser that, as of November 11, 1999, there
were 5,116,314 Shares outstanding and 702,727 Shares authorized for issuance
pursuant to the exercise of outstanding options to purchase Shares ("Company
Stock Options"). As a result, as of such date, the Minimum Tender Condition
would be satisfied if the Purchaser acquired 2,909,521 Shares.
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered, including
Shares issuable upon exercise of Company Stock Options (the "Option Shares")
prior to the Expiration Date and not theretofore withdrawn in accordance with
Section 3. The term "Expiration Date" means 12:00 Midnight, New York City time,
on Thursday, December 16, 1999, unless and until the Purchaser shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, will expire.
The Purchaser expressly reserves the right to modify the terms of the Offer,
except that without the consent of the Company, the Purchaser shall not
(a) reduce the number of Shares to be subject to the Offer, (b) reduce the Offer
Price, (c) modify or add to the conditions to the Offer, (d) waive the Minimum
Tender Condition (unless the failure of the Minimum Tender Condition to be
satisfied results from the failure of the Principal Shareholders to validly
tender their Shares pursuant to the Offer, or from the withdrawal of such
Shares) or amend the Offer in any manner materially adverse to the holders of
Shares or (e) except as provided in the next paragraph, extend the Offer if all
the conditions to the Offer have been satisfied.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (a) if at the scheduled initial or any extended expiration date
(whether extended pursuant to this clause (a) or otherwise) of the Offer any of
the conditions to the Offer shall not have been satisfied or waived, extend the
Offer for up to five business days from such scheduled initial or extended
expiration date, (b) extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer, (c) if at the scheduled initial or any extended
expiration date of the Offer all the conditions to the Offer are satisfied and
more than 70% but less than 90% of the outstanding Shares on a fully diluted
basis have been validly tendered and not withdrawn in the Offer, extend the
Offer up to a maximum of 10 additional business days in the aggregate beyond the
latest expiration date that would otherwise be permitted under clause (a) or
(b) of this sentence and (d) extend the Offer for any reason for a period of not
more than three business days beyond the latest expiration date that would
otherwise be permitted under clause (a), (b) or (c) of this sentence.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the SEC, the Purchaser reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or not
any of the events or facts set forth in Section 14 hereof shall have occurred,
to (a) extend the period of time during which the Offer is open and thereby
delay acceptance for payment of and the payment for any Shares, by giving oral
or written notice of such extension to the Depositary and (b) except as set
forth above, amend the Offer in any other respect by giving oral or written
notice of such amendment to the Depositary. Under no circumstances will interest
be paid on the purchase price for tendered Shares, whether or not the Purchaser
exercises its right to extend the Offer.
If by 12:00 Midnight, New York City time, on Thursday, December 16, 1999 (or
any date or time then set as the Expiration Date), any of or all of the
conditions to the Offer have not been satisfied or waived, the Purchaser
reserves the right (but shall not be obligated), subject to the terms and
conditions contained in the Merger Agreement and to the applicable rules and
regulations of the SEC, to (a) terminate the Offer and not accept for payment or
pay for any Shares and return all tendered Shares to tendering shareholders,
(b) except as set forth above with respect to the Minimum Tender Condition,
waive all the unsatisfied conditions and accept for payment and pay for all
Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn, (c) extend the Offer and, subject to the right of shareholders to
withdraw Shares until the Expiration Date, retain the Shares that have been
tendered during the period or periods for which the Offer is extended or
(d) amend the Offer.
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There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement in accordance with the
announcement requirements of Rule 14d-4(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In the case of an extension,
Rule 14e-1(d) under the Exchange Act requires that the announcement be issued no
later than 9:00 a.m., New York City time on the next business day after the
previously schedule Expiration Date. Subject to applicable law (including
Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that any
material change in the information published, sent or given to shareholders in
connection with the Offer be promptly disseminated to shareholders in a manner
reasonably designed to inform shareholders of such change), and without limiting
the manner in which the Purchaser may choose to make any public announcement,
the Purchaser will not have any obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of Shares (whether before or after its acceptance for
payment of Shares) or it is unable to accept for payment or pay for Shares
pursuant to the Offer for any reason, then, without prejudice to the Purchaser's
rights under the Offer (but subject to compliance with the terms of the Merger
Agreement and Rule 14e-1(c) under the Exchange Act, which requires that a tender
offeror pay the consideration offered or return the tendered securities promptly
after termination or withdrawal of a tender offer), the Depositary may
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to exercise, and duly exercise, withdrawal rights as described in
Section 3.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Tender Condition), the Purchaser will
disseminate additional tender offer materials and extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in the percentage of securities sought, would
depend upon the facts and circumstances then existing, including the relative
materiality of the changed terms or information. With respect to a change in
price or a change in the percentage of securities sought, a minimum period of 10
business days is generally required to allow for adequate dissemination to
shareholders.
The Company has provided or will provide the Purchaser with the Company's
shareholder list and security position listing for the purpose of disseminating
the Offer to holders of Shares. This Offer to Purchase, the related Letter of
Transmittal and other relevant materials will be mailed by the Purchaser to
record holders of Shares and will be furnished to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the Company's shareholder list, or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
VALID TENDER. For a shareholder validly to tender Shares (including Option
Shares) pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof), together with any required
signature guarantees and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date and, except in the case of Option Shares,
either certificates for tendered Shares must be received by the Depositary at
one of such addresses or such Shares must be delivered pursuant to the
procedures for book-entry transfer set forth below (and a confirmation of such
delivery, including an Agent's Message (as defined below), must be received by
the Depositary), in each case prior to the
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Expiration Date or (b) the tendering shareholder must comply with the guaranteed
delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account in
accordance with the Book-Entry Transfer Facility's procedures for such transfer.
However, although delivery of Shares may be effected through book- entry
transfer into the Depositary's account at the Book-Entry Transfer Facility, the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message, and any
other required documents, must, in any case, be transmitted to, and received by,
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date, or the tendering shareholder must
comply with the guaranteed delivery procedures described below. The confirmation
of a book-entry transfer of Shares into the Depositary's account at the
Book-Entry Transfer Facility as described above is referred to herein as a
"Book-Entry Confirmation." Delivery of documents to the Book-Entry Transfer
Facility in accordance with the Book-Entry Transfer Facility's procedures does
not constitute delivery to the Depositary.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through the Book-Entry Transfer Facility,
is at the election and risk of the tendering shareholder. Shares will be deemed
delivered only when actually received by the Depositary (including, in the case
of a book-entry transfer, by Book-Entry Confirmation). If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
In all cases, sufficient time should be allowed to ensure timely delivery.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) of Shares (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Guarantee Program or the Stock
Exchange Medallion Program or by any other "eligible guarantor institution", as
such term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal. If the certificates for Shares are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment is
to be made or certificates for Shares not tendered or not accepted for payment
are to be returned to a person other than the registered holder of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed in the manner
described above. See Instructions 1 and 5 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
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Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser, is received by the
Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents are received by the
Depositary within three trading days after the date of execution of
such Notice of Guaranteed Delivery. A "trading day" is any day on which
the New York Stock Exchange (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
such Shares are actually received by the Depositary. Under no circumstances will
any interest be paid on the purchase price of the Shares, regardless of any
extension of the Offer or any delay in making such payment.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
APPOINTMENT. By executing a Letter of Transmittal as set forth above, the
tendering shareholder will irrevocably appoint designees of the Purchaser as
such shareholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after November 11, 1999. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such shareholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
shareholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be deemed
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Shares and other securities or
rights in respect of any annual, special or adjourned meeting of the Company's
shareholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares and other securities or rights, including voting at any
meeting of shareholders.
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TENDER OF SHARES ISSUABLE UPON EXERCISE OF COMPANY STOCK OPTIONS. Holders
of Company Stock Options who wish to tender Shares for which their Company Stock
Options are exercisable may do so either (a) by first exercising their Company
Stock Options and delivering to the Depositary certificates for Shares being so
tendered or (b) by executing a Letter of Transmittal appointing the Depositary
as their agent to exercise if, and only if, the Offer is consummated, their
Company Stock Options for the number of Option Shares to be tendered indicated
in the Letter of Transmittal. In the case of clause (b), only a number of whole
Option Shares may be tendered. The Depositary will, in the event the Offer is
consummated, pay to the Company for each Option Share tendered pursuant to
clause (b) an amount equal to the exercise price of the related exercised
Company Stock Option, and pay to the holder of the Company Stock Option tendered
pursuant to clause (b) for each such Option Share tendered an amount equal to
the Offer Price minus the exercise price of the exercised Company Stock Option.
The amount paid to employees pursuant to clause (b) will be reduced by the
amount of any wage and employment withholding taxes required to be deducted and
withheld under the Internal Revenue Code of 1986, as amended, or under any
provision of state, local or foreign law. In any event, such payments for Option
Shares tendered upon exercise of such Company Stock Options that are accepted
for payment pursuant to the Offer will only be made after the receipt by the
Depositary of such Option Shares as described in Section 4. Holders of Company
Stock Options who elect to tender Option Shares pursuant to clause (b) above by
executing a Letter of Transmittal, in addition to the matters described under
"Appointment" above, will irrevocably appoint the Depositary as such holder's
agent and attorney-in-fact in the manner set forth in the Letter of Transmittal,
with full power of substitution, to the full extent of such holder's rights, to
exercise the Company Stock Options for the Option Shares being tendered. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts for payment Option Shares tendered by a holder of Company Stock Options.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
shareholder whether or not similar defects or irregularities are waived in the
case of other shareholders. No tender of Shares will be deemed to have been
validly made until all defects or irregularities relating thereto have been
cured or waived. None of the Purchaser, Parent, the Depositary, the Information
Agent, the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such shareholder is not subject to backup withholding. If a
shareholder does not provide such shareholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a $50 penalty on such shareholder and payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding of 31%. All
shareholders surrendering Shares pursuant to the Offer should complete and sign
the Substitute Form W-9 included as part of the Letter of Transmittal to provide
the information and certification necessary to avoid backup withholding (unless
an applicable exemption exists and is proved in a manner satisfactory to the
Purchaser and the Depositary). Certain shareholders (including, among others,
all corporations and certain foreign individuals and entities) are not subject
to backup withholding. Noncorporate foreign shareholders should complete and
sign a Form W-8, Certificate of Foreign Status, or a Form W-8BEN, Certificate of
Foreign Status of Beneficial Owner for United States Withholding, copies of
which may be obtained from the Depositary, in order to avoid backup withholding.
See Instruction 9 to the Letter of Transmittal.
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3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after Sunday, January 16, 2000.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn
(or in the case of holders tendering Shares issuable upon the exercise of
Company Stock Options, the name of the registered holder of the Company Stock
Options that have been tendered for the Shares to be withdrawn), the number of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution, the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedure for book-entry transfer as
set forth in Section 2, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and otherwise comply with the Book-Entry Transfer
Facility's procedures. Withdrawals of tenders of Shares may not be rescinded,
and any Shares properly withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date, and not properly withdrawn in
accordance with Section 3, promptly after the Expiration Date. All questions as
to the satisfaction of such terms and conditions will be determined by the
Purchaser in its reasonable discretion, which determination will be final and
binding. See Sections 1 and 14. The Purchaser expressly reserves the right, in
its reasonable discretion, to delay acceptance for payment of or payment for
Shares in order to comply in whole or in part with any applicable law,
including, without limitation, the HSR Act and the Exon-Florio Act. Any such
delays will be effected in compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after termination or withdrawal of a tender offer.
Thyssen-Bornemisza Continuity Trust (the "Trust"), which ultimately controls
Parent, has filed a Notification and Report Form with respect to the Offer under
the HSR Act. The waiting period under the HSR Act with respect to the Offer will
expire at 11:59 p.m., New York City time, on Tuesday, November 30, 1999, the
15th day after the day such form was filed, unless early termination of the
waiting period is granted. However, the Antitrust Division of the Department of
Justice (the "Antitrust Division") or the Federal Trade Commission (the "FTC")
may extend the waiting period by requesting additional information or
documentary material from the Trust. If such a request is made, such waiting
period will expire at 11:59 p.m., New York City time, on the 10th day after
substantial compliance by the Trust with such request. See Section 15.
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The Purchaser and the Company have made a filing under the Exon-Florio Act.
The time period for CFIUS to determine whether to undertake an investigation
will expire on Wednesday, December 15, 1999, the 30th day following the
acceptance of such filing by CFIUS. In the event that CFIUS determines to
undertake an investigation, such investigation must be completed within
forty-five days after such determination. The President has fifteen days
following the presentation by CFIUS of its recommendation to the President in
which to suspend or prohibit the proposed acquisition or seek other appropriate
relief. See Section 15.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation with respect to) such Shares, (b) a Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book- entry
transfer, an Agent's Message, and (c) any other documents required by the Letter
of Transmittal. The per Share consideration paid to any shareholder pursuant to
the Offer will be the highest per Share consideration paid to any other holder
of Shares pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares (which will
include all Shares received and Option Shares tendered upon the exercise of
Company Stock Options exercised at such time). Payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering shareholders
for the purpose of receiving payment from the Purchaser and transmitting payment
to tendering shareholders. Under no circumstances will interest be paid on the
purchase price of any Shares to be paid by the Purchaser, regardless of any
extension of the Offer or any delay in making such payment.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to accept for payment or pay
for Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer (but subject to compliance with the terms of
the Merger Agreement and Rule 14e-1(c) under the Exchange Act, which requires
that a tender offeror pay the consideration offered or return the tendered
securities promptly after termination or withdrawal of a tender offer), the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned without expense to the
tendering shareholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility) as promptly as practicable after the expiration or termination of the
Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to any wholly-owned subsidiary of Parent,
the right to purchase Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain United States Federal
income tax consequences of the receipt of cash by a holder of Shares pursuant to
the Offer or the Merger. Except as specifically noted, this discussion applies
only to a U.S. Holder.
9
<PAGE>
A "U.S. Holder" means a holder of Shares that is (i) a citizen or resident
of the United States, (ii) a corporation or other entity taxable as a
corporation created or organized in or under the laws of the United States or
any political subdivision thereof or therein or (iii) an estate or trust, the
income of which is subject to United States Federal income taxation regardless
of its source. A "Non-U.S. Holder" is a holder of Shares that is not a U.S.
Holder.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for Federal income tax purposes, a U.S. Holder will recognize gain or loss equal
to the difference between the amount of cash received by the U.S. Holder
pursuant to the Offer or the Merger and the aggregate tax basis in the Shares
purchased pursuant to the Offer (or canceled pursuant to the Merger). Gain or
loss will be calculated separately for each block of Shares purchased pursuant
to the Offer (or canceled pursuant to the Merger).
Gain (or loss) will be capital gain (or loss), assuming that such Shares are
held as a capital asset. Capital gains of individuals, estates and trusts
generally are subject to a maximum Federal income tax rate of (i) 39.6% if, at
the time the Purchaser accepts the Shares for payment (or the Shares are
canceled pursuant to the Merger) the shareholder held the Shares for not more
than one year and (ii) 20% if the shareholder held such Shares for more than one
year at such time. Capital gains of corporations generally are taxed at the
Federal income tax rates applicable to corporate ordinary income. In addition,
under present law, the ability to use capital losses to offset ordinary income
is limited.
A shareholder that tenders Shares pursuant to the Offer or surrenders Shares
pursuant to the Merger may be subject to 31% backup withholding unless the
shareholder provides its TIN and certifies, under penalties of perjury, that
such number is correct (or properly certifies that it is awaiting a TIN) and
that such shareholder is not subject to backup withholding, or unless an
exemption applies. A shareholder that does not furnish its TIN may be subject to
a penalty imposed by the IRS. See "--Backup Withholding" under Section 2.
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the shareholder upon filing an income tax return.
The foregoing discussion is not applicable with respect to Shares received
pursuant to the exercise of Company Stock Options or otherwise as compensation.
It may not be applicable with respect to holders of Shares who are subject to
special tax treatment under the Code, such as Non-U.S. Holders, life insurance
companies, tax-exempt organizations, financial institutions, dealers in
securities or currencies, persons who hold Shares as a position in a "straddle"
or as part of a "hedging" or "conversion" transaction and persons that have a
functional currency other than the U.S. dollar, and may not apply to a holder of
Shares in light of individual circumstances. Shareholders are urged to consult
their own tax advisors to determine the particular tax consequences to them
(including the application and effect of any state, local or foreign income and
other tax laws) of the Offer and the Merger.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares have been listed on the NYSE since March 31, 1999 under the
symbol "VTX". The Shares were previously quoted on the Nasdaq National Market
under the symbol "VTEX".
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The following table sets forth the range of high and low sale prices per
Share as reported on the NYSE or the Nasdaq National Market for the fiscal
periods indicated.
<TABLE>
<CAPTION>
PRICE OF SHARES
-------------------
HIGH LOW
-------- --------
<S> <C> <C>
FISCAL YEAR
1998
First Quarter (ended January 2, 1998)..................... $26.6250 $23.0000
Second Quarter (ended April 3, 1998)...................... 26.6875 24.1250
Third Quarter (ended July 3, 1998)........................ 26.7500 21.0625
Fourth Quarter (ended September 30, 1998)................. 24.0000 18.0000
1999
First Quarter (ended January 1, 1999)..................... $20.5000 $13.0000
Second Quarter (ended April 2, 1999)...................... 18.3750 14.0000
Third Quarter (ended July 2, 1999)........................ 16.5000 11.8125
Fourth Quarter (ended September 30, 1999)................. 13.8750 10.7500
2000
First Quarter (through November 16, 1999)................. $21.1250 $11.1875
</TABLE>
On November 11, 1999, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the NYSE was $14.8125 per Share. The Offer Price of
$22.00 represents a 48.5% premium over this closing price. On November 17, 1999,
the last full trading day before the commencement of the Offer, the last
reported sales price of the Shares on the NYSE was $20.9375 per Share.
The Purchaser has been advised by the Company that the Company has never
paid any cash dividends on the Shares.
Shareholders are urged to obtain current market quotations for the Shares.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; CONTINUED LISTING ON THE
NYSE; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
MARKET FOR SHARES. The purchase of Shares pursuant to the Offer will reduce
the number of holders of Shares and the number of Shares that might otherwise
trade publicly and could adversely affect the liquidity and market value of the
remaining Shares held by the public.
CONTINUED LISTING ON THE NYSE. Depending upon the number of Shares
purchased pursuant to the Offer, the Shares may no longer meet the requirements
of the NYSE for continued listing. According to the NYSE's published guidelines,
the NYSE would consider delisting the Shares if, among other things, the record
holders of at least 100 Shares were to fall below 1,200 and the average monthly
trading volume of the Shares were to fall below 100,000, or the number of
publicly held Shares (exclusive of management or other concentrated holdings)
were to fall below 600,000 and the aggregate market value of publicly held
Shares were to not exceed $8,000,000. According to the Company, as of
November 11, 1999, there were approximately 2,700 holders of record of Shares
and there were 5,116,314 Shares outstanding. If, as a result of the purchase of
Shares pursuant to the Offer or otherwise, the Shares no longer meet the
requirements of the NYSE for continued listing and the Shares are no longer
listed, the market for Shares would be adversely affected.
In the event that the Shares no longer meet the requirements of the NYSE for
continued listing, it is possible that the Shares would continue to trade in the
over-the-counter market and that price quotations would be reported by other
sources. The extent of the public market for the Shares and the availability of
such quotations would, however, depend upon the number of holders of Shares
remaining at such time, the interest in maintaining a market in Shares on the
part of securities firms, the possible termination of registration of the Shares
under the Exchange Act, as described below, and other factors.
11
<PAGE>
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the SEC if the Shares are not
listed on a national securities exchange, quoted on an automated inter-dealer
quotation system or held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its shareholders and to
the SEC and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
shareholders' meetings and the related requirement of furnishing an annual
report to shareholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), may be
impaired or eliminated. The Purchaser intends to seek to cause the Company to
apply for termination of registration of the Shares under the Exchange Act as
soon after the completion of the Offer as the requirements for such termination
are met.
If public quotation and registration of the Shares is not terminated prior
to the Merger, then the Shares will no longer be quoted and the registration of
the Shares under the Exchange Act will be terminated following the consummation
of the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers. In any event, the Shares will cease to be "margin securities" if
registration of the Shares under the Exchange Act is terminated.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
According to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1998, the Company is a Texas corporation which designs,
develops, manufactures and supports an extensive line of precision products for
satellite and deep space communications applications. These products include
sophisticated earth station antennas ranging in size from 1.2 to 34 meters in
diameter (which operate in various relevant frequency bands, including L-, C-,
X-, Ku-, and Ka-bands, and are available for commercial and military
applications), integrated communications network systems, and optical and radio
telescopes. The Company also manufactures state-of-the-art control systems
designed to manage and monitor the operation, guidance, tracking, and telemetry
capabilities of communications network systems as well as individual antennas,
related electronic components used to amplify radio frequency signals, and
precision waveguide components for application as component parts of
communications systems. The Company also provides custom engineering, turnkey
field installation, site testing and after-sale maintenance services, and spare
and replacement parts in support of its products.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries. The information for the fiscal
years ended September 30, 1997 and 1998 is excerpted from the information
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998. The information for the fiscal year ended September 30, 1999
is unaudited and was provided by the Company. More comprehensive financial
information is included in such reports and other documents filed by the Company
with the SEC, and the following summary is qualified in its entirety by
reference to such reports and such other documents and all the financial
information (including any
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<PAGE>
related notes) contained therein. Such reports and such other documents should
be available for inspection and copies thereof should be obtainable in the
manner set forth below under "Available Information".
VERTEX COMMUNICATIONS CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------
1999 1998 1997
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Sales....................................................... $116,936 $130,017 $ 92,433
Cost of sales............................................... 93,321 92,772 65,785
Research and development.................................... 6,600 5,968 3,775
Marketing................................................... 10,496 6,915 5,050
General and administrative.................................. 10,567 10,916 7,992
Impairment of goodwill...................................... 4,800 -- --
Operating income (loss)..................................... (8,848) 13,446 9,831
Net income (loss)........................................... (6,721) 10,086 7,175
Net income (loss) per common share--basic................... (1.32) 1.98 1.54
Net income (loss) per common share--diluted................. (1.32) 1.90 1.47
Total assets................................................ 103,131 110,771 100,493
Total liabilities........................................... 26,499 26,561 27,003
Total shareholders' equity.................................. 76,632 84,210 73,490
</TABLE>
AVAILABLE INFORMATION. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's shareholders and filed with the SEC. Such reports,
proxy statements and other information should be available for inspection at the
public reference facilities of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the SEC located at Seven World Trade
Center, 13th Floor, New York, NY 10049 and Citicorp Center, 500 West Madison
Street (Suite 1400), Chicago, IL 60661. Copies of such information should be
obtainable, by mail, upon payment of the SEC's customary charges, by writing to
the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such material should also be available for inspection at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. The SEC
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
Such reports, proxy and information statements and other information may be
found on the SEC's web site address, http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the SEC and other publicly available
information. Although the Purchaser and Parent do not have any knowledge that
any such information is untrue, none of the Purchaser or Parent takes any
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information.
13
<PAGE>
CERTAIN COMPANY PROJECTIONS. During the course of discussions between
representatives of Parent and the Company, the Company provided Parent or its
representatives with certain non-public business and financial information about
the Company. This information included a projected net income for the Company of
$4.2 million in fiscal year 2000.
The Company has advised the Purchaser and Parent that it does not as a
matter of course make public any projections as to future performance or
earnings, and the projections set forth above are included in this Offer to
Purchase only because the information was provided to Parent. The projections
were not prepared with a view to public disclosure or compliance with the
published guidelines of the SEC or the guidelines established by the American
Institute of Certified Public Accountants regarding projections or forecasts.
The Company's internal operating projections are, in general, prepared solely
for internal use and capital budgeting and other management decisions and are
subjective in many respects and thus susceptible to various interpretations and
periodic revision based on actual experience and business developments. The
projections were based on a number of assumptions that are beyond the control of
the Company, the Purchaser or Parent or their respective financial advisors,
including economic forecasting (both general and specific to the Company's
business), which is inherently uncertain and subjective. None of the Purchaser
or Parent or their respective financial advisors assumes any responsibility for
the accuracy of any of the projections. The inclusion of the foregoing
projections should not be regarded as an indication that the Company, the
Purchaser or Parent or any other person who received such information considers
it an accurate prediction of future events. None of the Company, the Purchaser
or Parent intends to update, revise or correct such projections if they become
inaccurate (even in the short term).
9. CERTAIN INFORMATION CONCERNING THE PURCHASER, PARENT AND TBG HOLDINGS
The Purchaser, a Texas corporation, was recently incorporated for the
purpose of acting as an acquisition vehicle. It has not conducted any unrelated
activities since its incorporation. The principal executive office of the
Purchaser is located at 565 Fifth Avenue, 17th Floor, New York, NY 10017. All
outstanding shares of common stock of Purchaser are owned by Parent.
The principal executive office of Parent, a Delaware corporation, is located
at 565 Fifth Avenue, 17th Floor, New York, NY 10017. Parent is a leading global
supplier of satellite and wireless communications products and services for
video, voice and data. The company is comprised of three groups: RSI, Prodelin
and CSA Wireless Communications. RSI offers a full range of earth station and
base station communications products and services. Prodelin offers VSAT
satellite antennae. CSA Wireless Communications offers wireless antenna
products. TBG Holdings indirectly owns 80% of the outstanding shares of common
stock of Parent.
The principal office of TBG Holdings, a Netherlands Antilles corporation, is
located at 17 Theaterstraat, Curacao, Netherlands Antilles. The principal
business of TBG Holdings is holding operating companies, management companies
and investment companies worldwide. Thyssen-Bornemisza Continuity Trust, a
Bermuda trust, is the sole shareholder of TBG Holdings and ultimately controls
Parent.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, Parent and TBG Holdings are set forth in
Schedule I hereto.
TBG Holdings, through its subsidiaries Thybo Gamma Ltd. and Vulcan
Securities Limited, both Bermuda corporations, beneficially owns 157,100 Shares,
none of which were acquired during the past 60 days. Except as described in this
Offer to Purchase, none of the Purchaser, Parent or TBG Holdings (together, the
"Corporate Entities") or, to the best knowledge of the Corporate Entities, any
of the persons listed in Schedule I or any associate or majority-owned
subsidiary of the Corporate Entities or any of the persons so listed,
beneficially owns any equity security of the Company, and none of the Corporate
Entities or, to the best knowledge of the Corporate Entities, any of the other
persons referred to above, or
14
<PAGE>
any of the respective directors, executive officers or subsidiaries of any of
the foregoing, has effected any transaction in any equity security of the
Company during the past 60 days. See Section 11.
Except as described in this Offer to Purchase, (a) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the SEC
and (b) none of the Corporate Entities or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I has any contract,
arrangement, understanding or relationship with any person with respect to any
securities of the Company.
Because the only consideration in the Offer and Merger is cash and the Offer
covers all outstanding Shares, and in view of the absence of a financing
condition and the amount of consideration payable in relation to the financial
capability of Parent and its affiliates, the Purchaser believes the financial
condition of Parent and its affiliates is not material to a decision by a holder
of Shares whether to sell, tender or hold Shares pursuant to the Offer.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the amount of funds required to purchase all
outstanding Shares pursuant to the Offer, to pay cash to holders of Stock
Options pursuant to the Merger Agreement and to pay fees and expenses related to
the Offer will be approximately $129 million. The Purchaser will obtain such
funds directly or indirectly from Parent. Such funds will be obtained by Parent
from existing cash resources or from borrowings pursuant to the Credit Facility
dated as of June 25, 1998 (the "Credit Facility Agreement") among Parent,
certain of its subsidiaries, First Union National Bank and certain other
financial institutions. Parent expects that the Credit Facility Agreement will
be amended in connection with the Merger although the terms of such amendment
have not yet been negotiated.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
On January 8, 1997, Jack Haegele, the Chief Executive Officer and a director
of Parent, met with J. Rex Vardeman, Chairman of the Board, President and Chief
Executive Officer of the Company, in Kilgore, Texas to discuss a possible
acquisition of the Company by Parent. This meeting was followed by a phone call
by Mr. Haegele on January 24, 1997 to further discuss this matter.
No further discussions between the Company and Parent regarding a possible
acquisition occurred until April 19, 1999, Mr. Haegele and Mr. Vardeman met
again in Las Vegas, Nevada to discuss the possible acquisition of the Company by
Parent.
On August 25, 1999, Mr. Haegele and Gary Kanipe, President of RSI Products
Inc., a subsidiary of Parent, met with Mr. Vardeman in Dallas, Texas to make a
proposal to acquire the Company and to discuss a price range for the
transaction.
On September 28, 1999, the Company entered into a confidentiality agreement
with Parent. Parent then began its due diligence review of the Company's
business and financial condition. Concurrently with its due diligence review,
Parent engaged in various discussions and meetings with management and employees
of the Company, its counsel and Frost Securities to negotiate the terms of the
Merger Agreement and the Shareholder Agreement. Parent's counsel provided an
initial draft of the proposed merger agreement to the Company's counsel on
October 14, 1999.
The Supervisory Board of TBG Holdings unanimously approved the proposed
transaction at a meeting on October 8, 1999. The Board of Directors of Parent
approved the proposed transaction by unanimous written consent on the same day.
These approvals were subject to the satisfactory completion of Parent's due
diligence review of the Company and negotiation of definitive agreements.
15
<PAGE>
On November 4, 1999, the Board met to discuss the proposed Merger. On
November 4, 1999, Frost Securities made a presentation to the Board regarding
the fairness from a financial point of view of the proposed per Share
consideration to be received by holders of Shares in the Offer and the Merger
and counsel to the Company explained in detail the terms of the current draft of
the merger agreement and the shareholder agreement. On November 10, 1999, Parent
completed its due diligence review of the Company and informed representatives
of the Company that Parent was willing to proceed with the transaction at a
price of $22.00 per Share. On November 11, 1999 Frost Securities delivered its
opinion to the Board that, as of such date, and subject to the conditions and
limitations set forth therein, the consideration to be received by holders of
Shares in the Offer and the Merger is fair, from a financial point of view. On
November 11, 1999, the Board of Directors of the Company unanimously approved
the Merger Agreement, the Shareholder Agreement, the Offer and the Merger.
The parties executed and delivered the Merger Agreement and the Shareholder
Agreement on the evening of November 11, 1999 and publicly announced the
transaction before the NYSE opened for trading on the morning of November 12,
1999.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE SHAREHOLDER AGREEMENT; PLANS
FOR THE COMPANY
PURPOSE. The purpose of the Offer is to acquire control of and the entire
equity interest in the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
THE MERGER AGREEMENT. The Merger Agreement provides that following the
satisfaction of the conditions described below under "Conditions to the Merger",
the Purchaser will be merged with and into the Company, and each outstanding
Share (other than Shares held by shareholders who perfect their dissent rights
under Texas law, Shares owned by the Company as treasury stock and Shares owned
by Parent or any direct or indirect wholly owned subsidiary of Parent or of the
Company) will be converted into the right to receive the Per Share Merger
Consideration, without interest.
(1) VOTE REQUIRED TO APPROVE MERGER. The TBCA requires, among other things,
that the adoption of any plan of merger or consolidation of the Company be
approved by the Board and generally by two-thirds of the holders of the
Company's outstanding voting securities. Article 2.28D of the TCBA, however,
provides that a corporation's articles of incorporation may provide that the act
of the shareholders on any matter for which the affirmative vote of the holders
of a specified portion of the shares entitled to vote is required by the TBCA
shall be the affirmative vote of the holders of a specified portion, but not
less than a majority of the shares entitled to vote on the matter, rather than
the affirmative vote otherwise required by the TBCA. Under the Company's
articles of incorporation, however, only a majority vote is required to approve
the Merger. The Board has approved the Offer and the Merger. Consequently, the
only additional action of the Company necessary to effect the Merger is approval
by such shareholders if the "short-form" merger procedure described below is not
available. If the Purchaser acquires, through the Offer or otherwise, voting
power with respect to at least a majority of the outstanding Shares (which would
be the case if the Minimum Tender Condition were satisfied and the Purchaser
were to accept for payment Shares tendered pursuant to the Offer), it would have
sufficient voting power to effect the Merger without the vote of any other
shareholder of the Company. However, Article 5.16 of the TBCA also provides that
if a purchaser owns at least 90% of each class of outstanding shares (pursuant
to the Offer or otherwise), the purchaser, by action of the board of directors
of the purchaser and without the action or vote by the shareholders of either
corporation, can effect a short-form merger with the target company.
Accordingly, if, as a result of the Offer or otherwise, the Purchaser acquires
or controls the voting power of at least 90% of the outstanding Shares, the
Purchaser could, and intends to, effect the Merger without prior notice to, or
any action by, any other shareholder of the Company.
(2) CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THE MERGER AGREEMENT. The
respective obligations of each party to effect the Merger under the Merger
Agreement is subject to the satisfaction at or prior to the
16
<PAGE>
Closing Date of the following conditions, any or all of which may be waived by
Parent and the Purchaser, in whole or in part, to the extent permitted by
applicable law: (a) the Merger Agreement shall have been approved by the
requisite vote of the shareholders of the Company, if required by applicable
law; (b) the waiting period (and any extension thereof) applicable to the Merger
under the HSR Act shall have been terminated or shall have expired, and the
period of time for any applicable review process by CFIUS under the Exon-Florio
Act shall have expired and CFIUS shall not have taken any action or made any
recommendation to the President of the United States to block or prevent the
consummation of the Offer or the Merger; (c) any consents, approvals and filings
under any foreign antitrust Law, the absence of which would prohibit the
consummation of the Merger, shall have been obtained or made; (d) no temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect and any party
asserting this condition shall have used all reasonable efforts to prevent the
entry of any such injunction or other order and to appeal as promptly as
possible any such injunction or other order that may be entered; and (e) the
Purchaser shall have accepted for payment and paid for all Shares validly
tendered and not withdrawn pursuant to the Offer; PROVIDED that this condition
shall be deemed satisfied with respect to the obligation of the Purchaser and
Parent to effect the Merger if the Purchaser fails to accept for payment or pay
for Shares pursuant to the Offer in violation of the Merger Agreement.
(3) TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be
terminated and the Offer and the Merger may be abandoned at any time
(notwithstanding approval of the Merger by the shareholders of the Company)
prior to the Effective Time provided that if the Shares are accepted for payment
pursuant to the Offer, neither Parent nor the Purchaser may terminate this
Agreement or abandon the Merger except pursuant to the following clause (a),
(b)(i) or (b)(iii): (a) by mutual written consent of Parent, the Purchaser and
the Company; (b) by either the Parent or the Company (i) if any court of
competent jurisdiction or other governmental authority issues an order, decree
or ruling or takes any other action permanently enjoining, restraining or
otherwise prohibiting the Merger, and such order, decree or ruling or other
action shall have become nonappealable; (ii) if (A) as a result of the failure
of any of the conditions to the Offer, (1) the Purchaser shall have failed to
commence the Offer within 20 days following the date of the Merger Agreement or
(2) the Offer shall have terminated or expired in accordance with its terms
without the Purchaser having purchased any Shares pursuant to the Offer or
(B) Purchaser shall not have accepted for payment any Shares pursuant to the
Offer prior to March 11, 2000 (the "Termination Date"), PROVIDED that the right
to terminate pursuant to clause (b)(ii) shall not be available (x) to the
Company as a result of the occurrence of any event set forth in paragraph (d)
under Section 14 or (y) to any party whose failure to fulfill any of its
obligations under the Merger Agreement or the Shareholder Agreement (each a
"Transaction Agreement" and together the "Transaction Agreements") results in
the failure of any condition set forth in Section 14 or if the failure of such
condition results from facts or circumstances that constitute a breach of any
representation or warranty of such party contained in any Transaction Agreement;
or (iii) if, upon a vote at a duly held meeting to obtain the Company
Shareholder Approval, such approval is not obtained, PROVIDED, HOWEVER, that the
Merger Agreement may not be terminated by Parent pursuant to this
clause (b)(iii) if Parent does not cause all Company Shares acquired pursuant to
the Offer or otherwise owned by the Purchaser or any other subsidiary of Parent
to be voted in favor of the Merger Agreement; (c) by Parent, if the Company
breaches or fails to perform in any material respect any of its representations,
warranties or covenants contained in any Transaction Agreement, which breach or
failure to perform (i) would give rise to the failure of a condition set forth
in Section 14 and (ii) cannot be or has not been cured within 30 days after
written notice to the Company of such breach; (d) by Parent or the Purchaser if
either Parent or the Purchaser is entitled to terminate the Offer as a result of
the occurrence of any event set forth in paragraph (d) of Section 14; or (e) by
the Company if the Board withdraws or modifies its approval or recommendation of
the Transaction Agreements, the Offer or the Merger in the circumstances
described below under the caption "Company Takeover Proposals"; PROVIDED that,
in order for termination pursuant to this clause (e)
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to be deemed effective, the Company shall have complied with all of its
obligations as described below under "Company Takeover Proposals", including the
notice provisions therein, and with all applicable requirements described below
under "Fees and Expenses", including payment of the Termination Fee.
(4) COMPANY TAKEOVER PROPOSALS. Pursuant to the Merger Agreement, the
Company was required to, and to cause its Representatives (as defined below) to,
cease immediately all current discussions and negotiations regarding any
proposal that constitutes, or may reasonably be expected to lead to, a Company
Takeover Proposal (as defined below). Further, the Company has agreed that it
will not, and will not authorize or permit any of its subsidiaries, or any
officer, director, employee, investment banker, financial advisor, attorney,
accountant or other advisor or representative (collectively, "Representatives")
of the Company or any of its subsidiaries to, (i) directly or indirectly
solicit, initiate or encourage the submission of any Company Takeover Proposal,
(ii) enter into any agreement with respect to any Company Takeover Proposal or
(iii) directly or indirectly participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Company Takeover
Proposal; PROVIDED, HOWEVER, that prior to the earlier to occur of acceptance
for payment of Shares pursuant to the Offer and approval of the Merger Agreement
by the Company's shareholders, the Company may, to the extent that a failure to
do so would violate the fiduciary obligations of the Company Board under
applicable law, as determined in good faith by a majority of the Disinterested
Directors (as defined below) based on the advice of outside counsel, in response
to a Superior Company Proposal (as defined below) that was not solicited by the
Company or its Representatives and that did not otherwise result from a breach
or a deemed breach of this provision, and subject to compliance with the notice
requirements described below, (x) furnish information with respect to the
Company to the person making such Superior Company Proposal pursuant to a
confidentiality agreement not less restrictive of the other party than the
confidentiality agreement between the Company and Parent and (y) participate in
discussions or negotiations regarding such Superior Company Proposal.
"Disinterested Director" means, with respect to any Company Takeover Proposal,
any member of the Company Board that is not an affiliate or Representative of
the person making such Company Takeover Proposal. Without limiting the
foregoing, any violation of the restrictions set forth in the preceding sentence
by any Representative or affiliate of the Company or any subsidiary of the
Company, whether or not such person is purporting to act on behalf of the
Company or any subsidiary of the Company or otherwise, would be deemed to be a
breach of the Merger Agreement by the Company.
The Merger Agreement provides further that, except as described below,
neither the Company, nor the Board nor any committee thereof shall (a) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent or the Purchaser, the approval or recommendation by the Company Board or
any such committee of the Transaction Agreements, the Offer or the Merger,
(b) approve or cause the Company or any subsidiary of the Company to enter into
any letter of intent, agreement in principle, acquisition agreement or similar
agreement (each, an "Acquisition Agreement") relating to any Company Takeover
Proposal or (c) approve or recommend, or propose publicly to approve or
recommend, any Company Takeover Proposal. Notwithstanding the foregoing, if,
prior to the earlier to occur of acceptance for payment of Shares pursuant to
the Offer and approval of the Merger Agreement by the shareholders of the
Company, the Board receives a Superior Company Proposal which was not solicited
by the Company and which did not otherwise result from a breach of the
non-solicitation provisions of the Merger Agreement, and the Board determines in
good faith, based on the advice of outside counsel, that the failure to do so
would violate its fiduciary obligations under applicable law, the Board may
withdraw or modify its approval or recommendation of the Transaction Agreements,
the Offer or the Merger; PROVIDED that such determination shall be made at a
time that is after the third business day following the receipt by Parent of
written notice advising Parent that the Board is prepared to accept a Superior
Company Proposal, specifying the material terms and conditions of such Superior
Company Proposal and identifying the person making such Superior Company
Proposal.
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In addition, under the Merger Agreement, the Company has agreed to promptly
advise Parent, orally and in writing, of any Company Takeover Proposal or any
inquiry with respect to, or that could reasonably be expected to lead to, any
Company Takeover Proposal (including any change to the terms of any such Company
Takeover Proposal or inquiry) and the identity of the person making any such
Company Takeover Proposal or inquiry. The Company shall (i) keep Parent fully
informed of the status of any such Company Takeover Proposal or inquiry
(including any change to the terms of any such Company Takeover Proposal or
inquiry) and (ii) provide to Parent copies of all correspondence and other
written material sent or provided by any third party to the Company, or by the
Company to any third party, in connection with any Company Takeover Proposal, as
soon as practicable after receipt or delivery thereof.
The Merger Agreement provides that the provisions described above will not
prohibit the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or making any
disclosure to the Company's shareholders if, in the good faith judgment of the
Company Board, based on the advice of outside counsel, failure so to disclose
would constitute a violation of applicable law; PROVIDED, HOWEVER, that neither
the Company, nor the Board nor any committee thereof shall withdraw or modify,
or propose publicly to withdraw or modify, its position with respect to the
Transaction Agreements, the Offer or the Merger (unless it is permitted to do so
as described above) or approve or recommend, or propose publicly to approve or
recommend, a Company Takeover Proposal.
"Company Takeover Proposal" means any inquiry, proposal or offer for (a) a
merger, consolidation, dissolution, recapitalization, liquidation or other
business combination involving the Company or any subsidiary of the Company,
(b) the acquisition by any person in any manner, directly or indirectly, of a
number of shares of any class of equity securities of the Company or any
subsidiary of the Company equal to or greater than 20% of the number of such
shares outstanding before such acquisition or (c) the acquisition by any person
in any manner, directly or indirectly, of assets that constitute 20% or more of
the net revenues, net income or assets of the Company or any subsidiary of the
Company, in each case other than the Offer, the Merger and the other
transactions contemplated by the Transaction Agreements (the "Transactions") and
other than the sale of Vertex Satcom Systems, Inc., a subsidiary of the Company,
on terms approved by Parent (the "Satcom Sale") (the transactions referred to in
clauses (a), (b) and (c) being referred to herein as "Company Takeover
Transactions").
"Superior Company Proposal" means any bona fide proposal made by a third
party to acquire substantially all the equity securities or assets of the
Company, pursuant to a tender or exchange offer, merger, consolidation,
liquidation or dissolution, recapitalization, sale of all or substantially all
its assets or otherwise, (a) on terms which the Board determines in its good
faith judgment to be superior from a financial point of view to the holders of
Shares than the Transactions (based on the written opinion, with only customary
qualifications, of the Company's independent financial advisor, which has been
provided to Parent), taking into account all the terms and conditions of such
proposal, the Transaction Agreements and any proposal by Parent to amend the
terms of the Transactions, (b) for which financing, to the extent required, is
then committed or which, in the good faith judgment of the Board, is reasonably
capable of being obtained by such third party and (c) for which, in the good
faith judgment of the Board, no regulatory approvals are required, including
antitrust approvals, that could not reasonably be expected to be obtained.
(5) FEES AND EXPENSES. Except with respect to the circumstances described
below, the Merger Agreement provides that each of Parent, the Purchaser and the
Company will bear its own fees and expenses in connection with the Merger
Agreement regardless of whether the Merger is consummated.
The Merger Agreement provides that in the event that (i) (A) a Company
Takeover Proposal shall have been made known to the Company or shall have been
made directly to its shareholders or any person shall have announced an
intention (whether or not conditional) to make a Company Takeover Proposal,
(B) thereafter the Merger Agreement is terminated as a result of the failure of
the conditions to the Offer, the failure to receive the Company Shareholder
Approval or an uncured material breach by the Company
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and (C) within 12 months after such termination a Company Takeover Transaction
is consummated or the Company (or one or more of the Company's subsidiaries
representing in the aggregate 20% or more of the net revenues, net income or the
assets of the Company and the Company's subsidiaries taken as a whole), enters
into an Acquisition Agreement with respect to, approves or recommends a Company
Takeover Transaction or (ii) the Merger Agreement is terminated by the Company
after receiving a Superior Company Proposal as described above or by Parent or
the Purchaser as a result of the failure of the conditions set forth in
paragraph (d) of Section 14, then the Company must promptly, but in no event
later than, in the case of clause (i), the date of the earliest to occur of such
consummation, approval, or recommendation of a Company Takeover Transaction or
the entering into of such Acquisition Agreement, or in the case of clause (ii),
the date of such termination, pay to Parent a fee equal to $3.84 million (the
"Termination Fee"), payable by wire transfer of same day funds. If the Company
is required to pay to Parent a fee pursuant to either of the above clauses, the
Company will also reimburse Parent and the Purchaser for all their out-of-pocket
expenses actually incurred in connection with the Transaction Agreements, the
Offer, the Merger and the other Transactions in an amount not to exceed
$640,000. Such reimbursement shall be paid upon demand following termination of
the Merger Agreement. The payment of any amounts due pursuant to this provision
do not constitute the exclusive remedy of Parent and the Purchaser under the
Transaction Agreements. Without limiting the generality of the foregoing, in the
event of a breach or deemed breach by the Company of the no solicitation
provisions of the Merger Agreement, Parent and the Purchaser will be entitled to
the other remedies contained in the Merger Agreement, including an injunction,
and all other remedies available at law or in equity to which Parent and the
Purchaser are entitled.
(6) CONDUCT OF BUSINESS OF THE COMPANY. Pursuant to the Merger Agreement,
the Company has agreed that from the date of the Merger Agreement to the
Effective Time, unless otherwise expressly permitted by the Merger Agreement or
agreed to in writing by Parent, it will and will cause each of its subsidiaries
to: (a) conduct its business diligently and in the usual, regular and ordinary
course of business and in substantially the same manner as previously conducted;
(b) use all reasonable efforts to preserve intact its current business
organization, keep available the services of its current officers and employees
and keep its relationships with customers, suppliers and others having business
dealings with it; (c) maintain its assets in as good working order and condition
as at present, ordinary wear and tear excepted, consistent with past practices;
and (d) maintain in full force and effect current insurance policies or other
comparable insurance coverage with respect to the assets and potential
liabilities thereof.
(7) PROHIBITED ACTIONS BY THE COMPANY. Under the Merger Agreement, the
Company has agreed that, except as expressly permitted by the Merger Agreement
or otherwise agreed to in writing by Parent, from the date of the Merger
Agreement until the Effective Time, it will not, and will not permit any of its
subsidiaries to, make any material change in personnel, operations or finance,
or do any of the following without the prior written consent of Parent: (i) (A)
declare, set aside or pay any dividends on, or make any other distributions in
respect of, any of its capital stock, other than dividends and distributions by
a direct or indirect wholly owned subsidiary of the Company to its parent,
(B) split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any subsidiary
of the Company or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities other than pursuant to
the provisions of the Merger Agreement relating to Company Stock Options and the
TIW Systems, Inc. Stock Bonus Plan; (ii) issue, deliver, sell, grant, pledge or
otherwise encumber or subject to any lien (A) any shares of its capital stock,
(B) any voting securities, (C) any securities convertible into or exchangeable
for, or any options, warrants or rights to acquire, any such shares, voting
securities or convertible or exchangeable securities or (D) any "phantom" stock,
"phantom" stock rights, stock appreciation rights or stock-based performance
units, other than the issuance of Shares upon the exercise of Company Stock
Options outstanding on the date of the Merger Agreement and in accordance with
their present terms; (iii) amend the Company charter, the Company by-laws or
other comparable charter or organizational
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documents other than pursuant to the Merger Agreement; (iv) acquire or agree to
acquire (A) by merging or consolidating with, or by purchasing the assets of, or
by any other manner, any equity interest in or business or any corporation,
partnership, company, limited liability company, joint venture, association or
other business organization or division thereof or (B) any assets that,
individually, are in excess of $100,000 or, in the aggregate, are in excess of
$300,000, except purchases of inventory in the ordinary course of business
consistent with past practice; (v) (A) grant to any officer or director of the
Company or any subsidiary of the Company any increase in compensation, except in
the ordinary course of business consistent with past practice or to the extent
required under employment agreements filed as exhibits to documents filed by the
Company with the SEC and publicly available prior to the date of the Merger
Agreement (the "Filed Company SEC Documents"), (B) grant to any employee,
officer or director of the Company or any subsidiary of the Company any increase
in severance or termination pay, except to the extent required under any
agreement filed as an exhibit to the Filed Company SEC Documents,
(C) establish, adopt, enter into or amend any Company benefit agreement,
(D) establish, adopt, enter into or amend in any material respect any collective
bargaining agreement or Company benefit plan or (E) take any action to
accelerate any rights or benefits, or make any material determinations not in
the ordinary course of business consistent with past practice, under any
collective bargaining agreement or Company benefit plan or Company benefit
agreement, other than pursuant to the provisions of the Merger Agreement
relating to Company Stock Options and the TIW Systems, Inc. Stock Bonus Plan;
(vi) make any change in accounting methods, principles or practices materially
affecting the reported consolidated assets, liabilities or results of operations
of the Company, except insofar as may have been required by a change in
generally accepted accounting principles; (vii) sell, lease (as lessor), license
or otherwise dispose of or subject to any lien any properties or assets that are
material, individually or in the aggregate, to the Company and its subsidiaries,
taken as a whole, except (A) sales of inventory and excess or obsolete assets in
the ordinary course of business consistent with past practice and (B) the Satcom
Sale; (viii) (A) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any subsidiary of
the Company, guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the ordinary
course of business consistent with past practice, or (B) make any loans,
advances or capital contributions to, or investments in, any other person, other
than to or in the Company or any direct or indirect wholly owned subsidiary of
the Company; (ix) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $100,000 or, in the aggregate,
are in excess of $300,000 in any calendar quarter; (x) make or change any
material tax election or settle or compromise any material tax liability or
refund; (xi) (A) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the unaudited financial statements of the Company for its
fiscal year ended September 30, 1999 (the "1999 Company Financial Statements")
or incurred since the date of such financial statements in the ordinary course
of business consistent with past practice, (B) cancel any indebtedness that is
material, individually or in the aggregate, to the Company and its subsidiaries
taken as a whole, or waive any claims or rights of substantial value or
(C) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any
subsidiary of the Company is a party; (xii) adopt a plan of complete or partial
liquidation or resolutions providing for or authorizing a liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization other than for the liquidation of any subsidiary of the Company
into the Company; (xiii) make or renew, extend, amend, modify, or waive any
material provisions of any contract or commitment or relinquish or waive any
material contract rights or agree to the termination of any material contract,
except in the ordinary course of business consistent with prior practice;
(xiv) institute, settle, or agree to settle any action or proceeding pending
before any
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court or other governmental entity; or (xv) authorize, or commit or agree to
take, any of the foregoing actions.
(8) DIRECTORS. The Merger Agreement provides that, promptly upon the
acceptance for payment of, and payment by the Purchaser for, any Shares pursuant
to the Offer, the Purchaser will be entitled to designate such number of
directors on the Board as will give the Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board equal to at least
that number of directors, rounded up to the next whole number, which is the
product of (a) the total number of directors on the Board (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) the percentage
that (i) such number of Shares so accepted for payment and paid for by the
Purchaser plus the number of Shares otherwise owned by the Purchaser or any
other subsidiary of Parent bears to (ii) the number of such Shares outstanding,
and the Company will, at such time, cause the Purchaser's designees to be so
elected; PROVIDED that in the event that the Purchaser's designees are appointed
or elected to the Board, until the Effective Time the Board will have at least
two directors who were directors on the date of the Merger Agreement and who are
not officers of the Company (the "Independent Directors"); and PROVIDED FURTHER
that in such event, if the number of Independent Directors is reduced below two
for any reason whatsoever, the remaining Independent Director will be entitled
to designate a person to fill such vacancy who will be deemed to be an
Independent Director or, if no Independent Directors then remain, the other
directors will designate two persons to fill such vacancies who are not current
or former officers, shareholders or affiliates of the Company, Parent or the
Purchaser, and such persons will be deemed to be Independent Directors. Subject
to applicable law, the Company will take all action requested by Parent
necessary to effect any such election, including mailing to its shareholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company will
make such mailing with the mailing of the Schedule 14D-9 (provided that the
Purchaser shall have provided to the Company on a timely basis all information
required to be included in the Information Statement with respect to the
Purchaser's designees). In connection with the foregoing, the Company will
promptly, at the option of the Purchaser, either increase the size of the Board
or obtain the resignation of such number of its current directors as is
necessary to enable the Purchaser's designees to be elected or appointed to the
Board as provided above.
(9) STOCK OPTIONS. The Merger Agreement provides that, as soon as
practicable following the date of the Merger Agreement, the Board (or, if
appropriate, any committee administering the Company Stock Plans (as defined
below)) shall adopt such resolutions or take such other actions as are required
to adjust the terms of all outstanding Company Stock Options and all outstanding
Company SARs (as defined below) to provide that (i) each outstanding Company
Stock Option may be exercised, whether or not such Company Stock Option is
vested, immediately prior to the acceptance for payment of Shares pursuant to
the Offer, contingent on and subject to the consummation of the Offer, PROVIDED
that the Shares issued upon such exercise are tendered into the Offer and not
withdrawn and (ii) each Company Stock Option and Company SAR outstanding that is
not exercised prior to the acceptance for payment of Shares pursuant to the
Offer shall be canceled effective immediately prior to the acceptance for
payment of Shares pursuant to the Offer with the holder thereof becoming
entitled to receive an amount of cash equal to the product of (x) the excess, if
any, of (A) the Per Share Merger Consideration over (B) the exercise price per
Share subject to such Company Stock Option or Company SAR, multiplied by
(y) the number of Shares issuable pursuant to the unexercised portion of such
Company Stock Option or Company SAR; PROVIDED, HOWEVER, that no cash payment
will be made with respect to any Company SAR that is related to a Company Stock
Option in respect of which such a cash payment is made. All amounts payable
pursuant to this paragraph will be subject to any required withholding of taxes
or proof of eligibility of exemption therefrom and will be paid at or as soon as
practicable following the Effective Time, but in any event within one business
day following the Effective Time, without interest.
The Company will use its best efforts to obtain all consents of the holders
of the Company Stock Options if such consents are determined to be necessary to
effectuate the foregoing as mutually agreed by Parent and the Company. The
cancelation of a Company Stock Option in exchange for the cash payment
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described in the preceding paragraph will be deemed a release of any and all
rights the holder of such Company Stock Option had or may have had in respect
thereof, and any necessary consents from all such holders shall so provide.
Notwithstanding anything to the contrary contained in the Merger Agreement,
payment shall, at Parent's request, be withheld in respect of any Company Stock
Option until all necessary consents are obtained.
As soon as practicable following the date of the Merger Agreement, the Board
(or, if appropriate, any committee administering the Company Stock Plans) will
take or cause to be taken such actions as are required to cause (x) the Company
Stock Plans to terminate as of the Effective Time and (y) the provisions in any
other Company benefit plan providing for the issuance, transfer or grant of any
capital stock of the Company or any interest in respect of any capital stock of
the Company to be deleted as of the Effective Time. The Company will ensure that
following the Effective Time no holder of a Company Stock Option or Company SAR
or any participant in any Company Stock Plan or other Company benefit plan will
have any right thereunder to acquire any capital stock of the Company or the
Surviving Corporation.
The Company will take or cause to be taken all actions required to cause the
TIW Systems, Inc. Stock Bonus Plan to be amended as of immediately prior to the
Effective Time to provide that, in the event the Company Common Stock ceases to
be readily tradable (within the meaning of Q/A-2(d)(1)(iv)(A) of Treas. Reg.
Section 1.411(d)-4), distributions of benefits under such plan will be in the
form of cash; PROVIDED that the foregoing will not apply in the event that prior
to the Effective Time (i) such plan has received a favorable determination
letter from the Internal Revenue Service in respect of the termination of the
plan, (ii) such plan has been terminated and (iii) all benefits payable under
such plan have been paid in full to each plan participant and beneficiary
entitled to receive benefits in respect of the termination of such plan.
"Company Stock Option" means any option to purchase Common Stock granted
under any Company Stock Plan.
"Company SAR" means any stock appreciation right linked to the price of
Common Stock and granted under any Company Stock Plan.
"Company Stock Plans" means the Company's 1995 Stock Compensation Plan, the
Company's Stock Option Plan for Key Employees, the Company's Non-Employee
Directors Stock Option Plan and the Company's Outside Directors Stock Option
Plan, in each case as amended from time to time.
(10) INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a) For six years after the
Effective Time, the Surviving Corporation (or any successor to the Surviving
Corporation) will honor all the Company's obligations to indemnify, defend and
hold harmless the present and former officers and directors of the Company and
its subsidiaries and certain other individuals (each an "Indemnified Party")
against losses, claims, damages, liabilities, costs, fees and expenses
(including reasonable fees and disbursements of counsel and judgments, fines,
losses, claims, liabilities and amounts paid in settlement provided that any
such settlement is effected with the written consent of Parent or the Surviving
Corporation, which consent shall not unreasonably be withheld) arising out of
actions or omissions occurring at or prior to the Effective Time ("Losses") to
the extent such obligations of the Company exist under the TBCA, the terms of
the Company charter or the Company by-laws, in each case as in effect on the
date of the Merger Agreement, or under any indemnification agreement between the
Company or any subsidiary of the Company, as applicable, and the Indemnified
Party that has been filed as an exhibit to the Filed Company SEC Documents or
that has been previously identified and delivered to Parent; PROVIDED that in
the event any claim or claims are asserted or made within such six-year period,
all rights to indemnification in respect of any such claim or claims shall
continue until disposition of any and all such claims. In the event that the
Surviving Corporation or any of its successors or assigns (i) consolidates with
or merges into any other person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision will be made so that the
successors and assigns of the Surviving Corporation shall expressly assume the
obligations set forth in this paragraph. The provisions described in this
paragraph are (i) intended to be for the benefit of, and to be enforceable by,
each Indemnified Party, his or her heirs and his or her representatives and
(ii) in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise.
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(11) REASONABLE EFFORTS. Upon the terms and subject to the conditions set
forth in the Merger Agreement, each of the parties will use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer, the Merger and the other
Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from governmental entities and the
making of all necessary registrations and filings (including filings with
governmental entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any governmental entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging the Transaction Agreements or the consummation of the Transactions,
including seeking to have any stay or temporary restraining order entered by any
court or other governmental entity vacated or reversed and (iv) the execution
and delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of the Transaction Agreements;
PROVIDED, HOWEVER, that Parent will not be required to consent to any action
described in paragraph (a) of Section 14. In connection with and without
limiting the foregoing, the Company and the Board will (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to any Transaction or the Transaction
Agreements, (ii) if any state takeover statute or similar statute or regulation
becomes applicable to the Transaction Agreements, take all action necessary to
ensure that the Offer, the Merger and the other Transactions may be consummated
as promptly as practicable on the terms contemplated by the Transaction
Agreements and otherwise to minimize the effect of such statute or regulation on
the Offer, the Merger and the other Transactions and (iii) cooperate with Parent
and the Purchaser in the arrangements for obtaining the financing required to
consummate the Offer and the Merger, and to pay related fees and expenses.
Nothing in the Merger Agreement will require Parent to waive any substantial
rights or agree to any substantial limitation on its operations or to dispose of
any asset or collection of assets of the Company, Parent or any of their
respective subsidiaries or affiliates. Notwithstanding the foregoing, the
Company is not prohibited from taking any action permitted by the
non-solicitation provisions of the Merger Agreement described under "Company
Takeover Proposals" above.
(12) DIRECTORS AND OFFICERS. The directors of the Purchaser immediately
prior to the Effective Time will be the directors of the Surviving Corporation,
and the officers of the Company immediately prior to the Effective Time shall be
the officers of the Surviving Corporation, in each case until the earlier of
their resignation or removal or until their respective successors are duly
elected or appointed and qualified.
(13) REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties.
(14) PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. Termination or amendment of, or extensions or waivers under, the Merger
Agreement, in order to be effective, require in the case of Parent, the
Purchaser or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors. In the event the Purchaser's
designees are elected to the Board as described above, after such election and
prior to the Effective Time, (i) the affirmative vote of a majority of the
Independent Directors will be required in addition to any required approval by
the full Board to (A) amend or terminate the Merger Agreement on behalf of the
Company, (B) waive any of the Company's rights, benefits or remedies under the
Merger Agreement or (C) extend the time for performance of the Purchaser's
obligations under the Merger Agreement and (ii) the Independent Directors will
have the power, acting together, to exercise any right of the Company under the
Merger Agreement that the Company otherwise fails to exercise to the extent that
the failure to exercise such right would materially adversely affect the holders
of Shares other than Parent, the Purchaser and their respective subsidiaries and
affiliates.
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THE SHAREHOLDER AGREEMENT.
Pursuant to the Shareholder Agreement, each Principal Shareholder has
agreed, among other things, to tender all the Shares that he owns (or has the
right to acquire upon the exercise of Company Stock Options) pursuant to the
Offer. In addition, each Principal Shareholder has granted the Purchaser an
option to purchase all his Shares at a price per Share equal to the Offer Price
in the event that such Principal Shareholder fails to tender such Shares
pursuant to the Offer, or withdraws such Shares prior to expiration of the
Offer. The Shareholder Agreement and all rights and obligations of the parties
to the Shareholder Agreement will terminate on the earlier to occur of the
Effective Time and the termination of the Merger Agreement in accordance with
its terms.
Each Principal Shareholder severally has agreed that prior to the
termination of the Shareholder Agreement, except as otherwise provided therein:
(a) such Principal Shareholder will not (i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
(including any profit sharing arrangement) with respect to the sale, transfer,
pledge, assignment or other disposition of such Principal Shareholder's Shares
to any person other than pursuant to the Offer and the Merger, (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, with
respect to such Principal Shareholder's Shares or (iii) commit or agree to take
any of the foregoing actions, (b) until the Merger is consummated or the Merger
Agreement is terminated, such Principal Shareholder will not, nor will such
Principal Shareholder permit any investment banker, attorney or other advisor or
representative of such Principal Shareholder to (i) directly or indirectly
solicit, initiate or encourage the submission of any Company Takeover Proposal,
(ii) enter into any agreement with respect to any Company Takeover Proposal or
(iii) directly or indirectly participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, any Company
Takeover Proposal; PROVIDED, HOWEVER, that the Principal Shareholder may furnish
information with respect to the Company to a person and participate in
discussions or negotiations with such person regarding a Superior Company
Proposal if at such time the Company is permitted to furnish information and
engage in discussions or negotiations with, and is actually furnishing
information to and engaging in discussions or negotiations with, such person
regarding such Superior Company Proposal pursuant to the nonsolicitation
provisions of the Merger Agreement, (c) at any meeting of shareholders of the
Company called to vote upon the Merger and the Merger Agreement or at any
adjournment thereof or in any other circumstances upon which a vote, consent or
other approval (including by written consent) with respect to the Merger and the
Merger Agreement is sought, such Principal Shareholder will, including by
executing a written consent solicitation if requested by Parent, vote (or cause
to be voted) such Principal Shareholder's Shares in favor of the Merger
Agreement and (d) at any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which such Principal
Shareholder's vote, consent or other approval is sought, such Principal
Shareholder will vote (or cause to be voted) such Principal Shareholder's Shares
against (i) any merger agreement or merger (other than the Merger Agreement and
the Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of or
by the Company, (ii) any Company Takeover Proposal and (iii) any amendment of
the Company's charter or bylaws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent, delay or nullify the
Offer, the Merger, the Merger Agreement or any of the other Transaction or
change in any manner the voting rights of any class of capital stock of the
Company. The Shareholder Agreement provides that each Principal Shareholder
executed the Shareholder Agreement solely in his or her capacity as the record
holder and beneficial owner of such Principal Shareholder's Shares and nothing
therein shall limit or affect any actions taken by a Principal Shareholder in
his capacity as an officer or director of the Company or any subsidiary of the
Company to the extent specifically permitted by the Merger Agreement.
Under the Shareholder Agreement each Principal Shareholder has, subject to
termination of the Shareholder Agreement, irrevocably granted to, and appointed,
Parent, Stephen Green and Jack Haegele, or any of them, and any individual
designated by any of them, and each of them, such Principal
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Shareholder's proxy and attorney-in-fact (with full power of substitution), for
and in the name, place and stead of such Principal Shareholder, to vote such
Principal Shareholder's Shares, or grant a consent or approval in respect of
such Shares, in the manner specified above.
THE CONFIDENTIALITY AGREEMENT. Pursuant to the Confidentiality Agreement
dated September 28, 1999, between the Company and Parent (the "Confidentiality
Agreement"), the Company and Parent agreed to keep confidential certain
information exchanged between such parties. The Confidentiality Agreement also
contains customary standstill provisions. The Merger Agreement provides that
certain information exchanged pursuant to the Merger Agreement will be subject
to the Confidentiality Agreement.
DISSENT RIGHTS. Holders of Shares do not have dissenters' rights as a
result of the Offer alone. However, if the Merger is consummated, holders of
Shares will have certain rights pursuant to the provisions of Articles 5.11,
5.12, 5.13 and 5.16 of the TBCA to dissent from the Merger Agreement and to
demand payment in cash of the fair value of their Shares. If the statutory
procedures are complied with, such rights can lead to a judicial determination
of the fair value required to be paid in cash to such dissenting holders for
their shares. Any such judicial determination of the fair value of Shares, in
the case where the proposed corporate action is submitted to a vote of the
shareholders, will be the value of the Shares as of the day immediately
preceding the Shareholder meeting, excluding any appreciation or depreciation in
anticipation of the proposed action. In the case where the proposed corporate
action is approved without a meeting, the fair value of the Shares will be the
value of the Shares as of the date the written consent authorizing the action
was delivered to the Company, excluding any appreciation or depreciation in
anticipation of the action.
If any holder of Shares who demands appraisal under the TBCA fails to
perfect, or effectively withdraws or loses his right to appraisal, as provided
in the TBCA, the Shares of such holder will be converted into the Per Share
Merger Consideration in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the TBCA and is qualified in its entirety by the full
text of Articles 5.11, 5.12, 5.13 and 5.16 of the TBCA.
FAILURE TO FOLLOW THE STEPS REQUIRED BY ARTICLES 5.11, 5.12, 5.13 AND 5.16
OF THE TBCA FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH
RIGHTS.
GOING PRIVATE TRANSACTIONS. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
shareholders be filed with the SEC and disclosed to minority shareholders prior
to consummation of the Merger.
PLANS FOR THE COMPANY. Parent intends to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right to
take such actions or effect such changes as it deems desirable. Such changes
could include changes in the Company's business, corporate structure,
capitalization, management or dividend policy.
Except as otherwise described in this Offer to Purchase, none of the
Purchaser, Parent or TBG Holdings have any current plans or proposals that would
relate to, or result in, any extraordinary corporate transaction involving the
Company or any of its subsidiaries, such as a merger, reorganization or
liquidation involving the Company, a sale or transfer of a material amount of
assets of the Company or any
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of its subsidiaries, any change in the Company's capitalization or dividend
policy or any other material change in the Company's business, corporate
structure or personnel.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the following actions without the prior written consent of
Parent: (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock other than dividends and
distributions by a direct or indirect wholly owned subsidiary of the Company to
its parent, (ii) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, (iii) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any subsidiary
of the Company or any other securities or (iv) issue, deliver, sell, grant,
pledge or otherwise encumber or subject to any lien (a) any shares of its
capital stock, (b) other voting securities, (c) any securities convertible into
or exchangeable for, or any options, warrants or rights to acquire, any such
shares, voting securities or convertible or exchangeable securities or (d) any
"phantom" stock, "phantom" stock rights, stock appreciation rights or
stock-based performance units, other than pursuant to the provisions of the
Merger Agreement relating to Company Stock Options and the TIW Systems, Inc.
Stock Bonus Plan. Nothing herein shall constitute a waiver by the Purchaser or
Parent of any of its rights under the Merger Agreement or a limitation of
remedies available to the Purchaser or Parent for any breach of the Merger
Agreement, including termination thereof.
If, on or after November 11, 1999, the Company should take any of the
actions described in clause (ii), (iii) or (iv) in the above paragraph, then,
subject to the provisions of Section 14, the Purchaser, in its sole discretion,
may make such adjustments as it deems appropriate in the Offer Price and other
terms of the Offer, including, without limitation, the number or type of
securities offered to be purchased.
If, on or after November 11, 1999, the Company should declare, set aside or
pay any dividends on, or make any other distributions in respect of, any of its
capital stock other than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent, then, subject to the
provisions of Section 14, (a) the Offer Price may, in the sole discretion of the
Purchaser, be reduced by the amount of any such cash dividend or cash
distribution and (b) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering shareholders will (i) be received and
held by the tendering shareholders for the account of the Purchaser and will be
required to be promptly remitted and transferred by each tendering shareholder
to the Depositary for the account of the Purchaser, accompanied by appropriate
documentation or transfer, or (ii) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance and
subject to applicable law, the Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire Offer Price or deduct from the Offer Price
the amount or value thereof, as determined by the Purchaser in its sole
discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after the termination or withdrawal of the Offer), to
pay for any Shares tendered pursuant to the Offer unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which would represent at least a majority of the
outstanding Shares on a fully diluted basis, (ii) any waiting period under the
HSR Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated and (iii) the period of time for any applicable
review process by CFIUS under the Exon-Florio Act shall have expired and CFIUS
shall not have taken any action or made any recommendation to the President of
the United States to block or prevent the
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consummation of the Offer or the Merger. Furthermore, notwithstanding any other
term of the Offer or the Merger Agreement, the Purchaser shall not be required
to commence the Offer, accept for payment or, subject as aforesaid, to pay for
any Shares not theretofore accepted for payment or paid for, and may terminate
or amend the Offer, (x) with the consent of the Company or (y) without the
consent of the Company if, at any time on or after the date of the Merger
Agreement and before the acceptance of such shares for payment or the payment
therefor, any of the following conditions exists:
(a) there shall be pending or threatened any suit, action or proceeding
by any Governmental Entity (as defined in the Merger Agreement), or by any
other person that has a reasonable likelihood of success, (i) challenging
the acquisition by Parent or the Purchaser of any Common Stock, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger
or any other Transaction, or seeking to obtain from the Company, Parent or
the Purchaser or any of their respective subsidiaries or affiliates any
damages that are material in relation to the Company and the Company
Subsidiaries (as defined in the Merger Agreement) taken as whole,
(ii) seeking to prohibit or limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of any material portion of
the business or assets of the Company, Parent or any of their respective
subsidiaries or affiliates, or to compel the Company, Parent or any of their
respective subsidiaries or affiliates to dispose of or hold separate any
material portion of the business or assets of the Company, Parent or any of
their respective subsidiaries or affiliates, as a result of the Offer, the
Merger or any other Transaction, (iii) seeking to impose limitations on the
ability of Parent or the Purchaser to acquire or hold, or exercise full
rights of ownership of, any Shares, including the right to vote the Company
Common Stock purchased by it on all matters properly presented to the
shareholders of the Company, or (iv) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any material respect the
business or operations of the Company and the Company Subsidiaries;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, entered, enforced,
promulgated, amended or issued with respect to, or deemed applicable to, or
any consent or approval withheld with respect to, (i) Parent, the Company or
any of their respective subsidiaries or affiliates or (ii) the Offer, the
Merger or any other Transaction, in either such case by any Governmental
Entity that is reasonably likely to result, directly or indirectly, in any
of the consequences referred to in paragraph (a) above;
(c) since the date of execution of the Merger Agreement, there shall
have been any event, change, effect or development that, individually or in
the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect (as defined in the Merger Agreement), other than any
event, change, effect or development to the extent attributable to (i) the
economy or the securities markets in general, (ii) the Merger Agreement or
the transactions contemplated hereby or the announcement thereof or
(iii) the Company's industry in general, and not specifically relating to
the Company or the Company Subsidiaries;
(d)(i) it shall have been publicly disclosed or Parent shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 35% of the outstanding Shares has been acquired by another
person or (ii)(A) the Company or any of its directors or officers shall have
breached Section 5.02 of the Merger Agreement (other than an immaterial
breach), (B) the Board shall have withdrawn or modified its approval or
recommendation of the Transaction Agreements, the Offer or the Merger,
(C) the Company or any of its directors or officers shall have made any
disclosure to the shareholders of the Company permitted pursuant to
Section 5.02(d) of the Merger Agreement that has the effect of
(x) withdrawing, modifying or changing the approval or recommendation of the
Board or any committee thereof of the Transaction Agreements, the Offer, the
Merger or the other Transactions in a manner adverse to Parent or the
Purchaser, (y) approving or recommending to the shareholders of the Company
a Company Takeover Proposal or (z) approving or recommending that the
shareholders of the Company tender their Shares into any tender offer or
exchange offer that is a Company
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Takeover Proposal or is related thereto, or (D) the Board shall have failed
to reaffirm publicly and unconditionally its recommendation to the Company's
shareholders that they accept the Offer and give the Company Shareholder
Approval by midnight, New York City time, on the third business day
following Parent's written request to do so (which request may be made at
any time that a Company Takeover Proposal is pending), which public
reaffirmation must also include the unconditional rejection of such Company
Takeover Proposal;
(e) any representation or warranty of the Company in any Transaction
Agreement that is qualified as to materiality shall not be true and correct
or any such representation or warranty that is not so qualified shall not be
true and correct in any material respect, as of the date of the Merger
Agreement and as of the scheduled or extended expiration of the Offer,
except to the extent such representation or warranty expressly relates to an
earlier date (in which case on and as of such earlier date);
(f) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under any
Transaction Agreement; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser or Parent regardless of the
circumstances giving rise to such condition or may be waived by the Purchaser
and Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent, the Purchaser or any other affiliate of
Parent at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances, and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the SEC and other publicly available
information concerning the Company, none of the Purchaser, Parent or TBG
Holdings is aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a whole,
that might be adversely affected by the Purchaser's acquisition of Shares (and
the indirect acquisition of the stock of the Company's subsidiaries), as
contemplated herein or of any approval or other action by any governmental
entity that would be required for the acquisition or ownership of Shares by the
Purchaser as contemplated herein. Should any such approval or other action be
required, the Purchaser, Parent and TBG Holdings currently contemplate that such
approval or action will be sought, except as described below under "State
Takeover Laws". While, except as otherwise expressly described in this
Section 15, the Purchaser does not presently intend to delay the acceptance for
payment of or payment for Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that failure to obtain any such approval or other
action might not result in consequences adverse to the Company's business or
that certain parts of the Company's business might not have to be disposed of if
such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, the Purchaser
could, subject to the terms and conditions of the Merger Agreement, decline to
accept for payment or pay for any Shares tendered. See Section 14 for certain
conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v.
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MITE Corp., the Supreme Court of the United States held that the Illinois
Business Takeover Act, which involved state securities laws that make the
takeover of certain corporations more difficult, imposed a substantial burden on
interstate commerce and therefore was unconstitutional. In CTS Corp. v. Dynamics
Corp. of America, however, the Supreme Court of the United States held that a
state may, as a matter of corporate law and, in particular, those laws
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that such laws were applicable
only under certain circumstances. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Article 13.03 of the TBCA limits the ability of a Texas corporation to
engage in business combinations with "affiliated shareholders" (defined
generally as any beneficial owner of 20% or more of the outstanding voting stock
of the corporation) for a period of three years from the time such affiliated
shareholders became the holders of 20% or more of such Shares unless, among
other things, the corporation's board of directors had given its prior approval
to either the business combination or the transaction which resulted in the
shareholder becoming an "affiliated shareholder". The Board has approved the
Merger Agreement and the Shareholder Agreement and the Purchaser's acquisition
of Shares pursuant to the Offer and, therefore, Section 13.03 of the TBCA is
inapplicable to the Merger.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchaser nor any action
taken in connection with the Offer or the Merger is intended as a waiver of that
right. In the event that any state takeover statute is found applicable to the
Offer or the Merger, the Purchaser might be unable to accept for payment or pay
for Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer or the Merger. In such case, the Purchaser might not be
obligated to accept for payment or pay for any Shares tendered. See Section 14.
ANTITRUST.
UNITED STATES ANTITRUST LAW. Under the provisions of the HSR applicable to
the Offer, the acquisition of Shares under the Offer may be consummated
following the expiration of a 15-calendar day waiting period following the
filing by the Trust of a Notification and Report Form with respect to the Offer,
unless the Trust receives a request for additional information or documentary
material from the Antitrust Division or the FTC or unless early termination of
the waiting period is granted. The Trust has made such filing. If, within the
initial 15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material from the Trust concerning the Offer, the
waiting period will be extended and would expire at 11:59 p.m., New York City
time, on the tenth calendar day after the date of substantial compliance by the
Trust with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
the Trust. In practice, complying with a request for additional information or
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while such negotiations continue.
Expiration or termination of the applicable waiting period under the HSR Act is
a condition to the Purchaser's obligation to accept for payment and pay for
Shares tendered pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the
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divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of the Company or its subsidiaries or the Trust or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. Based upon a preliminary examination of
information provided by the Company relating to the businesses in which the
Trust and the Company are engaged, Parent and the Purchaser believe that the
acquisition of Shares by Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result thereof.
OTHER LAWS.
EXON-FLORIO ACT. The Exon-Florio Act applies to all acquisitions proposed
or pending by or with foreign persons which could result in foreign control of
persons engaged in interstate commerce in the United States. The Exon-Florio Act
empowers the President of the United States to prohibit or suspend mergers,
acquisitions or takeovers by or with foreign persons if the President finds,
after investigation, credible evidence that the foreign person might take action
that threatens to impair the national security of the United States and that
other provisions of existing law do not provide adequate and appropriate
authority to protect the national security.
The President has designated CFIUS as the agency authorized under the
Exon-Florio Act to receive notices and other information and to conduct a review
process, which consists of a determination whether an investigation should be
undertaken and making any such investigation. Any determination by CFIUS that an
investigation is called for must be made within thirty days after its acceptance
of written notification concerning a proposed transaction. In the event that
CFIUS determines to undertake an investigation, such investigation must be
completed within forty-five days after such determination. Upon completion or
termination of any such investigation, CFIUS must report to the President and
present its recommendation. The President then has fifteen days in which to
suspend or prohibit the proposed transaction or to seek other appropriate
relief. In order for the President to exercise his authority to suspend or
prohibit a proposed transaction, the President must make two findings: (i) that
there is credible evidence that leads the President to believe that the foreign
interest exercising control might take action that threatens to impair national
security and (ii) that provisions of law other than the Exon-Florio Act and the
International Emergency Economic Powers Act do not in the President's judgment
provide adequate and appropriate authority for the President to protect the
national security in connection with the acquisition. Such findings are not
subject to judicial review. If the President makes such findings, he may take
action for such time as he considers appropriate to suspend or prohibit the
relevant acquisition. The President may direct the Attorney General to seek
appropriate relief, including divestment relief, in the District Courts of the
United States in order to implement and enforce the Exon-Florio Act. The
Exon-Florio Act does not obligate the parties to a proposed acquisition to
notify CFIUS of a proposed transaction. However, if notice of a proposed
acquisition is not submitted to CFIUS, then the transaction remains indefinitely
subject to review by the President under the Exon-Florio Act, unless it is
determined that CFIUS does not have jurisdiction over the transaction.
The Purchaser and the Company have made a filing under the Exon-Florio Act.
There can be no assurance that CFIUS will not determine to conduct an
investigation of the proposed acquisition of the Company and, if an
investigation is commenced, there can be no assurance regarding the outcome of
such investigation. If the results of such investigation are adverse to the
Purchaser, the Purchaser will not be obligated to accept for payment or pay for
any Shares tendered pursuant to the Offer.
16. FEES AND EXPENSES
First Union Securities is acting as Dealer Manager in connection with the
Purchaser's acquisition of the Company. First Union Securities will receive
customary compensation for its services as Dealer Manager in connection with the
Offer. Parent has also agreed to reimburse First Union Securities for its
reasonable out-of-pocket expenses related to such services, including the
reasonable fees and expenses of
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its counsel, and to indemnify First Union Securities and certain related persons
against certain liabilities and expenses, including certain liabilities and
expenses under the Federal securities laws.
The Purchaser has retained D.F. King & Co., Inc., to act as the Information
Agent and First Union National Bank to serve as the Depositary in connection
with the Offer. The Information Agent and the Depositary each will receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
and expenses under the Federal securities laws.
None of the Purchaser, Parent or TBG Holdings will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust
companies will be reimbursed by the Purchaser upon request for customary mailing
and handling expenses incurred by them in forwarding material to their
customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser, Parent or TBG Holdings becomes aware
of any state law that would limit the class of offerees in the Offer, the
Purchaser reserves the right to amend the Offer and, depending on the timing of
such amendment, if any, will extend the Offer to provide adequate dissemination
of such information to holders of Shares prior to the expiration of the Offer.
In any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by the Dealer Manager or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER, PARENT OR TBG HOLDINGS NOT CONTAINED
IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
The Purchaser, Parent and TBG Holdings have filed with the SEC a
Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with
exhibits, furnishing certain additional information with respect to the Offer,
and may file amendments thereto. In addition, the Company has filed a
Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act, together with
exhibits, setting forth its recommendation with respect to the Offer and the
reasons for such recommendation and furnishing such additional related
information. Such Schedules and any amendments thereto, including exhibits,
should be available for inspection and copies should be obtainable in the manner
set forth in Section 8 (except that such material will not be available at the
regional offices of the SEC).
SIGNAL ACQUISITION CORPORATION
November 18, 1999
32
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
TBG HOLDINGS, PARENT AND THE PURCHASER
MEMBERS OF THE SUPERVISORY BOARD AND EXECUTIVE OFFICERS OF TBG HOLDINGS NV
The following table sets forth the name, business address, citizenship,
present principal occupation or employment and five-year employment history of
each of the executive officers and members of the Supervisory Board of TBG
Holdings NV.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME, TITLE AND BUSINESS ADDRESS CITIZENSHIP FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------- ----------- ----------------------------------------------
<S> <C> <C>
Georg Heinrich Thyssen-Bornemisza Switzerland Mr. Thyssen-Bornemisza is Chairman and Chief
Chairman, Chief Executive Officer and Executive Officer of TBG Holdings N.V.
Member of Supervisory Board
c/o TBG Management SAM
29, Bd. Princesse Charlotte
B.P. 89
MC 98007 MONACO CEDEX
Michael von Staudt Germany Mr. von Staudt is Executive Vice President of
Executive Vice President TBG Holdings N.V. Prior to 1997, he was
c/o TBG Management SAM Managing Director of Bayerische Vereinsbank
29, Bd. Princesse Charlotte AG.
B.P. 89
MC 98007 MONACO CEDEX
Peter H. Frank United Mr. Frank is Senior Vice President and
Senior Vice President and Corporate Kingdom Corporate Secretary of TBG Holdings N.V.
Secretary
c/o TBG Management SAM
29, Bd. Princesse Charlotte
B.P. 89
MC 98007 MONACO CEDEX
Johannes A.M. Vijverberg Holland Mr. Vijverberg is Senior Vice President of TBG
Senior Vice President Holdings N.V.
c/o TBG Management SAM
29, Bd. Princesse Charlotte
B.P. 89
MC 98007 MONACO CEDEX
C. Michael Armstrong United Mr. Armstrong is Chairman and Chief Executive
Member of Supervisory Board States Officer of AT&T Corp. Prior to January of
c/o AT&T Corp. 1998, he was Chairman and Chief Executive
295 North Maple Avenue Officer of Hughes Electronics Corporation.
Basking Ridge, New Jersey 07920
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME, TITLE AND BUSINESS ADDRESS CITIZENSHIP FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------- ----------- ----------------------------------------------
<S> <C> <C>
Roger J. Holtback Sweden Mr. Holtback is President and Chief Executive
Member of Supervisory Board Officer of Investment AB Bure.
c/o Investment AB Bure
Massans Gata 8
40229 GOTEBORG
Sweden
Hans-Joerg Rudloff Germany Mr. Rudloff is Chairman of the Executive
Member of Supervisory Board Committee of Barclays Capital. Prior to May
c/o Barclays Capital 1998, he was President of MC Securities
5, The North Colonnade Limited.
Canary Wharf, London E14 4BB
England
Gerhard Schulmeyer Germany Mr. Schulmeyer is President and Chief
Member of Supervisory Board Executive Officer of Siemens Corporation.
c/o Siemens Corporation Prior to January of 1999, he was President and
1301 Avenue of the Americas Chief Executive Officer of Siemens Nixdorf
New York, NY 10019 Informationssyteme AG.
Jerre L. Stead United Mr. Stead is Chairman and Chief Executive
Member of Supervisory Board States Officer of Ingram Micro Inc. Prior to August
c/o Ingram Micro Inc. 1996, he was Chairman of Legent Corporation.
1600 East St. Andrew Place
P.O. Box 25125
Santa Ana, CA 92799-5125
Heinrich Weiss Germany Mr. Weiss is President and Chief Executive
Member of Supervisory Board Officer of SMS Aktiengesellschaft
c/o SMS Aktiengesellschaft
Eduard-Schloemann Strasse 4
D-40237 DUSSELDORF
Postfach 23 03 29, D-40088 Dusseldorf
Germany
</TABLE>
I-2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF TRIPOINT GLOBAL COMMUNICATIONS, INC.
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of TriPoint Global Communications, Inc. All the
directors and officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
NAME AND TITLE PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------- ---------------------------------------------------------------------------
<S> <C>
Jack Haegele, Mr. Haegele has been Chairman and Chief Executive Officer of TBG Industries
Chief Executive Officer and Director Inc., the majority shareholder of Parent, since 1997. He was President and
Chief Operating Officer of TBG Holdings NV from 1992 to 1997.
Stephen Green, Mr. Green has been Vice President and General Counsel of TBG Services Inc.,
Vice President and Director an affiliate of Parent, since 1997. Prior to 1997, he was Assistant General
Counsel with TBG Services Inc. and affiliated companies.
Donald Hofmann, Mr. Hofmann has been a General Partner of Chase Capital Partners since
Director 1992. Chase Capital Partners is an affiliate of Chase Manhattan Bank and is
a minority shareholder of Parent.
Robert B. Levine, Mr. Levine is Vice President-Taxes of TBG Services Inc., an affiliate of
Vice President Parent.
</TABLE>
The business address for Messrs. Haegele, Green and Levine is 565 5th Avenue,
17th Floor, New York, New York 10017.
The business address for Mr. Hofmann is 380 Madison Avenue, 12th Floor, New
York, New York 10017.
I-3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF SIGNAL ACQUISITION CORPORATION
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of Signal Acquisition Corporation. All the
directors and officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
NAME AND TITLE PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------- ---------------------------------------------------------------------------
<S> <C>
Jack Haegele, Mr. Haegele is the Chief Executive Officer and a Director of Parent. He has
Chief Executive Officer and Director been Chairman and Chief Executive Officer of TBG Industries Inc., the
majority shareholder of Parent, since 1997. He was President and Chief
Operating Officer of TBG Holdings NV from 1992 to 1997.
Stephen Green, Mr. Green is a Vice President and a Director of Parent. He has been Vice
Vice President, Treasurer, Secretary President and General Counsel of TBG Services Inc., an affiliate of Parent,
and Director since 1997. Prior to 1997, he was Assistant General Counsel with TBG
Services Inc. and affiliated companies.
</TABLE>
The business address for Messrs. Haegele and Green is 565 5th Avenue, 17th
Floor, New York, New York 10017.
I-4
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each shareholder of the Company or such shareholder's broker,
dealer, bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
FIRST UNION NATIONAL BANK
<TABLE>
<S> <C>
BY OVERNIGHT COURIER: BY MAIL OR HAND DELIVERY:
Corporate Trust--Reorganization Department Corporate Trust--Reorganization Department
1525 West W.T. Harris Blvd., 3C3 1525 West W.T. Harris Blvd., 3C3
Charlotte, North Carolina 28262-1153 Charlotte, North Carolina 28288-1153
</TABLE>
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(704) 590-7628
FOR CONFIRMATION OF FACSIMILE TRANSMISSIONS:
(704) 590-7400
FOR INFORMATION:
(800) 829-8432
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers listed below. You may also contact your broker,
dealer, bank, trust company or other nominee for assistance concerning the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 488-8095
THE DEALER MANAGER FOR THE OFFER IS:
FIRST UNION SECURITIES, INC.
901 E. Byrd Street, 3rd Floor
Richmond, Virginia 23219
CALL TOLL FREE: (800) 532-2916
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER
SHARES OF COMMON STOCK
OF
VERTEX COMMUNICATIONS CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 18, 1999
BY
SIGNAL ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
TRIPOINT GLOBAL COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, DECEMBER 16, 1999, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
FIRST UNION NATIONAL BANK
<TABLE>
<CAPTION>
BY OVERNIGHT COURIER: BY MAIL OR HAND DELIVERY:
<S> <C>
Corporate Trust--Reorganization Department Corporate Trust--Reorganization Department
1525 West W.T. Harris Blvd., 3C3 1525 West W.T. Harris Blvd., 3C3
Charlotte, North Carolina 28262-1153 Charlotte, North Carolina 28288-1153
</TABLE>
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(704) 590-7628
FOR CONFIRMATION OF FACSIMILE TRANSMISSIONS:
(704) 590-7408
FOR INFORMATION:
(800) 829-8432
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
- ----------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FSHARES,TENDERED
IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON S(ATTACHRADDITIONAL)SIGNED LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES TO BE
TOTAL NUMBER OF RECEIVED AND
SHARES TENDERED UPON
SHARE REPRESENTED EXERCISE OF NUMBER OF
CERTIFICATE BY SHARE COMPANY STOCK SHARES
NUMBER(S)* CERTIFICATE(S)* OPTIONS TENDERED**
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
TOTAL
SHARES
- ----------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See Instruction
4. IF
ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST OR DESTROYED SEE INSTRUCTION 11.
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at a Book-Entry Transfer Facility (as
defined in and pursuant to the procedures set forth in Section 2 of the Offer to
Purchase). Shareholders who deliver Shares by book-entry transfer are referred
to herein as "Book-Entry Shareholders" and other shareholders are referred to
herein as "Certificate Shareholders". Shareholders whose certificates for Shares
are not immediately available or who cannot deliver either the certificates for,
or a Book-Entry Confirmation (as defined in the Offer to Purchase) with respect
to, their Shares and all other documents required hereby to the Depositary prior
to the Expiration Date (as defined in the Offer to Purchase) must tender their
Shares in accordance with the guaranteed delivery procedures set forth in
Section 2 of the Offer to Purchase. See Instruction 2. Delivery of documents to
a Book-Entry Transfer Facility does not constitute delivery to the Depositary.
This Letter of Transmittal may also be used to tender Shares issuable upon the
exercise of Company Stock Options (as defined in the Offer to Purchase).
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, ENCLOSE A PHOTOCOPY
OF SUCH NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s) _____________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution that Guaranteed Delivery _______________________________
If delivered by book-entry transfer check box: / /
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Signal Acquisition Corporation, a Texas
corporation (the "Purchaser") and a wholly owned subsidiary of TriPoint Global
Communications Inc., a Delaware corporation ("Parent"), the above-described
shares of Common Stock, par value $.10 per share (the "Shares"), of Vertex
Communications Corporation, a Texas corporation (the "Company"), upon the terms
and subject to the conditions set forth in the Purchaser's Offer to Purchase
dated November 18, 1999 (the "Offer to Purchase"), and this Letter of
Transmittal (which, together with any amendments or supplements thereto or
hereto, collectively constitute the "Offer"), receipt of which is hereby
acknowledged. If this Letter of Transmittal relates to Shares issuable upon the
exercise of Company Stock Options ("Option Shares") the Company Stock Options
will only be exercised by the Depositary and the Option Shares will only be
tendered by it in the event that the Offer is consummated.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with the
terms of the Offer, the undersigned hereby sells, assigns and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities or rights issued in respect thereof on or after November 11, 1999)
and irrevocably constitutes and appoints First Union National Bank (the
"Depositary"), the true and lawful agent and attorney-in-fact of the
undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full extent
of the undersigned's rights with respect to such Shares (and any such other
Shares or securities or rights) (a) to deliver certificates for such Shares (and
any such other Shares or securities or rights) or transfer ownership of such
Shares (and any such other Shares or securities or rights) on the account books
maintained by a Book-Entry Transfer Facility together, in any such case, with
all accompanying evidences of transfer and authenticity to, or upon the order
of, the Purchaser, (b) to present such Shares (and any such other Shares or
securities or rights) for transfer on the Company's books and (c) to receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any such other Shares or securities or rights), all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other Shares or other securities or rights issued or issuable
in respect of such Shares on or after November 11, 1999) and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances and
the same will not be subject to any adverse claim. The undersigned will, upon
request, execute any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the tendered Shares (and any such other Shares or other securities
or rights).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer of Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Parent, Stephen Green and Jack
Haegele, and each of them, and any other designees of the Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's shareholders or otherwise in such manner as each such attorney-in-fact
and proxy or his or her substitute shall in his or her sole discretion deem
proper with respect to, to execute any written consent concerning any matter as
each such attorney-in-fact and proxy or his or her substitute shall in his or
her sole discretion deem proper with respect to, and to otherwise act as each
such attorney-in-fact and proxy or his or her substitute shall in his sole
discretion deem proper with respect to, the Shares tendered hereby that have
been accepted for payment by the Purchaser prior to the time any such action is
taken and with respect to which the undersigned is entitled to vote (and any and
all other Shares or other securities or rights issued or issuable in respect of
such Shares on or after November 11, 1999). This appointment is effective when,
and only to the extent that, the Purchaser accepts for payment such Shares as
provided in the Offer to Purchase. This power of attorney and proxy are
irrevocable and are granted in consideration of the acceptance for payment of
such Shares in accordance with the terms of the Offer. Upon such acceptance for
payment, all prior powers of attorney, proxies and consents given by the
undersigned with respect to such Shares (and any such other Shares or securities
or rights) will, without further action, be revoked and no subsequent powers of
attorney, proxies, consents or revocations may be given (and, if given, will not
be deemed effective) by the undersigned.
3
<PAGE>
If the undersigned is tendering Option Shares, in addition to the matters
described above, the undersigned hereby irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to the full extent of the undersigned's rights with
respect to Company Stock Options held by the undersigned, (a) to exercise
Company Stock Options for the Option Shares to be tendered, and (b) to receive
the Option Shares issuable upon exercise of such Company Stock Options. This
appointment will be effective if, when and only to the extent that, the
Purchaser accepts such Option Shares for payment pursuant to the Offer.
If the undersigned is tendering Option Shares issuable upon exercise of
Company Stock Options, the undersigned, upon request, shall execute and deliver
all additional documents deemed by the Depositary or the Purchaser to be
necessary or desirable to effectuate the exercise of such Company Stock Options
into the Option Shares tendered hereby.
The undersigned understands that the valid tender of Shares (including
Option Shares) pursuant to any of the procedures described in Section 2 of the
Offer to Purchase and in the Instructions hereto will constitute a binding
agreement between the undersigned and the Purchaser upon the terms and subject
to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered". Similarly, unless
otherwise indicated under "Special Delivery Instructions", please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered". In the event that both the "Special Delivery Instructions" and the
"Special Payment Instructions" are completed, please issue the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and any accompanying documents, as appropriate) in the
name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to, the person or persons so indicated.
Please credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that the Purchaser has no
obligation pursuant to "Special Payment Instructions" to transfer any Shares
from the name of the registered holder thereof if the Purchaser does not accept
for payment any of the Shares so tendered. The payment made to the undersigned
for each Option Share tendered will be an amount equal to the Offer Price minus
the exercise price of the related exercised Company Stock Option. The amount
paid to employees for Option Shares will be reduced by the amount of any wage
and employment withholding taxes required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, or under any provision of state, local, or foreign law. For each
Option Share tendered, an amount equal to the exercise price of the Company
Stock Option exercised for such Option Share shall be paid to the Company.
4
<PAGE>
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY THE LOST OR DESTROYED CERTIFICATES:
- ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than the
undersigned.
Issue / / Check / / Certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
/ / Credit unpurchased Shares delivered by Book-Entry Transfer to the
account designated above.
---------------------------------------------------------
- ------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment is to be sent to someone other than the undersigned or
to the undersigned at an address other than that above.
Mail / / Check / / Certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
-----------------------------------------------------------
5
<PAGE>
<TABLE>
<C> <S> <C>
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
. ------------------------------------------------------------ ,
. ------------------------------------------------------------ ,
(SIGNATURE(S) OF SHAREHOLDER(S))
Dated: ------------------- 1999
(Must be signed by registered holder(s) as name(s) appear(s)
on the certificate(s) for the Shares or on a security
position listing or by person(s) authorized to become
registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or
representative capacity, please provide the following
information and see Instruction 5.)
Name(s)
(PLEASE PRINT)
Capacity (full title)
Address
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone Number
Employer Identification or
Social Security Number
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ,
----------------------------------------------------
Name
(PLEASE PRINT)
Title
Name of Firm
Address
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone Number
--------------------------------
Dated: ------------------- 1999
</TABLE>
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction, includes any
participant in the Book-Entry Transfer Facilities' system whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Guarantee Program or the Stock
Exchange Medallion Program or by any other "eligible guarantor institution", as
such term is defined in Rule 17-Ad-15 under the Securities Exchange Act of 1934,
as amended (each, an "Eligible Institution"). In all other cases, all signatures
on this Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by shareholders either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined below) is utilized, if delivery of Shares is to
be made pursuant to the procedures for book-entry transfer set forth in
Section 2 of the Offer to Purchase. For a shareholder to validly tender Shares
pursuant to the Offer, either (a) a Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents, must be received by the Depositary at
one of its addresses set forth herein prior to the Expiration Date (as defined
in the Offer to Purchase) and either certificates for tendered Shares must be
received by the Depositary at one of such addresses or Shares must be delivered
pursuant to the procedures for book-entry transfer set forth herein (and a
Book-Entry Confirmation (as defined in the Offer to Purchase) must be received
by the Depositary), in each case, prior to the Expiration Date, or (b) the
tendering shareholder must comply with the guaranteed delivery procedures set
forth below and in Section 2 of the Offer to Purchase.
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedures, (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser must be received by the
Depositary prior to the Expiration Date and (c) the certificates for all
tendered Shares in proper form for transfer (or a Book-Entry Confirmation with
respect to all such Shares), together with a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed Delivery
as provided in Section 2 of the Offer to Purchase. A "trading day" is any day on
which the New York Stock Exchange is open for business.
"Agent's Message" means a message transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-Entry
Confirmation, that states that such Book-Entry Transfer Facility has received an
express acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Shares that such participant has received and agrees to be bound
by the terms of the Letter of Transmittal and that the Purchaser may enforce
such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK- ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL, WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
7
<PAGE>
No alternative, conditional (except as provided herein for tendering Option
Shares) or contingent tenders will be accepted and no fractional Shares will be
purchased. All tendering shareholders, by execution of this Letter of
Transmittal (or facsimile thereof), waive any right to receive any notice of the
acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE SHAREHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered". In any such case, new certificate(s) for the remainder of
the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the acceptance of payment
of, and payment for, the Shares tendered herewith. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or accepted for payment are to be issued to
a person other than the registered owner(s). Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of certificates listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the registered owner(s), or
if tendered certificates are registered in the name of any person(s) other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered owner(s) or such person(s))
payable on account of the transfer to such person(s) will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
8
<PAGE>
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not accepted for payment are to
be issued in the name of, a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed.
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in whole
or in part, in the case of any Shares tendered.
9. 31% BACKUP WITHHOLDING. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 below in this Letter of Transmittal and certify under
penalties of perjury that such TIN is correct and that such shareholder is not
subject to backup withholding. If a shareholder does not provide such
shareholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on such
shareholder and payment of cash to such shareholder pursuant to the Offer may be
subject to backup withholding of 31%.
Backup withholding is not an additional tax. Rather, the amount of the
backup withholding can be credited against the Federal income tax liability of
the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the shareholder upon filing an income tax
return.
The shareholder is required to give the Depositary the TIN (I.E., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
shareholder if a TIN is provided to the Depositary within 60 days.
Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign shareholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, or a Form W-8BEN,
Certificate of Foreign Status of Beneficial Owner for United States Tax
Witholding, copies of which may be obtained from the Depositary, in order to
avoid backup withholding. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
9
<PAGE>
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares so lost, destroyed or stolen, or call the Transfer Agent at
1-800-635-9270. The shareholder will then be instructed by the Depositary or the
Transfer Agent as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
THEREOF) TOGETHER WITH ANY SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED
BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR
TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED
PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING SHAREHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
10
<PAGE>
PAYER'S NAME: FIRST UNION NATIONAL BANK
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Social Security Number(s)
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND or
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW. Employer Identification
Number
------------------------
--------------------------------------------------------------------------
PART 2--Certification under penalties of perjury, I certify that (1) the number shown on
DEPARTMENT OF THE TREASURY this form is my correct Taxpayer Identification Number (or I am waiting for a number to
INTERNAL REVENUE SERVICE be issued for me) and (2) I am not subject to backup withholding because: (a) I am
exempt from backup withholding or (b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
--------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (2) in Part 2 above if
PAYER'S REQUEST FOR TAXPAYER you have been notified by the IRS that you are subject to backup PART 3
IDENTIFICATION NUMBER (TIN) withholding because of underreporting interest or dividends on your tax Awaiting TIN
returns. However, if after being notified by the IRS that you are subject / /
to backup withholding, you received another notification from the IRS
stating that you are no longer subject to backup withholding, do not cross PART 4
out such item (2). If you are exempt from backup withholding, check the Exempt TIN
/ /
box in Part 4.
--------------------------------------------------------------------------
Signature: Date:
--------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number to the
Depositary, 31% percent of all reportable payments made to me will be
withheld, but will be refunded to me if I provide a certified taxpayer
identification number within 60 days.
Signature ____________________________________________ Date __________________
11
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
FIRST UNION NATIONAL BANK
<TABLE>
<CAPTION>
BY OVERNIGHT COURIER: BY MAIL OR HAND DELIVERY:
<S> <C>
Corporate Trust--Reorganization Department Corporate Trust--Reorganization Department
1525 West W.T. Harris Blvd., 3C3 1525 West W.T. Harris Blvd., 3C3
Charlotte, North Carolina 28262-1153 Charlotte, North Carolina 28288-1153
</TABLE>
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(704) 590-7628
FOR CONFIRMATION OF FACSIMILE TRANSMISSIONS:
(704) 590-7408
FOR INFORMATION:
(800) 829-8432
Questions and requests for assistance or for additional copies of the Offer
to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 488-8095
THE DEALER MANAGER FOR THE OFFER IS:
FIRST UNION SECURITIES, INC.
901 E. Byrd Street, 3rd Floor
Richmond, Virginia 23219
CALL TOLL FREE: (800) 532-2916
12
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
VERTEX COMMUNICATIONS CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of Common Stock, par value
$.10 per share (the "Shares"), of Vertex Communications Corporation, a Texas
corporation (the "Company"), are not immediately available or if the procedures
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in the Offer to Purchase). This form may be delivered by hand
to the Depositary or transmitted by telegram, facsimile transmission or mail to
the Depositary and must include a guarantee by an Eligible Institution (as
defined in the Offer to Purchase). See Section 2 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
FIRST UNION NATIONAL BANK
<TABLE>
<S> <C>
BY OVERNIGHT COURIER: BY MAIL OR HAND DELIVERY:
Corporate Trust--Reorganization Corporate Trust--Reorganization
Department Department
1525 West W.T. Harris Blvd., 3C3 1525 West W.T. Harris Blvd., 3C3
Charlotte, North Carolina 28262-1153 Charlotte, North Carolina 28288-1153
</TABLE>
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(704) 590-7628
FOR CONFIRMATION OF FACSIMILE TRANSMISSIONS:
(704) 590-7408
FOR INFORMATION:
(800) 829-8432
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Signal Acquisition Corporation, a Texas
corporation (the "Purchaser") and a wholly owned subsidiary of TriPoint Global
Communications Inc., a Delaware corporation, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated November 18,
1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares set
forth below, all pursuant to the guaranteed delivery procedures set forth in
Section 2 of the Offer to Purchase.
- -------------------------------------------
Number of Shares: ____________________________________________________________
Certificate Nos. (if available): _____________________________________________
______________________________________________________________________________
/ / If shares will be tendered by book-entry transfer, name of tendering
institution:
__________________________________________________________________________
Account Number: ______________________________________________________________
Dated: _______________________________________________________________________
- -------------------------------------------
- -------------------------------------------
Name(s) of
(Record Holder(s): ___________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Please Print
Address(es): _________________________________________________________________
______________________________________________________________________________
(Zip Code)
Daytime Area Code & Tel. No.: ________________________________________________
Signature(s): ________________________________________________________________
______________________________________________________________________________
Dated: _________________________________________________________________, 1999
- ------------------------------------------
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a participant in the Security Transfer
Agents Medallion Program or the New York Stock Exchange Guarantee Program or the
Stock Exchange Medallion Program or an "eligible guarantor institution", as such
term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby guarantees to deliver to the Depositary either the certificates
representing the Shares tendered hereby, in proper form for transfer, or a
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to
such Shares, in any such case together with a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase), and any other required documents, within three trading days (as
defined in the Letter of Transmittal) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in the Offer to Purchase) and certificates for
Shares to the Depositary within the time period shown herein. Failure to do so
could result in a financial loss to such Eligible Institution.
- -------------------------------------------
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
Zip Code
Area Code and Tel. No: _______________________________________________________
- -------------------------------------------
- -------------------------------------------
______________________________________________________________________________
Authorized Signature
Name: ________________________________________________________________________
Please Type or Print
______________________________________________________________________________
Title: _______________________________________________________________________
Dated: _______________________________________________________________________
--------------------------------------------
--------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
First Union Securities, Inc.
901 E. Byrd Street, 3rd Floor
Richmond, Virginia 23219
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
VERTEX COMMUNICATIONS CORPORATION
AT
$22.00 PER SHARE
BY
SIGNAL ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
TRIPOINT GLOBAL COMMUNICATIONS INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, DECEMBER 16, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
November 18, 1999
To Brokers, Dealers, Banks,
Trust Companies and other Nominees:
We have been engaged by Signal Acquisition Corporation, a Texas corporation
(the "Purchaser") and a wholly owned subsidiary of TriPoint Global
Communications Inc., a Delaware corporation ("Parent"), and Parent to act as
Dealer Manager in connection with the Purchaser's offer to purchase all
outstanding shares of Common Stock, par value $.10 per share (the "Shares"), of
Vertex Communications Corporation, a Texas corporation (the "Company"), at
$22.00 per share (the "Offer Price"), net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated November 18, 1999 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Please furnish copies
of the enclosed materials to those of your clients for whom you hold Shares
registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated November 18, 1999;
2. Letter of Transmittal to be used by shareholders of the Company in
accepting the Offer (facsimile copies of the Letter of Transmittal may be
used to tender the Shares);
3. The Letter to Shareholders of the Company from the President and
Chief Executive
Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
5. Notice of Guaranteed Delivery with respect to Shares;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to First Union National Bank, as
Depositary.
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL OUTSTANDING SHARES ON A
FULLY DILUTED BASIS, (B) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, APPLICABLE TO THE PURCHASE OF
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED, (C) THE PERIOD
OF TIME FOR ANY APPLICABLE REVIEW PROCESS BY THE COMMITTEE ON FOREIGN INVESTMENT
IN THE UNITED STATES ("CFIUS") UNDER SECTION 721(A) OF THE DEFENSE PRODUCTION
ACT OF 1950, AS AMENDED, HAVING EXPIRED, AND CFIUS NOT HAVING TAKEN ANY ACTION
OR MADE ANY RECOMMENDATION TO THE PRESIDENT OF THE UNITED STATES TO BLOCK OR TO
PREVENT THE OFFER OR THE MERGER (AS DEFINED BELOW) AND (D) RECEIVING CERTAIN
OTHER REGULATORY AND ANTITRUST CLEARANCES.
We urge you to contact your clients promptly. Please note that the Offer and
withdrawal rights will expire at 12:00 midnight, New York City time, on
Thursday, December 16, 1999, unless extended.
The Board of Directors of the Company has unanimously approved the Offer and
the Merger and determined that the terms of the Offer and the Merger are fair
to, and in the best interests of, the Company's shareholders, and recommends
that shareholders of the Company accept the Offer and tender their Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of November 11, 1999 (the "Merger Agreement") among Parent, the Purchaser and
the Company pursuant to which, as soon as practicable following the consummation
of the Offer and the satisfaction or waiver of certain conditions, the Purchaser
will be merged with and into the Company (the "Merger"), with the Company
surviving the Merger as a wholly owned subsidiary of Parent. At the effective
time of the Merger, each outstanding Share (other than Shares held by
shareholders who perfect their dissent rights under Texas law, Shares owned by
the Company as treasury stock and Shares owned by the Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company) will be converted
into the right to receive $22.00 in cash, without interest thereon, as set forth
in the Merger Agreement and described in the Offer to Purchase. The Merger
Agreement provides that the Purchaser may assign any or all of its rights and
obligations (including the right to purchase Shares in the Offer) to Parent or
any wholly owned subsidiary of Parent, but no such assignment shall relieve the
Purchaser of its obligations under the Merger Agreement.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with
respect to) such Shares, (b) a Letter of Transmittal (or a facsimile thereof),
properly completed, and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer effected pursuant to the procedure set
forth in Section 2 of the Offer to Purchase, an Agent's message (as defined in
the Offer to Purchase), and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering shareholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary. Under no
circumstances will interest be paid on the purchase price of the Shares to be
paid by the Purchaser, regardless of any extension of the Offer or any delay in
making such payment.
None of the Purchaser or Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager, the Depositary
and the Information Agent as described in the Offer to Purchase) in connection
with the solicitation of tenders of Shares pursuant to the Offer. You will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by you in forwarding the enclosing Offering materials to your
customers.
2
<PAGE>
Questions and requests for additional copies of the enclosed material may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone number set forth on the back cover of the enclosed Offer
to Purchase.
Very truly yours,
FIRST UNION SECURITIES, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER PERSON TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH
RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF
TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
VERTEX COMMUNICATIONS CORPORATION
AT
$22.00 PER SHARE
BY
SIGNAL ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
TRIPOINT GLOBAL COMMUNICATIONS INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, DECEMBER 16, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
November 18, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated November 18,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with amendments or supplements thereto, collectively constitute the
"Offer") relating to the Offer by Signal Acquisition Corporation, a Texas
corporation (the "Purchaser") and a wholly owned subsidiary of TriPoint Global
Communications Inc., a Delaware corporation ("Parent"), to purchase all
outstanding shares of Common Stock, par value $.10 per share (the "Shares"), of
Vertex Communications Corporation, a Texas corporation (the "Company"), upon the
terms and subject to the conditions set forth in the Offer. Also enclosed is the
Letter to Shareholders of the Company from the Chairman of the Board of the
Company accompanied by the Company's Solicitation/Recommendation Statement on
Schedule 14D-9.
We (or our nominees) are the holder of record of shares held by us for your
account. A tender of such shares can be made only by us as the holder of record
and pursuant to your instructions. The Letter of Transmittal is furnished to you
for your information only and cannot be used to tender shares held by us for
your account.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The offer price is $22.00 per Share net to the seller in cash,
without interest thereon, upon the term and subject to the conditions of the
Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined below) and determined that the terms of the
Offer and the Merger are fair to, and in the best interests of, the
Company's shareholders and unanimously recommends that shareholders of the
Company accept the Offer and tender their Shares.
4. The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of November 11, 1999 (the "Merger Agreement") among Parent, the
Purchaser and the Company pursuant to which, as soon as practicable
following the consummation of the Offer and the satisfaction or waiver of
certain conditions, the Purchaser will be merged with and into the Company
with the Company surviving the merger as a wholly owned subsidiary of Parent
(the "Merger"). At the effective time of the Merger, each outstanding Share
(other than Shares held by shareholders who perfect their dissent rights
under Texas law, Shares owned by the Company as treasury stock and Shares
owned by Parent or any direct or indirect wholly owned subsidiary of Parent)
will be converted into the right to receive $22.00 in cash, without
interest, as set forth in the Merger Agreement and described in the Offer to
Purchase. The Merger Agreement provides that the Purchaser may assign any or
all of its rights and obligations (including the right to purchase Shares in
the Offer) to Parent or
<PAGE>
any wholly owned subsidiary of Parent, but no such assignment shall relieve
the Purchaser of its obligations under the Merger Agreement.
5. THE OFFER AND WITHDRAWAL RIGHT EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, DECEMBER 16, 1999 (THE "EXPIRATION DATE"), UNLESS
THE OFFER IS EXTENDED BY THE PURCHASER, IN WHICH EVENT THE TERM "EXPIRATION
DATE" SHALL MEAN THE LATEST TIME AT WHICH THE OFFER, AS SO EXTENDED BY THE
PURCHASER, WILL EXPIRE.
6. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the Expiration Date such number
of Shares that would constitute at least a majority of all outstanding
Shares on a fully diluted basis, (2) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable
to the purchase of Shares pursuant to the Offer having expired or been
terminated, (3) the period of time for any applicable review process by the
Committee on Foreign Investment in the United States ("CFIUS") under
Section 721(a) of the Defense Production Act of 1950, as amended, having
expired and CFIUS not having taken any action or made any recommendation to
the President of the United States to block or prevent the Offer or the
Merger and (4) receiving certain other regulatory and antitrust clearances.
7. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
8. Tendering Shareholders will not be obligated to pay brokerage fees or
commissions to the Dealer Manager, the Depositary or the Information Agent
or, except as set forth in Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer.
However, federal income tax backup withholding at a rate of 31% may be
required, unless an exemption is provided or unless the required taxpayer
identification information is provided. See Instruction 9 of the Letter of
Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form on the detachable part hereof. An envelope to return
your instructions to us is enclosed. If you authorize the tender of your Shares,
all such Shares will be tendered unless otherwise specified on the detachable
part hereof. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT
US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION DATE.
Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by First Union National Bank (the
"Depositary") of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2 of the Offer to
Purchase, an Agent's Message, and (c) any other documents required by the Letter
of Transmittal. Accordingly, tendering shareholders may be paid at different
times depending upon when certificates for Shares or Book-Entry Confirmations
with respect to Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or Parent becomes aware of any state
law that would limit the class of Offerees in the Offer, the Purchaser reserves
the right to amend the Offer and, depending on the timing of such amendment, if
any, will extend the Offer to provide adequate dissemination of such information
to holders of Shares prior to the expiration of the Offer. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of the Purchaser by
First Union Securities, Inc., the Dealer Manager for the Offer, or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF VERTEX COMMUNICATIONS CORPORATION
The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase
of Signal Acquisition Corporation dated November 18, 1999 (the "Offer to
Purchase"), and the related Letter of Transmittal relating to shares of Common
Stock, par value $.10 per share (the "Shares"), of Vertex Communications
Corporation, a Texas corporation.
This will instruct you to tender the number of shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and related Letter of Transmittal.
- ------------------------------
Number of Shares to be
Tendered:(*)
Shares
- ------------------------------
SIGN HERE
----------------------------------------
Signature(s)
----------------------------------------
----------------------------------------
Please Type or Print Name(s)
----------------------------------------
----------------------------------------
Please Type or Print Address(es)
----------------------------------------
Area Code and Telephone Number
----------------------------------------
Taxpayer Identification or Social
Security Number
Dated: , 1999
- ------------------------
* Unless otherwise indicated, it will be assumed that all your Shares are to
be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- -------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(l)
4. Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(l)
6. Account in the name The ward, minor, or
of guardian or incompetent person(3)
committee for a
designated ward,
minor, or incompetent
person
7. a. The usual The
revocable savings grantor-trustee(l)
trust account
(grantor is also
trustee)
b. So-called trust The actual owner
account that is
not a legal or
(1) valid trust
under State law
8. Sole proprietorship The owner(4)
account
9. A valid trust, The legal entity (Do
estate, or pension not furnish the
trust identifying number of
the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(5)
- -------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or The broker or nominee
registered nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 5% on any portion of
an underpayment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
[LOGO] VERTEX
Vertex Communications Corporation
2600 N. Longview Street
Kilgore, Texas 75662-6842
903/984-0555
- --------------------------------------------------------------------------------
NEWS RELEASE
- --------------------------------------------------------------------------------
TriPoint Global Communications, Inc. to Acquire
Vertex Communications Corporation
for $22.00 per Share or $118,686,383
Gastonia, NC, and Kilgore, TX (November 12, 1999)--TriPoint Global
Communications, Inc., a leading supplier of satellite and wireless
communications products and services, and Vertex Communications Corporation
(NYSE - VTX), a leader in the design and manufacture of satellite
communications earth station products, today announced that they have entered
into a definitive agreement under which TriPoint Global Communications, Inc.
will acquire Vertex Communications Corporation for $22.00 per share, for an
aggregate consideration of $118,686,383.
Pursuant to the agreement, TriPoint Global Communications, Inc. will begin
a tender offer for all outstanding shares of Vertex Communications Corporation
for $22.00 per share. TriPoint Global Communications, Inc. expects to commence
the offer on November 18, 1999. The offer will remain open for a minimum of 20
business days. Any shares not purchased in the offer will be acquired for the
same price in cash in a second-step merger. Vertex will pay a termination fee if
the merger agreement is terminated under circumstances specified in the
agreement. In addition, certain members of the management and board of directors
of Vertex have entered into a shareholder agreement in which they have agreed to
tender their shares into the offer and to vote in favor of the merger.
The merger agreement and the shareholder agreement have been approved
by the boards of directors of TriPoint Global Communications, Inc. and Vertex
Communications Corporation. The offer and the merger are conditioned upon,
among other things, clearance under the Hart-Scott-Rodino Antitrust
Improvements Act and the Exon-Florio Act. Assuming the required regulatory
approvals and clearances are received, it is anticipated that the acquisition
of Vertex Communications Corporation will be completed in December of 1999.
TriPoint Global Communications, Inc. (www.tripointglobal.com) comprises
three groups--RSI, Prodelin, and CSA Wireless Communications. The company is a
leading global supplier of satellite and wireless communications products and
services.
Vertex Communications Corporation (www.vertexcomm.com) is a leader in the design
and manufacture of satellite communications earth station products for worldwide
commercial and government use, offering full service from engineering and design
to standard products, turnkey installations and site service and maintenance
around the world.
Vertex Communications Corporation, 2600 N. Longview Street
Kilgore, TX 75662-6842
<PAGE>
For more information call:
E. Scott Wood
TriPoint Global Communications, Inc.
at 770/689-2059
J. Rex Vardeman, President and CEO or
James D. Carter, Chief Financial Officer
Vertex Communications Corporation
at 903/984-0555
Vertex Communications Corporation, 2600 N. Longview Street
Kilgore, TX 75662-6842
####
<PAGE>
Exhibit 99.a.8
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE DATED
NOVEMBER 18, 1999, AND THE RELATED LETTER OF TRANSMITTAL AND IS NOT BEING
MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SHARES
IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN ANY
JURISDICTION IN WHICH THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE
OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED
MADE ON BEHALF OF THE PURCHASER BY THE DEALER MANAGER, FIRST UNION
SECURITIES, INC., OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER
THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF
VERTEX COMMUNICATIONS CORPORATION
AT
$22.00 PER SHARE
BY
SIGNAL ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
TRIPOINT GLOBAL COMMUNICATIONS INC.
Signal Acquisition Corporation, a Texas corporation (the "Purchaser")
and a wholly owned subsidiary of Tri Point Global Communications Inc., a
Delaware corporation ("Parent"), is offering to purchase all outstanding
shares of Common Stock, par value $.10 per share (the "Shares"), of Vertex
Communications Corporation, a Texas corporation (the "Company"), at $22.00
per Share (the "Offer Price"), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated November 18, 1999, and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, DECEMBER 16, 1999, UNLESS THE OFFER IS EXTENDED.
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER
OF SHARES WHICH WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL OUTSTANDING
SHARES ON A FULLY DILUTED BASIS, (2) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, APPLICABLE
TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN
TERMINATED, (3) THE PERIOD OF TIME FOR ANY APPLICABLE REVIEW PROCESS BY THE
COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES ("CFIUS") UNDER SECTION
721(a) OF THE DEFENSE PRODUCTION ACT OF 1950, AS AMENDED, HAVING EXPIRED AND
CFIUS NOT HAVING TAKEN ANY ACTION OR MADE ANY RECOMMENDATION TO THE PRESIDENT
OF THE UNITED STATES TO BLOCK OR PREVENT THE OFFER OR THE MERGER (AS DEFINED
BELOW) AND (4) RECEIVING CERTAIN OTHER REGULATORY AND ANTITRUST CLEARANCES.
The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of November 11, 1999 (the "Merger Agreement") among Parent, the
Purchaser and the Company pursuant to which, as soon as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company, with the
Company surviving the merger as a wholly owned subsidiary of Parent (the
"Merger"). At the effective time of the Merger, each outstanding Share (other
than Shares held by shareholders who perfect their dissent rights under Texas
law, Shares owned by the Company as treasury stock and Shares owned by Parent
or any direct or any indirect wholly owned subsidiary of Parent or of the
Company) will be converted into the right to receive $22.00 in cash, without
interest, as set forth in the Merger Agreement and described in the Offer to
Purchase. The Merger Agreement provides that the Purchaser may assign any or
all of its rights and obligations (including the right to purchase Shares in
the Offer) to Parent or any wholly-owned subsidiary of Parent, but no such
assignment shall relieve the Purchaser of its obligations under the Merger
Agreement.
Simultaneously with entering into the Merger Agreement, Parent, the
Purchaser and certain shareholders of the Company (collectively, the "Principal
Shareholders") entered into the Company Shareholder Agreement dated as of
November 11, 1999 (the "Shareholder Agreement"), whereby each Principal
Shareholder has agreed, among other things, to tender his Shares pursuant to the
Offer. If the Principal Shareholders fail to tender their Shares, or withdraw
their Shares prior to expiration of the Offer, Parent will have the option to
purchase such Shares at the Offer Price following consummation of the Offer. The
Principal Shareholders collectively own approximately 13.1% of all outstanding
Shares (assuming the exercise of all Company stock options held by the Principal
Shareholders).
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER THEIR SHARES.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice
to the Depositary (as defined in the Offer to Purchase) of the Purchaser's
acceptance for payment of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the
purpose of receiving payment from the Purchaser and transmitting payment to
tendering shareholders. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of (a) certificates for such Shares or timely confirmation of
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant
to the procedures set forth in Section 2 of the Offer to Purchase, (b) a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase)
and (c) any other documents required by the Letter of Transmittal. Under no
circumstances will interest be paid on the purchase price of the Shares to be
paid by the Purchaser, regardless of any extension of the Offer or any delay
in making such payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday, December 16, 1999, unless and until the Purchaser, in its sole
discretion (but subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event
the term "Expiration Date" shall mean the latest time and date at which the
Offer, as so extended by the Purchaser, will expire. Subject to the terms of
the Merger Agreement and applicable rules and regulations of the Securities
and Exchange Commission, the Purchaser reserves the right, in its sole
discretion, at any time and from time to time and regardless of whether or
not any of the events or facts set forth in Section 14 of the Offer to
Purchase shall have occurred, to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment
for, any Shares, by giving oral or written notice of such extension to the
Depositary and (b) except as set forth above, amend the Offer in any other
respect by giving oral or written notice of such amendment to the Depositary.
Under no circumstances will interest be paid on the purchase price for
tendered Shares, whether or not the Purchaser exercises its right to extend
the Offer. There can be no assurance that the Purchaser will exercise its
right to extend the Offer. Any such extension will be followed by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. During any such
extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering shareholder to
withdraw such shareholder's Shares.
<PAGE>
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for
by the Purchaser pursuant to the Offer, may also be withdrawn at any time
after Sunday, January 16, 2000. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addressees set forth on the back
cover of the Offer to Purchase and must specify the name of the person having
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder of the Shares to be withdrawn, if different
from the name of the person who tendered the Shares. If certificates for
Shares have been delivered or otherwise identified to the Depositary, then
prior to the physical release of such certificates, the serial numbers shown
on such certificates must be submitted to the Depositary and, unless such
Shares have been tendered by an Eligible Institution (as defined in the Offer
to Purchase), the signatures on the notice of withdrawal must be guaranteed
by an Eligible Institution. If Shares have been delivered pursuant to the
procedure for book-entry transfer as set forth in Section 2 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with the Book-Entry Transfer Facility's
procedures. Withdrawals of tenders of shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn shares may be retendered by again
following one of the procedures described in Section 2 of the Offer to
Purchase at any time prior to the Expiration Date. All questions as to the
form and validity (including time of receipt) of notices of withdrawal will
be determined by the Purchaser, in its sole discretion, which determination
will be final and binding.
The Company has provided the Purchaser with the Company's shareholder
list and security position listings for the purpose of disseminating the
Offer to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares and furnished to brokers, dealers, banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
shareholder lists, or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under
the Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager, as set forth below. Requests for copies of the
Offer to Purchase, the Letter of Transmittal and all other tender offer
materials may be directed to the Information Agent or the Dealer Manager as
set forth below, and copies will be furnished promptly at the Purchaser's
expense. No fees or commissions will be payable to brokers, dealers or other
persons (other than the Dealer Manager and the Information Agent) for
soliciting tenders of Shares pursuant to the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: (800) 488-8095
THE DEALER MANAGER FOR THE OFFER IS:
Insert First Union LOGO
901 E. Byrd Street, 3rd Floor
Richmond, Virginia 23219
Call Toll-Free: (800) 532-2916
November 18, 1999
<PAGE>
CREDIT AGREEMENT
Dated as of June 25, 1998
among
PRODELIN HOLDING CORPORATION
as Borrower,
AND
CERTAIN SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
FIRST UNION NATIONAL BANK,
as Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 DEFINITIONS ...........................................................................................1
1.1 DEFINITIONS .........................................................................................1
1.2 COMPUTATION OF TIME PERIODS..........................................................................26
1.3 ACCOUNTING TERMS ....................................................................................26
SECTION 2 CREDIT FACILITIES .....................................................................................26
2.1 REVOLVING LOANS .....................................................................................26
2.2 LETTER OF CREDIT SUBFACILITY.........................................................................28
2.3 SWINGLINE LOANS .....................................................................................33
2.4 TRANCHE A TERM LOAN..................................................................................35
2.5 TRANCHE B TERM LOAN..................................................................................36
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES.........................................................39
3.1 DEFAULT RATE ........................................................................................39
3.2 BORROWINGS; EXTENSION AND CONVERSION.................................................................39
3.3 PREPAYMENTS .........................................................................................41
3.4 TERMINATION AND REDUCTION OF REVOLVING COMMITTED AMOUNT..............................................43
3.5 FEES ................................................................................................43
3.6 CAPITAL ADEQUACY ....................................................................................44
3.7 LIMITATION ON EURODOLLAR LOANS.......................................................................45
3.8 ILLEGALITY ..........................................................................................45
3.9 REQUIREMENTS OF LAW..................................................................................45
3.10 TREATMENT OF AFFECTED LOANS.........................................................................46
3.11 TAXES ..............................................................................................47
3.12 COMPENSATION .......................................................................................49
3.13 PRO RATA TREATMENT..................................................................................50
3.14 SHARING OF PAYMENTS.................................................................................51
3.15 PAYMENTS, COMPUTATIONS, ETC.........................................................................51
3.16 EVIDENCE OF DEBT....................................................................................53
SECTION 4 GUARANTY ..............................................................................................54
4.1 THE GUARANTY ........................................................................................54
4.2 OBLIGATIONS UNCONDITIONAL............................................................................55
4.3 REINSTATEMENT .......................................................................................56
4.4 CERTAIN ADDITIONAL WAIVERS...........................................................................56
4.5 REMEDIES ............................................................................................56
4.6 RIGHTS OF CONTRIBUTION...............................................................................56
4.7 CONTINUING GUARANTEE.................................................................................58
SECTION 5 CONDITIONS ............................................................................................58
5.1 CLOSING CONDITIONS...................................................................................58
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT...............................................................64
SECTION 6 REPRESENTATIONS AND WARRANTIES.........................................................................65
6.1 FINANCIAL CONDITION..................................................................................65
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
6.2 NO MATERIAL CHANGE...................................................................................66
6.3 ORGANIZATION AND GOOD STANDING.......................................................................66
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS........................................................66
6.5 NO CONFLICTS ........................................................................................67
6.6 NO DEFAULT ..........................................................................................67
6.7 OWNERSHIP ...........................................................................................67
6.8 LITIGATION ..........................................................................................68
6.9 TAXES ...............................................................................................68
6.10 COMPLIANCE WITH LAW.................................................................................68
6.11 ERISA ..............................................................................................68
6.12 SUBSIDIARIES .......................................................................................69
6.13 GOVERNMENTAL REGULATIONS, ETC.......................................................................70
6.14 PURPOSE OF LOANS AND LETTERS OF CREDIT..............................................................71
6.15 ENVIRONMENTAL MATTERS...............................................................................71
6.16 INTELLECTUAL PROPERTY...............................................................................72
6.17 SOLVENCY ...........................................................................................72
6.18 INVESTMENTS ........................................................................................72
6.19 LOCATION OF COLLATERAL..............................................................................72
6.20 DISCLOSURE .........................................................................................73
6.21 NO BURDENSOME RESTRICTIONS..........................................................................73
6.22 LABOR MATTERS ......................................................................................73
6.23 NATURE OF BUSINESS..................................................................................73
6.24 REPRESENTATIONS AND WARRANTIES FROM PURCHASE AGREEMENT..............................................73
6.25 YEAR 2000 COMPLIANCE................................................................................73
SECTION 7 AFFIRMATIVE COVENANTS..................................................................................74
7.1 INFORMATION COVENANTS................................................................................74
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.............................................................78
7.3 BOOKS AND RECORDS....................................................................................78
7.4 COMPLIANCE WITH LAW..................................................................................78
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS..............................................................78
7.6 INSURANCE ...........................................................................................78
7.7 MAINTENANCE OF PROPERTY..............................................................................79
7.8 PERFORMANCE OF OBLIGATIONS...........................................................................80
7.9 USE OF PROCEEDS .....................................................................................80
7.10 AUDITS/INSPECTIONS..................................................................................80
7.11 FINANCIAL COVENANTS.................................................................................80
7.12 ADDITIONAL CREDIT PARTIES...........................................................................82
7.13 PLEDGED ASSETS .....................................................................................82
7.14 YEAR 2000 COMPLIANCE................................................................................83
7.15 ANNUAL MEETING......................................................................................83
7.16 NAME CHANGE DOCUMENTATION...........................................................................84
7.17 IRB FACILITY. ....................................................................................84
7.18 NORTH CAROLINA SURVEY...............................................................................84
7.19 INTEREST RATE PROTECTION............................................................................84
SECTION 8 NEGATIVE COVENANTS ....................................................................................84
8.1 INDEBTEDNESS ........................................................................................85
</TABLE>
<PAGE>
ii
<TABLE>
<S> <C>
8.2 LIENS ...............................................................................................86
8.3 NATURE OF BUSINESS...................................................................................86
8.4 CONSOLIDATION, MERGER, DISSOLUTION, ETC..............................................................86
8.5 ASSET DISPOSITIONS...................................................................................87
8.6 INVESTMENTS .........................................................................................88
8.7 RESTRICTED PAYMENTS..................................................................................88
8.8 PREPAYMENTS OF INDEBTEDNESS, ETC.....................................................................88
8.9 TRANSACTIONS WITH AFFILIATES.........................................................................89
8.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS...............................................................89
8.11 LIMITATION ON RESTRICTED ACTIONS....................................................................89
8.12 OWNERSHIP OF SUBSIDIARIES...........................................................................90
8.13 SALE LEASEBACKS ....................................................................................90
8.14 NO FURTHER NEGATIVE PLEDGES.........................................................................90
SECTION 9 EVENTS OF DEFAULT .....................................................................................91
9.1 EVENTS OF DEFAULT....................................................................................91
9.2 ACCELERATION; REMEDIES...............................................................................94
SECTION 10 AGENCY PROVISIONS ....................................................................................95
10.1 APPOINTMENT, POWERS AND IMMUNITIES..................................................................95
10.2 RELIANCE BY AGENT...................................................................................95
10.3 DEFAULTS ...........................................................................................96
10.4 RIGHTS AS A LENDER..................................................................................96
10.5 INDEMNIFICATION ....................................................................................96
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.............................................................97
10.7 SUCCESSOR AGENT ....................................................................................97
SECTION 11 MISCELLANEOUS ........................................................................................98
11.1 NOTICES ............................................................................................98
11.2 RIGHT OF SET-OFF; ADJUSTMENTS.......................................................................99
11.3 BENEFIT OF AGREEMENT................................................................................99
11.4 NO WAIVER; REMEDIES CUMULATIVE......................................................................101
11.5 EXPENSES; INDEMNIFICATION...........................................................................101
11.6 AMENDMENTS, WAIVERS AND CONSENTS....................................................................102
11.7 COUNTERPARTS .......................................................................................104
11.8 HEADINGS ...........................................................................................104
11.9 SURVIVAL ...........................................................................................104
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE...................................................104
11.11 SEVERABILITY ......................................................................................105
11.12 ENTIRETY ..........................................................................................105
11.13 BINDING EFFECT; TERMINATION........................................................................105
11.14 SOURCE OF FUNDS....................................................................................106
11.15 CONFLICT ..........................................................................................106
11.16 CONFIDENTIALITY....................................................................................106
11.17 ARBITRATION; CONSENT TO JURISDICTION AND SERVICE OF PROCESS........................................107
</TABLE>
iii
<PAGE>
SCHEDULES
Schedule 1.1A Investments
Schedule 1.1B Liens
Schedule 2.1(a) Lenders
Schedule 5.1(j) Corporate Structure
Schedule 6.1 Modifications to GAAP
Schedule 6.2 Material Change
Schedule 6.4 Required Consents, Authorizations, Notices
and Filings
Schedule 6.8 Litigation
Schedule 6.12 Subsidiaries
Schedule 6.16 Intellectual Property
Schedule 6.19(a) Mortgaged Properties
Schedule 6.19(b) Collateral Locations
Schedule 6.19(c) Chief Executive Offices/Principal Places
of Business
Schedule 7.6 Insurance
Schedule 8.1 Indebtedness
Schedule 8.9 Transactions with Affiliates
Schedule 8.11 Restricted Actions
EXHIBITS
Exhibit 1.1A Form of Pledge Agreement
Exhibit 1.1B Form of Security Agreement
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.3(d) Form of Swingline Note
Exhibit 2.4(e) Form of Tranche A Term Note
Exhibit 2.5(e) Form of Tranche B Term Note
Exhibit 3.2(a)(i) Form of Notice of Borrowing
Exhibit 3.2(a)(iii) Form of Notice of Account Designation
Exhibit 3.2(b) Form of Notice of Extension/Conversion
Exhibit 7.1(d) Form of Officer's Compliance Certificate
Exhibit 7.12 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment and Acceptance
iv
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 25, 1998 (as amended, modified,
restated or supplemented from time to time, the "CREDIT AGREEMENT"), is by and
among PRODELIN HOLDING CORPORATION, a Delaware corporation (the "BORROWER"), the
Guarantors (as defined herein), the Lenders (as defined herein) and FIRST UNION
NATIONAL BANK, as Agent for the Lenders (in such capacity, the "AGENT").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a
$160,000,000 credit facility for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"ACQUIRED COMPANY" means Comsat RSI, Inc., a Delaware
corporation.
"ACQUISITION" means the acquisition by any Person of the
Capital Stock or all or substantially all of the Property of another
Person, whether or not involving a merger or consolidation with such
Person.
"ADDITIONAL CREDIT PARTY" means each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement.
"ADJUSTED BASE RATE" means the Base Rate PLUS the Applicable
Percentage.
"ADJUSTED EURODOLLAR RATE" means the Eurodollar Rate PLUS the
Applicable Percentage.
"AFFILIATE" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the
1
<PAGE>
equity interest in such Person. For purposes of this definition,
"control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"AGENT" shall have the meaning assigned to such term in the
heading hereof, together with any successors or assigns.
"AGENT'S FEE LETTER" means that certain letter agreement,
dated as of April 21, 1998, between the Agent and the Borrower, as
amended, modified, restated or supplemented from time to time.
"AGENT'S FEES" shall have the meaning assigned to such term in
Section 3.5(d).
"APPLICABLE LENDING OFFICE" means, for each Lender, the office
of such Lender (or of an Affiliate of such Lender) as such Lender may
from time to time specify to the Agent and the Borrower by written
notice as the office by which its Eurodollar Loans are made and
maintained.
"APPLICABLE PERCENTAGE" means, for purposes of calculating the
applicable interest rate for any day for any Revolving Loan, any
Tranche A Term Loan or any Tranche B Term Loan, the applicable rate of
the Commitment Fee for any day for purposes of Section 3.5(a), and the
applicable rate of the Letter of Credit Fee for any day for purposes of
Section 3.5(b)(i), the appropriate applicable percentage corresponding
to the Leverage Ratio in effect as of the most recent Calculation Date:
<TABLE>
<CAPTION>
APPLICABLE
APPLICABLE APPLICABLE APPLICABLE PERCENTAGE
PERCENTAGE FOR PERCENTAGE FOR PERCENTAGE FOR FOR TRANCHE
REVOLVING LOANS AND REVOLVING LOANS AND TRANCHE B TERM B TERM LOANS
TRANCHE A TERM TRANCHE A TERM LOANS WHICH WHICH ARE
PRICING LEVERAGE LOANS WHICH ARE LOANS WHICH ARE ARE EURODOLLAR BASE RATE
LEVEL RATIO EURODOLLAR LOANS BASE RATE LOANS LOANS LOANS
--------- ---------------------- --------------------- --------------------- ---------------- --------------
<S> <C> <C> <C> <C>
I GREATER THAN 5.0 to 1.0 2.50% 1.25% 3.00% 1.75%
II LESS THAN 5.0 to 1.0 but
GREATER THAN 4.5 to 1.0 2.25% 1.00% 2.75% 1.50%
III LESS THAN 4.5 to 1.0 but
GREATER THAN 3.75 to 1.0 2.00% .75% 2.50% 1.25%
IV LESS THAN 3.75 to 1.0 but
GREATER THAN 3.25 to 1.0 1.50% .25% 2.50% 1.25%
V LESS THAN 3.25 to 1.0 but
GREATER THAN 2.75 to 1.0 1.25% 0% 2.25% 1.00%
VI LESS THAN 2.75 to 1.0 1.00% 0% 2.00% .75%
========= ====================== ===================== ===================== ================ ==============
</TABLE>
<TABLE>
<CAPTION>
APPLICABLE
APPLICABLE PERCENTAGE
PERCENTAGE FOR
PRICING LEVERAGE FOR LETTER COMMITMENT
LEVEL RATIO OF CREDIT FEE FEES
--------- ------------------------- -------------- -------------
<S> <C> <C>
I GREATER THAN 5.0 to 1.0 2.50% .50%
II LESS THAN 5.0 to 1.0 but
GREATER THAN 4.5 to 1.0 2.25% .50%
III LESS THAN 4.5 to 1.0 but
GREATER THAN 3.75 to 1.0 2.00% .375%
IV LESS THAN 3.75 to 1.0 but
GREATER THAN 3.25 to 1.0 1.50% .375%
V LESS THAN 3.25 to 1.0 but
GREATER THAN 2.75 to 1.0 1.25% .25%
VI LESS THAN 2.75 to 1.0 1.00% .25%
========= ========================= ============== =============
</TABLE>
The Applicable Percentages shall be determined and adjusted quarterly
on the date (each a "CALCULATION DATE") five Business Days after
receipt by the Agent of the officer's certificate in accordance with
the provisions of Section 7.1(c) for the most recently ended fiscal
quarter
2
<PAGE>
of the Consolidated Parties the first of which to occur on August 31,
1998; PROVIDED, HOWEVER, that (i) the initial Applicable Percentages
shall be based on Pricing Level I (as shown above) and shall remain at
Pricing Level I until the first Calculation Date subsequent to the
Closing Date and, thereafter, the Pricing Level shall be determined by
the Leverage Ratio as of the last day of the most recently ended fiscal
quarter of the Consolidated Parties preceding the applicable
Calculation Date, and (ii) if the Borrower fails to provide the
officer's certificate to the Agent as required by Section 7.1(c) for
the last day of the most recently ended fiscal quarter of the
Consolidated Parties preceding the applicable Calculation Date, the
Applicable Percentage from such Calculation Date shall be based on
Pricing Level I until such time as an appropriate officer's certificate
is provided, whereupon the Pricing Level shall be determined by the
Leverage Ratio as of the last day of the most recently ended fiscal
quarter of the Consolidated Parties preceding such Calculation Date.
Each Applicable Percentage shall be effective from one Calculation Date
until the next Calculation Date. Any adjustment in the Applicable
Percentages shall be applicable to all existing Loans as well as any
new Loans made or issued.
"APPLICATION PERIOD", in respect of any Asset Disposition,
shall have the meaning assigned to such term in Section 8.5.
"ASSET DISPOSITION" means the disposition of any or all of the
assets (including without limitation the Capital Stock of a Subsidiary)
of any Consolidated Party whether by sale, lease, transfer or
otherwise. The term "Asset Disposition" shall not include (i) any
Equity Issuance, (ii) sales of inventory and Cash Equivalents, and
grants of licenses in Intellectual Property, in each case in the
ordinary course of business for fair consideration or (iii) the sale or
disposition of machinery and equipment no longer used or useful in the
conduct of such Person's business.
"ASSET DISPOSITION PREPAYMENT EVENT" means, with respect to
any Asset Disposition other than an Excluded Asset Disposition, the
failure of the Borrower to apply (or cause to be applied) the Net Cash
Proceeds of such Asset Disposition to the purchase, acquisition or
construction of Eligible Assets during the Application Period for such
Asset Disposition.
"BANKRUPTCY CODE" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"BANKRUPTCY EVENT" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
3
<PAGE>
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty (60)
consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they
become due.
"BASE RATE" means, for any day, the rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus one-half of
one percent (.5%) and (b) the Prime Rate for such day. Any change in
the Base Rate due to a change in the Prime Rate or the Federal Funds
Rate shall be effective on the effective date of such change in the
Prime Rate or Federal Funds Rate.
"BASE RATE LOAN" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"BORROWER" means the Person identified as such in the heading
hereof, together with any permitted successors and assigns.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or New
York, New York are authorized or required by law to close, EXCEPT THAT,
when used in connection with a Eurodollar Loan, such day shall also be
a day on which dealings between banks are carried on in U.S. dollar
deposits in London, England.
"CALCULATION DATE" has the meaning set forth in the definition
of "Applicable Percentage" set forth in this Section 1.1.
"CAPITAL LEASE" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"CAPITAL STOCK" means (i) in the case of a corporation,
capital stock, (ii) in the case of an association or business entity,
any and all shares, interests, participations, rights or other
equivalents (however designated) of capital stock, (iii) in the case of
a partnership, partnership interests (whether general or limited) and
(iv) in the case of a limited liability company, membership interests.
"CASH EQUIVALENTS" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S.
4
<PAGE>
dollar denominated time deposits and certificates of deposit of (i) any
domestic commercial bank of recognized standing having capital and
surplus in excess of $500,000,000 or (ii) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent
thereof or from Moody's is at least P-1 or the equivalent thereof (any
such bank being an "APPROVED BANK"), in each case with maturities of
not more than 270 days from the date of acquisition, (c) commercial
paper and variable or fixed rate notes issued by any Approved Bank (or
by the parent company thereof) or issued by, or guaranteed by, any
domestic corporation rated A-1 (or the equivalent thereof) or better by
S&P or P-1 (or the equivalent thereof) or better by Moody's and
maturing within six months of the date of acquisition, (d) repurchase
agreements with a bank or trust company (including any of the Lenders)
or recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by
the United States of America in which any Credit Party shall have a
perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at
least 100% of the amount of the repurchase obligations and (e)
Investments, classified in accordance with GAAP as current assets, in
money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (d).
"CHANGE OF CONTROL" means that TBG Industries, Inc. and/or
Chase Capital Partners and their Affiliates shall own outstanding
shares of Capital Stock representing less than 51% of the Voting Stock
of the Borrower.
"CLOSING DATE" means the date hereof.
"CODE" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed also to
refer to any successor sections.
"COLLATERAL" means a collective reference to the collateral
which is identified in, and at any time will be covered by, the
Collateral Documents.
"COLLATERAL DOCUMENTS" means a collective reference to the
Security Agreement, the Pledge Agreement, the Mortgage Instruments and
such other documents executed and delivered in connection with the
attachment and perfection of the Agent's security interests and liens
arising thereunder, including without limitation, UCC financing
statements and patent and trademark filings.
"COMMITMENT" means (i) with respect to each Lender, the
Revolving Commitment of such Lender, the Tranche A Term Loan Commitment
of such Lender and the Tranche B Term Loan Commitment of such Lender,
(ii) with respect to the Issuing Lender, the LOC Commitment and (iii)
with respect to the Swingline Lender, the Swingline Commitment.
5
<PAGE>
"COMMITMENT FEE" shall have the meaning assigned to such term
in Section 3.5(a).
"COMMITMENT FEE CALCULATION PERIOD" shall have the meaning
assigned to such term in Section 3.5(a).
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, all
capital expenditures (excluding capital expenditures made with proceeds
from Asset Dispositions or proceeds received from casualty or
condemnation recovery events) of the Consolidated Parties on a
consolidated basis for such period, as set forth on a statement of cash
flows of the Consolidated Parties in accordance with GAAP.
"CONSOLIDATED EBITDA" means, for any period, the sum of (i)
Consolidated Net Income (excluding non-recurring, non-duplicative
non-cash items including those associated with the sale of the Divested
Businesses, which amount in connection with such sale shall not in an
aggregate amount on an after-tax basis exceed $4,800,000) for such
period, plus (ii) an amount which, in the determination of Consolidated
Net Income for such period, has been deducted for (A) Consolidated
Interest Expense, (B) total federal, state, local and foreign income,
value added and similar taxes and (C) depreciation and amortization
expense, all as determined in accordance with GAAP. For purposes
hereof, Consolidated EBITDA of the Consolidated Parties for the
quarterly period ending November 30, 1997 shall be $7,367,000 and for
the quarterly period ending February 28, 1998, $7,199,000.
"CONSOLIDATED INTEREST EXPENSE" means, for any period,
interest expense (including the amortization of debt discount and
premium, the interest component under Capital Leases and the implied
interest component under Synthetic Leases, but excluding pay-in-kind
interest) of the Consolidated Parties on a consolidated basis for such
period, as determined in accordance with GAAP. For purposes hereof,
Consolidated Interest Expense of the Consolidated Parties for the first
three fiscal quarters to occur after the Closing Date shall be
determined by annualizing the components thereof such that Consolidated
Interest Expense for the first fiscal quarter to occur after the
Closing Date would be multiplied by four (4), the first two (2) fiscal
quarters would be multiplied by two (2) and the first three (3) fiscal
quarters would be multiplied by one and one-third (1 1/3).
"CONSOLIDATED NET INCOME" means, for any period, net income
after taxes for such period of the Consolidated Parties on a
consolidated basis, as determined in accordance with GAAP.
"CONSOLIDATED NET WORTH" means, as of any date, shareholders'
equity of the Consolidated Parties on a consolidated basis, as
determined in accordance with GAAP.
"CONSOLIDATED PARTIES" means a collective reference to the
Borrower and its Subsidiaries, and "CONSOLIDATED PARTY" means any one
of them.
6
<PAGE>
"CONSOLIDATED SCHEDULED FUNDED DEBT PAYMENTS" means, as of the
end of each fiscal quarter of the Consolidated Parties, for the
Consolidated Parties on a consolidated basis, the sum of all scheduled
payments of principal on Funded Indebtedness for the applicable period
ending on such date (including the principal component of payments due
on Capital Leases during the applicable period ending on such date); it
being understood that Scheduled Funded Debt Payments shall not include
voluntary prepayments or the mandatory prepayments required pursuant to
Section 3.3.
"CONSOLIDATED WORKING CAPITAL" means, at any time, the excess
of (i) current assets of the Consolidated Parties on a consolidated
basis at such time over (ii) current liabilities of the Consolidated
Parties on a consolidated basis at such time, all as determined in
accordance with GAAP.
"CONTINUE", "CONTINUATION", and "CONTINUED" shall refer to the
continuation pursuant to Section 3.2(b) hereof of a Eurodollar Loan
from one Interest Period to the next Interest Period.
"CONVERT", "CONVERSION", and "CONVERTED" shall refer to a
conversion pursuant to Section 3.2(b) or Sections 3.7 through 3.12,
inclusive, of a Base Rate Loan into a Eurodollar Loan.
"CREDIT DOCUMENTS" means a collective reference to this Credit
Agreement, the Notes, the LOC Documents, each Joinder Agreement, the
Agent's Fee Letter, the Collateral Documents and all other related
agreements and documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto (in each case as the same may be amended,
modified, restated, supplemented, extended, renewed or replaced from
time to time), and "CREDIT DOCUMENT" means any one of them.
"CREDIT PARTIES" means a collective reference to the Borrower
and the Guarantors, and "CREDIT PARTY" means any one of them.
"CREDIT PARTY OBLIGATIONS" means, without duplication, (i) all
of the obligations of the Credit Parties to the Lenders (including the
Issuing Lender) and the Agent, whenever arising, under this Credit
Agreement, the Notes, the Collateral Documents or any of the other
Credit Documents (including, but not limited to, any interest accruing
after the occurrence of a Bankruptcy Event with respect to any Credit
Party, regardless of whether such interest is an allowed claim under
the Bankruptcy Code) and (ii) all liabilities and obligations, whenever
arising, owing from the Borrower to any Lender, or any Affiliate of a
Lender, arising under any Hedging Agreement.
"DEBARMENT EVENT" means an event or series of events with
respect to which (i) one or more Consolidated Parties are "debarred"
from participation in federal, state or local government contract
programs and (ii) revenues of the Consolidated Parties derived from
such debarred government programs in the prior fiscal year taken as a
whole are equal to or greater than the lesser of (a) 7% of total
revenues of the Consolidated Parties during such period or (b)
$25,000,000.
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"DEBT ISSUANCE" means the issuance of any Indebtedness for
borrowed money by any Consolidated Party.
"DEFAULT" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" means, at any time, any Lender that (a)
has failed to make a Loan or purchase a Participation Interest required
pursuant to the term of this Credit Agreement within one Business Day
of when due, (b) other than as set forth in (a) above, has failed to
pay to the Agent or any Lender an amount owed by such Lender pursuant
to the terms of this Credit Agreement within one Business Day of when
due, unless such amount is subject to a good faith dispute or (c) has
been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or with respect to which (or with respect to any
of assets of which) a receiver, trustee or similar official has been
appointed.
"DESIGNATED CORPORATIONS" means Comsat RSI, Inc., Comsat RSI
Communications Corp., Comsat RSI Foreign Sales Corporation and Comsat
RSI Maryland Inc.
"DIVESTED BUSINESSES" means the operating assets of the
Acquired Company involved in network systems and precision grinding
technology or the Capital Stock of PG Technology Ltd. (or any
Subsidiary engaged in the network systems business).
"DOLLARS" and "$" means dollars in lawful currency of the
United States of America.
"DOMESTIC SUBSIDIARY" means, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the
laws of any State of the United States or the District of Columbia.
"ELIGIBLE ASSETS" means another business or any substantial
part of another business or other long-term assets, in each case, in,
or used or useful in, the same or a similar line of business as the
Consolidated Parties were engaged in on the Closing Date or any
reasonable extensions or expansions thereof.
"ELIGIBLE ASSIGNEE" means (i) a Lender; (ii) an Affiliate of a
Lender; (iii) a Related Fund; and (iv) any other Person approved by the
Agent (such approval not to be unreasonably withheld or delayed) and,
unless an Event of Default has occurred and is continuing at the time
any assignment is effected in accordance with Section 11.3, the
Borrower (such approval not to be unreasonably withheld or delayed by
the Borrower and such approval to be deemed given by the Borrower if no
objection is received by the assigning Lender and the Agent from the
Borrower within three Business Days after notice of such proposed
assignment has been provided by the assigning Lender to the Borrower);
PROVIDED, HOWEVER, that neither the Borrower nor an Affiliate of the
Borrower shall qualify as an Eligible Assignee.
"ENVIRONMENTAL LAWS" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees,
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permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances
or wastes into the environment including, without limitation, ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes.
"EQUITY ISSUANCE" means any issuance by any Consolidated Party
to any Person which is not a Credit Party of shares of its Capital
Stock. The term "Equity Issuance" shall not include any Asset
Disposition.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA AFFILIATE" means an entity which is under common
control with any Credit Party within the meaning of Section 4001(a)(14)
of ERISA, or is a member of a group which includes the Borrower and
which is treated as a single employer under Sections 414(b) or (c) of
the Code.
"ERISA EVENT" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by any Consolidated Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a substantial
employer (as such term is defined in Section 4001(a)(2) of ERISA), or
the termination of a Multiple Employer Plan; (iii) the distribution of
a notice of intent to terminate or the actual termination of a Plan
pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) the institution
of proceedings to terminate or the actual termination of a Plan by the
PBGC under Section 4042 of ERISA; (v) any event or condition which
could reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial withdrawal of any
Consolidated Party or any ERISA Affiliate from a Multiemployer Plan;
(vii) the conditions for imposition of a lien under Section 302(f) of
ERISA exist with respect to any Plan; or (vii) the adoption of an
amendment to any Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA.
"EURODOLLAR LOAN" means any Loan that bears interest at a rate
based upon the Eurodollar Rate.
"EURODOLLAR RATE" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Agent to be
equal to the quotient obtained by dividing (a) the London Interbank
Offered Rate for such Eurodollar Loan for such Interest Period by (b) 1
minus the Eurodollar Reserve Requirement for such Eurodollar Loan for
such Interest Period.
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<PAGE>
"EURODOLLAR RESERVE REQUIREMENT" means, at any time, the
maximum rate at which reserves (including, without limitation, any
marginal, special, supplemental, or emergency reserves) are required to
be maintained under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities"
(as such term is used in Regulation D). Without limiting the effect of
the foregoing, the Eurodollar Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by
reference to which the Adjusted Eurodollar Rate is to be determined, or
(ii) any category of extensions of credit or other assets which include
Eurodollar Loans. The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Requirement.
"EVENT OF DEFAULT" means such term as defined in Section 9.1.
"EXCESS CASH FLOW" means, with respect to any fiscal year
period of the Consolidated Parties on a consolidated basis, an amount
equal to (a) Consolidated EBITDA for such period MINUS (b) Consolidated
Capital Expenditures for such period MINUS (c) Consolidated Interest
Expense for such period MINUS (d) increases (or PLUS decreases) in
Consolidated Working Capital for such fiscal year MINUS (e) Federal,
state and other income, value added and similar taxes actually paid by
the Consolidated Parties on a consolidated basis during such period
MINUS (f) Consolidated Scheduled Funded Debt Payments made during such
period.
"EXCLUDED ASSET DISPOSITION" means any Asset Disposition by
any Consolidated Party to any Credit Party if the Credit Parties shall
cause to be executed and delivered such documents, instruments and
certificates as the Agent may request so as to cause the Credit Parties
to be in compliance with the terms of Section 7.13 after giving effect
to such Asset Disposition.
"EXCLUDED ISSUANCE" means either (i) the receipt by the
Borrower of a capital contribution from, or the sale by the Borrower of
its Capital Stock to, TBG Industries, Inc. and/or Chase Capital
Partners or any of their Affiliates (ii) the issuance by the Borrower
in favor of TBG Industries, Inc. and/or Chase Capital Partners or any
of their Affiliates after the Closing Date of subordinated debt on
terms and conditions reasonably satisfactory to the Required Lenders or
(iii) the issuance of any other Indebtedness permitted to be issued
pursuant to Section 8.1 (excluding for purposes hereof Section 8.1(g)).
"FEES" means all fees payable pursuant to Section 3.5.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) 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 on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; PROVIDED
that (a) if such day is not a
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Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate
for such day shall be the average rate charged to the Agent (in its
individual capacity) on such day on such transactions as determined by
the Agent.
"FIRST UNION NATIONAL BANK" means First Union National Bank
and its successors.
"FOREIGN SUBSIDIARY" means, with respect to any Person, any
Subsidiary of such Person which is not a Domestic Subsidiary of such
Person.
"FUNDED INDEBTEDNESS" means, with respect to any Person,
without duplication, (i) all Indebtedness of such Person for borrowed
money, (ii) all purchase money Indebtedness of such Person, including
without limitation the principal portion of all obligations of such
Person under Capital Leases, (iii) all Guaranty Obligations of such
Person with respect to Funded Indebtedness of another Person, (iv) all
Funded Indebtedness of another Person secured by a Lien on any Property
of such Person, whether or not such Funded Indebtedness has been
assumed, PROVIDED that for purposes hereof the amount of such Funded
Indebtedness shall be limited to the greater of (A) the amount of such
Funded Indebtedness to which there is recourse to such Person and (B)
the fair market value of the property which is subject to the Lien
(unless the amount of Funded Indebtedness secured by such Lien is less
than such fair market value in which case the amount of such Funded
Indebtedness), and (v) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing product to which such Person is
a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP. The Funded Indebtedness of any Person shall
include the Funded Indebtedness of any partnership or joint venture in
which such Person is a general partner or joint venturer, but only to
the extent to which there is recourse to such Person for the payment of
such Funded Indebtedness.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3.
"GOVERNMENTAL AUTHORITY" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"GUARANTOR" means each of the Persons identified as a
"Guarantor" on the signature pages hereto and each Additional Credit
Party which may hereafter execute a Joinder Agreement, together with
their successors and permitted assigns, and "GUARANTOR" means any one
of them.
"GUARANTY OBLIGATIONS" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including
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without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the
payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for
the benefit of any holder of Indebtedness of such other Person, (iii)
to lease or purchase Property, securities or services primarily for the
purpose of assuring the holder of such Indebtedness, or (iv) to
otherwise assure or hold harmless the holder of such Indebtedness
against loss in respect thereof. The amount of any Guaranty Obligation
hereunder shall (subject to any limitations set forth therein) be
deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of
which such Guaranty Obligation is made.
"HEDGING AGREEMENTS" means any interest rate protection
agreement or foreign currency exchange agreement between any
Consolidated Party and any Lender, or any Affiliate of a Lender.
"ILLINOIS IRB" means the $3,065,000 Illinois Development
Finance Authority Industrial Development Bonds (Mark Antenna Products,
Inc. Project) Series 1991.
"INDEBTEDNESS" of any Person means (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced
by debentures, notes or similar instruments, or upon which interest
payments are customarily made, (c) all obligations of such Person under
conditional sale or other title retention agreements relating to
Property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the
ordinary course of business), (d) all obligations of such Person issued
or assumed as the deferred purchase price of Property or services
purchased by such Person (other than trade debt incurred in the
ordinary course of business and due within six months of the incurrence
thereof) which would appear as liabilities on a balance sheet of such
Person, (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, Property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (f)
all Guaranty Obligations of such Person, (g) the principal portion of
all obligations of such Person under Capital Leases, (h) all
obligations of such Person under Hedging Agreements, (i) the maximum
amount of all letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed),
(j) all preferred Capital Stock issued by such Person and required by
the terms thereof to be redeemed, or for which mandatory sinking fund
payments are due, by a fixed date, but only to the extent such
redemption or sinking fund payments would be due prior to the final
maturity date of the Loans hereunder, (k) the principal portion of all
obligations of such Person under Synthetic Leases and (l) the
Indebtedness of any partnership or joint venture in which such Person
is a general partner or a joint venturer, but only to the extent to
which there is recourse to such Person for the payment of such
Indebtedness.
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"INTEREST COVERAGE RATIO" means, with respect to the
Consolidated Parties on a consolidated basis for the twelve month
period ending on the last day of any fiscal quarter of the Consolidated
Parties, the ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Interest Expense for such period.
"INTEREST PAYMENT DATE" means (a) as to Base Rate Loans, the
last day of each fiscal quarter and the Maturity Date, and (b) as to
Eurodollar Loans, the last day of each applicable Interest Period and
the Maturity Date, and in addition where the applicable Interest Period
for a Eurodollar Loan is greater than three months, then also the date
three months from the beginning of the Interest Period and each three
months thereafter.
"INTEREST PERIOD" means, as to Eurodollar Loans, a period of
one, two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); PROVIDED, HOWEVER, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day),
(b) no Interest Period shall extend beyond the Maturity Date, (c) with
regard to the Tranche A Term Loans, no Interest Period shall extend
beyond any Principal Amortization Payment Date unless the portion of
Tranche A Term Loans comprised of Base Rate Loans together with the
portion of Tranche A Term Loans comprised of Eurodollar Loans with
Interest Periods expiring prior to the date such Principal Amortization
Payment is due, is at least equal to the amount of such Principal
Amortization Payment due on such date, (d) with regard to the Tranche B
Term Loans, no Interest Period shall extend beyond any Principal
Amortization Payment Date unless the portion of Tranche B Term Loans
comprised of Base Rate Loans together with the portion of Tranche B
Term Loans comprised of Eurodollar Loans with Interest Periods expiring
prior to the date such Principal Amortization Payment due, is at least
equal to the amount of such Principal Amortization Payment due on such
date and (e) where an Interest Period begins on a day for which there
is no numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month.
"INVESTMENT" in any Person means (a) the acquisition (whether
for cash, property, services, assumption of Indebtedness, securities or
otherwise) of assets (excluding capital expenditures, purchases of
inventory and other assets acquired in the ordinary course of business
and similar items), shares of Capital Stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other
securities of such other Person or (b) any deposit with, or advance,
loan or other extension of credit to, such Person (other than deposits
made in connection with the purchase of equipment or other assets or
extensions of credit to customers in the ordinary course of business)
or (c) any other capital contribution to or investment in such Person,
including, without limitation, any Guaranty Obligations (including any
support for a letter of credit issued on behalf of such Person)
incurred for the benefit of such Person, but excluding any Restricted
Payment to such Person.
"ISSUING LENDER" means First Union National Bank.
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"ISSUING LENDER FEES" shall have the meaning assigned to such
term in Section 3.5(b)(iii).
"JOINDER AGREEMENT" means a Joinder Agreement substantially in
the form of EXHIBIT 7.12 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.12.
"LENDER" means any of the Persons identified as a "Lender" on
the signature pages hereto, and any Person which may become a Lender by
way of assignment in accordance with the terms hereof, together with
their successors and permitted assigns.
"LETTER OF CREDIT" means any letter of credit issued by the
Issuing Lender for the account of any Credit Party in accordance with
the terms of Section 2.2.
"LETTER OF CREDIT FEE" shall have the meaning assigned to such
term in Section 3.5(b)(i).
"LEVERAGE RATIO" means, with respect to the Consolidated
Parties on a consolidated basis for the twelve month period ending on
the last day of any fiscal quarter, the ratio of (a) Funded
Indebtedness of the Consolidated Parties on a consolidated basis on the
last day of such period to (b) Consolidated EBITDA for such period.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise) or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention
agreement, any financing or similar statement which purports to create
an encumbrance or notice filed under the Uniform Commercial Code as
adopted and in effect in the relevant jurisdiction or other similar
recording or notice statute, and any lease in the nature thereof).
"LOAN" or "LOANS" means the Revolving Loans, the Tranche A
Term Loans and/or the Tranche B Term Loans (or a portion of any
Revolving Loan, any Tranche A Term Loan or any Tranche B Term Loan
bearing interest at the Adjusted Base Rate or the Adjusted Eurodollar
Rate), individually or collectively, as appropriate.
"LOC COMMITMENT" means the commitment of the Issuing Lender to
issue Letters of Credit in an aggregate face amount at any time
outstanding (together with the amounts of any unreimbursed drawings
thereon) of up to the LOC Committed Amount.
"LOC COMMITTED AMOUNT" shall have the meaning assigned to such
term in Section 2.2.
"LOC DOCUMENTS" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
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providing for (i) the rights and obligations of the parties concerned
or at risk or (ii) any collateral security for such obligations.
"LOC OBLIGATIONS" means, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit PLUS (ii) the aggregate amount of all drawings
under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed by the Borrower.
"LONDON INTERBANK OFFERED RATE" shall mean, with respect to
any Eurodollar Loan for the Interest Period applicable thereto, the
rate of interest per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such
Interest Period; PROVIDED, HOWEVER, if more than one rate is specified
on Telerate Page 3750, the applicable rate shall be the arithmetic mean
of all such rates. If, for any reason, such rate is not available, the
term "LONDON INTERBANK OFFERED RATE" shall mean, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; PROVIDED,
HOWEVER, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such
rates.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets or liabilities of the Consolidated Parties, taken as a whole,
(ii) the ability of the Credit Parties to perform any material
obligation under the Credit Documents to which it is a party or (iii)
the material rights and remedies of the Lenders under the Credit
Documents.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, friable asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"MATURITY DATE" means (i) as to the Revolving Loans, June 25,
2004, (ii) as to Letters of Credit (and the related LOC Obligations),
June 15, 2004 and (iii) as to the Tranche A Term Loan and the Tranche B
Term Loan, the date of the final maturity of such Term Loan.
"MAXIMUM PAYMENT AMOUNT" means, as of the date of
determination, the sum of the following: (a) for each complete fiscal
year ending on or after November 30, 1999 where the Leverage Ratio on
the last day of such fiscal year is less than or equal to 3.0 to 1.0
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but greater than 2.5 to 1.0 (calculated after giving effect to any
dividend or payment proposed to be paid pursuant to Section 8.7 in
connection with the calculation of such Maximum Payment Amount), 50% of
Excess Cash Flow for such fiscal year, plus (b) for each complete
fiscal year ending on or after November 30, 1999 where the Leverage
Ratio on the last day of such fiscal year is less than or equal to 2.5
to 1.0 but greater than 2.0 to 1.0 (calculated after giving effect to
any dividend or payment proposed to be paid pursuant to Section 8.7 in
connection with the calculation of such Maximum Payment Amount), 75% of
Excess Cash Flow, plus (c) for each complete fiscal year ending on or
after November 30, 1999 where the Leverage Ratio is less than or equal
to 2.0 to 1.0, 100% of Excess Cash Flow (measured cumulatively from the
Closing Date) not otherwise distributed either in the form of payments
permitted under Section 8.7 or repayments of the Loans as set forth in
Section 3.3(b)(ii) since the Closing Date.
"MOODY'S" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"MORTGAGE INSTRUMENTS" shall have the meaning assigned such
term in Section 5.1(h).
"MORTGAGE POLICIES" shall have the meaning assigned such term
in Section 5.1(h).
"MORTGAGED REAL PROPERTIES" shall have the meaning assigned
such term in Section 5.1(h).
"MULTIEMPLOYER PLAN" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"MULTIPLE EMPLOYER PLAN" means a Plan which any Consolidated
Party or any ERISA Affiliate and at least one employer other than the
Consolidated Parties or any ERISA Affiliate are contributing sponsors.
"NET CASH PROCEEDS" means the aggregate cash proceeds received
by the Consolidated Parties in respect of any Asset Disposition, Debt
Issuance or Equity Issuance, net of (a) direct costs (including,
without limitation, legal, accounting and investment banking fees, and
sales commissions) (b) taxes paid or payable as a result thereof, (c)
the amount of all payments required to be made by the Borrower and its
Subsidiaries as a result of such event to repay Indebtedness secured by
the assets the subject of such Asset Disposition or otherwise subject
to mandatory prepayment as a result of such event (including in order
to obtain consent required therefor) and (d) the amount of any reserves
established by the Borrower and its Subsidiaries to fund contingent
liabilities reasonably estimated to be payable, and that are directly
attributable to such event (as determined reasonably and in good faith
by the chief financial officer of the Borrower); it being understood
that "Net Cash Proceeds" shall include, without limitation, any cash
received upon the sale or other disposition of any non-cash
consideration received by the Consolidated Parties in any Asset
Disposition or Equity Issuance.
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"NOTE" or "NOTES" means the Revolving Notes and/or the Term
Notes, individually or collectively, as appropriate.
"NOTICE OF ACCOUNT DESIGNATION" means a written notice of
account designation in substantially the form of EXHIBIT 3.2(A)(III).
"NOTICE OF BORROWING" means a written notice of borrowing in
substantially the form of EXHIBIT 3.2(A)(I), as required by Section
3.2(a)(i).
"NOTICE OF EXTENSION/CONVERSION" means the written notice of
extension or conversion in substantially the form of EXHIBIT 3.2(B), as
required by Section 3.2(b).
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"OTHER TAXES" means such term as is defined in Section 3.11.
"PARTICIPATION INTEREST" means a purchase by a Lender of a
participation in Letters of Credit or LOC Obligations as provided in
Section 2.2, in Swingline Loans as provided in Section 2.3 or in any
Loans as provided in Section 3.14.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"PERMITTED INVESTMENTS" means Investments which are either (i)
cash and Cash Equivalents; (ii) accounts receivable created, acquired
or made by any Consolidated Party in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
(iii) Investments consisting of Capital Stock, obligations, securities
or other property received by any Consolidated Party in settlement of
accounts receivable (created in the ordinary course of business) or
other obligations from bankrupt obligors; (iv) Investments existing as
of the Closing Date and set forth in SCHEDULE 1.1A, (v) Guaranty
Obligations permitted by Section 8.1; (vi) transactions permitted by
Section 8.9, (vii) Investments resulting from non-cash proceeds of
Asset Dispositions permitted under Section 8.5, (viii) payroll, travel
and similar advances made in the ordinary course of business which are
expected to be treated as expenses for accounting purposes and other
advances or loans to directors, officers, employees, agents, customers
or suppliers that do not exceed $500,000 in the aggregate at any one
time outstanding for all of the Consolidated Parties; (ix) Investments
in any other Credit Party, (x) equity securities listed on the New York
Stock Exchange, PROVIDED that (A) the long-term credit rating of the
corporation issuing such securities shall be A- (or the equivalent
thereof) or better from S&P or A3 (or the equivalent thereof) or better
from Moody's and (B) the purchase price paid for all such equity
securities held at any time shall not exceed $100,000, (xi) Investments
in Subsidiaries which are not Credit Parties in an aggregate amount not
to exceed $1,000,000 in the aggregate at any time outstanding, (xii)
Hedging Agreements and other hedging contracts not entered into for
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speculative purposes, (xiii) acquisitions of Eligible Assets as
contemplated by 8.5(f), (xiv) Investments resulting from transactions
permitted by Section 8.4 and (xv) other Investments in an aggregate
amount not to exceed $200,000.
"PERMITTED LIENS" means:
(i) Liens in favor of the Agent to secure the Credit Party
Obligations;
(ii) Liens (other than Liens created or imposed under ERISA)
for taxes, assessments or governmental charges or levies not yet due or
Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with
GAAP have been established (and as to which the Property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account
thereof);
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens
imposed by law or pursuant to customary reservations or retentions of
title arising in the ordinary course of business, PROVIDED that such
Liens secure only amounts not yet due and payable or, if due and
payable, are unfiled and no other action has been taken to enforce the
same or are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have
been established (and as to which the Property subject to any such Lien
is not yet subject to foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any Consolidated Party in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure
the performance of tenders, statutory obligations, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of
borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) PROVIDED that the judgments
secured shall, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall have
been discharged within 30 days after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect, impairing
the use of the encumbered Property for its intended purposes;
(vii) Liens on Property securing purchase money Indebtedness
(including Capital Leases) to the extent permitted under Section
8.1(c), PROVIDED that any such Lien attaches to such Property
concurrently with or within 90 days after the acquisition thereof;
(viii) any interest of title of a lessor under, and Liens
arising from UCC financing statements (or equivalent filings,
registrations or agreements in foreign jurisdictions) relating to,
leases permitted by this Credit Agreement;
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(ix) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 8.6;
(x) normal and customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions;
(xi) Liens existing as of the Closing Date and set forth on
SCHEDULE 1.1B; PROVIDED that (a) no such Lien shall at any time be
extended to or cover any Property other than the Property subject
thereto on the Closing Date and (b) the principal amount of the
Indebtedness secured by such Liens shall not be extended, renewed,
refunded or refinanced;
(xii) Liens of a collection bank arising in the ordinary
course of business not to exceed the amount of any fees incurred in
connection therewith as provided under Section 4-208 of the Uniform
Commercial Code in effect in the relevant jurisdiction;
(xiii) licenses of patents, trademarks and other intellectual
property entered into in the ordinary course of business; and
(xiv) other Liens securing amounts not to exceed $1,000,000 at
any time outstanding.
"PERSON" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"PLAN" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any
Consolidated Party or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" within the meaning of Section 3(5) of ERISA.
"PLEDGE AGREEMENT" means the pledge agreement dated as of the
Closing Date in the form of EXHIBIT 1.1A to be executed in favor of the
Agent by each of the Credit Parties, as amended, modified, restated or
supplemented from time to time.
"PRIME RATE" means the per annum rate of interest established
from time to time by First Union National Bank as its prime rate, which
rate may not be the lowest rate of interest charged by First Union
National Bank to its customers.
"PRINCIPAL AMORTIZATION PAYMENT" means a principal payment on
the Tranche A Term Loans as set forth in Section 2.4(c) or on the
Tranche B Term Loans as set forth in Section 2.5(c).
"PRINCIPAL AMORTIZATION PAYMENT DATE" means the date a
Principal Amortization Payment is due.
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"PRINCIPAL OFFICE" means the principal office of First Union
National Bank, presently located at Charlotte, North Carolina.
"PRO FORMA BASIS" means, with respect to any
transaction, that such transaction shall be deemed to have occurred
(for purposes of calculating compliance in respect of such transaction
with each of the financial covenants set forth in Section 7.11 as of
the most recent fiscal quarter end preceding the date of such
transaction with respect to which the Agent has received the required
financial information) as of the first day of the four fiscal-quarter
period ending as of such fiscal quarter end. As used herein,
"TRANSACTION" shall mean (i) any incurrence or assumption of
Indebtedness as referred to in Section 8.1(g)(i), (ii) any merger,
consolidation or other transaction as referred to in Section 8.4 or
(iii) any Asset Disposition as referred to in Section 8.5. With respect
to any transaction of the type described in clause (i) above regarding
Indebtedness which has a floating or formula rate, the implied rate of
interest for such Indebtedness for the applicable period for purposes
of this definition shall be determined by utilizing the rate which is
or would be in effect with respect to such Indebtedness as at the
relevant date of determination. With respect to any transaction of the
type described in clause (ii) above, any Indebtedness incurred by the
Borrower or any of its Subsidiaries in order to consummate such
transaction (A) shall be deemed to have been incurred on the first day
of the applicable period four fiscal-quarter period and (B) if such
Indebtedness has a floating or formula rate, then the implied rate of
interest for such Indebtedness for the applicable period for purposes
of this definition shall be determined by utilizing the rate which is
or would be in effect with respect to such Indebtedness as at the
relevant date of determination. In connection with any calculation of
the financial covenants set forth in Section 7.11 upon giving effect to
a transaction on a Pro Forma Basis for purposes of Section 8.1(g)(i),
Section 8.4 or Section 8.5 as applicable:
(A) for purposes of any such calculation in respect
of any incurrence or assumption of Indebtedness as referred to
in Section 8.1(g)(i), any Indebtedness which is retired in
connection with such incurrence or assumption shall be
excluded and deemed to have been retired as of the first day
of the applicable period;
(B) for purposes of any such calculation in respect
of any Asset Disposition as referred to in Section 8.5, (1)
income statement items (whether positive or negative)
attributable to the Property disposed of in such Asset
Disposition shall be excluded and (2) any Indebtedness which
is retired in connection with such Asset Disposition shall be
excluded and deemed to have been retired as of the first day
of the applicable period;
(C) for purposes of any such calculation in respect
of any merger or consolidation as referred to in Section 8.4,
(1) any Indebtedness incurred by the Borrower or any of its
Subsidiaries in connection with such transaction shall be
deemed to have been incurred as of the first day of the
applicable period and (2) income statement items (whether
positive or negative) attributable to the Property acquired in
such transaction or to the Investment comprising such
transaction, as
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applicable, shall be included to the extent relating to the
relevant period. The Borrower may, on a one-time basis in
connection with a merger, consolidation or other transaction
referred to in Section 8.4, include readily definable cost
savings (subject to the Agent's reasonable consent) in an
aggregate amount not to exceed 10% of the earnings before
interest, taxes, depreciation and amortization of the Person
acquired for the immediately preceding fiscal year; and
(D) for purposes of any such calculation, the
principles set forth in the second paragraph of Section 1.3
shall be applicable.
"PRO FORMA COMPLIANCE CERTIFICATE" means a certificate of the
chief financial officer of the Borrower delivered to the Agent in
connection with (i) any incurrence, assumption or retirement of
Indebtedness as referred to in Section 8.1(g)(i), (ii) any merger or
consolidation as referred to in Section 8.4 or (iii) any Asset
Disposition as referred to in Section 8.5, as applicable, and
containing reasonably detailed calculations, upon giving effect to the
applicable transaction on a Pro Forma Basis, of the Interest Coverage
Ratio and the Leverage Ratio as of the most recent fiscal quarter end
preceding the date of the applicable transaction with respect to which
the Agent shall have received the required financial information.
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"PURCHASE AGREEMENT" means that certain Stock Purchase and
Sale Agreement dated as of March 16, 1998, as amended, among Comsat
Corporation, TBG Industries, Inc. and the Borrower.
"REAL PROPERTIES" shall have the meaning given such term in
Section 6.15.
"REGISTER" shall have the meaning given such term in Section
11.3(c).
"REGULATION T, U, OR X" means Regulation T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"RELATED FUNDS" means, with respect to any Lender which is a
fund that invests in loans, any other fund that invests in loans and is
managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"RELEASE" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
notice requirement has been waived by regulation.
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"REQUIRED LENDERS" means, at any time, (i) Lenders which are
then in compliance with their obligations hereunder (as determined by
the Agent) and holding in the aggregate at least 51% of the Revolving
Commitments (and Participation Interests therein) and the outstanding
Tranche A Term Loans (and Participation Interests therein) or if the
Commitments have been terminated, the outstanding Revolving Loans and
Tranche A Term Loans and Participation Interests (including the
Participation Interests of the Issuing Lender in any Letters of Credit
and of the Swingline Lender in any Swingline Loans) and (ii) Lenders
which are then in compliance with their obligations hereunder (as
determined by the Agent) and holding in the aggregate at least 51% of
the Tranche B Term Loans (and Participation Interests therein) or if
the Commitments have been terminated, the outstanding Tranche B Term
Loans and Participation Interests.
"REQUIREMENT OF LAW" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
with respect to which any of its material property is subject.
"RESTRICTED PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of Capital Stock of any Consolidated Party, now or hereafter
outstanding, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of Capital Stock of any Consolidated Party,
now or hereafter outstanding and (iii) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any class of Capital Stock of any
Consolidated Party, now or hereafter outstanding.
"REVOLVING COMMITMENT" means, with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Revolving Commitment Percentage of
the Revolving Committed Amount, (i) to make Revolving Loans in
accordance with the provisions of Section 2.1(a) and (ii) to purchase
Participation Interests in Letters of Credit in accordance with the
provisions of Section 2.2(c).
"REVOLVING COMMITMENT PERCENTAGE" means, for any Lender, the
percentage identified as its Revolving Commitment Percentage on
SCHEDULE 2.1(a), as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section 11.3.
"REVOLVING COMMITTED AMOUNT" shall have the meaning assigned
to such term in Section 2.1(a).
"REVOLVING LOANS" shall have the meaning assigned to such term
in Section 2.1(a).
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"REVOLVING NOTE" or "REVOLVING NOTES" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1(e), individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, restated, supplemented, extended, renewed or replaced from
time to time.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party,
providing for the leasing to any Consolidated Party of any Property,
whether owned by such Consolidated Party as of the Closing Date or
later acquired, which has been or is to be sold or transferred by such
Consolidated Party to such Person or to any other Person from whom
funds have been, or are to be, advanced by such Person on the security
of such Property.
"SECURITY AGREEMENT" means the security agreement dated as of
the Closing Date in the form of EXHIBIT 1.1B to be executed in favor of
the Agent by each of the Credit Parties, as amended, modified, restated
or supplemented from time to time.
"SENIOR DEBT" means all Funded Indebtedness which is not
contractually subordinated or junior in right of payment to the Credit
Party Obligations.
"SENIOR LEVERAGE RATIO" means with respect to the Consolidated
Parties on a consolidated basis for the twelve month period ending on
the last day of any fiscal quarter of the Consolidated Parties, the
ratio of (a) Senior Debt at such time to (b) Consolidated EBITDA for
such period.
"SENIOR SUBORDINATED NOTES" means the Prodelin Holding
Corporation Senior Subordinated Notes in favor of TBG Industries, Inc.
and Chase Equity Associates, L.P. dated as of June 25, 1998.
"SINGLE EMPLOYER PLAN" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
Employer Plan.
"SOLVENT" or "SOLVENCY" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's Property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which such Person is engaged or is to engage, (iv) the
fair value of the Property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of such Person and (v) the present fair salable value of
the
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assets of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they
become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"SUBSIDIARY" means, as to any Person, (a) any corporation more
than 50% of whose Capital Stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time, any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time owned by such Person directly or indirectly through Subsidiaries,
and (b) any partnership, association, joint venture or other entity in
which such Person directly or indirectly through Subsidiaries has more
than 50% equity interest at any time.
"SWINGLINE COMMITMENT" means the commitment of the Swingline
Lender to make Swingline Loans in an aggregate principal amount at any
time outstanding of up to the Swingline Committed Amount.
"SWINGLINE COMMITTED AMOUNT" shall have the meaning assigned
to such term in Section 2.3(a).
"SWINGLINE LENDER" means First Union National Bank.
"SWINGLINE LOAN" shall have the meaning assigned to such term
in Section 2.3(a).
"SWINGLINE NOTE" means the promissory note of the Borrower in
favor of the Swingline Lender in the original principal amount of
$4,000,000, as such promissory note may be amended, modified, restated
or replaced from time to time.
"SYNTHETIC LEASE" means any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an Operating Lease.
"TAX SHARING AGREEMENT" means that certain Federal Income Tax
Allocation Agreement dated as of May 21, 1998 among Holland America
Investment Corporation and its Subsidiaries.
"TAXES" means such term as is defined in Section 3.11.
"TRANCHE A TERM LOAN" shall have the meaning assigned to such
term in Section 2.4(a).
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"TRANCHE A TERM LOAN COMMITMENT" means, with respect to each
Lender, the commitment of such Lender to make its portion of the
Tranche A Term Loan in a principal amount equal to such Lender's
Tranche A Term Loan Commitment Percentage of the Tranche A Term Loan
Committed Amount.
"TRANCHE A TERM LOAN COMMITMENT PERCENTAGE" means, for any
Lender, the percentage identified as its Tranche A Term Loan Commitment
Percentage on SCHEDULE 2.1(A), as such percentage may be modified in
connection with any assignment made in accordance with the provisions
of Section 11.3.
"TRANCHE A TERM LOAN COMMITTED AMOUNT" shall have the meaning
assigned to such term in Section 2.4(a). "TRANCHE A TERM NOTE" or
"TRANCHE A TERM NOTES" means the promissory notes of the Borrower in
favor of each of the Lenders evidencing the Tranche A Term Loans
provided pursuant to Section 2.4(e), individually or collectively, as
appropriate, as such promissory notes may be amended, modified,
restated, supplemented, extended, renewed or replaced from time to
time. "TRANCHE B TERM LOAN" shall have the meaning assigned to such
term in Section 2.5(a). "TRANCHE B TERM LOAN COMMITMENT" means, with
respect to each Lender, the commitment of such Lender to make its
portion of the Tranche B Term Loan in a principal amount equal to such
Lender's Tranche B Term Loan Commitment Percentage of the Tranche B
Term Loan Committed Amount. "TRANCHE B TERM LOAN COMMITMENT PERCENTAGE"
means, for any Lender, the percentage identified as its Tranche B Term
Loan Commitment Percentage on SCHEDULE 2.1(A), as such percentage may
be modified in connection with any assignment made in accordance with
the provisions of Section 11.3. "TRANCHE B TERM LOAN COMMITTED AMOUNT"
shall have the meaning assigned to such term in Section 2.5(a).
"TRANCHE B TERM NOTE" or "TRANCHE B TERM NOTES" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Tranche B Term Loans provided pursuant to Section 2.5(e), individually
or collectively, as appropriate, as such promissory notes may be
amended, modified, restated, supplemented, extended, renewed or
replaced from time to time.
"VOTING STOCK" means, with respect to any Person, Capital
Stock issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening of
such a contingency.
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"WHOLLY OWNED SUBSIDIARY" of any Person means any Subsidiary
100% of whose Voting Stock or other equity interests (other than
directors qualifying shares required by applicable law) is at the time
owned by such Person directly or indirectly through other Wholly Owned
Subsidiaries.
1.2 COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements as at November 29, 1997; PROVIDED,
HOWEVER, if (a) the Borrower shall object to determining such compliance on such
basis at the time of delivery of such financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) the Agent or the
Required Lenders shall so object in writing within 60 days after delivery of
such financial statements, then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Borrower
to the Lenders as to which no such objection shall have been made.
Notwithstanding the above, the parties hereto acknowledge and agree that, for
purposes of all calculations made in determining compliance with the financial
covenants set forth in Section 7.11 (including without limitation for purposes
of the definitions of "Applicable Percentage" and "Pro Forma Basis" set forth in
Section 1.1), (i) income statement items (whether positive or negative)
attributable to the Property disposed of in any Asset Disposition as
contemplated by Section 8.5, as applicable, shall be excluded to the extent
relating to any period occurring prior to the date of such transaction and (ii)
Indebtedness which is retired in connection with any such Asset Disposition
shall be excluded and deemed to have been retired as of the first day of the
applicable period.
SECTION 2
CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) REVOLVING COMMITMENT. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set
forth herein, each Lender severally
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agrees to make available to the Borrower such Lender's Revolving
Commitment Percentage of revolving credit loans requested by the
Borrower in Dollars ("REVOLVING LOANS") from time to time from the
Closing Date until the Maturity Date, or such earlier date as the
Revolving Commitments shall have been terminated as provided herein for
the purposes hereinafter set forth; PROVIDED, HOWEVER, that the sum of
the aggregate principal amount of outstanding Revolving Loans shall not
exceed FORTY MILLION DOLLARS ($40,000,000) (provided, that until the
time that amounts outstanding under the loan agreement in connection
with the Illinois IRB shall have been paid in full as set forth in
Section 7.17, the aggregate principal amount of outstanding Revolving
Loans shall not exceed $37,500,000), (as such aggregate maximum amount
may be reduced from time to time as provided in Section 3.4, the
"REVOLVING COMMITTED AMOUNT"); PROVIDED, FURTHER, (A) with regard to
each Lender individually, such Lender's outstanding Revolving Loans
shall not exceed such Lender's Revolving Commitment Percentage of the
Revolving Committed Amount, and (B) the aggregate principal amount of
outstanding Revolving Loans PLUS LOC Obligations PLUS outstanding
Swingline Loans outstanding shall not exceed the Revolving Committed
Amount. Revolving Loans may consist of Base Rate Loans or Eurodollar
Loans, or a combination thereof, as the Borrower may request, and may
be repaid and reborrowed in accordance with the provisions hereof;
PROVIDED, HOWEVER, that no more than 10 Eurodollar Loans shall be
outstanding in the aggregate under this Credit Agreement at any time.
For purposes hereof, Eurodollar Loans with different Interest Periods
shall be considered as separate Eurodollar Loans, even if they begin on
the same date, although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new Eurodollar Loan with a
single Interest Period. Revolving Loans hereunder may be repaid and
reborrowed in accordance with the provisions hereof.
(b) REVOLVING LOAN BORROWINGS. The Borrower shall request
Revolving Loans as set forth in Section 3.2(a).
(c) REPAYMENT. The principal amount of all Revolving Loans
shall be due and payable in full on the Maturity Date, unless
accelerated sooner pursuant to Section 9.2.
(d) INTEREST. Subject to the provisions of Section 3.1,
(i) BASE RATE LOANS. During such periods as Revolving
Loans shall be comprised in whole or in part of Base Rate
Loans, such Base Rate Loans shall bear interest at a per annum
rate equal to the applicable Adjusted Base Rate.
(ii) EURODOLLAR LOANS. During such periods as
Revolving Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at
a per annum rate equal to the applicable Adjusted Eurodollar
Rate.
Interest on Revolving Loans shall be payable in arrears on
each applicable Interest Payment Date (or at such other times as may be
specified herein).
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(e) REVOLVING NOTES. The Revolving Loans made by each Lender
shall be evidenced by a duly executed promissory note of the Borrower
payable to such Lender in an original principal amount equal to such
Lender's Revolving Commitment Percentage of the Revolving Committed
Amount and in substantially the form of EXHIBIT 2.1(E).
2.2 LETTER OF CREDIT SUBFACILITY.
(a) ISSUANCE. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the Issuing Lender may reasonably require and in reliance upon the
representations and warranties set forth herein, the Issuing Lender
agrees to issue, and each Lender severally agrees to participate in the
issuance by the Issuing Lender of Letters of Credit in Dollars from
time to time from the Closing Date until the Maturity Date as the
Borrower may request, in a form acceptable to the Issuing Lender;
PROVIDED, HOWEVER, that (i) the LOC Obligations outstanding shall not
at any time exceed FIFTEEN MILLION DOLLARS ($15,000,000) (the "LOC
COMMITTED AMOUNT") and (ii) the sum of the aggregate principal amount
of outstanding Revolving Loans PLUS LOC Obligations outstanding PLUS
outstanding Swingline Loans shall not at any time exceed the Revolving
Committed Amount. No Letter of Credit shall (x) except as otherwise
agreed by the Agent, have an original expiry date more than one year
from the date of issuance or (y) as originally issued or as extended,
have an expiry date extending beyond the Maturity Date. Each Letter of
Credit shall comply with the related LOC Documents. The issuance and
expiry dates of each Letter of Credit shall be a Business Day.
(b) NOTICE AND REPORTS. The request for the issuance of a
Letter of Credit shall be submitted by the Borrower to the Issuing
Lender at least three (3) Business Days prior to the requested date of
issuance. The Issuing Lender will, at least quarterly, disseminate to
each of the Lenders a detailed report specifying the Letters of Credit
which are then issued and outstanding and any activity with respect
thereto which may have occurred since the date of the prior report, and
including therein, among other things, the beneficiary, the face amount
and the expiry date, as well as any payment or expirations which may
have occurred.
(c) PARTICIPATION. Each Lender, upon issuance of a Letter of
Credit, shall be deemed to have purchased without recourse a
Participation Interest from the applicable Issuing Lender in such
Letter of Credit and the obligations arising thereunder and any
collateral relating thereto, in each case in an amount equal to its pro
rata share of the obligations under such Letter of Credit (based on the
respective Revolving Commitment Percentages of the Lenders) and shall
absolutely, unconditionally and irrevocably assume and be obligated to
pay to the Issuing Lender and discharge when due, its pro rata share of
the obligations arising under such Letter of Credit. Without limiting
the scope and nature of each Lender's Participation Interest in any
Letter of Credit, to the extent that the Issuing Lender has not been
reimbursed as required hereunder or under any such Letter of Credit,
each such Lender shall pay to the Issuing Lender its pro rata share of
such unreimbursed drawing in same day funds on the day of notification
by the Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) below. The obligation of each Lender to so
reimburse the Issuing Lender shall be absolute and unconditional and
28
<PAGE>
shall not be affected by the occurrence of a Default, an Event of
Default or any other occurrence or event. Any such reimbursement shall
not relieve or otherwise impair the obligation of the Borrower to
reimburse the Issuing Lender under any Letter of Credit, together with
interest as hereinafter provided.
(d) REIMBURSEMENT. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the Borrower.
Unless the Borrower shall immediately notify the Issuing Lender that
the Borrower intends to otherwise reimburse the Issuing Lender for such
drawing, the Borrower shall be deemed to have requested that the
Lenders make a Revolving Loan in the amount of the drawing as provided
in subsection (e) below on the related Letter of Credit, the proceeds
of which will be used to satisfy the related reimbursement obligations.
The Borrower promises to reimburse the Issuing Lender on the day of
drawing under any Letter of Credit (either with the proceeds of a
Revolving Loan obtained hereunder or otherwise) in same day funds. If
the Borrower shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear
interest at a per annum rate equal to the Adjusted Base Rate PLUS 2%.
The Borrower's reimbursement obligations hereunder shall be absolute
and unconditional under all circumstances irrespective of any rights of
setoff, counterclaim or defense to payment the Borrower may claim or
have against the Issuing Lender, the Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other Person,
including without limitation any defense based on any failure of the
Borrower or any other Credit Party to receive consideration or the
legality, validity, regularity or unenforceability of the Letter of
Credit. The Issuing Lender will promptly notify the other Lenders of
the amount of any unreimbursed drawing and each Lender shall promptly
pay to the Agent for the account of the Issuing Lender in Dollars and
in immediately available funds, the amount of such Lender's pro rata
share of such unreimbursed drawing. Such payment shall be made on the
day such notice is received by such Lender from the Issuing Lender if
such notice is received at or before 2:00 P.M. (Charlotte, North
Carolina time) otherwise such payment shall be made at or before 12:00
Noon (Charlotte, North Carolina time) on the Business Day next
succeeding the day such notice is received. If such Lender does not pay
such amount to the Issuing Lender in full upon such request, such
Lender shall, on demand, pay to the Agent for the account of the
Issuing Lender interest on the unpaid amount during the period from the
date of such drawing until such Lender pays such amount to the Issuing
Lender in full at a rate per annum equal to, if paid within two (2)
Business Days of the date that such Lender is required to make payments
of such amount pursuant to the preceding sentence, the Federal Funds
Rate and thereafter at a rate equal to the Base Rate. Each Lender's
obligation to make such payment to the Issuing Lender, and the right of
the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and
without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default
or the acceleration of the obligations of the Borrower hereunder and
shall be made without any offset, abatement, withholding or reduction
whatsoever. Simultaneously with the making of each such payment by a
Lender to the Issuing Lender, such Lender shall, automatically and
without any further action on the part of the Issuing Lender or such
Lender, acquire a Participation Interest in an amount equal to such
payment (excluding the portion of such payment constituting interest
owing to the Issuing Lender) in the related unreimbursed drawing
29
<PAGE>
portion of the LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the Borrower with
respect thereto.
(e) REPAYMENT WITH REVOLVING LOANS. On any day on which the
Borrower shall have requested, or been deemed to have requested, a
Revolving Loan advance to reimburse a drawing under a Letter of Credit,
the Agent shall give notice to the Lenders that a Revolving Loan has
been requested or deemed requested by the Borrower to be made in
connection with a drawing under a Letter of Credit, in which case a
Revolving Loan advance comprised of Base Rate Loans (or Eurodollar
Loans to the extent the Borrower has complied with the procedures of
Section 3.2(a)(i) with respect thereto) shall be immediately made to
the Borrower by all Lenders (notwithstanding any termination of the
Commitments pursuant to Section 9.2) PRO RATA based on the respective
Revolving Commitment Percentages of the Lenders (determined before
giving effect to any termination of the Commitments pursuant to Section
9.2) and the proceeds thereof shall be paid directly to the Issuing
Lender for application to the respective LOC Obligations. Each such
Lender hereby irrevocably agrees to make its pro rata share of each
such Revolving Loan immediately upon any such request or deemed request
in the amount, in the manner and on the date specified in the preceding
sentence NOTWITHSTANDING (i) the amount of such borrowing may not
comply with the minimum amount for advances of Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in
Section 5.2 are then satisfied, (iii) whether a Default or an Event of
Default then exists, (iv) failure for any such request or deemed
request for Revolving Loan to be made by the time otherwise required
hereunder, (v) whether the date of such borrowing is a date on which
Revolving Loans are otherwise permitted to be made hereunder or (vi)
any termination of the Commitments relating thereto immediately prior
to or contemporaneously with such borrowing. In the event that any
Revolving Loan cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to
the Borrower or any Credit Party), then each such Lender hereby agrees
that it shall forthwith purchase (as of the date such borrowing would
otherwise have occurred, but adjusted for any payments received from
the Borrower on or after such date and prior to such purchase) from the
Issuing Lender such Participation Interests in the outstanding LOC
Obligations as shall be necessary to cause each such Lender to share in
such LOC Obligations ratably (based upon the respective Revolving
Commitment Percentages of the Lenders (determined before giving effect
to any termination of the Commitments pursuant to Section 9.2)),
PROVIDED that at the time any purchase of Participation Interests
pursuant to this sentence is actually made, the purchasing Lender shall
be required to pay to the Issuing Lender, to the extent not paid to the
Issuing Lender by the Borrower in accordance with the terms of
subsection (d) above, interest on the principal amount of Participation
Interests purchased for each day from and including the day upon which
such borrowing would otherwise have occurred to but excluding the date
of payment for such Participation Interests, at the rate equal to, if
paid within two (2) Business Days of the date of the Revolving Loan
advance, the Federal Funds Rate, and thereafter at a rate equal to the
Base Rate.
(f) DESIGNATION OF CONSOLIDATED PARTIES AS ACCOUNT PARTIES.
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation
30
<PAGE>
Section 2.2(a), a Letter of Credit issued hereunder may contain a
statement to the effect that such Letter of Credit is issued for the
account of a Consolidated Party other than the Borrower, provided that
notwithstanding such statement, the Borrower shall be the actual
account party for all purposes of this Credit Agreement for such Letter
of Credit and such statement shall not affect the Borrower's
reimbursement obligations hereunder with respect to such Letter of
Credit.
(g) RENEWAL, EXTENSION. The renewal or extension of any Letter
of Credit shall, for purposes hereof, be treated in all respects the
same as the issuance of a new Letter of Credit hereunder.
(h) UNIFORM CUSTOMS AND PRACTICES. The Issuing Lender may have
the Letters of Credit be subject to The Uniform Customs and Practice
for Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (the "UCP"), in which case the UCP
may be incorporated therein and deemed in all respects to be a part
thereof.
(i) INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.
(i) In addition to its other obligations under this
Section 2.2, the Borrower hereby agrees to pay, and protect,
indemnify and save each Lender harmless from and against, any
and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees)
that such Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any Letter of
Credit or (B) the failure of such Lender to honor a drawing
under a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure
or de facto government or Governmental Authority (all such
acts or omissions, herein called "Government Acts").
(ii) As between the Borrower and the Lenders
(including the Issuing Lender), the Borrower shall assume all
risks of the acts, omissions or misuse of any Letter of Credit
by the beneficiary thereof. No Lender (including the Issuing
Lender) shall be responsible: (A) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if
it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) for the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (D) for any loss or delay in
the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (E) for any consequences arising from
causes beyond the control of such Lender, including, without
limitation,
31
<PAGE>
any Government Acts. None of the above shall affect, impair,
or prevent the vesting of the Issuing Lender's rights or
powers hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by any Lender (including the
Issuing Lender), under or in connection with any Letter of
Credit or the related certificates, if taken or omitted in
good faith, shall not put such Lender under any resulting
liability to the Borrower or any other Credit Party. It is the
intention of the parties that this Credit Agreement shall be
construed and applied to protect and indemnify each Lender
(including the Issuing Lender) against any and all risks
involved in the issuance of the Letters of Credit, all of
which risks are hereby assumed by the Borrower (on behalf of
itself and each of the other Credit Parties), including,
without limitation, any and all Government Acts. No Lender
(including the Issuing Lender) shall, in any way, be liable
for any failure by such Lender or anyone else to pay any
drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of such
Lender.
(iv) Nothing in this subsection (i) is intended to
limit the reimbursement obligations of the Borrower contained
in subsection (d) above. The obligations of the Borrower under
this subsection (i) shall survive the termination of this
Credit Agreement. No act or omissions of any current or prior
beneficiary of a Letter of Credit shall in any way affect or
impair the rights of the Lenders (including the Issuing
Lender) to enforce any right, power or benefit under this
Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (i), the Borrower shall have no
obligation to indemnify any Lender (including the Issuing
Lender) in respect of any liability incurred by such Lender
(A) arising solely out of the gross negligence or willful
misconduct of such Lender, as determined by a court of
competent jurisdiction, or (B) caused by such Lender's failure
to pay under any Letter of Credit after presentation to it of
a request strictly complying with the terms and conditions of
such Letter of Credit, as determined by a court of competent
jurisdiction, unless such payment is prohibited by any law,
regulation, court order or decree.
(j) RESPONSIBILITY OF ISSUING LENDER. It is expressly
understood and agreed that the obligations of the Issuing Lender
hereunder to the Lenders are only those expressly set forth in this
Credit Agreement and that the Issuing Lender shall be entitled to
assume that the conditions precedent set forth in Section 5.2 have been
satisfied unless it shall have acquired actual knowledge that any such
condition precedent has not been satisfied; PROVIDED, HOWEVER, that
nothing set forth in this Section 2.2 shall be deemed to prejudice the
right of any Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this Section
2.2 in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit
constituted gross negligence or willful misconduct on the part of the
Issuing Lender.
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<PAGE>
(k) CONFLICT WITH LOC DOCUMENTS. In the event of any conflict
between this Credit Agreement and any LOC Document (including any
letter of credit application), this Credit Agreement shall control.
2.3 SWINGLINE LOANS.
(a) SWINGLINE COMMITMENT. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties herein set forth, the
Swingline Lender, in its individual capacity, agrees to make certain revolving
credit loans to the Borrower (each a "SWINGLINE LOAN" and, collectively, the
"SWINGLINE LOANS") from time to time from the Closing Date until the Maturity
Date for the purposes hereinafter set forth; PROVIDED, HOWEVER, (i) the
aggregate principal amount of Swingline Loans outstanding at any time shall not
exceed FOUR MILLION DOLLARS ($4,000,000) (the "SWINGLINE COMMITTED AMOUNT"), and
(ii) the sum of the aggregate principal amount of outstanding Revolving Loans
plus LOC Obligations PLUS outstanding Swingline Loans at any time shall not
exceed the Revolving Committed Amount. Swingline Loans hereunder shall be made
as Base Rate Loans in accordance with the provisions of this Section 2.3, and
may be repaid and reborrowed in accordance with the provisions hereof.
(b) SWINGLINE LOAN ADVANCES.
(i) NOTICES; DISBURSEMENT. Whenever the Borrower desires a
Swingline Loan advance hereunder it shall give written notice (or
telephone notice promptly confirmed in writing) to the Swingline Lender
not later than 12:00 Noon (Charlotte, North Carolina time) on the
Business Day of the requested Swingline Loan advance. Each such notice
shall be irrevocable and shall specify (A) that a Swingline Loan
advance is requested, (B) the date of the requested Swingline Loan
advance (which shall be a Business Day) and (C) the principal amount of
the Swingline Loan advance requested. Each Swingline Loan shall be made
as a Base Rate Loan and shall have such maturity date as the Swingline
Lender and the Borrower shall agree upon receipt by the Swingline
Lender of any such notice from the Borrower. The Swingline Lender shall
initiate the transfer of funds representing the Swingline Loan advance
to the Borrower by 3:00 P.M. (Charlotte, North Carolina time) on the
Business Day of the requested borrowing.
(ii) MINIMUM AMOUNT. Each Swingline Loan shall be in a minimum
principal amount of $300,000 and in integral multiples of $100,000 in
excess thereof (or the remaining amount of the Swingline Committed
Amount, if less).
(iii) REPAYMENT OF SWINGLINE LOANS. The principal amount of
all Swingline Loans shall be due and payable on the earlier of (A) the
maturity date agreed to by the Swingline Lender and the Borrower with
respect to such Loan (which maturity date shall be upon demand by the
Agent) or (B) the Maturity Date. The Swingline Lender may, at any time,
in its sole discretion, by written notice to the Borrower and the
Lenders, demand repayment of its Swingline Loans by way of a Revolving
Loan advance, in which case the Borrower shall be deemed to have
requested a Revolving Loan advance comprised solely of Base Rate Loans
in the amount of such Swingline Loans; PROVIDED, HOWEVER, that any such
demand shall be deemed to have been given one Business Day prior to the
Maturity Date
33
<PAGE>
and on the date of the occurrence of any Event of Default described in
Section 9.1 and upon acceleration of the indebtedness hereunder and the
exercise of remedies in accordance with the provisions of Section 9.2.
Each Lender hereby irrevocably agrees to make its pro rata share of
each such Revolving Loan in the amount, in the manner and on the date
specified in the preceding sentence NOTWITHSTANDING (I) the amount of
such borrowing may not comply with the minimum amount for advances of
Revolving Loans otherwise required hereunder, (II) whether any
conditions specified in Section 5.2 are then satisfied, (III) whether a
Default or Event of Default then exists, (IV) failure of any such
request or deemed request for Revolving Loan to be made by the time
otherwise required hereunder, (V) whether the date of such borrowing is
a date on which Revolving Loans are otherwise permitted to be made
hereunder or (VI) any termination of the Commitments relating thereto
immediately prior to or contemporaneously with such borrowing. In the
event that any Revolving Loan cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code with respect
to the Borrower or any other Credit Party), then each Lender hereby
agrees that it shall forthwith purchase (as of the date such borrowing
would otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase)
from the Swingline Lender such participations in the outstanding
Swingline Loans as shall be necessary to cause each such Lender to
share in such Swingline Loans ratably based upon its Commitment
Percentage of the Revolving Committed Amount (determined before giving
effect to any termination of the Commitments pursuant to Section 3.4),
PROVIDED that (A) all interest payable on the Swingline Loans shall be
for the account of the Swingline Lender until the date as of which the
respective participation is purchased and (B) at the time any purchase
of participations pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay to the Swingline Lender in
accordance with the terms of subsection (c)(ii) hereof, interest on the
principal amount of participation purchased for each day from and
including the day upon which such borrowing would otherwise have
occurred to but excluding the date of payment for such participation,
at the rate equal to the Federal Funds Rate.
(c) INTEREST ON SWINGLINE LOANS.
(i) Subject to the provisions of Section 3.1, each Swingline
Loan shall bear interest at a per annum rate (computed on the basis of
the actual number of days elapsed over a year of 360 days) equal to the
Base Rate PLUS the Applicable Percentage for Base Rate Loans.
(ii) Interest on Swingline Loans shall be payable in arrears
on each applicable Interest Payment Date (or at such other times as may
be specified herein).
(d) SWINGLINE NOTE. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrower payable to the Swingline Lender in
substantially the form of EXHIBIT 2.3(D).
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<PAGE>
2.4 TRANCHE A TERM LOAN.
(a) TERM COMMITMENT. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set
forth herein each Lender severally agrees to make available to the
Borrower on the Closing Date such Lender's Tranche A Term Loan
Commitment Percentage of a term loan in Dollars (the "TRANCHE A TERM
LOAN") in the aggregate principal amount of TWENTY MILLION DOLLARS
($20,000,000) (the "TRANCHE A TERM LOAN COMMITTED AMOUNT") for the
purposes hereinafter set forth. The Tranche A Term Loan may consist of
Base Rate Loans or Eurodollar Loans, or a combination thereof, as the
Borrower may request; PROVIDED, HOWEVER, that no more than 10
Eurodollar Loans shall be outstanding in the aggregate under this
Credit Agreement at any time. For purposes hereof, Eurodollar Loans
with different Interest Periods shall be considered as separate
Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods
to constitute a new Eurodollar Loan with a single Interest Period.
Amounts repaid on the Tranche A Term Loan may not be reborrowed.
(b) BORROWING PROCEDURE. The Borrower shall request Tranche A
Term Loan borrowings as set forth in Section 3.2(a).
(c) REPAYMENT OF TERM LOAN. The principal amount of the
Tranche A Term Loan shall be repaid in twenty (20) consecutive
quarterly installments as follows, unless accelerated sooner pursuant
to Section 9.2:
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZATION TERM LOAN PRINCIPAL
PAYMENT DATES AMORTIZATION PAYMENT
---------------------- --------------------
<S> <C>
May 31, 1999 $500,000
August 31, 1999 $500,000
November 30, 1999 $500,000
February 29, 2000 $500,000
May 31, 2000 $750,000
August 31, 2000 $750,000
November 30, 2000 $750,000
February 28, 2001 $750,000
May 31, 2001 $1,000,000
August 31, 2001 $1,000,000
November 30, 2001 $1,000,000
</TABLE>
35
<PAGE>
<TABLE>
<S> <C>
February 28, 2002 $1,000,000
May 31, 2002 $1,250,000
August 31, 2002 $1,250,000
November 30, 2002 $1,250,000
February 28, 2003 $1,250,000
May 31, 2003 $1,500,000
August 31, 2003 $1,500,000
November 30, 2003 $1,500,000
February 28, 2004 $1,500,000
</TABLE>
(d) INTEREST. Subject to the provisions of Section 3.1, the
Tranche A Term Loan shall bear interest at a per annum rate equal to:
(i) BASE RATE LOANS. During such periods as the
Tranche A Term Loan shall be comprised in whole or in part of
Base Rate Loans, such Base Rate Loans shall bear interest at a
per annum rate equal to the applicable Adjusted Base Rate.
(ii) EURODOLLAR LOANS. During such periods as the
Tranche A Term Loan shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at
a per annum rate equal to the applicable Adjusted Eurodollar
Rate.
Interest on the Tranche A Term Loan shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
(e) TERM NOTES. The portion of the Tranche A Term Loan made by
each Lender shall be evidenced by a duly executed promissory note of
the Borrower payable to such Lender in an original principal amount
equal to such Lender's Tranche A Term Loan Commitment Percentage of the
Tranche A Term Loan and substantially in the form of EXHIBIT 2.4(E).
2.5 TRANCHE B TERM LOAN.
(a) TRANCHE B TERM COMMITMENT. Subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein, each Lender severally agrees to make
available to the Borrower on the Closing Date such Lender's Tranche B
Term Loan Commitment Percentage of a term loan in Dollars (the "TRANCHE
B TERM LOAN") in the aggregate principal amount of ONE HUNDRED MILLION
DOLLARS ($100,000,000) (the "TRANCHE B TERM LOAN COMMITTED AMOUNT") for
the purposes hereinafter set forth. The Tranche B Term Loan may consist
of Base Rate Loans or Eurodollar Loans, or a combination thereof, as
the Borrower may request; PROVIDED,
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<PAGE>
HOWEVER, that no more than 10 Eurodollar Loans shall be outstanding in
the aggregate under this Credit Agreement at any time. For purposes
hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same
date, although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new Eurodollar Loan with a
single Interest Period. Amounts repaid on the Tranche B Term Loan may
not be reborrowed.
(b) BORROWING PROCEDURES. The Borrower shall request Tranche B
Term Loan borrowings as set forth in Section 3.2(a).
(c) REPAYMENT OF TRANCHE B TERM LOAN. The principal amount of
the Tranche B Term Loan shall be repaid in thirty-two (32) consecutive
quarterly installments as follows, unless accelerated sooner pursuant
to Section 9.2:
<TABLE>
<CAPTION>
TRANCHE B TERM LOAN
PRINCIPAL AMORTIZATION PRINCIPAL AMORTIZATION
PAYMENT DATES PAYMENT
---------------------- ----------------------
<S> <C>
August 31, 1998 $250,000
November 30, 1998 $250,000
February 28, 1999 $250,000
May 31, 1999 $250,000
August 31, 1999 $250,000
November 30, 1999 $250,000
February 29, 2000 $250,000
May 31, 2000 $250,000
August 31, 2000 $250,000
November 30, 2000 $250,000
February 28, 2001 $250,000
May 31, 2001 $250,000
August 31, 2001 $250,000
November 30, 2001 $250,000
February 28, 2002 $250,000
May 31, 2002 $250,000
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
TRANCHE B TERM LOAN
PRINCIPAL AMORTIZATION PRINCIPAL AMORTIZATION
PAYMENT DATES PAYMENT
---------------------- ----------------------
<S> <C>
August 31, 2002 $250,000
November 30, 2002 $250,000
February 28, 2003 $250,000
May 31, 2003 $250,000
August 31, 2003 $250,000
November 30, 2003 $250,000
February 29, 2004 $250,000
May 31, 2004 $250,000
August 31, 2004 $8,750,000
November 30, 2004 $8,750,000
February 28, 2005 $8,750,000
May 31, 2005 $8,750,000
August 31, 2005 $14,750,000
November 30, 2005 $14,750,000
February 28, 2006 $14,750,000
May 31, 2006 $14,750,000
</TABLE>
(d) INTEREST. Subject to the provisions of Section 3.1, the
Tranche B Term Loan shall bear interest at a per annum rate equal to:
(i) BASE RATE LOANS. During such periods as the
Tranche B Term Loan shall be comprised in whole or in part of
Base Rate Loans, such Base Rate Loans shall bear interest at a
per annum rate equal to the applicable Adjusted Base Rate.
(ii) EURODOLLAR LOANS. During such periods as the
Tranche B Term Loan shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at
a per annum rate equal to the applicable Adjusted Eurodollar
Rate.
Interest on the Tranche B Term Loan shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
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<PAGE>
(e) TRANCHE B TERM NOTES. The portion of the Tranche B Term
Loan made by each Lender shall be evidenced by a duly executed
promissory note of the Borrower payable to such Lender in an original
principal amount equal to such Lender's Tranche B Term Loan Commitment
Percentage of the Tranche B Term Loan and substantially in the form of
EXHIBIT 2.5(E).
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 DEFAULT RATE.
Upon the occurrence, and during the continuance, of an Event of
Default, the principal of and, to the extent permitted by law, interest on the
Loans and any other amounts owing hereunder or under the other Credit Documents
shall bear interest, payable on demand, at a per annum rate 2% greater than the
rate which would otherwise be applicable (or if no rate is applicable, whether
in respect of interest, fees or other amounts, then the Adjusted Base Rate plus
2%).
3.2 BORROWINGS; EXTENSION AND CONVERSION.
(a) (i) NOTICE OF BORROWING. The Borrower shall request a
Revolving Loan borrowing, Tranche A Term Loan borrowing or a Tranche B
Term Loan borrowing by written notice (or telephonic notice promptly
confirmed in writing) to the Agent not later than 11:00 A.M.
(Charlotte, North Carolina time) on the Business Day prior to the date
of the requested borrowing in the case of Base Rate Loans, and on the
third Business Day prior to the date of the requested borrowing in the
case of Eurodollar Loans; PROVIDED, HOWEVER that only Eurodollar Loans
with Interest Periods of one month shall be available hereunder until
the Borrower shall have received notification (which notification in
any event shall be provided within 90 days after the Closing Date) from
the Agent that it has completed the syndication process. Each such
request for borrowing shall be irrevocable and shall specify (A) the
type of Loan requested, (B) the date of the requested borrowing (which
shall be a Business Day), (C) the aggregate principal amount to be
borrowed, and (D) whether the borrowing shall be comprised of Base Rate
Loans, Eurodollar Loans or a combination thereof, and if Eurodollar
Loans are requested, the Interest Period(s) therefor. If the Borrower
shall fail to specify in any such Notice of Borrowing (I) an applicable
Interest Period in the case of a Eurodollar Loan, then such notice
shall be deemed to be a request for an Interest Period of one month, or
(II) the type of Loan requested, then such notice shall be deemed to be
a request for a Revolving Loan which is a Base Rate Loan hereunder. The
Agent shall give notice to each affected Lender promptly upon receipt
of each Notice of Borrowing pursuant to this Section 3.2(a)(i), the
contents thereof and each such Lender's share of any borrowing to be
made pursuant thereto.
(ii) MINIMUM AMOUNTS. Each Eurodollar Loan shall be
in a minimum aggregate principal amount of $3,000,000 and integral
multiples of $1,000,000 in excess thereof. Each Base Rate shall be in a
minimum aggregate principal amount of $1,000,000 and integral multiples
of $500,000 in excess thereof (or, as applicable, the remaining amount
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of the Revolving Committed Amount, if less, the remaining principal
balance of the Tranche A Term Loan, if less, or the remaining principal
balance of the Tranche B Term Loan, if less).
(iii) ADVANCES. Each Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing available to the
Agent for the account of the Borrower as specified in SECTION 3.15(A),
or in such other manner as the Agent may specify in writing, by 1:00
P.M. (Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Agent. Such borrowing will then be made available to
the Borrower by the Agent by crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by
the Agent. Each Lender shall make its Tranche A Term Loan Commitment
Percentage of the Tranche A Term Loan and its Tranche B Term Loan
Percentage of the Tranche B Term Loan available to the Agent for the
account of the Borrower at the office of the Agent specified in
SCHEDULE 2.1(A), or at such other office as the Agent may designate in
writing, by 1:00 P.M. (Charlotte, North Carolina time) on the Closing
Date in Dollars and in funds immediately available to the Agent. The
Borrower hereby irrevocably authorizes the Agent to, and the Agent
shall, on such date disburse the proceeds of each Revolving Loan
requested by the Borrower pursuant to this subsection 3.2(a)(iii) in
immediately available funds by crediting or wiring such proceeds to the
deposit account of the Borrower identified in the most recent Notice of
Account Designation substantially in the form of Exhibit 3.2(a)(iii)
hereto (a "NOTICE OF ACCOUNT DESIGNATION") delivered by the Borrower to
the Agent or as may be otherwise agreed upon by the Borrower and the
Agent from time to time.
(b) Subject to the terms of Section 5.2, the Borrower shall
have the option, on any Business Day, to extend existing Loans into a
subsequent permissible Interest Period or to convert Loans into Loans
of another interest rate type; PROVIDED, HOWEVER, that (i) except as
provided in Section 3.8, Eurodollar Loans may be converted into Base
Rate Loans only on the last day of the Interest Period applicable
thereto, (ii) Eurodollar Loans may be extended, and Base Rate Loans may
be converted into Eurodollar Loans, only if no Default or Event of
Default is in existence on the date of extension or conversion, (iii)
Loans extended as, or converted into, Eurodollar Loans shall be subject
to the terms of the definition of "INTEREST PERIOD" set forth in
Section 1.1 and shall be in such minimum amounts as provided in Section
3.2(a), (iv) no more than 10 Eurodollar Loans shall be outstanding in
the aggregate under this Credit Agreement at any time (it being
understood that, for purposes hereof, Eurodollar Loans with different
Interest Periods shall be considered as separate Eurodollar Loans, even
if they begin on the same date, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined
at the end of existing Interest Periods to constitute a new Eurodollar
Loan with a single Interest Period) and (v) any request for extension
or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period
of one month. Each such extension or conversion shall be effected by
the Borrower by giving a Notice of Extension/Conversion (or telephonic
notice promptly confirmed in writing) to the office of the Agent
specified in specified in SCHEDULE 2.1(A), or at such other office as
the Agent may designate in writing, prior to 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan, and on the third
Business Day prior to, in the case of the extension of a Eurodollar
Loan as, or conversion of a Base Rate Loan into, a Eurodollar Loan, the
date of the proposed extension or conversion, specifying the date of
the proposed extension or conversion, the Loans to be so extended or
converted, the types of Loans into which such Loans are to be converted
and, if appropriate, the applicable Interest Periods with respect
thereto. Each request for extension or conversion shall be irrevocable
and shall constitute a representation and warranty by the Borrower of
the matters specified in subsections (b), (c), (d), (e) and (f) of
Section 5.2. In the event the Borrower fails to request extension or
conversion of any Eurodollar Loan in accordance with this Section, or
any such conversion or extension is not permitted or required by this
Section, then such Eurodollar Loan shall be automatically converted
into a Base Rate Loan at the end of the Interest Period applicable
thereto. The Agent shall give each Lender notice as promptly as
practicable of any such proposed extension or conversion affecting any
Loan.
3.3 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. The Borrower shall have the right
to prepay Loans in whole or in part from time to time, without premium
or penalty; PROVIDED, HOWEVER, that each partial prepayment of Loans
shall be in a minimum principal amount of $1,000,000 and integral
multiples of $100,000. Subject to the foregoing terms, amounts prepaid
under this Section 3.3(a) shall be applied as the Borrower may elect;
PROVIDED that if the Borrower fails to specify a voluntary prepayment
then such prepayment shall be applied first ratably to the Tranche A
Term Loan and the Tranche B Term Loan (in each case ratably to the
remaining Principal Amortization Payments thereof), in each case first
to Base Rate Loans and then to Eurodollar Loans in direct order of
Interest Period maturities. All prepayments under this Section 3.3(a)
shall be subject to Section 3.12 but shall be otherwise without premium
or penalty.
(b) MANDATORY PREPAYMENTS.
(i) REVOLVING COMMITTED AMOUNT. If at any time, the
sum of the aggregate principal amount of outstanding Revolving
Loans plus LOC Obligations outstanding PLUS outstanding
Swingline Loans shall exceed the Revolving Committed Amount,
the Borrower immediately shall prepay the Revolving Loans and
Swingline Loans and (after all Revolving Loans and Swingline
Loans have been repaid) cash collateralize the LOC
Obligations, in an amount sufficient to eliminate such excess.
(ii) EXCESS CASH FLOW. Within 120 days after the end
of each fiscal year (commencing with the fiscal year ending
November 30, 1999), the Borrower shall prepay the Loans in an
amount equal to (x) 50% of the Excess Cash Flow earned during
such prior fiscal year less (y) the amount of any voluntary
prepayments of the Tranche A Term Loan, the Tranche B Term
Loan and (to the extent accompanied by a reduction in the
Revolving Committed Amount) the Revolving Loans during such
prior fiscal year; PROVIDED, HOWEVER, that the Borrower shall
not be required to make
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prepayments hereunder if, as of the most recently ended fiscal
year of the Borrower, the Leverage Ratio was less than 3.0 to
1.0. Any payments of Excess Cash Flow shall be applied as set
forth in clause (vi) below.
(iii) ASSET DISPOSITIONS. Immediately upon the
occurrence of any Asset Disposition Prepayment Event with Net
Cash Proceeds in excess of $1,000,000, the Borrower shall
prepay the Loans in an aggregate amount equal to the Net Cash
Proceeds of the related Asset Disposition not applied (or
caused to be applied) by the Consolidated Parties during the
related Application Period to the purchase, acquisition or
construction of Eligible Assets as contemplated by the terms
of Section 8.5(f) (such prepayment to be applied as set forth
in clause (vi) below); PROVIDED, HOWEVER, that if the Asset
Disposition occurs with respect to assets of the Divested
Businesses and the Leverage Ratio as of the end of the most
recent fiscal quarter of the Borrower was less than 3.75 to
1.0 at the time such Asset Disposition occurs, the Borrower
may apply Net Cash Proceeds from such Asset Disposition to
prepay the Senior Subordinated Notes or, after such time as
the pending litigation with respect to Anghel Laboratories,
Inc. shall have been settled or otherwise concluded to the
satisfaction of the Required Lenders, to redeem or repurchase
preferred stock.
(iv) DEBT ISSUANCES. Immediately upon receipt by any
Consolidated Party of proceeds from any Debt Issuance (other
than an Excluded Issuance), the Borrower shall prepay the
Loans in an aggregate amount equal to the Net Cash Proceeds of
such Debt Issuance to the Lenders (such prepayment to be
applied as set forth in clause (vi) below); PROVIDED, HOWEVER,
that if the Borrower shall have received in excess of
$75,000,000 in Net Cash Proceeds from the issuance of
additional subordinated debt on terms and conditions
satisfactory to the Required Lenders and as otherwise
permitted by Section 8.1(f), the Borrower may apply up to
$20,000,000 of such Net Cash Proceeds to prepay the Senior
Subordinated Notes or, after such time as the pending
litigation with respect to Anghel Laboratories, Inc. shall
have been settled or otherwise concluded to the satisfaction
of the Required Lenders, to redeem or repurchase preferred
stock.
(v) ISSUANCES OF EQUITY. Immediately upon receipt by
the Borrower of proceeds from any Equity Issuance (other than
an Excluded Issuance), the Borrower shall prepay the Loans in
an aggregate amount equal to 100% of the Net Cash Proceeds of
such Equity Issuance to the Lenders (such prepayment to be
applied as set forth in clause (vi) below).
(vi) APPLICATION OF MANDATORY PREPAYMENTS. All
amounts required to be paid pursuant to this Section 3.3(b)
shall be applied as follows: (A) with respect to all amounts
prepaid pursuant to Section 3.3(b)(i), to Revolving Loans and
Swingline Loans and (after all Revolving Loans and Swingline
Loans have been repaid) to a cash collateral account in
respect of LOC Obligations, (B) with respect to all amounts
prepaid pursuant to Section 3.3(b)(ii), (iii), (iv) and (v),
pro rata to the Tranche A Term Loan and the Tranche B Term
Loan (in each case to the
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remaining Principal Amortization Payments thereof in direct
order of maturity). Promptly upon notification thereof, one or
more holders of the Tranche B Term Loans may decline to accept
a mandatory prepayment under Section 3.3(b)(ii), (iii), (iv)
or (v) to the extent there are sufficient Tranche A Term Loans
outstanding to be paid with such prepayment, in which case,
such declined prepayments shall be allocated pro rata among
the Tranche A Term Loans and the Tranche B Term Loans held by
Lenders accepting such prepayments. Within the parameters of
the applications set forth above, prepayments shall be applied
first to Base Rate Loans and then to Eurodollar Loans in
direct order of Interest Period maturities. All prepayments
under this Section 3.3(b) shall be subject to Section 3.12.
3.4 TERMINATION AND REDUCTION OF REVOLVING COMMITTED AMOUNT.
(a) VOLUNTARY REDUCTIONS. The Borrower may from time to time
permanently reduce or terminate the Revolving Committed Amount in whole
or in part (in minimum aggregate amounts of $1,000,000 or in integral
multiples of $500,000 in excess thereof (or, if less, the full
remaining amount of the then applicable Revolving Committed Amount))
upon three Business Days prior written notice to the Agent; PROVIDED,
HOWEVER, no such termination or reduction shall be made which would
cause the aggregate principal amount of outstanding Revolving Loans
PLUS LOC Obligations PLUS Swingline Loans outstanding to exceed the
Revolving Committed Amount, unless, concurrently with such termination
or reduction, the Revolving Loans are repaid to the extent necessary to
eliminate such excess. The Agent shall promptly notify each affected
Lender of receipt by the Agent of any notice from the Borrower pursuant
to this Section 3.4(a).
(b) MATURITY DATE. The Revolving Commitments of the Lenders
and the LOC Commitment of the Issuing Lender shall automatically
terminate on the Maturity Date.
(c) GENERAL. The Borrower shall pay to the Agent for the
account of the Lenders in accordance with the terms of Section 3.5(b),
on the date of each termination or reduction of the Revolving Committed
Amount, the Commitment Fee accrued through the date of such termination
or reduction on the amount of the Revolving Committed Amount so
terminated or reduced.
3.5 FEES.
(a) COMMITMENT FEE. In consideration of the Revolving
Commitments of the Lenders hereunder, the Borrower agrees to pay to the
Agent for the account of each Lender a fee (the "COMMITMENT FEE") on
the unused portion of the Revolving Committed Amount computed at a per
annum rate for each day during the applicable Commitment Fee
Calculation Period (hereinafter defined) at a rate equal to the
Applicable Percentage in effect from time to time. The Commitment Fee
shall commence to accrue on the Closing Date and shall be due and
payable in arrears on the last business day of each February, May,
August and November (and upon the Maturity Date) for the immediately
preceding quarter (or portion thereof) (each such quarter or portion
thereof for which the Commitment Fee is
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payable hereunder being herein referred to as an "COMMITMENT FEE
CALCULATION PERIOD"), beginning with the first of such dates to occur
after the Closing Date.
(b) LETTER OF CREDIT FEES.
(i) LETTER OF CREDIT ISSUANCE FEE. In
consideration of the issuance of Letters of Credit
hereunder, the Borrower promises to pay to the Agent
for the account of each Lender a fee (the "LETTER OF
CREDIT FEE") on such Lender's Revolving Commitment
Percentage of the average daily maximum amount
available to be drawn under each such Letter of
Credit computed at a per annum rate for each day from
the date of issuance to the date of expiration equal
to the Applicable Percentage (provided that the
Letter of Credit Fee shall not be less than $500 in
the aggregate for each Letter of Credit in any
event). The Letter of Credit Fee will be payable
quarterly in arrears on the last Business Day of each
February, May, August and November for the
immediately preceding quarter (or a portion thereof).
(ii) ISSUING LENDER FEES. In addition to the
Letter of Credit Fee payable pursuant to clause (i)
above, the Borrower promises to pay to the Issuing
Lender for its own account without sharing by the
other Lenders the customary charges from time to time
of the Issuing Lender with respect to the issuance,
amendment, transfer, administration, cancellation and
conversion of, and drawings under, such Letters of
Credit (collectively, the "ISSUING LENDER FEES").
(c) ADMINISTRATIVE FEES. The Borrower agrees to pay to the
Agent, for its own account, as applicable, the fees referred to in the
Agent's Fee Letter (collectively, the "AGENT'S FEES").
3.6 CAPITAL ADEQUACY.
If any Lender has determined, after the date hereof, that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower (such notice to be given within six
calendar months of the Lender's determination thereof) specifying in reasonable
detail the basis for the calculation of any additional amounts owed, the
Borrower shall be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. Each determination by
any such Lender of amounts
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owing under this Section shall, absent manifest error, be conclusive and binding
on the parties hereto.
3.7 LIMITATION ON EURODOLLAR LOANS.
If on or prior to the first day of any Interest Period for any
Eurodollar Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall
be conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans, Continue Eurodollar Loans, or to Convert Base
Rate Loans into Eurodollar Loans and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans, either
prepay such Eurodollar Loans or Convert such Eurodollar Loans into Base Rate
Loans in accordance with the terms of this Credit Agreement.
3.8 ILLEGALITY.
Notwithstanding any other provision of this Credit Agreement, in the
event that it becomes unlawful for any Lender or its Applicable Lending Office
to make, maintain, or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.10 shall be
applicable).
3.9 REQUIREMENTS OF LAW.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank, or
comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Notes, or its obligation to make Eurodollar
Loans, or change the basis of taxation of any amounts payable to such
Lender (or its Applicable Lending Office) under this Credit Agreement
or its Notes in respect of any Eurodollar Loans (other than taxes
imposed on, or measured by, the overall net income or net capital of
such Lender by the jurisdiction in which such Lender is
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organized, has its principal office or such Applicable Lending Office
or is doing business (other than solely in connection with this Credit
Agreement));
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement (other
than the Eurodollar Reserve Requirement utilized in the determination
of the Adjusted Eurodollar Rate) relating to any extensions of credit
or other assets of, or any deposits with or other liabilities or
commitments of, such Lender (or its Applicable Lending Office),
including the Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or on the United States market for certificates of
deposit or the London interbank market any other condition affecting
this Credit Agreement or its Notes or any of such extensions of credit
or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Notes with respect to any Eurodollar Loans, then the Borrower shall pay to
such Lender on demand such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any Lender requests compensation by the
Borrower under this Section 3.9(a), the Borrower may, by notice to such Lender
(with a copy to the Agent), suspend the obligation of such Lender to make or
Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans,
until the event or condition giving rise to such request ceases to be in effect
(in which case the provisions of Section 3.10 shall be applicable); PROVIDED
that such suspension shall not affect the right of such Lender to receive the
compensation so requested.
(b) Each Lender shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section 3.9 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 3.9 shall furnish to the Borrower and the Agent
a statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
3.10 TREATMENT OF AFFECTED LOANS.
If the obligation of any Lender to make any Eurodollar Loan or to
Continue, or to Convert Base Rate Loans into, Eurodollar Loans shall be
suspended pursuant to Section 3.8 or 3.9 hereof, such Lender's Eurodollar Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for such Eurodollar Loans (or, in the case of a
Conversion required by Section 3.8 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided
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below that the circumstances specified in Section 3.8 or 3.9 hereof
that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have
been so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Eurodollar Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Eurodollar Loans shall be made or Continued instead as
Base Rate Loans, and all Base Rate Loans of such Lender that would
otherwise be Converted into Eurodollar Loans shall remain as Base Rate
Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 3.8 or 3.9 hereof that gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to this Section 3.10 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Lenders are
outstanding, such Lender's Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Loans, to the extent necessary so that, after giving effect thereto,
all Loans held by the Lenders holding Eurodollar Loans and by such Lender are
held pro rata (as to principal amounts, interest rate basis, and Interest
Periods) in accordance with their respective Commitments.
3.11 TAXES.
(a) Any and all payments by the Borrower to or for the account
of any Lender or the Agent hereunder or under any other Credit Document
shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, EXCLUDING,
in the case of each Lender and the Agent, taxes imposed on, or measured
by, its income or capital, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender (or its Applicable
Lending Office) or the Agent (as the case may be) is located or
organized or in which such Lender or the Agent is doing business (other
than solely by reason of this Agreement) or any political subdivision
thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter
referred to as "TAXES"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable under this
Credit Agreement or any other Credit Document to any Lender or the
Agent, (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable
to additional sums payable under this Section 3.11) such Lender or the
Agent receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law, and (iv) the Borrower shall furnish to the Agent, at
its address referred to in Section 11.1, the original or a certified
copy of a receipt evidencing payment thereof.
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(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any
payment made under this Credit Agreement or any other Credit Document
or from the execution or delivery of, or otherwise with respect to,
this Credit Agreement or any other Credit Document (hereinafter
referred to as "OTHER TAXES").
(c) The Borrower agrees to indemnify each Lender and the Agent
for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 3.11) paid by such
Lender or the Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect
thereto.
(d) Each Lender and the Agent hereby represents that as of the
Closing Date (or at such time as it becomes a Lender or the Agent, as
the case may be, if later), all payments or principal, interest, and
fees to be made to such Lender or the Agent, as the case may be, by the
Borrower or any other Credit Party pursuant to this Agreement will be
totally exempt from Taxes which would require indemnification under
Section 3.11(a), 3.11(b) or 3.11(c). Each Lender organized under the
laws of a jurisdiction outside the United States, on or prior to the
date of its execution and delivery of this Credit Agreement in the case
of each Lender listed on the signature pages hereof and on or prior to
the date on which it becomes a Lender in the case of each other Lender,
and from time to time thereafter if requested in writing by the
Borrower or the Agent (but only so long as such Lender remains lawfully
able to do so), shall provide the Borrower and the Agent with complete
and accurate copies of (i) Internal Revenue Service Form 1001 or 4224,
as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits
under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Credit Agreement
is effectively connected with the conduct of a trade or business in the
United States, (ii) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and
881(c) of the Internal Revenue Code), certifying that such Lender is
entitled to an exemption from or a reduced rate of tax on payments
pursuant to this Credit Agreement or any of the other Credit Documents.
(e) For any period with respect to which a Lender has failed
to provide the Borrower and the Agent with the appropriate form
pursuant to Section 3.11(d) (unless such failure is due to a change in
treaty, law, or regulation occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 3.11(a), 3.11(b) or 3.11(c)
with respect to Taxes imposed by the United States; PROVIDED, HOWEVER,
that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take
such steps as such Lender shall reasonably request to assist such
Lender to recover such Taxes. The Borrower shall not be required to
make gross-up or indemnification payments under Section 3.11(a),
3.11(b) or 3.11(c) to any Lender or the Agent, as the
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case may be, to the extent that the obligation to pay such additional
amounts or indemnification would not have arisen if the representation
set forth in the first sentence of Section 3.11(d) were true with
respect to such Lender or the Agent, as the case may be.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Lender pursuant to this Section 3.11, then
such Lender will agree to use reasonable efforts to change the
jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Lender, is not otherwise
disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of
Taxes, the Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 3.11 shall survive the repayment of
the Loans, LOC Obligations and other obligations under the Credit
Documents and the termination of the Commitments hereunder.
(i) If any Lender or the Agent shall become aware that it is
entitled to receive a refund in respect to Taxes as to which it has
been indemnified by the Borrower pursuant to this Section 3.11, it
shall promptly notify the Borrower of the availability of such refund
and shall, within 30 days after receipt of a request by the Borrower,
apply for such refund at the expense of the Borrower. If any Lender
receives a refund in respect of any Taxes as to which it has been
indemnified by the Borrower pursuant to this Section 3.11, it shall
promptly notify the Borrower of such refund and shall, within 30 days
after receipt of a request by the Borrower (or promptly upon receipt,
if the Borrower has requested application for such refund pursuant
hereto), repay such refund (including any interest actually received
from the taxing authority with respect thereto) to the Borrower (to the
extent of amounts that have been paid by the Borrower under this
Section 3.11 with respect to such refund), net of all out-of-pocket
expenses of such Lender and Taxes imposed with respect to such refund;
PROVIDED that the Borrower, upon the request of such Lender, agrees to
return such refund (plus penalties, interest or other charges) to such
Lender in the event such Lender is required to repay such refund.
Nothing contained in this subsection 3.11(i) shall require any Lender
to make available any tax returns (or any other information relating to
its taxes that it deems confidential).
3.12 COMPENSATION.
Upon the request of any Lender, the Borrower shall pay to such Lender
such amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense incurred by it as a
result of:
(a) any payment, prepayment, or Conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration of
the Loans pursuant to Section 9.2) on a date other than the last day of
the Interest Period for such Loan; or
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(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
Section 5 to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this Credit
Agreement.
With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein (excluding,
however, the Applicable Percentage included therein, if any) over (b) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. The covenants of
the Borrower set forth in this Section 3.12 shall survive the repayment of the
Loans, LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
3.13 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) LOANS. Each Loan, each payment or (subject to the terms of
Section 3.3) prepayment of principal of any Loan or reimbursement
obligations arising from drawings under Letters of Credit, each payment
of interest on the Loans or reimbursement obligations arising from
drawings under Letters of Credit, each payment of Commitment Fees, each
payment of the Letter of Credit Fee, each reduction of the Revolving
Committed Amount and each conversion or extension of any Loan, shall be
allocated pro rata among the Lenders in accordance with the respective
principal amounts of their outstanding Loans and Participation
Interests.
(b) ADVANCES. No Lender shall be responsible for the failure
or delay by any other Lender in its obligation to make its ratable
share of a borrowing hereunder; PROVIDED, HOWEVER, that the failure of
any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder. Unless the Agent shall have
been notified by any Lender prior to the date of any requested
borrowing that such Lender does not intend to make available to the
Agent its ratable share of such borrowing to be made on such date, the
Agent may assume that such Lender has made such amount available to the
Agent on the date of such borrowing, and the Agent in reliance upon
such assumption, may (in its sole discretion but without any obligation
to do so) make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Agent,
the Agent shall be able to recover such corresponding amount from such
Lender. If such Lender does not pay such corresponding amount forthwith
upon the Agent's demand therefor, the Agent will promptly notify the
Borrower, and the Borrower shall immediately
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pay such corresponding amount to the Agent. The Agent shall also be
entitled to recover from the Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by the Agent to
the Borrower to the date such corresponding amount is recovered by the
Agent at a per annum rate equal to (i) from the Borrower at the
applicable rate for the applicable borrowing pursuant to the Notice of
Borrowing and (ii) from a Lender at the Federal Funds Rate.
3.14 SHARING OF PAYMENTS.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a Participation Interest in such Loans, LOC
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
Participation Interest theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored.
The Borrower agrees that any Lender so purchasing such a Participation Interest
may, to the fullest extent permitted by law, exercise all rights of payment,
including setoff, banker's lien or counterclaim, with respect to such
Participation Interest as fully as if such Lender were a holder of such Loan,
LOC Obligations or other obligation in the amount of such Participation
Interest. Except as otherwise expressly provided in this Credit Agreement, if
any Lender or the Agent shall fail to remit to the Agent or any other Lender an
amount payable by such Lender or the Agent to the Agent or such other Lender
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.14 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.14 to share in the benefits of any recovery on such secured claim.
3.15 PAYMENTS, COMPUTATIONS, ETC.
(a) Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Agent in dollars in immediately
available funds, without offset, deduction, counterclaim or withholding
of any kind, at the Agent's office specified in
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SCHEDULE 2.1(A) not later than 2:00 P.M. (Charlotte, North Carolina
time) on the date when due. Payments received after such time shall be
deemed to have been received on the next succeeding Business Day. The
Agent may (but shall not be obligated to) debit the amount of any such
payment which is not made by such time to any ordinary deposit account
of the Borrower maintained with the Agent (with notice to the
Borrower). The Borrower shall, at the time it makes any payment under
this Credit Agreement, specify to the Agent the Loans, LOC Obligations,
Fees, interest or other amounts payable by the Borrower hereunder to
which such payment is to be applied (and in the event that it fails so
to specify, or if such application would be inconsistent with the terms
hereof, the Agent shall distribute such payment to the Lenders in such
manner as the Agent may determine to be appropriate in respect of
obligations owing by the Borrower hereunder, subject to the terms of
Section 3.13(a)). The Agent will distribute such payments to such
Lenders, if any such payment is received prior to 12:00 Noon
(Charlotte, North Carolina time) on a Business Day in like funds as
received prior to the end of such Business Day and otherwise the Agent
will distribute such payment to such Lenders on the next succeeding
Business Day. Whenever any payment hereunder shall be stated to be due
on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day (subject to accrual of
interest and Fees for the period of such extension), except that in the
case of Eurodollar Loans, if the extension would cause the payment to
be made in the next following calendar month, then such payment shall
instead be made on the next preceding Business Day. Except as expressly
provided otherwise herein, all computations of interest and fees shall
be made on the basis of actual number of days elapsed over a year of
360 days. Interest shall accrue from and include the date of borrowing,
but exclude the date of payment.
(b) ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, after the occurrence and during the continuance of an Event
of Default, all amounts collected or received by the Agent or any
Lender on account of the Credit Party Obligations or any other amounts
outstanding under any of the Credit Documents or in respect of the
Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agent in connection with enforcing the rights of the Lenders
under the Credit Documents and any protective advances made by the
Agent with respect to the Collateral under or pursuant to the terms of
the Collateral Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation, reasonable attorneys' fees)
of each of the Lenders in connection with enforcing its rights under
the Credit Documents or otherwise with respect to the Credit Party
Obligations owing to such Lender;
FOURTH, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest;
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FIFTH, to the payment of the outstanding principal amount of
the Credit Party Obligations (including the payment or cash
collateralization of the outstanding LOC Obligations);
SIXTH, to all other Credit Party Obligations and other
obligations which shall have become due and payable under the Credit
Documents or otherwise and not repaid pursuant to clauses "FIRST"
through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in
the numerical order provided until exhausted prior to application to
the next succeeding category; (ii) each of the Lenders shall receive an
amount equal to its pro rata share (based on the proportion that the
then outstanding Loans and LOC Obligations held by such Lender bears to
the aggregate then outstanding Loans and LOC Obligations) of amounts
available to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH"
and "SIXTH" above; and (iii) to the extent that any amounts available
for distribution pursuant to clause "FIFTH" above are attributable to
the issued but undrawn amount of outstanding Letters of Credit, such
amounts shall be held by the Agent in a cash collateral account and
applied (A) first, to reimburse the Issuing Lender from time to time
for any drawings under such Letters of Credit and (B) then, following
the expiration of all Letters of Credit, to all other obligations of
the types described in clauses "FIFTH" and "SIXTH" above in the manner
provided in this Section 3.15(b).
3.16 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts
evidencing each Loan made by such Lender to the Borrower from time to
time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Credit Agreement. Each
Lender will make reasonable efforts to maintain the accuracy of its
account or accounts and to promptly update its account or accounts from
time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section
11.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to
each Lender hereunder and (iii) the amount of any sum received by the
Agent hereunder from or for the account of the Borrower and each
Lender's share thereof. The Agent will make reasonable efforts to
maintain the accuracy of the subaccounts referred to in the preceding
sentence and to promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.16 (and, if
consistent with the entries of the Agent, subsection (a)) shall be
prima facie evidence of the existence and amounts of the
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obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that
the failure of any Lender or the Agent to maintain any such account,
such Register or such subaccount, as applicable, or any error therein,
shall not in any manner affect the obligation of the Borrower to repay
the Loans made by such Lender in accordance with the terms hereof.
SECTION 4
GUARANTY
4.1 THE GUARANTY.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Hedging Agreement, and the
Agent as hereinafter provided the prompt payment of the Credit Party Obligations
in full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) strictly in
accordance with the terms thereof. The Guarantors hereby further agree that if
any of the Credit Party Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and severally,
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Credit Party
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, the obligations of each
Guarantor hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the Bankruptcy Code or any comparable provisions of any
applicable state law.
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4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under Section 4.1 are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any other guarantee of or
security for any of the Credit Party Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or contribution against
the Borrower or any other Guarantor of the Credit Party Obligations for amounts
paid under this Section 4 until such time as the Lenders (and any Affiliates of
Lenders entering into Hedging Agreements) have been paid in full, all
Commitments under this Credit Agreement have been terminated and no Person or
Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received under
the Credit Documents or Hedging Agreements. Without limiting the generality of
the foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(a) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Credit Party Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of any
of the Credit Documents, any Hedging Agreement or any other agreement
or instrument referred to in the Credit Documents or Hedging Agreements
shall be done or omitted;
(c) the maturity of any of the Credit Party Obligations shall
be accelerated, or any of the Credit Party Obligations shall be
modified, supplemented or amended in any respect, or any right under
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements shall be waived or any other guarantee of any of the Credit
Party Obligations or any security therefor shall be released, impaired
or exchanged in whole or in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Agent or any
Lender or Lenders as security for any of the Credit Party Obligations
shall fail to attach or be perfected; or
(e) any of the Credit Party Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the
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Agent or any Lender exhaust any right, power or remedy or proceed against any
Person under any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements, or against any other Person under any other guarantee of, or
security for, any of the Credit Party Obligations.
4.3 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.4 CERTAIN ADDITIONAL WAIVERS.
Without limiting the generality of the provisions of this Section 4,
each Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss.
26-7 through 26-9, inclusive, to the extent applicable. Each Guarantor further
agrees that such Guarantor shall have no right of recourse to security for the
Credit Party Obligations, except through the exercise of rights of subrogation
pursuant to Section 4.2 and through the exercise of rights of contribution
pursuant to Section 4.6.
4.5 REMEDIES.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Credit Party Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Credit Party
Obligations being deemed to have become automatically due and payable), the
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of Section
4.1. The Guarantors acknowledge and agree that their obligations hereunder are
secured in accordance with the terms of the Security Agreements and the other
Collateral Documents and that the Lenders may exercise their remedies thereunder
in accordance with the terms thereof.
4.6 RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each
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other Guarantor in an amount equal to such other Guarantor's Contribution Share
(as defined below) of such Excess Payment. The payment obligations of any
Guarantor under this Section 4.6 shall be subordinate and subject in right of
payment to the prior payment in full to the Agent and the Lenders of the
Guaranteed Obligations, and none of the Guarantors shall exercise any right or
remedy under this Section 4.6 against any other Guarantor until payment and
satisfaction in full of all of such Guaranteed Obligations. For purposes of this
Section 4.6, (a) "GUARANTEED OBLIGATIONS" shall mean any obligations arising
under the other provisions of this Section 4; (b) "EXCESS PAYMENT" shall mean
the amount paid by any Guarantor in excess of its Pro Rata Share of any
Guaranteed Obligations; (c) "PRO RATA SHARE" shall mean, for any Guarantor in
respect of any payment of Guaranteed Obligations, the ratio (expressed as a
percentage) as of the date of such payment of Guaranteed Obligations of (i) the
amount by which the aggregate present fair salable value of all of its assets
and properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of the Borrower and all of the Guarantors exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and the
Guarantors hereunder) of the Borrower and all of the Guarantors; PROVIDED,
HOWEVER, that, for purposes of calculating the Pro Rata Shares of the Guarantors
in respect of any payment of Guaranteed Obligations, any Guarantor that became a
Guarantor subsequent to the date of any such payment shall be deemed to have
been a Guarantor on the date of such payment and the financial information for
such Guarantor as of the date such Guarantor became a Guarantor shall be
utilized for such Guarantor in connection with such payment; and (d)
"CONTRIBUTION SHARE" shall mean, for any Guarantor in respect of any Excess
Payment made by any other Guarantor, the ratio (expressed as a percentage) as of
the date of such Excess Payment of (i) the amount by which the aggregate present
fair salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of the Borrower and all of the
Guarantors other than the maker of such Excess Payment exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and the
Guarantors hereunder) of the Borrower and all of the Guarantors other than the
maker of such Excess Payment; PROVIDED, HOWEVER, that, for purposes of
calculating the Contribution Shares of the Guarantors in respect of any Excess
Payment, any Guarantor that became a Guarantor subsequent to the date of any
such Excess Payment shall be deemed to have been a Guarantor on the date of such
Excess Payment and the financial information for such Guarantor as of the date
such Guarantor became a Guarantor shall be utilized for such Guarantor in
connection with such Excess Payment. This Section 4.6 shall not be deemed to
affect any right of subrogation, indemnity, reimbursement or contribution that
any Guarantor may have under applicable law against the Borrower in respect of
any payment of Guaranteed Obligations. Notwithstanding the foregoing, all rights
of contribution against any Guarantor shall terminate from and after such time,
if ever, that such Guarantor shall be relieved of its obligations pursuant to
Section 8.4.
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4.7 CONTINUING GUARANTEE.
The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Credit Party
Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 CLOSING CONDITIONS.
The obligation of the Lenders to enter into this Credit Agreement and
to make the initial Loans or the Issuing Lender to issue the initial Letter of
Credit, whichever shall occur first, shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):
(a) EXECUTED CREDIT DOCUMENTS. Receipt by the Agent of duly
executed copies of: (i) this Credit Agreement; (ii) the Notes; (iii)
the Collateral Documents and (iv) all other applicable Credit
Documents, each in form and substance acceptable to the Lenders in
their sole discretion.
(b) CORPORATE DOCUMENTS. Receipt by the Agent of the
following:
(i) CHARTER DOCUMENTS. Copies of the articles or
certificates of incorporation or other charter documents of
each Credit Party certified to be true and complete as of a
recent date by the appropriate Governmental Authority of the
state or other jurisdiction of its incorporation and certified
by a secretary or assistant secretary of such Credit Party to
be true and correct as of the Closing Date.
(ii) BYLAWS. A copy of the bylaws of each Credit
Party certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Closing Date.
(iii) RESOLUTIONS. Copies of resolutions of the Board
of Directors of each Credit Party approving and adopting the
Credit Documents to which it is a party, the transactions
contemplated therein and authorizing execution and delivery
thereof, certified by a secretary or assistant secretary of
such Credit Party to be true and correct and in force and
effect as of the Closing Date.
(iv) GOOD STANDING. Copies of (A) certificates of
good standing, existence or its equivalent with respect to
each Credit Party certified as of a recent date by the
appropriate Governmental Authorities of the state or other
jurisdiction of incorporation and each other jurisdiction in
which the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse Effect and
(B) to the extent available, a certificate indicating payment
of all corporate franchise taxes certified as of a recent date
by the appropriate governmental taxing authorities.
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(v) INCUMBENCY. An incumbency certificate of each
Credit Party certified by a secretary or assistant secretary
to be true and correct as of the Closing Date.
(c) FINANCIAL STATEMENTS. Receipt by the Agent and the Lenders
of (i) the financial statements referred to in Section 6.1(a) and (b),
(ii) satisfactory projections including balance sheets and income and
cash flow statements for each twelve month period through the twelve
month period ending November 30, 2006 and (iii) such other information
relating to the Borrower and its Subsidiaries or the Acquired Company
and its Subsidiaries as the Agent may reasonably require in connection
with the structuring and syndication of credit facilities of the type
described herein.
(d) OPINIONS OF COUNSEL. The Agent shall have received legal
opinions dated as of the Closing Date from counsel to the Credit
Parties in form and substance satisfactory to the Agent.
(e) ENVIRONMENTAL REPORTS. Receipt by the Agent in form and
substance satisfactory to it of environmental assessment reports and
related documents of a recent date with respect to all Real Properties.
(f) PERSONAL PROPERTY COLLATERAL. The Agent shall have
received:
(i) searches of Uniform Commercial Code filings in the
jurisdiction of the chief executive office of each Credit
Party and each jurisdiction where any Collateral is located or
where a filing would need to be made in order to perfect the
Agent's security interest in such Collateral, copies of the
financing statements on file in such jurisdictions and
evidence that no Liens exist other than Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Agent's sole
discretion, to perfect the Agent's security interest in the
Collateral;
(iii) searches of ownership of intellectual property in
the appropriate governmental offices and such
patent/trademark/copyright filings as requested by the Agent
in order to perfect the Agent's security interest in the
Collateral;
(iv) all stock certificates evidencing the Capital Stock
pledged to the Agent pursuant to the Pledge Agreement,
together with duly executed in blank undated stock powers
attached thereto (unless, with respect to the pledged Capital
Stock of any Foreign Subsidiary, such stock powers are deemed
unnecessary by the Agent in its reasonable discretion under
the law of the jurisdiction of incorporation of such Person);
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(v) such patent/trademark/copyright filings as requested
by the Agent in order to perfect the Agent's security interest
in the Collateral;
(vi) all instruments and chattel paper in the possession
of any of the Credit Parties, together with allonges or
assignments as may be necessary or appropriate to perfect the
Agent's security interest in the Collateral; and
(vii) duly executed consents as are necessary, in the
Agent's sole discretion, to perfect the Lenders' security
interest in the Collateral.
(g) PRIORITY OF LIENS. The Agent shall have received
satisfactory evidence that (i) the Agent, on behalf of the Lenders,
holds a perfected, first priority Lien on all Collateral and (ii) none
of the Collateral is subject to any other Liens other than Permitted
Liens.
(h) REAL PROPERTY COLLATERAL. The Agent shall have received,
in form and substance reasonably satisfactory to the Agent:
(i) fully executed and notarized mortgages, deeds of
trust or deeds to secure debt (each, as the same may be
amended, modified, restated or supplemented from time to time,
a "MORTGAGE INSTRUMENT" and collectively the "MORTGAGE
INSTRUMENTS") encumbering the fee interest and/or leasehold
interest of any Credit Party (to the extent deemed material by
the Agent) in each real property asset designated in SCHEDULE
6.19(A) (each a "MORTGAGED PROPERTY" and collectively the
"MORTGAGED REAL PROPERTIES");
(ii) a title report obtained by the Credit Parties to
the extent deemed necessary by the Agent) in respect of each
of the Mortgaged Properties;
(iii) in the case of each material real property
leasehold interest of any Credit Party constituting Mortgaged
Property, (a) such estoppel letters, consents and waivers from
the landlords on such real property as may be required by the
Agent, which estoppel letters shall be in the form and
substance reasonably satisfactory to the Agent and (b)
evidence that the applicable lease, a memorandum of lease with
respect thereto, or other evidence of such lease in form and
substance reasonably satisfactory to the Agent, has been or
will be recorded in all places to the extent necessary or
desirable, in the reasonable judgment of the Agent, so as to
enable the Mortgage Instrument encumbering such leasehold
interest to effectively create a valid and enforceable first
priority lien (subject to Permitted Liens) on such leasehold
interest in favor of the Agent (or such other Person as may be
required or desired under local law) for the benefit of
Lenders;
(iv) the Agent shall have received, and the title
insurance company issuing the policy referred to in Section
5.1(i) (the "TITLE INSURANCE COMPANY") shall have received,
maps or plats of an as-built survey of the sites of the real
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property covered by the Mortgage Instruments certified to the
Agent and the Title Insurance Company in a manner reasonably
satisfactory to each of the agent and the Title Insurance
Company, dated a date reasonably satisfactory to the Agent and
the Title Insurance Company by an independent professional
licensed land surveyor, which maps or plats and the surveys on
which they are based shall be made in accordance with
standards that enable the Title Insurance Company to issue the
policies referred to in Section 5.1(i)(v) below without
exception for "Survey matters", except for matters as are
reasonably acceptable to the Agent;
(v) ALTA mortgagee title insurance policies issued by
First American Title Insurance Company (the "MORTGAGE
POLICIES"), in amounts not less than the respective amounts
designated in SCHEDULE 6.19(A) with respect to any particular
Mortgaged Property, assuring the Agent that each of the
Mortgage Instruments creates a valid and enforceable first
priority mortgage lien on the applicable Mortgaged Property,
free and clear of all defects and encumbrances except
Permitted Liens, which Mortgage Policies shall be in form and
substance reasonably satisfactory to the Agent and shall
provide for affirmative insurance and such reinsurance as the
Agent may reasonably request, all of the foregoing in form and
substance reasonably satisfactory to the Agent;
(vi) Evidence, which may be in the form of a letter
from an insurance broker or a municipal engineer or certified
on a survey, as to whether (a) any Mortgaged Property (an
"FLOOD HAZARD PROPERTY") is in an area designated by the
Federal Emergency Management Agency as having special flood or
mud slide hazards and (b) the community in which such Flood
Hazard Property is located is participating in the National
Flood Insurance Program;
(vii) If there are any Flood Hazard Properties, a
Credit Party's written acknowledgment of receipt of written
notification from the Agent (a) as to the existence of each
such Flood Hazard Property and (b) as to whether the community
in which each such Flood Hazard Property is located is
participating in the National Flood Insurance Program;
(viii) If there are maps or plats of an as-built
survey of the sites of the Mortgaged Properties certified to
the Agent and the Title Insurance Company in a manner
reasonably satisfactory to them, dated a date satisfactory to
the Agent and the Title Insurance Company by an independent
professional licensed land surveyor reasonably satisfactory to
the Agent and the Title Insurance Company, which maps or plats
and the surveys on which they are based shall be sufficient to
delete any standard printed survey exception contained in the
applicable title policy and be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping
in 1992 or 1997, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such maps,
plats or surveys the following: (A) the locations on such
sites of all the buildings, structures and other
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improvements and the established building setback lines; (B)
the lines of streets abutting the sites and width thereof; (C)
all access and other easements appurtenant to the sites
necessary to use the sites; (D) all roadways, paths,
driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the
sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building
structures and improvements on the sites; and (F) if the site
is described as being on a filed map, a legend relating the
survey to said map; and
(ix) Evidence reasonably satisfactory to the Agent
that each of the Mortgaged Properties, and the uses of the
Mortgaged Properties, are in compliance in all material
respects with all applicable laws, regulations and ordinances
including without limitation health and environmental
protection laws, erosion control ordinances, storm drainage
control laws, doing business and/or licensing laws, zoning
laws (the evidence submitted as to zoning should include the
zoning designation made for each of the Real Properties, the
permitted uses of each such Real Properties under such zoning
designation and zoning requirements as to parking, lot size,
ingress, egress and building setbacks) and laws regarding
access and facilities for disabled persons including, but not
limited to, the federal Architectural Barriers Act, the Fair
Housing Amendments Act of 1988, the Rehabilitation Act of 1973
and the Americans with Disabilities Act of 1990.
(i) EVIDENCE OF INSURANCE. Receipt by the Agent of copies of
insurance policies or certificates of insurance of the Consolidated
Parties evidencing liability and casualty insurance meeting the
requirements set forth in the Credit Documents, including, but not
limited to, naming the Agent as sole loss payee on behalf of the
Lenders.
(j) CORPORATE STRUCTURE. The corporate capital and ownership
structure of the Consolidated Parties (after giving effect to the
purchase of the Acquired Company) shall be as described in SCHEDULE
5.1(J).
(k) GOVERNMENT CONSENT. Receipt by the Agent of evidence that
all governmental, shareholder and material third party consents
(including Hart-Scott-Rodino clearance) and approvals necessary in
connection with the acquisition of the Acquired Company and the related
financings and other transactions contemplated hereby and expiration of
all applicable waiting periods without any action being taken by any
authority that could restrain, prevent or impose any material adverse
conditions on the acquisition of the Acquired Company or such other
transactions or that could seek or threaten any of the foregoing, and
no law or regulation shall be applicable which in the judgment of the
Agent could have such effect.
(l) MATERIAL ADVERSE EFFECT. No material adverse change shall
have occurred since November 29, 1997 in the condition (financial or
otherwise), business or management of the Consolidated Parties taken as
a whole.
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(m) LITIGATION. There shall not exist (i) any order, decree,
judgment, ruling or injunction which restrains the consummation of the
acquisition of the Acquired Company in the manner contemplated by the
Purchase Agreement or (ii) any pending or threatened action, suit,
investigation or proceeding against a Consolidated Party that could
reasonably be expected to have a Material Adverse Effect.
(n) EQUITY INVESTMENT. Receipt by the Agent of satisfactory
evidence that a cash equity investment of at least $20,000,000 shall
have been received by the Borrower on terms and conditions satisfactory
to the Agent.
(o) SUBORDINATED DEBT. The Borrower shall have received
proceeds from the issuance of Senior Subordinated Notes on terms and
conditions acceptable to the Lenders in an aggregate principal amount
not less than $13,000,000.
(p) PREFERRED EQUITY. The Borrower shall have received
proceeds from the issuance of preferred stock on terms and conditions
acceptable to the Lenders in an aggregate principal amount not less
than $7,000,000.
(q) PURCHASE AGREEMENT. There shall not have been any material
modification, amendment, supplement or waiver to the Purchase Agreement
without the prior written consent of the Agent, including, but not
limited to, any material modification, amendment, supplement or waiver
relating to the amount or type of consideration to be paid in
connection with the acquisition of the Acquired Company and the
contents of all disclosure schedules and exhibits, and the acquisition
of the Acquired Company shall have been consummated in accordance with
the terms of the Purchase Agreement (without waiver of any conditions
precedent to the obligations of the buyer thereunder) and the purchase
price related to such acquisition shall not exceed $116,500,000
(subject to a purchase price adjustment not greater than $5,000,000)
The Agent shall have received a final Purchase Agreement, together with
all exhibits and schedules thereto, certified by an officer of the
Borrower.
(r) EBITDA OF ACQUIRED COMPANY. The Agent shall have
determined to its reasonable satisfaction that the net income of the
Acquired Company before deductions for interest, taxes, depreciation
and amortization expenses was at least $13,000,000 for the twelve month
period ending on March 31, 1998.
(s) OFFICER'S CERTIFICATES. The Agent shall have received a
certificate or certificates executed by a responsible officer of the
Borrower as of the Closing Date stating that (A) each Consolidated
Party is in material compliance with all material existing financial
obligations, (B) all material governmental, shareholder and third party
consents and approvals, if any, with respect to the Credit Documents
and the transactions contemplated thereby have been obtained, (C) no
action, suit, investigation or proceeding is pending or threatened in
any court or before any arbitrator or governmental instrumentality that
purports to affect any Consolidated Party or any transaction
contemplated by the Credit Documents, if such action, suit,
investigation or proceeding could reasonably be expected to have a
Material Adverse Effect, (D) after receipt of proceeds of the Loans
hereunder, the
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transactions contemplated by the Purchase Agreement shall be
consummated on the Closing Date in accordance with the terms thereof
and (E) immediately after giving effect to this Credit Agreement, the
other Credit Documents and all the transactions contemplated therein to
occur on such date, (1) each of the Credit Parties is Solvent, (2) no
Default or Event of Default exists, (3) all representations and
warranties contained herein and in the other Credit Documents are true
and correct in all material respects, and (4) the Credit Parties are in
compliance with each of the financial covenants set forth in Section
7.11.
(t) FEES AND EXPENSES. Payment by the Credit Parties of all
fees and expenses owed by them to the Lenders and the Agent, including,
without limitation, payment to the Agent of the fees set forth in the
Fee Letter.
(u) OTHER. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to, information regarding
litigation, tax, accounting, labor, insurance, pension liabilities
(actual or contingent), real estate leases, material contracts, debt
agreements, property ownership and contingent liabilities of the
Consolidated Parties.
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligations of each Lender to make, convert or extend any Loan and
of the Issuing Lender to issue or extend any Letter of Credit (including the
initial Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing Date of the
conditions set forth in Section 5.1:
(a) The Borrower shall have delivered (i) in the case of any
Revolving Loan, any portion of the Tranche A Term Loan or any portion
of the Tranche B Term Loan, an appropriate Notice of Borrowing or
Notice of Extension/Conversion or (ii) in the case of any Letter of
Credit, an appropriate request for issuance in accordance with the
provisions of Section 2.2(b);
(b) The representations and warranties set forth in Section 6
shall, subject to the limitations set forth therein, be true and
correct in all material respects as of such date (except for those
which expressly relate to an earlier date);
(c) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto;
(d) Immediately after giving effect to the making of such Loan
(and the application of the proceeds thereof) or to the issuance of
such Letter of Credit, as the case may be, (i) the sum of the aggregate
principal amount of outstanding Revolving Loans PLUS LOC Obligations
outstanding shall not exceed the Revolving Committed Amount, and (ii)
the LOC Obligations shall not exceed the LOC Committed Amount.
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The delivery of each Notice of Borrowing, each Notice of Extension/Conversion
and each request for a Letter of Credit pursuant to Section 2.2(b) shall
constitute a representation and warranty by the Borrower of the correctness of
the matters specified in subsections (b), (c) and (d) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 FINANCIAL CONDITION.
(a)(i) The audited consolidated balance sheet and the
consolidated statement of income and retained earnings and the
consolidated statement of cash flows as of November 29, 1997 and for
the year ended, and the audited consolidated balance sheet and the
consolidated statement of income and retained earnings and the
consolidated of cash flows as of November 30, 1996 and for the eight
months then ended, and the audited consolidated balance sheet and the
consolidated statement of income and retained earnings and the
consolidated statement of cash flows as of December 31, 1995 and for
the year then ended have heretofore been furnished to each Lender. Such
financial statements (including the notes thereto) (A) have been
audited by Price Waterhouse, LLP, (B) have been prepared in accordance
with GAAP consistently applied throughout the periods covered thereby
and (C) present fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries as of
such date and for such periods. The unaudited interim balance sheets of
the Borrower and its Subsidiaries as at the end of, and the related
unaudited interim statements of earnings and of cash flows for the
period ended February 28, 1998 have heretofore been furnished to each
Lender. Such interim financial statements for each such quarterly
period, (A) have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby and (B) present fairly
in all material respects consolidated financial condition in each case
subject to year end audit adjustments and the absence of footnotes,
results of operations and cash flows of the Borrower and its
Subsidiaries as of such date and for such periods. During the period
from November 29, 1997 to and including the Closing Date, there has
been no sale, transfer or other disposition by the Borrower or any of
its Subsidiaries of any material part of the business or property of
the Borrower and its Subsidiaries, taken as a whole, and no purchase or
other acquisition by any of them of any business or property (including
any capital stock of any other person) material in relation to the
consolidated financial condition of the Borrower and its Subsidiaries,
taken as a whole, in each case, which, is not reflected in the
foregoing financial statements or in the notes thereto and has not
otherwise been disclosed in writing to the Lenders on or prior to the
Closing Date.
(ii) The financial information of the Acquired Company and its
Subsidiaries referred to in Section 2.4.1 and Section 3.6 of the
Purchase Agreement has heretofore been furnished to each Lender. Such
financial information fairly presents the financial condition,
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results of operations, retained earnings and cash flows for the
Acquired Company and its Subsidiaries for the dates and periods therein
indicated Such financial information was prepared in accordance with
GAAP consistently applied throughout the periods covered thereby except
as otherwise noted in the Purchase Agreement, in the schedules thereto
or in SCHEDULE 6.1.
(b) The pro forma consolidated balance sheet of the
Consolidated Parties as of the Closing Date giving effect to the
Acquisition in accordance with the terms of the Purchase Agreement and
reflecting estimated purchase price accounting adjustments, has
heretofore been furnished to each Lender. Such pro forma balance sheet
is based upon reasonable assumptions made known to the Lenders and upon
information not known to be incorrect or misleading in any material
respect.
(c) The financial statements delivered to the Lenders pursuant
to Section 7.1(a) and (b), (i) have been prepared in accordance with
GAAP (except as may otherwise be permitted under Section 7.1(a) and
(b)) and (ii) present fairly in all material respects (on the basis
disclosed in the footnotes to such financial statements) the
consolidated and consolidating financial condition, results of
operations and cash flows of the Consolidated Parties as of such date
and for such periods in the case of the financial statements referred
to in Section 7.1(b), subject to year and audit adjustments and the
absence of footnotes.
6.2 NO MATERIAL CHANGE.
Since November 29, 1997, (a) there has been no development or event
relating to or affecting a Consolidated Party which has had or could reasonably
be expected to have a Material Adverse Effect and (b) except as otherwise
permitted under this Credit Agreement or as set forth on SCHEDULE 6.2, no
dividends or other distributions have been declared, paid or made upon the
Capital Stock in a Consolidated Party nor has any of the Capital Stock in a
Consolidated Party been redeemed, retired, purchased or otherwise acquired for
value.
6.3 ORGANIZATION AND GOOD STANDING.
Each of the Consolidated Parties (a) is duly organized, validly
existing and is in good standing, to the extent applicable, under the laws of
the jurisdiction of its incorporation or organization, (b) has the corporate
power and authority to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and (c) is duly qualified as a foreign entity and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing could
not reasonably be expected to have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of the Borrower, to obtain
extensions of credit hereunder, and has taken all necessary corporate
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action to authorize the borrowings and other extensions of credit on the terms
and conditions of this Credit Agreement and to authorize the execution, delivery
and performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Credit Party in connection with the borrowings or
other extensions of credit hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents to which such
Credit Party is a party, except for (i) consents, authorizations, notices and
filings described in SCHEDULE 6.4, all of which have been obtained or made or
have the status described in such SCHEDULE 6.4 and (ii) filings to perfect the
Liens created by the Collateral Documents. This Credit Agreement has been, and
each other Credit Document to which any Credit Party is a party will be, duly
executed and delivered on behalf of the Credit Parties. This Credit Agreement
constitutes, and each other Credit Document to which any Credit Party is a party
when executed and delivered will constitute, a legal, valid and binding
obligation of such Credit Party enforceable against such party in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
6.5 NO CONFLICTS.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws or other organizational or governing documents of such
Person, (b) to the extent it could reasonably be expected to have a Material
Adverse Effect violate, contravene or materially conflict with any Requirement
of Law or any other law, regulation (including, without limitation, Regulation U
or Regulation X), order, writ, judgment, injunction, decree or permit applicable
to it, (c) violate, contravene or conflict with contractual provisions of, or
cause an event of default under, any indenture, loan agreement, mortgage, deed
of trust, contract or other agreement or instrument to which it is a party or by
which it may be bound, the violation of which could have a Material Adverse
Effect, or (d) result in or require the creation of any Lien (other than those
contemplated in or created in connection with the Credit Documents) upon or with
respect to its properties.
6.6 NO DEFAULT.
No Consolidated Party is in default in any respect under any contract,
lease, loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of its properties
is bound which default could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred or exists except as
previously disclosed in writing to the Lenders.
6.7 OWNERSHIP.
Each Consolidated Party is the owner of, and has good and marketable
title to, all of its respective assets and none of such assets is subject to any
Lien other than Permitted Liens.
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6.8 LITIGATION.
Set forth on Schedule 6.8 is a list of all litigation matters with
respect to which any Credit Party is a party as of the Closing Date except for
any such matters that, if adversely determined, would not result in liability in
excess of $25,000. There are no actions, suits or legal, equitable, arbitration
or administrative proceedings, pending or, to the knowledge of any Credit Party,
threatened against any Consolidated Party that could be reasonably expected to
have a Material Adverse Effect.
6.9 TAXES.
Each Consolidated Party has filed, or caused to be filed, all material
tax returns (federal, state, local and foreign) required to be filed and paid
(a) all amounts of taxes shown thereon to be due (including interest and
penalties) and (b) all other material taxes, fees, assessments and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangibles taxes) owing by it, except for such taxes (i) which are
not yet delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. No Credit Party is aware as of the Closing Date of any
proposed tax assessments against it or any other Consolidated Party.
6.10 COMPLIANCE WITH LAW.
Each Consolidated Party is in compliance with all Requirements of Law
and all other laws, rules, regulations, orders and decrees (including without
limitation Environmental Laws) applicable to it, or to its properties, unless
such failure to comply could not reasonably be expected to have a Material
Adverse Effect.
6.11 ERISA.
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no ERISA Event has
occurred, and, to the best knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any ERISA Event
could reasonably be expected to occur, with respect to any Plan; (ii)
no "accumulated funding deficiency," as such term is defined in Section
302 of ERISA and Section 412 of the Code, whether or not waived, has
occurred with respect to any Plan; (iii) each Plan has been maintained,
operated, and funded in material compliance with its own terms and in
material compliance with the provisions of ERISA, the Code, and any
other applicable federal or state laws; and (iv) no lien in favor of
the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA), whether or not vested,
under each Single Employer Plan, as of the last annual valuation date
prior to the date on which this representation is made or deemed made
(determined, in each case, utilizing the actuarial assumptions used in
such Plan's most
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recent actuarial valuation report), did not exceed as of such valuation
date the fair market value of the assets of such Plan.
(c) Neither any Consolidated Party nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Credit Parties, could be
reasonably expected to incur, any withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. Neither any
Consolidated Party nor any ERISA Affiliate would become subject to any
withdrawal liability under ERISA if any Consolidated Party or any ERISA
Affiliate were to withdraw completely from all Multiemployer Plans and
Multiple Employer Plans as of the valuation date most closely preceding
the date on which this representation is made or deemed made. Neither
any Consolidated Party nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within
the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning
of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or may subject any Consolidated Party or any ERISA Affiliate to any
material liability under Sections 406, 409, 502(i), or 502(l) of ERISA
or Section 4975 of the Code, or under any agreement or other instrument
pursuant to which any Consolidated Party or any ERISA Affiliate has
agreed or is required to indemnify any person against any such
liability.
(e) Neither any Consolidated Party nor any ERISA Affiliates
has any material liability with respect to "expected post-retirement
benefit obligations" within the meaning of the Financial Accounting
Standards Board Statement 106.
6.12 SUBSIDIARIES.
Set forth on SCHEDULE 6.12 is a complete and accurate list of all
Subsidiaries of each Consolidated Party. Information on SCHEDULE 6.12 includes
jurisdiction of incorporation, the number of shares of each class of Capital
Stock outstanding, the number and percentage of outstanding shares of each class
owned (directly or indirectly) by such Consolidated Party; and the number and
effect, if exercised, of all outstanding options, warrants, rights of conversion
or purchase and all other similar rights with respect thereto. The outstanding
Capital Stock of all such Subsidiaries is validly issued, fully paid and
non-assessable and is owned by each such Consolidated Party, directly or
indirectly, free and clear of all Liens (other than those arising under or
contemplated in connection with the Credit Documents). Neither the Borrower nor
any other Consolidated Party, other than as set forth in SCHEDULE 6.12, has
outstanding any securities convertible into or exchangeable for its Capital
Stock nor does any such Person have outstanding any rights to subscribe for or
to purchase or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to its Capital Stock. SCHEDULE 6.12 may be updated
from time to time by the Borrower by giving written notice thereof to the Agent.
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6.13 GOVERNMENTAL REGULATIONS, ETC.
(a) No part of the Letters of Credit or proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation U, or for
the purpose of purchasing or carrying or trading in any securities
except as contemplated in connection with the purchase of the Acquired
Company or the securities of any other Subsidiary of the Borrower. If
requested by any Lender or the Agent, the Borrower will furnish to the
Agent and each Lender a statement to the foregoing effect in conformity
with the requirements of FR Form U-1 referred to in Regulation U. No
indebtedness being reduced or retired out of the proceeds of the Loans
was or will be incurred for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U or any "margin
security" within the meaning of Regulation T. "Margin stock" within the
meaning of Regulation U does not constitute more than 25% of the value
of the consolidated assets of the Consolidated Parties. None of the
transactions contemplated by this Credit Agreement (including, without
limitation, the direct or indirect use of the proceeds of the Loans)
will violate or result in a violation of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, or
regulations issued pursuant thereto, or Regulation T, U or X.
(b) No Consolidated Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act or
the Investment Company Act of 1940, each as amended. In addition, no
Consolidated Party is (i) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding
company", within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(c) No director, executive officer or principal shareholder of
any Consolidated Party is a director, executive officer or principal
shareholder of any Lender. For the purposes hereof the terms
"director", "executive officer" and "principal shareholder" (when used
with reference to any Lender) have the respective meanings assigned
thereto in Regulation O issued by the Board of Governors of the Federal
Reserve System.
(d) Each Consolidated Party has obtained and holds in full
force and effect, all material franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations,
easements, rights of way and other rights, consents and approvals which
are necessary for the ownership of its respective Property and to the
conduct of its respective businesses as presently conducted.
(e) To the best of each Consolidated Party's knowledge, each
Consolidated Party is current with all material reports and documents,
if any, required to be filed with any state or federal securities
commission or similar agency and is in full compliance in all material
respects with all applicable rules and regulations of such commissions.
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6.14 PURPOSE OF LOANS AND LETTERS OF CREDIT.
The proceeds of the Loans hereunder shall be used solely by the
Borrower to (i) finance a portion of the purchase price of the Acquired Company
and to pay certain fees and expenses related thereto, (ii) refinance existing
Indebtedness and (iii) provide for working capital and other general corporate
purposes. The Letters of Credit shall be used only for or in connection with
appeal bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade transactions, to
secure obligations to Comsat Corporation relating to letters of credit obtained
for the benefit of the Acquired Company and obligations not otherwise
aforementioned relating to transactions entered into by the applicable account
party in the ordinary course of business.
6.15 ENVIRONMENTAL MATTERS.
Except any of the following that could not reasonably be expected to
have a Material Adverse Effect:
(a) Each of the facilities and properties owned, leased or
operated by the Consolidated Parties (the "REAL PROPERTIES") and all
operations at the Real Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law
with respect to the Real Properties or the businesses operated by the
Consolidated Parties (the "BUSINESSES"), and there are no conditions
relating to the Businesses or Real Properties that could give rise to
liability under any applicable Environmental Laws.
(b) None of the Real Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or under the
Real Properties in amounts or concentrations that constitute or
constituted a violation of, or could give rise to liability under,
Environmental Laws.
(c) No Consolidated Party has received any written or verbal
notice of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Real Properties or the
Businesses, nor does any Consolidated Party have knowledge that any
such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Real Properties, or generated,
treated, stored or disposed of at, on or under any of the Real
Properties or any other location, in each case by or on behalf of any
Consolidated Party in violation of, or in a manner that could
reasonably be expected to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of any Credit Party,
threatened, under any Environmental Law to which any Consolidated Party
is or will be named as a party, nor are there any consent
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decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the
Consolidated Parties, the Real Properties or the Businesses.
(f) There has been no Release or, threat of Release of
Materials of Environmental Concern at or from the Real Properties, or
arising from or related to the operations (including, without
limitation, disposal) of any Consolidated Party in connection with the
Real Properties or otherwise in connection with the Businesses, in
violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.
6.16 INTELLECTUAL PROPERTY.
Each Consolidated Party owns, or has the legal right to use, all
trademarks, tradenames, copyrights, technology, know-how and processes (the
"INTELLECTUAL PROPERTY") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal right
to use could not be reasonably expected to have a Material Adverse Effect. Set
forth on SCHEDULE 6.16 is a list of all patents and patent applications and all
federally registered trademarks, trademark applications, copyrights and
copyright applications, tradename applications, service marks and service mark
applications owned, or applied for, by each Consolidated Party or that any
Consolidated Party has licensed (if such license has been federally recorded).
Except as provided on SCHEDULE 6.16, no claim has been asserted and is pending
by any Person challenging or questioning the use of any such Intellectual
Property or the validity or effectiveness of any such Intellectual Property, nor
does any Credit Party know of any such claim, and to the Credit Parties'
knowledge the use of such Intellectual Property by any Consolidated Party does
not infringe on the rights of any Person, except for such claims and
infringements that in the aggregate, could not be reasonably expected to have a
Material Adverse Effect. SCHEDULE 6.16 may be updated from time to time by the
Borrower by giving written notice thereof to the Agent.
6.17 SOLVENCY.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement (including without limitation the
acquisition of the Acquired Company by the Borrower), will be Solvent.
6.18 INVESTMENTS.
All Investments of each Consolidated Party are Permitted Investments.
6.19 LOCATION OF COLLATERAL.
Set forth on SCHEDULE 6.19(A) is a list of all Mortgaged Properties
with street address, county and state where located. Set forth on SCHEDULE
6.19(B) is a list of all locations where any tangible personal property of a
Consolidated Party is located, including county and state where located. Set
forth on SCHEDULE 6.19(C) is the chief executive office and principal place of
business of each Consolidated Party. SCHEDULE 6.19(A), 6.19(B) and 6.19(C) may
be updated from time to time by the Borrower giving written notice thereof to
the Agent, but the Borrower shall not be required to
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update Schedule 6.19(b) with respect to any location unless the tangible
personal property so located has a net book value greater than $100,000
individually or $500,000 in the aggregate.
6.20 DISCLOSURE.
Neither this Credit Agreement nor any financial statements delivered to
the Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Consolidated Party in connection with the
transactions contemplated hereby, taken as a whole, contains any untrue
statement of a material fact or omits to state a material fact known to any
Credit Party (or which reasonably should have been known by any Credit Party)
necessary in order to make the statements contained therein or herein not
misleading.
6.21 NO BURDENSOME RESTRICTIONS.
No Consolidated Party is a party to any agreement or instrument or
subject to any other obligation or any charter or corporate restriction or any
provision of any applicable law, rule or regulation which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
6.22 LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of a Consolidated Party as of the Closing Date and none
of the Consolidated Parties has suffered any strikes, walkouts, work stoppages
or other material labor difficulty within the last five years.
6.23 NATURE OF BUSINESS.
As of the Closing Date, the Consolidated Parties are engaged in the
business of manufacturing VSAT antennas, systems and products for satellite and
terrestrial communications, and products for cellular and other wireless
communications applications.
6.24 REPRESENTATIONS AND WARRANTIES FROM PURCHASE AGREEMENT.
To the knowledge of the Borrower, as of the Closing Date, each of the
representations and warranties made in the Purchase Agreement by each of the
parties thereto is true and correct in all material respects.
6.25 YEAR 2000 COMPLIANCE.
The Borrower has (i) initiated a review and assessment of all areas
within its and each of its Subsidiaries' business and operations (including
those affected by suppliers and vendors) that could be adversely affected by the
"Year 2000 Problem" (that is, the risk that computer applications used by the
Borrower or any of its Subsidiaries (or suppliers and venders) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the
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Year 2000 Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with such timetable. The Borrower believes that all computer
applications (including those of its suppliers and vendors) that are material to
its or any of its Subsidiaries' business and operations will on a timely basis
be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent
that a failure to do so could not reasonably be expected to have Material
Adverse Effect.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
7.1 INFORMATION COVENANTS.
The Borrower will furnish, or cause to be furnished, to the Agent and
each of the Lenders:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 120 days after the close of each fiscal year of the
Consolidated Parties, a consolidated and consolidating balance sheet of
the Consolidated Parties, as of the end of such fiscal year, together
with related consolidated and consolidating income statements and
statements of retained earnings and of cash flows for such fiscal year,
setting forth in comparative form consolidated and consolidating
figures for the preceding fiscal year (commencing with the 1999 fiscal
year), all such financial information described above to be in
reasonable form and detail and, in the case of consolidated financial
statements, audited by independent certified public accountants of
recognized national standing reasonably acceptable to the Agent and
whose opinion shall be to the effect that such financial statements
have been prepared in accordance with GAAP (except for changes with
which such accountants concur) and shall not be limited as to the scope
of the audit or qualified as to the status of the Consolidated Parties
as a going concern.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 60 days after the close of each fiscal quarter of
the Consolidated Parties (other than the fourth fiscal quarter, in
which case 120 days after the end thereof) a consolidated and
consolidating balance sheet of the Consolidated Parties, as of the end
of such fiscal quarter, together with related consolidated and
consolidating income statements and statements of retained earnings and
of cash flows for such fiscal quarter in each case setting forth in
comparative form consolidated and consolidating figures for the
corresponding period of the preceding fiscal year (commencing with the
fifth fiscal quarter ending after the Closing Date) and consolidated
budget projections, all such financial information described above to
be in reasonable form and detail and reasonably acceptable to the
Agent, and accompanied by a certificate of the chief financial officer
of the Borrower to the effect that such quarterly financial statements
fairly present in all material respects the financial condition of the
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Consolidated Parties and have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end audit
adjustments and the absence of footnotes.
(c) MONTHLY FINANCIAL STATEMENTS. As soon as available, and in
any event within 30 days after the close of each month of the
Consolidated Parties financial statements as agreed to between the
Borrower and the Agent in reasonable form and detail and reasonably
acceptable to the Agent, and accompanied by a certificate of the chief
financial officer of the Borrower to the effect that such monthly
financial statements fairly present in all material respects the
financial condition of the Consolidated Parties subject to changes
resulting from audit and normal year-end audit adjustments and the
absence of footnotes.
(d) OFFICER'S CERTIFICATE. At the time of delivery of the
financial statements provided for in Sections 7.1(a) and 7.1(b) above,
a certificate of the chief financial officer of the Borrower
substantially in the form of EXHIBIT 7.1(D), (i) demonstrating
compliance with the financial covenants contained in Section 7.11 by
calculation thereof as of the end of each such fiscal period and (ii)
stating that no Default or Event of Default exists, or if any Default
or Event of Default does exist, specifying the nature and extent
thereof and what action the Credit Parties propose to take with respect
thereto. At the time of delivery of the financial statements provided
for in Section 7.1(c) above, a certificate of the chief financial
officer of the Borrower stating that no Default or Event of Default
exists, or if any Event of Default does exist, specifying the nature
and extent thereof and what action the Credit Parties propose to take
with respect thereto.
(e) ANNUAL BUSINESS PLAN AND BUDGETS. Not later than 30 days
after the end of each fiscal year of the Borrower, beginning with the
fiscal year ending November 30, 1998, an annual business plan and
budget of the Consolidated Parties containing, among other things, pro
forma financial statements for the next fiscal year on a quarterly
basis and for the two fiscal years thereafter on an annual basis.
(f) COMPLIANCE WITH CERTAIN PROVISIONS OF THE CREDIT
AGREEMENT. Within 120 days after the end of each fiscal year of the
Borrower, a certificate containing information regarding (i) the
calculation of Excess Cash Flow and all payments made pursuant to
Section 8.7 and (ii) the amount of all Asset Dispositions, Debt
Issuances and Equity Issuances that were made during the prior fiscal
year.
(g) ACCOUNTANT'S CERTIFICATE. Within the period for delivery
of the annual financial statements provided in Section 7.1(a), a
certificate of the accountants conducting the annual audit stating that
they have reviewed this Credit Agreement and stating further whether,
in the course of their audit, they have become aware of any Default or
Event of Default and, if any such Default or Event of Default exists,
specifying the nature and extent thereof.
(h) AUDITOR'S REPORTS. Promptly upon receipt thereof, a copy
of any other report or "management letter" submitted by independent
accountants to any Consolidated Party in connection with any annual,
interim or special audit of the books of such Person.
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(i) REPORTS. Promptly upon transmission or receipt thereof,
(i) copies of any filings and registrations with, and reports to or
from, the Securities and Exchange Commission, or any successor agency,
and copies of all financial statements, proxy statements and similar
information as any Consolidated Party shall send to its shareholders or
to a holder of any Indebtedness in excess of $1,000,000 owed by any
Consolidated Party in its capacity as such a holder and (ii) upon the
request of the Agent, all reports and written information to and from
the United States Environmental Protection Agency, or any state or
local agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety
matters.
(j) NOTICES. Upon an Executive Officer of the Borrower
obtaining knowledge thereof, the Borrower promptly will give written
notice to the Agent of (i) the occurrence of an event or condition
consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the Credit Parties propose to take
with respect thereto, and (ii) the occurrence of any of the following
with respect to any Consolidated Party (A) the pendency or commencement
of any litigation, arbitral or governmental proceeding against such
Person which if adversely determined is likely to have a Material
Adverse Effect, (B) the institution of any proceedings against such
Person with respect to, or the receipt of notice by such Person of
potential liability or responsibility for violation, or alleged
violation of any federal, state or local law, rule or regulation,
including but not limited to, Environmental Laws, the violation of
which could reasonably be expected to have a Material Adverse Effect,
or (C) any notice or determination concerning the imposition of any
withdrawal liability by a Multiemployer Plan against such Person or any
ERISA Affiliate, the determination that a Multiemployer Plan is, or is
expected to be, in reorganization within the meaning of Title IV of
ERISA or the termination of any Plan.
(k) ERISA. Upon an Executive Officer of the Borrower obtaining
knowledge thereof, the Borrower promptly will give written notice to
the Agent (and in any event within five business days) of: (i) of any
event or condition, including, but not limited to, any Reportable
Event, that constitutes, or could reasonably be expected to lead to, an
ERISA Event; (ii) with respect to any Multiemployer Plan, the receipt
of notice as prescribed in ERISA or otherwise of any withdrawal
liability assessed against the Borrower or any of its ERISA Affiliates,
or of a determination that any Multiemployer Plan is in reorganization
or insolvent (both within the meaning of Title IV of ERISA); (iii) the
failure to make full payment on or before the due date (including
extensions) thereof of all amounts which any Consolidated Party or any
ERISA Affiliate is required to contribute to each Plan pursuant to its
terms and as required to meet the minimum funding standard set forth in
ERISA and the Code with respect thereto; or (iv) any change in the
funding status of any Plan that could reasonably be expected to have a
Material Adverse Effect, together with a description of any such event
or condition or a copy of any such notice and a statement by the chief
financial officer of the Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action, if any,
which has been or is being taken or is proposed to be taken by the
Credit Parties with respect thereto. Promptly upon request, the Credit
Parties shall furnish the Agent and the Lenders with such additional
information concerning any Plan as
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may be reasonably requested, including, but not limited to, copies of each
annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the Code, respectively, for each
"plan year" (within the meaning of Section 3(39) of ERISA).
(l) ENVIRONMENTAL.
(i) Upon the reasonable written request of the Agent
following any material Release of Materials of Environmental
Concern or if the Agent shall otherwise determine in its
reasonable discretion that cause shall exist, the Credit
Parties will furnish or cause to be furnished to the Agent, at
the Borrower's expense, a report of an environmental
assessment of reasonable scope, form and depth, (including,
where appropriate, invasive soil or groundwater sampling) by a
consultant reasonably acceptable to the Agent as to the nature
and extent of the presence of any Materials of Environmental
Concern on any Real Properties (as defined in Section 6.16)
and as to the compliance by any Consolidated Party with
Environmental Laws at such Real Properties. If the Credit
Parties fail to deliver such an environmental report within
seventy-five (75) days after receipt of such written request
then the Agent may arrange for same, and the Consolidated
Parties hereby grant to the Agent and their representatives
access to the Real Properties to reasonably undertake such an
assessment (including, where appropriate, invasive soil or
groundwater sampling). The reasonable cost of any assessment
arranged for by the Agent pursuant to this provision will be
payable by the Borrower on demand and added to the obligations
secured by the Collateral Documents.
(ii) The Consolidated Parties will conduct and
complete all investigations, studies, sampling, and testing
and all remedial, removal, and other actions necessary to
address all Materials of Environmental Concern on, from or
affecting any of the Real Properties to the extent necessary
to be in compliance with all Environmental Laws and with the
validly issued orders and directives of all Governmental
Authorities with jurisdiction over such Real Properties to the
extent any failure could reasonably be expected to have a
Material Adverse Effect.
(m) ADDITIONAL PATENTS AND TRADEMARKS. At the time of delivery
of the financial statements and reports provided for in Section 7.1(a),
a report signed by the chief financial officer or treasurer of the
Borrower setting forth (i) a list of registration numbers for all
patents and all federally registered trademarks, service marks,
tradenames and copyrights awarded to any Consolidated Party since the
last day of the immediately preceding fiscal year and (ii) a list of
all patent applications and all federally registered trademark
applications, service mark applications, trade name applications and
copyright applications submitted by any Consolidated Party since the
last day of the immediately preceding fiscal year and the status of
each such application, all in such form as shall be reasonably
satisfactory to the Agent.
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(n) OTHER INFORMATION. With reasonable promptness upon any
such request, such other information regarding the business, properties
or financial condition of any Consolidated Party as the Agent or the
Required Lenders may reasonably request.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4 or Section 8.5, each
Credit Party will, and will cause each of its Subsidiaries to, do all things
necessary to preserve and keep in full force and effect its corporate existence
and material rights, franchises and authority.
7.3 BOOKS AND RECORDS.
Each Credit Party will, and will cause each of its Subsidiaries to,
keep complete and accurate books and records of its transactions in accordance
with good accounting practices on the basis of GAAP (including the establishment
and maintenance of appropriate reserves).
7.4 COMPLIANCE WITH LAW.
Each Credit Party will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders, and all applicable
restrictions imposed by all Governmental Authorities, applicable to it and its
Property if noncompliance with any such law, rule, regulation, order or
restriction could reasonably be expected to have a Material Adverse Effect.
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each Credit Party will, and will cause each of its Subsidiaries to, pay
and discharge (a) all taxes, assessments and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of its properties,
before they shall become delinquent, (b) all lawful claims (including claims for
labor, materials and supplies) which, if unpaid, could reasonably be expected to
give rise to a Lien upon any of its properties, and (c) except as prohibited
hereunder, all of its other Indebtedness as it shall become due; PROVIDED,
HOWEVER, that no Consolidated Party shall be required to pay any such tax,
assessment, charge, levy, claim or Indebtedness which is being contested in good
faith by appropriate proceedings and as to which adequate reserves therefor have
been established in accordance with GAAP, unless the failure to make any such
payment (i) could give rise to an immediate right to foreclose on a Lien
securing such amounts or (ii) could reasonably be expected to have a Material
Adverse Effect.
7.6 INSURANCE.
(a) Each Credit Party will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect
insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption insurance) in
such amounts, covering such risks and liabilities and with such
deductibles or self-insurance retentions as are in accordance with
normal industry practice. The Agent shall be named as loss payee or
mortgagee, as its interest may appear, and/or additional insured with
respect to any
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such insurance providing coverage in respect of any Collateral, and
each provider of any such insurance shall agree, by endorsement upon
the policy or policies issued by it or by independent instruments
furnished to the Agent, that it will give the Agent thirty (30) days
prior written notice before any such policy or policies shall be
altered or canceled, and that no act or default of any Consolidated
Party or any other Person shall affect the rights of the Agent or the
Lenders under such policy or policies. The present insurance coverage
of the Consolidated Parties is outlined as to carrier, policy number,
expiration date, type and amount on SCHEDULE 7.6.
(b) In case of any material loss, damage to or destruction of
the Collateral of any Credit Party or any part thereof, such Credit
Party shall promptly give written notice thereof to the Agent generally
describing the nature and extent of such damage or destruction. In case
of any loss, damage to or destruction of the Collateral of any Credit
Party or any part thereof, such Credit Party, whether or not the
insurance proceeds, if any, received on account of such damage or
destruction shall be sufficient for that purpose, at such Credit
Party's cost and expense, will promptly repair or replace the
Collateral of such Credit Party so lost, damaged or destroyed;
PROVIDED, HOWEVER, that such Credit Party need not repair or replace
the Collateral of such Credit Party so lost, damaged or destroyed to
the extent the failure to make such repair or replacement (i)
determined by the board of directors of the Borrower to be desirable to
the proper conduct of the business of such Credit Party in the ordinary
course and otherwise in the best interest of such Credit Party; and
(ii) would not materially impair the rights of the Agent or the Lenders
under the Collateral Documents, any other Credit Document or any
Hedging Agreement. In the event a Credit Party shall receive net
proceeds of such insurance in excess of $1,000,000, such Credit Party
will immediately pay over such proceeds to the Agent, for payment on
the Credit Party Obligations for application as an Asset Disposition as
set forth in Section 3.3(b)(iii); PROVIDED, HOWEVER, that the Agent
agrees to release such insurance proceeds to such Credit Party for
replacement or restoration of the portion of the Collateral of such
Credit Party lost, damaged or destroyed (including reimbursement of any
Credit Party for expenditures previously made therefore) if, but only
if, (A) no Default or Event of Default shall have occurred and be
continuing at the time of release, (B) written application for such
release is received by the Agent from such Credit Party within 30 days
of receipt of such proceeds and (C) the Agent has received evidence
reasonably satisfactory to it that the Collateral lost, damaged or
destroyed has been or will be replaced or restored to reasonable
condition within 180 days after the date such Collateral was lost,
damaged or destroyed.
7.7 MAINTENANCE OF PROPERTY.
Each Credit Party will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in reasonable repair, working order and condition, normal wear and
tear and casualty and condemnation excepted, and will make, or cause to be made,
in such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper in the reasonable conduct of its business, to the extent and
in the manner customary for companies in similar businesses.
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7.8 PERFORMANCE OF OBLIGATIONS.
Except as could not reasonably be expected to result in a Material
Adverse Effect, each Credit Party will, and will cause each of its Subsidiaries
to, perform in all material respects all of its obligations under the terms of
all material agreements, indentures, mortgages, security agreements or other
debt instruments to which it is a party or by which it is bound.
7.9 USE OF PROCEEDS.
The Borrower will use the proceeds of the Loans and will use the
Letters of Credit solely for the purposes set forth in Section 6.14.
7.10 AUDITS/INSPECTIONS.
Upon reasonable notice, during normal business hours and without undue
disruption, each Credit Party will, and will cause each of its Subsidiaries to,
permit representatives appointed by the Agent, including, without limitation,
independent accountants, agents, attorneys, and appraisers to visit and inspect
its property, including its books and records, its accounts receivable and
inventory, its facilities and its other business assets, and to make photocopies
or photographs thereof and to write down and record any information such
representative obtains and shall permit the Agent or its representatives to
investigate and verify the accuracy of information provided to the Lenders and
to discuss all such matters with the officers, employees and representatives of
such Person. All information obtained pursuant to this Section 7.10 shall be
subject to the provisions of Section 11.16. The Credit Parties agree that the
Agent, and its representatives, may conduct an annual audit of the Collateral,
at the expense of the Borrower. Notwithstanding the foregoing, the rights of the
Lenders and the Agent under this Section 7.10 shall be subject to restrictions
on access to the Credit Parties' information and facilities under laws and
regulations applicable to the Credit Parties', including without limitations any
laws or regulations governing national security matters, security clearances or
the like.
7.11 FINANCIAL COVENANTS.
(a) INTEREST COVERAGE RATIO. The Interest Coverage Ratio, as
of the last day of each fiscal quarter of the Consolidated Parties
during the periods shown below, shall be greater than or equal to:
<TABLE>
<CAPTION>
PERIOD RATIO
<S> <C>
August 31, 1998 through November 30, 1998 2.00 to 1.0
February 28, 1999 2.10 to 1.0
May 31, 1999 2.20 to 1.0
August 31, 1999 through November 30, 1999 2.30 to 1.0
February 29, 2000 through August 31, 2000 2.50 to 1.0
November 30, 2000 through February 28, 2001 2.75 to 1.0
May 31, 2001 and thereafter 3.00 to 1.0
</TABLE>
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(b) LEVERAGE RATIO. The Leverage Ratio, as of the last day of
each fiscal quarter of the Consolidated Parties during the periods
shown below, shall be less than or equal to:
<TABLE>
<CAPTION>
PERIOD RATIO
<S> <C> <C>
August 31, 1998 through May 31, 1999 5.35 to 1.0
August 31, 1999 4.75 to 1.0
November 30, 1999 4.50 to 1.0
February 29, 2000 through May 31, 2000 4.25 to 1.0
August 31, 2000 4.00 to 1.0
November 30, 2000 through February 28, 2001 3.75 to 1.0
May 31, 2001 through November 30, 2001 3.50 to 1.0
February 28, 2002 through November 30, 2002 3.25 to 1.0
February 28, 2003 and thereafter 3.00 to 1.0
</TABLE>
(c) SENIOR LEVERAGE RATIO. The Senior Leverage Ratio, as of
the last day of each fiscal quarter of the Consolidated Parties during
the periods shown below, shall be less than or equal to:
<TABLE>
<CAPTION>
PERIOD RATIO
<S> <C> <C>
August 31, 1998 through May 31, 1999 4.60 to 1.0
August 31, 1999 4.25 to 1.0
November 30, 1999 4.00 to 1.0
February 29, 2000 through May 31, 2000 3.75 to 1.0
August 31, 2000 3.50 to 1.0
November 30, 2000 through February 28, 2001 3.25 to 1.0
May 31, 2001 through November 30, 2001 3.00 to 1.0
February 28, 2001 through November 30, 2002 2.75 to 1.0
February 28, 2003 and thereafter 2.50 to 1.0
</TABLE>
(d) CONSOLIDATED NET WORTH. At all times the Consolidated Net
Worth of the Borrower shall be greater than or equal to $60,000,000
(decreased by the after-tax losses associated with the Divested
Businesses at the time incurred in an aggregate amount not to exceed
$4,800,000), increased on a cumulative basis as of the end of each
fiscal quarter of the Consolidated Parties, commencing with the fiscal
quarter ending August 31, 1998, by an amount equal to 50% of
Consolidated Net Income (to the extent positive) for the fiscal quarter
then ended.
(e) CAPITAL EXPENDITURES. The Credit Parties will not permit
Consolidated Capital Expenditures (excluding any capital expenditures
made with the proceeds of an Excluded Issuance) for any fiscal year to
exceed the amounts set forth below during the periods set forth below:
<TABLE>
<CAPTION>
PERIOD AMOUNT
<S> <C>
Closing Date through the 1998
fiscal year end $4,000,000
</TABLE>
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<TABLE>
<S> <C>
Each fiscal year occurring thereafter $6,500,000
</TABLE>
provided, however, that the Credit Parties may apply any amounts not
utilized in any fiscal year to the amount otherwise available for the
next fiscal year only.
7.12 ADDITIONAL CREDIT PARTIES.
As soon as practicable and in any event within 30 days after any Person
becomes a Subsidiary of any Credit Party, the Borrower shall provide the Agent
with written notice thereof setting forth information in reasonable detail
describing all of the assets of such Person and shall (a) if such Person is a
Domestic Subsidiary of a Credit Party, cause such Person to execute a Joinder
Agreement in substantially the same form as EXHIBIT 7.12, (b) cause 100% (if
such Person is a Domestic Subsidiary of a Credit Party) or 65% (if such Person
is a direct Foreign Subsidiary of the Borrower or a Domestic Subsidiary) of the
Capital Stock of such Person to be delivered to the Agent (together with undated
stock powers signed in blank (unless, with respect to a Foreign Subsidiary, such
stock powers are deemed unnecessary by the Agent in its reasonable discretion
under the law of the jurisdiction of incorporation of such Person)) and pledged
to the Agent pursuant to an appropriate pledge agreement(s) in substantially the
form of the Pledge Agreement and otherwise in form acceptable to the Agent and
(c) cause such Person (if such Person is a Domestic Subsidiary) to (i) if such
Person owns or leases any real property located in the United States of America
or deemed to be material by the Agent or the Required Lenders in its or their
sole reasonable discretion, deliver to the Agent with respect to such real
property documents, instruments and other items of the types required to be
delivered by the Agent all in form, content and scope reasonably satisfactory to
the Agent and (ii) deliver such other documentation as the Agent may reasonably
request in connection with the foregoing, including, without limitation,
appropriate UCC-1 financing statements, real estate title insurance policies,
environmental reports, landlord's waivers, certified resolutions and other
organizational and authorizing documents of such Person, favorable opinions of
counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to
above and the perfection of the Agent's liens thereunder) and other items of the
types required to be delivered pursuant to Section 5.1(f), all in form, content
and scope reasonably satisfactory to the Agent.
7.13 PLEDGED ASSETS.
Each Credit Party will, and will cause each of its Domestic
Subsidiaries to, cause (i) all of its owned real and personal property located
in the United States, (ii) to the extent deemed to be material by the Agent or
the Required Lenders in its or their sole reasonable discretion, all of its
other owned real and personal property and (iii) to the extent deemed material
by the Agent or the Required Lenders in its or their sole reasonable discretion
all of its leased real property located in the United States, to be subject at
all times to first priority, perfected and, in the case of real property
(whether leased or owned), title insured Liens in favor of the Agent pursuant to
the terms and conditions of the Collateral Documents or, with respect to any
such property acquired subsequent to the Closing Date, such other additional
security documents as the Agent shall reasonably request; PROVIDED, HOWEVER that
upon the Borrower's request, the Agent may in its reasonable discretion, waive
certain of the requirements hereunder if it is determined that the
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costs of compliance with the provisions hereof are excessive in light of the
benefit to be obtained in connection therewith. With respect to any real
property (whether leased or owned) located in the United States of America
acquired by any direct or indirect Domestic Subsidiary of the Borrower
subsequent to the Closing Date, such Person will cause to be delivered to the
Agent with respect to such real property documents, instruments and other items
of the types required to be delivered pursuant to Section 5.1(h) in form
acceptable to the Agent. In furtherance of the foregoing terms of this Section
7.13, the Borrower agrees to promptly provide the Agent with written notice of
the acquisition by, or the entering into a leasing by, any Credit Party of any
asset(s) having a market value greater than $500,000, setting forth in
reasonable detail the location and a description of the asset(s) so acquired.
Without limiting the generality of the above, the Credit Parties will cause 100%
of the Capital Stock of the Borrower and each other direct or indirect Domestic
Subsidiaries of the Borrower and 65% of the Capital Stock in each of the direct
Foreign Subsidiaries of the Borrower and its Domestic Subsidiaries to be subject
at all times to a first priority, perfected Lien in favor of the Agent pursuant
to the terms and conditions of the Collateral Documents or such other security
documents as the Agent shall reasonably request.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire
any intellectual property, securities, instruments, chattel paper or other
personal property required to be delivered to the Agent as Collateral hereunder
or under any of the Collateral Documents or (b) acquire or lease any real
property, the Borrower shall promptly (and in any event within three (3)
Business Days) after any Executive Officer of a Credit Party acquires knowledge
of same notify the Agent of same. Each Credit Party shall, and shall cause each
of its Subsidiaries to, take such action (including but not limited to the
actions set forth in Sections 5.1(f) and 5.1(i) at its own expense as requested
by the Agent to ensure that the Agent has a first priority perfected Lien to
secure the Credit Party Obligations in (i) all owned real property and personal
property of the Credit Parties located in the United States, (ii) to the extent
deemed to be material by the Agent or the Required Lenders in its or their sole
reasonable discretion, all other owned real and personal property of the Credit
Parties and (iii) to the extent deemed material by the Agent or the Required
Lenders in its or their sole reasonable discretion, all leased real property
located in the United States, subject in each case only to Permitted Liens. Each
Credit Party shall, and shall cause each of its Domestic Subsidiaries to, adhere
to the covenants regarding the location of personal property as set forth in the
Security Agreements.
7.14 YEAR 2000 COMPLIANCE.
The Borrower will promptly notify the Agent in the event that the
Borrower discovers or determines that any computer application (including those
of its suppliers and vendors) that is material to its or any of its Subsidiaries
business and operations will not be Year 2000 compliant (as such term is defined
in Section 6.25), except to the extent that such failure could not reasonably be
expected to have a Material Adverse Effect.
7.15 ANNUAL MEETING.
The Borrower will assist the Agent in organizing an annual bank meeting
where members of management will be available to meet with representatives of
the Lenders.
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7.16 NAME CHANGE DOCUMENTATION.
As soon as practicable, but in any event within 5 Business Days after
the Closing Date, the Credit Parties shall have filed all documentation
applicable and/or appropriate in all relevant jurisdictions to effectuate each
relevant name change as required under the Purchase Agreement for each of the
Designated Corporations.
7.17 IRB FACILITY.
As soon as practicable, but in any event within 45 days after the
Closing Date, the Credit Parties shall have either (i) obtained the consent of
the First National Bank of Maryland, as trustee under the Illinois IRB, to the
transfer of the Capital Stock of Mark Antenna Products, Inc. from CRSI, Inc. to
the Borrower, in which case, the Credit Parties may maintain and continue the
industrial revenue bond facility until October 15, 1998, upon which time, the
industrial revenue bond facility shall be terminated and the real and personal
property assets securing the loan agreement in connection with the same shall be
pledged to secure the Credit Party Obligations or (ii) failed to obtain the
consent of the First National Bank of Maryland to the transfer of the Capital
Stock of Mark Antenna Products, Inc., terminated the industrial revenue bond
facility and pledged the real and personal property assets securing the loan
agreement in connection with such facility to secure the Credit Party
Obligations.
7.18 NORTH CAROLINA SURVEY.
As soon as practicable, but in any event within 45 days after the
Closing Date, the Credit Parties shall have provided the Agent with a survey
reasonably satisfactory to the Agent of the real property assets owned by any
Credit Party located in Catawba County, North Carolina.
7.19 INTEREST RATE PROTECTION.
Within 180 days after the Closing Date, the Borrower shall have entered
into interest rate protection agreements protecting against fluctuations in
interest rates as to which the material terms are reasonably satisfactory to the
Agent, which agreements shall provide coverage in an amount and for a duration
satisfactory to the Agent.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
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8.1 INDEBTEDNESS.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower and its Subsidiaries set
forth in SCHEDULE 8.1 (and renewals, refinancings and extensions
thereof on terms and conditions no less favorable to such Person than
such existing Indebtedness);
(c) purchase money Indebtedness (including Capital Leases) or
Synthetic Leases hereafter incurred by the Borrower or any of its
Subsidiaries to finance the purchase of fixed assets PROVIDED that (i)
the total of all such Indebtedness for all such Persons taken together
shall not exceed an aggregate principal amount of $5,000,000 at any one
time (including any such Indebtedness referred to in subsection (b)
above); (ii) such Indebtedness when incurred shall not exceed the
purchase price of the asset(s) financed; and (iii) no such Indebtedness
shall be refinanced for a principal amount in excess of the principal
balance outstanding thereon at the time of such refinancing;
(d) obligations of the Borrower or any of its Subsidiaries in
respect of Hedging Agreements entered into in order to manage existing
or anticipated interest rate or exchange rate risks and not for
speculative purposes;
(e) intercompany Indebtedness arising out of loans and
advances permitted under Section 8.6;
(f) indebtedness in respect of the Senior Subordinated Notes
referred to in Section 3.3(b) and additional Senior Subordinated Notes
on the same terms and conditions or on other terms and conditions
reasonably acceptable to the Lenders; and
(g) in addition to the Indebtedness otherwise permitted by
this Section 8.1, other Indebtedness hereafter incurred by the Borrower
or any of its Subsidiaries PROVIDED that (A) the loan documentation
with respect to such Indebtedness shall be on terms and conditions
reasonably satisfactory to the Required Lenders, shall be subordinated
to the Credit Party Obligations and shall not contain covenants or
default provisions relating to any Consolidated Party that are more
restrictive than the covenants and default provisions contained in the
Credit Documents, (B) the Borrower shall have delivered to the Agent a
Pro Forma Compliance Certificate demonstrating that, upon giving effect
on a Pro Forma Basis to the incurrence of such Indebtedness and to the
concurrent retirement of any other Indebtedness of any Consolidated
Party, no Default or Event of Default would exist hereunder.
(h) Guarantees by the Borrower or any other Credit Party of
any Indebtedness of the Borrower or another Credit Party otherwise
permitted hereunder.
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(i) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business provided that
such Indebtedness is extinguished within two Business Days of its
incurrence.
(j) Indebtedness arising from agreements of the Borrower or
any other Credit Party providing for indemnification, adjustment of
purchase price or similar obligations, in each case incurred or assumed
in connection with the disposition of any business, assets or any
Subsidiary.
(k) Other Indebtedness of the Borrower in an amount not to
exceed $1,000,000 in the aggregate at any time outstanding.
8.2 LIENS.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Lien with respect to any of its
Property, whether now owned or after acquired, except for Permitted Liens.
8.3 NATURE OF BUSINESS.
The Credit Parties will not permit any Consolidated Party to engage in
business substantively different in nature from that set forth in Section 6.23
or reasonable extensions or expansions thereof.
8.4 CONSOLIDATION, MERGER, DISSOLUTION, ETC.
Except in connection with an Asset Disposition permitted by the terms
of Section 8.5, the Credit Parties will not permit any Consolidated Party to
enter into any transaction of merger or consolidation or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution); PROVIDED that,
notwithstanding the foregoing provisions of this Section 8.4, (a) the Borrower
may merge or consolidate with any of its Subsidiaries PROVIDED that (i) the
Borrower shall be the continuing or surviving corporation, (ii) the Credit
Parties shall cause to be executed and delivered such documents, instruments and
certificates as the Agent may reasonably request so as to cause the Credit
Parties to be in compliance with the terms of Section 7.13 after giving effect
to such transaction and (iii) the Borrower shall have delivered to the Agent a
Pro Forma Compliance Certificate demonstrating that, upon giving effect on a Pro
Forma Basis to such transaction, no Default or Event of Default would exist, (b)
any Credit Party other than the
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Borrower may merge or consolidate with any other Credit Party other than the
Borrower PROVIDED that (i) the Credit Parties shall cause to be executed and
delivered such documents, instruments and certificates as the Agent may request
so as to cause the Credit Parties to be in compliance with the terms of Section
7.13 after giving effect to such transaction and (ii) the Borrower shall have
delivered to the Agent a Pro Forma Compliance Certificate demonstrating that,
upon giving effect on a Pro Forma Basis to such transaction, no Default or Event
of Default would exist, (c) any Consolidated Party which is not a Credit Party
may be merged or consolidated with or into any Credit Party other than the
Borrower PROVIDED that (i) such Credit Party shall be the continuing or
surviving corporation, (ii) the Credit Parties shall cause to be executed and
delivered such documents, instruments and certificates as the Agent may request
so as to cause the Credit Parties to be in compliance with the terms of Section
7.13 after giving effect to such transaction and (iii) the Borrower shall have
delivered to the Agent a Pro Forma Compliance Certificate demonstrating that,
upon giving effect on a Pro Forma Basis to such transaction, no Default or Event
of Default would exist, (d) any Consolidated Party which is not a Credit Party
may be merged or consolidated with or into any other Consolidated Party which is
not a Credit Party PROVIDED the Borrower shall have delivered to the Agent a Pro
Forma Compliance Certificate demonstrating that, upon giving effect on a Pro
Forma Basis to such transaction, no Default or Event of Default would exist, (e)
the Borrower or any of its Subsidiaries may acquire all or a portion of the
capital stock or other ownership interest in any Person which is not a
Subsidiary or all or any substantial portion of the assets, property and/or
operations of a Person which is not a Subsidiary in an aggregate amount not to
exceed $5,000,000 in any fiscal year; PROVIDED, HOWEVER, (i) the Borrower shall
comply with the provisions of Section 7.12 and (ii) no Default or Event of
Default would exist after giving effect to such acquisitions on a Pro Forma
Basis, and (f) any Wholly-Owned Subsidiary of the Borrower may dissolve,
liquidate or wind up its affairs at any time.
8.5 ASSET DISPOSITIONS.
The Credit Parties will not permit any Consolidated Party to make any
Asset Disposition (including, without limitation, any Sale and Leaseback
Transaction) other than the sale of assets of the Divested Businesses unless (a)
the consideration paid in connection therewith is cash, Cash Equivalents or
other noncash consideration (PROVIDED that non-cash consideration (excluding
liabilities assumed by the acquiror and assets received in a trade-in or similar
transaction) shall not comprise in excess of 15% of the total value of proceeds
received in connection with any Asset Disposition), (b) if such transaction is a
Sale and Leaseback Transaction, such transaction is permitted by the terms of
Section 8.13, (c) such transaction does not involve the sale or other
disposition of a minority equity interest in any Consolidated Party, (d) the
aggregate net book value of all of the assets sold or otherwise disposed of by
the Consolidated Parties (excluding for purposes hereof assets sold in
connection with the sale of the Divested Businesses) in all such transactions
(excluding the sale of real estate no longer used or useful in such Consolidated
Parties business) after the Closing Date shall not exceed $5,000,000, (c) the
Borrower shall have delivered to the Agent a Pro Forma Compliance Certificate
demonstrating that, upon giving effect on a Pro Forma Basis to such transaction,
no Default or Event of Default would exist hereunder, and (f) no later than 30
days prior to such Asset Disposition, the Agent and the Lenders shall have
received a certificate of an officer of the Borrower specifying the anticipated
or actual date of such Asset Disposition, briefly describing the assets to be
sold or otherwise disposed of and setting forth the net book value of such
assets, the aggregate consideration and the Net Cash Proceeds to be received for
such assets in connection with such Asset Disposition, and thereafter the
Borrower shall, within the period of 180 days following the consummation of such
Asset Disposition (with respect to any such Asset Disposition, the "APPLICATION
PERIOD"), apply (or cause to be applied) an amount equal to the Net Cash
Proceeds of such Asset Disposition to (i) the purchase, acquisition or, in the
case of improvements to real property, construction of Eligible Assets or (ii)
to the prepayment of the Loans in accordance with the terms of Section
3.3(b)(iii).
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Upon a sale or other disposition of assets the Agent shall (to the
extent applicable) deliver to the Borrower, upon the Borrower's request and at
the Borrower's expense, such documentation as is reasonably necessary to
evidence the release of the Agent's security interest, if any, in such assets or
Capital Stock, including, without limitation, amendments or terminations of UCC
financing statements, if any, the return of stock certificates, if any, and the
release of such Subsidiary from all of its obligations, if any, under the Credit
Documents.
8.6 INVESTMENTS.
The Credit Parties will not permit any Consolidated Party to make
Investments in or to any Person, except for Permitted Investments.
8.7 RESTRICTED PAYMENTS.
(a) The Credit Parties will not permit any Consolidated Party
to, directly or indirectly, declare, order, make or set apart any sum
for or pay any Restricted Payment, except (i) to make dividends payable
solely in the same class of Capital Stock of such Person, (ii) to make
dividends or other distributions payable to the Borrower or a
Wholly-Owned Subsidiary of the Borrower (directly or indirectly through
Subsidiaries), (iii) as permitted by Section 8.8, (iv), transactions
permitted by Section 8.9, (v) provided that no Default or Event of
Default has occurred and is continuing at such time or would be
directly or indirectly caused as a result thereof, the Borrower may pay
dividends or repay the Senior Subordinated Notes during the term of
this Agreement in an amount that, together with any dividends and other
payments of the Senior Subordinated Notes previously paid during the
term of this Agreement, does not exceed the Maximum Payment Amount as
of the date of such payment; PROVIDED, however, that no preferred stock
shall be redeemed or repurchased nor shall any dividend payments with
respect to such preferred stock be declared (other than on a
cumulative, compounded basis) until such time as the pending litigation
with respect to Anghel Laboratories, Inc. shall have been settled or
otherwise concluded to the satisfaction of the Required Lenders and
(vi) the Borrower may make payments permitted by the provisos to
Sections 3.3(b)(iii) and 3.3(b)(iv).
(b) The Credit Parties will not permit any Consolidated Party
to engage in any Equity Issuance other than (i) an Equity Issuance made
by a Subsidiary of a Credit Party to a Credit Party and (ii) any Equity
Issuance made by the Borrower provided that prepayments are made to the
extent required by Section 3.3(b)(v).
8.8 PREPAYMENTS OF INDEBTEDNESS, ETC.
The Credit Parties will not permit any Consolidated Party to (a) after
the issuance thereof, amend or modify (or permit the amendment or modification
of) any of the terms of any subordinated Indebtedness if such amendment or
modification would add or change any terms in a manner adverse to the issuer of
such Indebtedness, or shorten the final maturity or average life to maturity or
require any payment to be made sooner than originally scheduled or increase the
interest rate applicable thereto (provided, that the Borrower may change the
interest rate owing with respect to the Senior Subordinated Notes from a
floating rate to a fixed rate on terms and conditions
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satisfactory to the Agent) or change any subordination provision thereof, or (b)
(i) if any Default or Event of Default has occurred and is continuing or would
be directly or indirectly caused as a result thereof, make (or give any notice
with respect thereto) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including without limitation, by way of
depositing money or securities with the trustee with respect thereto before due
for the purpose of paying when due), refund, refinance or exchange of any other
subordinated Indebtedness (including without limitation any Indebtedness
permitted by Section 8.1(f) or (ii) make (or give any notice with respect
thereto) any voluntary or optional payment or prepayment, redemption,
acquisition for value or defeasance of (including without limitation, by way of
depositing money or securities with the trustee with respect thereto before due
for the purpose of paying when due), refund, refinance or exchange of any
subordinated Indebtedness except that the Borrower make payments permitted by
the provisos to Sections 3.3(b)(iii) and 3.3(b)(iv).
8.9 TRANSACTIONS WITH AFFILIATES.
Except as set forth on SCHEDULE 8.9, the Credit Parties will not permit
any Consolidated Party to enter into or permit to exist any transaction or
series of transactions with any officer, director, shareholder, Subsidiary or
Affiliate of such Person other than (a) advances of working capital to any
Credit Party, (b) transfers of cash and assets to any Credit Party other than
the Borrower, (c) transactions permitted by Section 8.1, Section 8.4, Section
8.5, Section 8.6, or Section 8.7, (d) normal compensation and reimbursement of
expenses of officers and directors, (e) payments pursuant to the Tax Sharing
Agreement as in effect on the date hereof and (f) except as otherwise
specifically limited in this Credit Agreement, other transactions which are
entered into in the ordinary course of such Person's business on terms and
conditions substantially as favorable to such Person as would be obtainable by
it in a comparable arms-length transaction with a Person other than an officer,
director, shareholder, Subsidiary or Affiliate.
8.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
The Credit Parties will not permit any Consolidated Party to change its
fiscal year (other than the Acquired Company and its Subsidiaries to conform
with the Borrower's fiscal year) or amend, modify or change its articles of
incorporation (or corporate charter or other similar organizational document) or
bylaws (or other similar document) without the prior written consent of the
Required Lenders.
8.11 LIMITATION ON RESTRICTED ACTIONS.
Except for conditions and restrictions existing as of the date hereof
and described on SCHEDULE 8.11, the Credit Parties will not permit any
Consolidated Party to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any such Person to (a) pay dividends or make any other distributions
to any Credit Party on its Capital Stock or with respect to any other interest
or participation in, or measured by, its profits, (b) pay any Indebtedness or
other obligation owed to any Credit Party, (c) make loans or advances to any
Credit Party, (d) sell, lease or transfer any of its properties or assets to any
Credit Party, or (e) act as a Guarantor and pledge its assets pursuant to the
Credit Documents or any renewals, refinancings, exchanges, refundings or
extension thereof, except (in respect of any
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of the matters referred to in clauses (a)-(d) above) for such encumbrances or
restrictions existing under or by reason of (i) this Credit Agreement and the
other Credit Documents, (ii) the Senior Subordinated Note documentation as in
effect as of the Closing Date, (iii) applicable law, (iv) any document or
instrument governing Indebtedness incurred pursuant to Section 8.1(c), PROVIDED,
HOWEVER, that any such restriction contained therein relates only to the asset
or assets constructed or acquired in connection therewith, (v) any Permitted
Lien or any document or instrument governing any Permitted Lien, provided that
any such restriction contained therein relates only to the asset or assets
subject to such Permitted Lien PROVIDED, FURTHER, that no such lien shall
encumber any of the Consolidated Parties' fee simple owned real property or
leasehold assets, (vi) customary restrictions and conditions contained in
agreements relating to Asset Dispositions otherwise permitted hereunder pending
such sale, provided that such restrictions and conditions apply only to the
assets which are to be sold (including the assets of a Subsidiary being sold)
and (vii) customary provisions in leases, licenses and similar contracts
restricting the subletting, assignment or transfer thereof, or any property or
asset the subject thereof.
8.12 OWNERSHIP OF SUBSIDIARIES.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, the Credit Parties will not permit any Consolidated Party to (i)
permit any Person (other than the Borrower or any Wholly-Owned Subsidiary of the
Borrower) to own any Capital Stock of any Subsidiary of the Borrower, (ii)
permit any Subsidiary of the Borrower to issue Capital Stock (except to the
Borrower or to a Wholly-Owned Subsidiary of the Borrower), (iii) permit, create,
incur, assume or suffer to exist any Lien thereon, in each case except (A)
except to qualify directors where required by applicable law or to satisfy other
requirements of applicable law with respect to the ownership of Capital Stock of
Foreign Subsidiaries, (B) except as a result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted under Section 8.4
or Section 8.5 or (C) except for Permitted Liens and (iv) notwithstanding
anything to the contrary contained in clause (ii) above, permit any Subsidiary
of the Borrower to issue any shares of preferred Capital Stock.
8.13 SALE LEASEBACKS.
Except in connection with a purchase money financing permitted by
Section 8.1(c), the Credit Parties will not permit any Consolidated Party to,
directly or indirectly, become or remain liable as lessee or as guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any Property (whether real, personal or mixed), whether now owned or
hereafter acquired, (a) which such Consolidated Party has sold or transferred or
is to sell or transfer to a Person which is not a Consolidated Party or (b)
which such Consolidated Party intends to use for substantially the same purpose
as any other Property which has been sold or is to be sold or transferred by
such Consolidated Party to another Person which is not a Consolidated Party in
connection with such lease.
8.14 NO FURTHER NEGATIVE PLEDGES.
The Credit Parties will not permit any Consolidated Party to enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
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security for such obligation if security is given for some other obligation,
except (a) pursuant to this Credit Agreement and the other Credit Documents, (b)
pursuant to Indebtedness referred to in Section 8.1(f), in each case as in
effect as of the Closing Date and (c) pursuant to any document or instrument
governing Indebtedness incurred pursuant to Section 8.1(c), PROVIDED, HOWEVER,
that any such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith, (d) customary restrictions and
conditions contained in agreements relating to Asset Dispositions otherwise
permitted hereunder pending such sale, provided that such restrictions and
conditions apply only to the assets which are to be sold (including the assets
of a Subsidiary being sold) and (e) customary provisions in leases, licenses and
similar contracts restricting the subletting, assignment or transfer thereof, or
any property or asset the subject thereof.
SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "EVENT OF DEFAULT"):
(a) PAYMENT. Any Credit Party shall
(i) default in the payment when due of any principal
of any of the Loans or of any reimbursement obligations
arising from drawings under Letters of Credit, or
(ii) default, and such default shall continue for
three (3) or more Business Days, in the payment when due of
any interest on the Loans or on any reimbursement obligations
arising from drawings under Letters of Credit, or of any Fees
or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith or therewith; or
(b) REPRESENTATIONS. Any representation, warranty or statement
made or deemed to be made by any Credit Party herein, in any of the
other Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue
in any material respect on the date as of which it was made or deemed
to have been made; or
(c) COVENANTS. Any Credit Party shall
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2,
7.11 or 8.1 through 8.14, inclusive;
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(ii) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.1(a),
(b), (c) or (d), 7.9, 7.12 or 7.13 and such default shall
continue unremedied for a period of at least 5 days after the
earlier of a responsible officer of a Credit Party becoming
aware of such default or notice thereof by the Agent; or
(iii) default in the due performance or observance by
it of any term, covenant or agreement (other than those
referred to in subsections (a), (b), (c)(i) or (c)(ii) of this
Section 9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at least 30
days after the earlier of a responsible officer of a Credit
Party becoming aware of such default or notice thereof by the
Agent; or
(d) OTHER CREDIT DOCUMENTS. (i) Any Credit Party shall default
in the due performance or observance of any term, covenant or agreement
in any of the other Credit Documents (subject to applicable grace or
cure periods, if any), or (ii) except as a result of or in connection
with a dissolution, merger or disposition of a Subsidiary permitted
under Section 8.4 or Section 8.5, any Credit Document shall fail to be
in full force and effect or to give the Agent and/or the Lenders the
Liens, rights, powers and privileges purported to be created thereby,
or any Credit Party shall so state in writing; or
(e) GUARANTIES. Except as the result of or in connection with
a dissolution, merger or disposition of a Subsidiary permitted under
Section 8.4 or Section 8.5, the guaranty given by any Guarantor
hereunder (including any Additional Credit Party) or any provision
thereof shall cease to be in full force and effect, or any Guarantor
(including any Additional Credit Party) hereunder or any Person acting
by or on behalf of such Guarantor shall deny or disaffirm such
Guarantor's obligations under such guaranty, or any Guarantor shall
default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any
guaranty; or
(f) BANKRUPTCY, ETC. Any Bankruptcy Event shall occur with
respect to any Consolidated Party; or
(g) DEFAULTS UNDER OTHER AGREEMENTS. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) in excess of $1,000,000 in the aggregate for the
Consolidated Parties taken as a whole, (A) any Consolidated Party shall
(1) default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness, or (2)
the occurrence and continuance of a default in the observance or
performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event or condition shall occur or condition exist, the effect
of which default or other event or condition is to cause, or permit,
the holder or holders of such Indebtedness (or trustee or agent on
behalf of such holders) to cause (determined without regard to whether
any notice or lapse of time is required), any such Indebtedness to
become due prior to its stated maturity; or (B) any such Indebtedness
shall be declared due and payable, or required to be prepaid other than
by a regularly scheduled required prepayment, prior to the stated
maturity thereof; or
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(h) JUDGMENTS. One or more judgments or decrees shall be
entered against one or more of the Consolidated Parties involving a
liability of $1,000,000 or more in the aggregate (to the extent not
paid or fully covered by insurance provided by a carrier who has
acknowledged coverage and has the ability to perform) and any such
judgments or decrees shall not have been vacated, discharged or stayed
or bonded pending appeal within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if such
event or condition could reasonably be expected to have a Material
Adverse Effect: (i) any "accumulated funding deficiency," as such term
is defined in Section 302 of ERISA and Section 412 of the Code, whether
or not waived, shall exist with respect to any Plan, or any lien shall
arise on the assets of any Consolidated Party or any ERISA Affiliate in
favor of the PBGC or a Plan; (ii) an ERISA Event shall occur with
respect to a Single Employer Plan, which is, in the reasonable opinion
of the Agent, likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (iii) an ERISA Event shall occur with
respect to a Multiemployer Plan or Multiple Employer Plan, which is, in
the reasonable opinion of the Agent, likely to result in (A) the
termination of such Plan for purposes of Title IV of ERISA, or (B) any
Consolidated Party or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency or (within the meaning
of Section 4245 of ERISA) such Plan; or (iv) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the
Code) or breach of fiduciary responsibility shall occur which may
subject any Consolidated Party or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
the Code, or under any agreement or other instrument pursuant to which
any Consolidated Party or any ERISA Affiliate has agreed or is required
to indemnify any person against any such liability; or
(j) SENIOR SUBORDINATED NOTES. (i) There shall occur and be
continuing any Event of Default under and as defined in the Senior
Subordinated Notes or (ii) any of the Credit Party Obligations for any
reason shall cease to be "Designated Senior Indebtedness" under and as
defined in the Senior Subordinated Notes.
(k) OWNERSHIP. There shall occur a Change of Control.
(l) DEBARMENT. There shall occur a Debarment Event.
(m) LIABILITY LIMIT. Any Consolidated Party individually, or
collectively with other Consolidated Parties, shall incur liability
(either through a judgment, settlement, order or decree) relating to
the "whistleblower suit" against Anghel Laboratories, Inc. (net of
proceeds actually obtained from Comsat Corporation under relevant
indemnification agreements) in an aggregate amount with respect to all
the Consolidated Parties in excess of $7,000,000.
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9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Agent may, with the consent of the Required Lenders, and the
Agent shall, upon the request and direction of the Required Lenders, by written
notice to the Credit Parties take any of the following actions:
(a) TERMINATION OF COMMITMENTS. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) ACCELERATION. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other
indebtedness or obligations of any and every kind owing by the Borrower
to the Agent and/or any of the Lenders hereunder to be due whereupon
the same shall be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower.
(c) CASH COLLATERAL. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), it will
immediately pay) to the Agent additional cash, to be held by the Agent,
for the benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of subsequent
drawings under all then outstanding Letters of Credit in an amount
equal to the maximum aggregate amount which may be drawn under all
Letters of Credits then outstanding.
(d) ENFORCEMENT OF RIGHTS. Enforce any and all rights and
interests created and existing under the Credit Documents including,
without limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a Guarantor and
all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(f) shall occur, then the Commitments shall automatically terminate
and all Loans, all reimbursement obligations arising from drawings under Letters
of Credit, all accrued interest in respect thereof, all accrued and unpaid Fees
and other indebtedness or obligations owing to the Agent and/or any of the
Lenders hereunder automatically shall immediately become due and payable without
the giving of any notice or other action by the Agent or the Lenders. If an
Event of Default occurs, all U.S. and foreign government classified information
in possession of any Credit Party shall remain the property of the U.S.
Government and the applicable foreign government(s).
In the event that the Agent determines to commence foreclosure proceedings under
any of the Credit Documents, or the Agent is instructed by the Required Lenders
to do so, the Agent will promptly deliver (by hand delivery or facsimile
transmission) to the U.S. Department of Defense, Defense Security Service, at
1340 Braddock Place, Alexandria, Virginia, Facsimile No.: (703) 325-1329,
Attention: Valerie Heil, notice of such determination, or a copy of such
instructions. The
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Agent will not commence such foreclosure proceedings earlier than the day
following the fifth Business Day after the date that such notice was sent to the
Defense Security Service (including the date the notice was sent) as provided
above unless instructed otherwise by the Required Lenders. Notwithstanding
anything to the contrary therein, each Credit Document shall be subject to the
foregoing provisions of this Section 9.2.
SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT, POWERS AND IMMUNITIES.
Each Lender hereby irrevocably appoints and authorizes the Agent to act
as its agent under this Credit Agreement and the other Credit Documents with
such powers and discretion as are specifically delegated to the Agent by the
terms of this Credit Agreement and the other Credit Documents, together with
such other powers as are reasonably incidental thereto. The Agent (which term as
used in this sentence and in Section 10.5 and the first sentence of Section 10.6
hereof shall include its Affiliates and its own and its Affiliates' officers,
directors, employees, and agents): (a) shall not have any duties or
responsibilities except those expressly set forth in this Credit Agreement and
shall not be a trustee or fiduciary for any Lender; (b) shall not be responsible
to the Lenders for any recital, statement, representation, or warranty (whether
written or oral) made in or in connection with any Credit Document or any
certificate or other document referred to or provided for in, or received by any
of them under, any Credit Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Credit Document, or any other
document referred to or provided for therein or for any failure by any Credit
Party or any other Person to perform any of its obligations thereunder; (c)
shall not be responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements by any
Credit Party or the satisfaction of any condition or to inspect the property
(including the books and records) of any Credit Party or any of its Subsidiaries
or Affiliates; (d) shall not be required to initiate or conduct any litigation
or collection proceedings under any Credit Document; and (e) shall not be
responsible for any action taken or omitted to be taken by it under or in
connection with any Credit Document, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
10.2 RELIANCE BY AGENT.
The Agent shall be entitled to rely upon any certification, notice,
instrument, writing, or other communication (including, without limitation, any
thereof by telephone or telecopy) believed by it to be genuine and correct and
to have been signed, sent or made by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel for
any Credit Party), independent accountants, and other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the holder thereof
for all purposes hereof unless and until the Agent receives and accepts an
Assignment and Acceptance executed in
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accordance with Section 11.3(b) hereof. As to any matters not expressly provided
for by this Credit Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding on all of the Lenders; PROVIDED, HOWEVER, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to any Credit Document or applicable law or unless it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking any such action.
10.3 DEFAULTS.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Agent has received
written notice from a Lender or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall (subject to Section 10.2 hereof) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders, PROVIDED THAT, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
10.4 RIGHTS AS A LENDER.
With respect to its Commitment and the Loans made by it, First Union
National Bank (and any successor acting as Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. First Union National Bank (and any
successor acting as Agent) and its Affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to, make investments
in, provide services to, and generally engage in any kind of lending, trust, or
other business with any Credit Party or any of its Subsidiaries or Affiliates as
if it were not acting as Agent, and First Union National Bank (and any successor
acting as Agent) and its Affiliates may accept fees and other consideration from
any Credit Party or any of its Subsidiaries or Affiliates for services in
connection with this Credit Agreement or otherwise without having to account for
the same to the Lenders.
10.5 INDEMNIFICATION.
The Lenders agree to indemnify the Agent (to the extent not reimbursed
under Section 11.5 hereof, but without limiting the obligations of the Borrower
under such Section) ratably in accordance with their respective Commitments, for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees), or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Agent (including by any Lender) in any way relating to or
arising out of any
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Credit Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Credit Document; PROVIDED that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by the
Borrower under Section 11.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements in this
Section 10.5 shall survive the repayment of the Loans, LOC Obligations and other
obligations under the Credit Documents and the termination of the Commitments
hereunder.
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender agrees that it has, independently and without reliance on
the Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Credit Parties and
their Subsidiaries and decision to enter into this Credit Agreement and that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under the Credit Documents. Except for notices, reports, and other
documents and information expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition, or business of any Credit Party or any of its Subsidiaries
or Affiliates that may come into the possession of the Agent or any of its
Affiliates.
10.7 SUCCESSOR AGENT.
The Agent may resign at any time by giving notice thereof to the
Lenders and the Borrower. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a commercial bank organized under the laws of the
United States of America having combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor, such successor shall thereupon succeed to and become vested with all
the rights, powers, discretion, privileges, and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 10 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.
If the Agent shall become aware that it has become a "foreign interest"
(as such term is defined in paragraph 1.231-1 of the Department of Defense
Industrial Security Regulation, D.O.D. 5220.22-R (December 1985)) at any time
during the term of this Agreement, the Agent shall resign as Agent under this
Agreement and
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the other Credit Documents. If the Required Lenders shall become aware that the
Agent shall have become a "foreign interest" (as so defined), then the Required
Lenders shall remove the Agent as Agent under this Agreement and the other
Credit Documents. If the Agent shall become aware that any subagent, deed of
trust trustee or other Person acting in a fiduciary or representative capacity
under any of the Credit Documents shall become a "foreign interest" (as so
defined), then the Agent shall remove such Person from acting in such capacity.
Notwithstanding anything to the contrary contained therein, each Credit Document
shall be subject to the foregoing provisions of this Section 10.7. Any successor
Agent, or other Person appointed to act in a fiduciary or representative
capacity shall not be a "foreign interest" (as so defined).
SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below provided that such transmission is made on a Business Day,
receipt is confirmed and a copy of such notice is also sent by overnight
courier, (c) the Business Day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (d)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address, in the case of the Borrower, Guarantors and the Agent, set forth
below, and, in the case of the Lenders, set forth on SCHEDULE 2.1(A), or at such
other address as such party may specify by written notice to the other parties
hereto:
if to the Borrower or the Guarantors:
Prodelin Holding Corporation
565 Fifth Avenue - 17th Floor
New York, New York 10017
Attn: Stephen Green
Telephone: (212) 850-8543
Telecopy: (212) 850-8530
if to the Agent:
First Union National Bank
301 South College St., DC-5
Charlotte, N.C. 28288-0737
Attn: William R. Goley
Telephone: (704) 383-8180
Telecopy: (704) 374-3300
with a copy to:
First Union National Bank
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Agency Services
One First Union Center
NC-0608
301 South College Street
Charlotte, NC 28282
Attn: Nicole Ray
Telephone: (704) 383-8452
Telecopy: (704) 383-2802
With respect to any notice delivered to the Agent to the effect that a
Default or an Event of Default exists, the Borrower shall promptly deliver a
copy thereof (by hand delivery or facsimile transmission) to the U.S. Department
of Defense, Defense Security Service, at 1340 Braddock Place, Alexandria,
Virginia, Facsimile No.: (703) 325-1329, Attention: Valerie Heil.
11.2 RIGHT OF SET-OFF; ADJUSTMENTS.
Upon the occurrence and during the continuance of any Event of Default,
each Lender (and each of its Affiliates in connection with Hedging Agreements)
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender (or any of its Affiliates in connection with
Hedging Agreements) to or for the credit or the account of any Credit Party
against any and all of the obligations of such Person now or hereafter existing
under this Credit Agreement, under the Notes, under any other Credit Document or
otherwise, irrespective of whether such Lender shall have made any demand under
hereunder or thereunder and although such obligations may be unmatured. Each
Lender agrees promptly to notify any affected Credit Party after any such
set-off and application made by such Lender; PROVIDED, HOWEVER, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 11.2 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
11.3 BENEFIT OF AGREEMENT.
(a) This Credit Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; PROVIDED that none of the Credit Parties
may assign or transfer any of its interests and obligations without
prior written consent of the Lenders; PROVIDED FURTHER that the rights
of each Lender to transfer, assign or grant participations in its
rights and/or obligations hereunder shall be limited as set forth in
this Section 11.3.
(b) Each Lender may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Credit
Agreement (including, without limitation, all or a portion of its
Loans, its Notes, and its Commitment); PROVIDED, HOWEVER, that
(i) each such assignment shall be to an Eligible
Assignee;
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(ii) except in the case of an assignment to another
Lender or an assignment of all of a Lender's rights and
obligations under this Credit Agreement, any such partial
assignment shall be in an amount at least equal to $5,000,000
(or, if less, the remaining amount of the Commitment being
assigned by such Lender) or an integral multiple of $1,000,000
in excess thereof;
(iii) the parties to such assignment shall execute
and deliver to the Agent for its acceptance an Assignment and
Acceptance in the form of Exhibit 11.3(b) hereto, together
with any Note subject to such assignment and a processing fee
of $3,500.
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of such assignment, have the obligations, rights, and benefits
of a Lender hereunder and the assigning Lender shall, to the extent of
such assignment, relinquish its rights and be released from its
obligations under this Credit Agreement. Upon the consummation of any
assignment pursuant to this Section 11.3(b), the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if
required, new Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the laws of the United States of
America or a state thereof, it shall deliver to the Borrower and the
Agent certification as to exemption from deduction or withholding of
Taxes in accordance with Section 3.11. No assignee shall be entitled to
receive any greater payment or indemnification under Section 3.11 than
the assigning Lender would have been entitled to receive with respect
to the rights assigned unless such assignment shall have been made at a
time when the circumstances giving rise to such greater payment did not
exist.
(c) The Agent shall maintain at its address referred to in
Section 11.1 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of
the Loans owing to, each Lender from time to time (the "REGISTER"). The
entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Credit Agreement. The
Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially
the form of Exhibit 11.3(b) hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the parties thereto.
(e) Each Lender may sell participations to one or more Persons
in all or a portion of its rights and obligations under this Credit
Agreement (including all or a portion of its Commitment and its Loans);
PROVIDED, HOWEVER, that (i) such Lender's
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obligations under this Credit Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) the participant shall be
entitled to the benefit of the yield protection provisions contained in
Sections 3.7 through 3.12 (PROVIDED that the Borrower's liability in
aggregate for both the Lender and its participant shall be limited to
the amount it would owe the Lender granting the participation),
inclusive, and the right of set-off contained in Section 11.2, and (iv)
the Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
this Credit Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Loans and its
Notes and to approve any amendment, modification, or waiver of any
provision of this Credit Agreement (other than amendments,
modifications, or waivers decreasing the amount of principal of or the
rate at which interest is payable on such Loans or Notes, extending any
scheduled principal payment date or date fixed for the payment of
interest on such Loans or Notes, or extending its Commitment).
(f) Notwithstanding any other provision set forth in this
Credit Agreement, any Lender may at any time assign and pledge all or
any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release
the assigning Lender from its obligations hereunder.
(g) Any Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such Lender
from time to time to assignees and participants (including prospective
assignees and participants), subject, however, to the provisions of
Section 11.16 hereof.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Agent or any Lender and any of the
Credit Parties shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agent or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle the Borrower or any other
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the Lenders
to any other or further action in any circumstances without notice or demand.
11.5 EXPENSES; INDEMNIFICATION.
(a) The Borrower agrees to pay on demand all costs and expenses of the
Agent in connection with the syndication, preparation, execution, delivery,
administration, modification, and amendment of this Credit Agreement, the other
Credit Documents, and the other documents
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to be delivered hereunder, including, without limitation, the reasonable fees
and expenses of counsel for the Agent (including the reasonable cost of internal
counsel) with respect thereto and with respect to advising the Agent as to its
rights and responsibilities under the Credit Documents. The Borrower further
agrees to pay on demand all costs and expenses of the Agent and the Lenders, if
any (including, without limitation, reasonable attorneys' fees and expenses and
the reasonable cost of internal counsel), in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) of the Credit
Documents and the other documents to be delivered hereunder.
(b) The Borrower agrees to indemnify and hold harmless the Agent and
each Lender and each of their Affiliates and their respective officers,
directors, employees, agents, and advisors (each, an "INDEMNIFIED PARTY") from
and against any and all claims, damages, losses, liabilities, costs, and
expenses (including, without limitation, reasonable attorneys' fees) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation, or proceeding or
preparation of defense in connection therewith) the Credit Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Loans, except to the extent such claim, damage, loss, liability, cost, or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 11.5 applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by the Borrower, its directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated. The Borrower agrees not to assert any claim against the Agent, any
Lender, any of their Affiliates, or any of their respective directors, officers,
employees, attorneys, agents, and advisers, on any theory of liability, for
special, indirect, consequential, or punitive damages arising out of or
otherwise relating to the Credit Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 11.5 shall survive the repayment of the Loans, LOC Obligations and
other obligations under the Credit Documents and the termination of the
Commitments hereunder.
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, PROVIDED, HOWEVER, that:
(a) without the consent of each Lender affected thereby,
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(i) extend the final maturity of any Loan or the time of
payment of any reimbursement obligation, or any portion
thereof, arising from drawings under Letters of Credit, or
extend or waive any Principal Amortization Payment of any
Loan, or any portion thereof,
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability
of any post-default increase in interest rates) thereon or
Fees hereunder,
(iii) reduce or waive the principal amount of any Loan or
of any reimbursement obligation, or any portion thereof,
arising from drawings under Letters of Credit,
(iv) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a
waiver of any Default or Event of Default or mandatory
reduction in the Commitments shall not constitute a change in
the terms of any Commitment of any Lender),
(v) except as the result of or in connection with an
Asset Disposition permitted by Section 8.5, release all or
substantially all of the Collateral,
(vi) except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted
under Section 8.4, release the Borrower or substantially all
of the other Credit Parties from its or their obligations
under the Credit Documents,
(vii) except amend, modify or waive any provision of
this Section 11.6 or Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11,
3.12, 3.13, 3.14, 9.1(a), 11.2, 11.3, 11.5 or 11.9,
(viii) reduce any percentage specified in, or
otherwise modify, the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the
Borrower or all or substantially all of the other Credit
Parties of any of its or their rights and obligations under
(or in respect of) the Credit Documents except as permitted
thereby;
(b) without the consent of Lenders holding in the aggregate
more than 50% of the outstanding Tranche A Term Loans and more than 50%
of the outstanding Tranche B Term Loans, extend the time for or the
amount or the manner of application of proceeds of any mandatory
prepayment required by Section 3.3(b)(ii), (iii), (iv) or (v) hereof;
(c) without the consent of the Agent, no provision of Section
10 may be amended;
(d) without the consent of the Issuing Lender, no provision of
Section 2.2 may be amended.
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(e) without the consent of the Swingline Lender, no provision
of Section 2.3 may be amended.
Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender
is entitled to vote as such Lender sees fit on any bankruptcy
reorganization plan that affects the Loans, and each Lender
acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code supersedes the unanimous consent provisions set forth herein and
(y) the Required Lenders may consent to allow a Credit Party to use
cash collateral in the context of a bankruptcy or insolvency
proceeding.
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Credit Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 SURVIVAL.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.11, 3.12, 10.5 or 11.5 shall survive the execution and
delivery of this Credit Agreement, the making of the Loans, the issuance of the
Letters of Credit, the repayment of the Loans, LOC Obligations and other
obligations under the Credit Documents and the termination of the Commitments
hereunder, and all representations and warranties made by the Credit Parties
herein shall survive delivery of the Notes and the making of the Loans
hereunder.
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action or proceeding
with respect to this Credit Agreement or any other Credit Document may
be brought in the courts of the State of North Carolina in Mecklenburg
County, or of the United States for the Western District of North
Carolina, and, by execution and delivery of this Credit Agreement, each
of the Credit Parties
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hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the nonexclusive jurisdiction of such
courts. Each of the Credit Parties further irrevocably consents to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set out for
notices pursuant to Section 11.1, such service to become effective
three (3) Business Days after such mailing. Nothing herein shall affect
the right of the Agent or any Lender to serve process in any other
manner permitted by law or to commence legal proceedings or to
otherwise proceed against any Credit Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Credit Agreement or any other Credit Document
brought in the courts referred to in subsection (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE
LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.11 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 ENTIRETY.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 BINDING EFFECT; TERMINATION.
(a) This Credit Agreement shall become effective at such time
on or after the Closing Date when it shall have been executed by the
Borrower, the Guarantors and the Agent, and the Agent shall have
received copies hereof (telefaxed or otherwise) which, when taken
together, bear the signatures of each Lender, and thereafter this
Credit Agreement shall be binding upon and inure to the benefit of the
Borrower, the Guarantors, the Agent and each Lender and their
respective successors and assigns.
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(b) The term of this Credit Agreement shall be until no Loans,
LOC Obligations or any other amounts payable hereunder or under any of
the other Credit Documents shall remain outstanding, no Letters of
Credit shall be outstanding, all of the Credit Party Obligations have
been irrevocably satisfied in full and all of the Commitments hereunder
shall have expired or been terminated.
11.14 SOURCE OF FUNDS.
Each of the Lenders hereby represents and warrants to the Borrower that
at least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes
assets allocated to any separate account maintained by such Lender,
such Lender has disclosed to the Borrower the name of each employee
benefit plan whose assets in such account exceed 10% of the total
assets of such account as of the date of such purchase (and, for
purposes of this subsection (b), all employee benefit plans maintained
by the same employer or employee organization are deemed to be a single
plan);
(c) to the extent that any part of such funds constitutes
assets of an insurance company's general account, such insurance
company has complied with all of the requirements of the regulations
issued under Section 401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific
benefit plans which such Lender has identified in writing to the
Borrower.
As used in this Section 11.14, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.15 CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
11.16 CONFIDENTIALITY.
The Agent and each Lender will hold all non-public information,
obtained pursuant to the requirements of this Credit Agreement (and including
the financial information), in accordance with its customary procedure for
handling confidential information of such nature and in accordance with safe and
sound commercial lending practices, but may, in any event, make
106
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disclosure (i) on a confidential basis to its officers, directors, employees,
agents, representatives and advisers (including regular and special accountants
and legal counsel), (ii) to any transferee or participant, or prospective
transferee or participant, in connection with the contemplated transfer of the
Loans and Commitments hereunder or participations thereof; provided such
transferees or participants, or prospective transferees or participants, shall
consent in writing to be bound by the terms of this Section 11.16, (iii) as
required or requested by any governmental agency or representative thereof in
the ordinary course of the Lender's regulatory compliance or the National
Association of Insurance Commissioners to the extent so required, or (iv)
pursuant to legal process; PROVIDED that (A) such party shall, to the extent
reasonably possible, give the Borrower five days prior written notice thereof;
it being understood, however, that the failure to give any such notice shall not
give rise to any action or claim on account of any such failure and (B) neither
the Agent, nor any of the Lenders shall have any obligation under this Section
11.16 to the extent that any such information becomes available on a
non-confidential basis from a source other than the Borrower or its
Subsidiaries, or that any such information becomes publicly available other than
by breach of this Section 11.16.
11.17 ARBITRATION; CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial action, any dispute, claim or controversy arising
out of or connected herewith or with the Credit Documents ("Disputes") shall be
resolved by binding arbitration as provided herein. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class actions
and claims arising herefrom or from Credit Documents executed in the future.
Arbitration shall be conducted under the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association and Title 9 of the U.S. Code. All arbitration hearings shall be
conducted in Charlotte, Mecklenburg County, North Carolina, or such other place
as agreed to in writing by the parties. A judgment upon the award may be entered
in any court having jurisdiction, and all decisions shall be in writing. The
panel from which all arbitrators are selected shall be comprised of licensed
attorneys having at least ten years' experience representing parties in secured
lending transactions. Notwithstanding the foregoing, this arbitration provision
does not apply to disputes under or related to interest protection agreements.
(b) Notwithstanding the preceding binding arbitration provision, the
Agent, on behalf of the Lenders, preserves certain remedies that may be
exercised during a Dispute. The Agent, on behalf of the Lenders, shall have the
right to proceed in any court of proper jurisdiction or by self help to exercise
or prosecute the following remedies, as applicable: (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted in the Credit Documents or under applicable law, (ii) all rights of
self help including peaceful occupation of real property and collection of
rents, set-off and peaceful possession of personal property, (iii) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment and appointment of receiver, and (iv) other remedies.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
107
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(c) By execution and delivery of this Credit Agreement, each of the
parties hereto accepts, for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction relating to any
arbitration proceedings conducted under the Arbitration Rules in Charlotte,
Mecklenburg County, North Carolina and irrevocably agrees to be bound by any
final judgment rendered thereby in connection with this Credit Agreement from
which no appeal has been taken or is available. Each of the parties hereto
irrevocably agrees that all process in any such arbitration proceedings or
otherwise may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to it at its
address set forth in Section 11.1 or at such other address of which such party
shall have been notified pursuant thereto, such service being hereby
acknowledged by each party hereto to be effective and binding service in every
respect. Each party hereto irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens which it may now or hereafter have to the bringing of any
such action or proceeding in any such jurisdiction. Nothing herein shall affect
the right to serve process in any other manner permitted by law or shall limit
the right of any party to bring proceedings against the Borrower or any party
hereto in any court or pursuant to arbitration proceedings in any other
jurisdiction.
[Signature Page to Follow]
108
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: PRODELIN HOLDING CORPORATION
a Delaware corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
SUBSIDIARY
GUARANTORS: PRODELIN CORPORATION,
- ----------
a North Carolina corporation
SATSYSTEMS, INC.,
a Delaware corporation
C&S ANTENNAS, INC.,
a Delaware corporation
MARK ANTENNA PRODUCTS, INC.
a Nevada corporation
RSI COMMUNICATIONS CORP.,
a Delaware corporation
CRSI, INC.,
a Delaware corporation
ANGHEL LABORATORIES, INC.,
a Delaware corporation
RSI MARYLAND, INC.,
a Delaware corporation
UNIVERSAL ANTENNAS INCORPORATED,
a Nevada corporation
RADIATION SYSTEMS PRECISION
CONTROLS, INC., a Nevada
corporation POWER TECHNOLOGIES,
INC., a Delaware corporation MEXIA
FABRICATORS, INC., a Texas
corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
<PAGE>
LENDERS: FIRST UNION NATIONAL BANK,
individually in its capacity as a
Lender and in its capacity as Agent
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
ALLSTATE INSURANCE COMPANY
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
ALLSTATE LIFE INSURANCE COMPANY
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
HELLER FINANCIAL, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
IBJ SCHRODER BANK & TRUST COMPANY
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
<PAGE>
JACKSON NATIONAL LIFE
INSURANCE COMPANY
By: PPM America, Inc., as attorney in fact, on behalf
of Jackson National Life Insurance Company
By:
----------------------------
Michael DiRe
Managing Director
PILGRIM AMERICA PRIME RATE TRUST
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisors
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
TORONTO DOMINION
(TEXAS), INC.
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE>
EXHIBIT 3.2(A)(III)
NOTICE OF ACCOUNT DESIGNATION
Dated _____________, 1998
First Union National Bank
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attn: Syndication Agency Services
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you by Prodelin
Holding Corporation (the "Borrower"), a corporation organized under the laws of
______________, under Section 2.1(b)(iii) of the Credit Agreement dated as of
________________, 1998 (as amended, restated or otherwise modified, the "Credit
Agreement") by and among the Company, the Guarantors party thereto, the Lenders
party thereto and First Union National Bank, as Agent.
The Agent is hereby authorized to disburse all Loan proceeds into the
following account, unless the Borrower shall designate, in writing to the Agent,
one or more other accounts:
Bank: First Union National Bank
ABA #: ____________________________________
Account: ____________________________________
Notwithstanding the foregoing, on the closing date of the Credit
Agreement, funds borrowed under the Credit Agreement shall be sent to the
institutions and/or persons designated on the attached payment instructions.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account
Designation this ____ day of _____________, 1998.
[CORPORATE SEAL] Prodelin Holding Corporation
By:_____________________________
Name:
Title:
<PAGE>
CONFORMED COPY
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Dated as of November 11, 1999,
among
TRIPOINT GLOBAL COMMUNICATIONS INC.,
SIGNAL ACQUISITION CORPORATION
and
VERTEX COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. The Offer.......................................................2
SECTION 1.02. Company Actions.................................................4
SECTION 1.03. The Merger......................................................5
SECTION 1.04. Closing.........................................................5
SECTION 1.05. Effective Time..................................................5
SECTION 1.06. Effects.........................................................6
SECTION 1.07. Articles of Incorporation
and By-laws...................................................6
SECTION 1.08. Directors.......................................................6
SECTION 1.09. Officers........................................................6
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock.........................................6
SECTION 2.02. Exchange of Certificates........................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization, Standing and Power...............................11
SECTION 3.02. Company Subsidiaries; Equity
Interests....................................................12
SECTION 3.03. Capital Structure..............................................12
SECTION 3.04. Authority; Execution and Delivery;
Enforceability...............................................14
SECTION 3.05. No Conflicts; Consents.........................................15
SECTION 3.06. SEC Documents and Financial Statements.........................17
SECTION 3.07. Information Supplied...........................................18
SECTION 3.08. Absence of Certain Changes
or Events....................................................19
SECTION 3.09. Taxes..........................................................20
SECTION 3.10. Absence of Changes in Benefit Plans............................21
SECTION 3.11. ERISA Compliance; Excess Parachute
Payments.....................................................22
<PAGE>
ii
SECTION 3.12. Litigation.....................................................25
SECTION 3.13. Compliance with Applicable Laws................................26
SECTION 3.14. Environmental Matters..........................................27
SECTION 3.15. Contracts......................................................28
SECTION 3.16. Title to Properties............................................30
SECTION 3.17. Intellectual Property..........................................31
SECTION 3.18. Labor Matters..................................................32
SECTION 3.19. Brokers........................................................32
SECTION 3.20. Opinion of Financial Advisor...................................32
SECTION 3.21. Year 2000 Compliance...........................................32
SECTION 3.22. Potential Conflicts of Interest................................33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
SECTION 4.01. Organization, Standing and Power...............................34
SECTION 4.02. Sub............................................................34
SECTION 4.03. Authority; Execution and Delivery;
Enforceability...............................................34
SECTION 4.04. No Conflicts; Consents.........................................35
SECTION 4.05. Information Supplied...........................................36
SECTION 4.06. Brokers........................................................36
SECTION 4.07. Financing......................................................37
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business............................................37
SECTION 5.02. No Solicitation................................................41
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Preparation of Proxy Statement;
Shareholders Meeting.........................................44
SECTION 6.02. Access to Information;
Confidentiality..............................................46
SECTION 6.03. Reasonable Efforts; Notification...............................47
SECTION 6.04. Stock Options..................................................48
SECTION 6.05. Indemnification................................................50
SECTION 6.06. Fees and Expenses..............................................53
SECTION 6.07. Public Announcements...........................................54
SECTION 6.08. Transfer Taxes.................................................54
SECTION 6.09. Directors......................................................55
SECTION 6.10. Shareholder Litigation.........................................56
<PAGE>
iii
SECTION 6.11. Compliance of Sub..............................................56
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. Conditions to Each Party's Obligation to
Effect the Merger............................................56
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination....................................................58
SECTION 8.02. Effect of Termination..........................................60
SECTION 8.03. Amendment......................................................60
SECTION 8.04. Extension; Waiver..............................................61
SECTION 8.05. Procedure for Termination, Amendment,
Extension or Waiver..........................................61
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Nonsurvival of Representations
and Warranties...............................................61
SECTION 9.02. Notices........................................................61
SECTION 9.03. Definitions....................................................63
SECTION 9.04. Interpretation; Disclosure Letters.............................63
SECTION 9.05. Severability...................................................64
SECTION 9.06. Counterparts...................................................64
SECTION 9.07. Entire Agreement; No Third-Party
Beneficiaries................................................64
SECTION 9.08. GOVERNING LAW..................................................65
SECTION 9.09. Assignment.....................................................65
SECTION 9.10. Enforcement....................................................65
EXHIBIT A Conditions of the Offer...........................A-1
<PAGE>
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER dated
as of November 11, 1999 among TRIPOINT GLOBAL
COMMUNICATIONS INC., a Delaware corporation
("PARENT"), SIGNAL ACQUISITION CORPORATION, a Texas
corporation and a wholly owned subsidiary of Parent
("SUB"), and VERTEX COMMUNICATIONS CORPORATION, a
Texas corporation (the "COMPANY").
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause Sub to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "OFFER") to purchase all the outstanding
shares of common stock, par value $.10 per share, of the Company (the "COMPANY
COMMON STOCK"), at a price per share of Company Common Stock of $22.00, net to
the seller in cash (such amount, or any greater amount per share paid pursuant
to the Offer, the "OFFER PRICE"), on the terms and subject to the conditions set
forth in this Agreement;
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the merger (the "MERGER") of Sub into the Company on
the terms and subject to the conditions set forth in this Agreement, whereby
each issued share of Company Common Stock not owned directly or indirectly by
Parent or the Company shall be converted into the right to receive an amount in
cash equal to the Offer Price;
WHEREAS, simultaneously with the execution and delivery of
this Agreement, Parent and certain shareholders of the Company (the "PRINCIPAL
SHAREHOLDERS") are entering into an agreement (the "SHAREHOLDER AGREEMENT", and
together with this Agreement, the "TRANSACTION AGREEMENTS") pursuant to which
the Principal Shareholders will agree to take specified actions in furtherance
of the Offer and the Merger; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger
<PAGE>
2
and also to prescribe various conditions to the Offer and the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The Offer and the Merger
SECTION 1.01. THE OFFER. (a) Provided that this Agreement
shall not have been terminated in accordance with Article VIII hereof and
subject to the conditions set forth in Exhibit A hereto (the "TENDER OFFER
CONDITIONS"), as promptly as practicable but in no event later than five
business days after the date of the public announcement by Parent and the
Company of this Agreement (the "ANNOUNCEMENT DATE"), Sub shall, and Parent shall
cause Sub to, commence the Offer within the meaning of Rule
<PAGE>
3
14d-2 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), for all the outstanding shares of Company Common Stock at the Offer
Price. The obligation of Sub to, and of Parent to cause Sub to, commence the
Offer and accept for payment, and pay for, any shares of Company Common Stock
tendered pursuant to the Offer are subject only to the provisions of Article
VIII and the Tender Offer Conditions (any of which may be waived by Sub in its
sole discretion, except as otherwise provided herein). Sub expressly reserves
the right to modify the terms of the Offer, except that, without the prior
written consent of the Company, Sub shall not (i) reduce the number of shares of
Company Common Stock subject to the Offer, (ii) reduce the price per share of
Company Common Stock to be paid pursuant to the Offer, (iii) modify or add to
the Tender Offer Conditions, (iv) waive the Minimum Tender Condition (except
that Sub may waive the Minimum Tender Condition if the failure of such condition
to be satisfied results from the failure of the Principal Shareholders to
validly tender any Subject Shares, as defined in the Shareholder Agreement,
prior to the expiration of the Offer, or from the withdrawal of any Subject
Shares prior to the expiration of the Offer) or amend any other term of the
Offer in any manner materially adverse to the holders of Company Common Stock or
(v) except as provided below, extend the Offer if all the Tender Offer
Conditions have been satisfied. Subject to the terms and conditions hereof, the
Offer shall remain open until midnight, New York City time, on the date that is
20 business days after the Offer is commenced (within the meaning of Rule 14d-2
of the Exchange Act); PROVIDED, HOWEVER, that without the prior written consent
of the Company, Sub may (A) if at the scheduled initial or any extended
expiration date (whether extended pursuant to this clause (A) or otherwise) of
the Offer any of the Tender Offer Conditions shall not have been satisfied or
waived, extend the Offer for up to five business days from such scheduled
initial or extended expiration date, (B) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer, (C) if at the scheduled initial or any extended expiration date of the
Offer all the Tender Offer Conditions are satisfied and more than 70% but less
than 90% of the Fully Diluted Shares (as defined in Exhibit A) have been validly
tendered and not withdrawn in the Offer, extend the Offer up to a maximum of 10
additional business days in the aggregate beyond the latest expiration date that
would otherwise be permitted under clause (A) or (B) of this sentence and (D)
extend the Offer for any reason for a period of not more than three business
days beyond the latest expiration date that would otherwise be permitted under
clause (A), (B) or (C) of this sentence. On the terms and subject to the
conditions of the Offer and this Agreement, Parent shall cause Sub to, and Sub
shall, accept for payment and pay for all shares of Company Common Stock validly
tendered and not withdrawn pursuant to the Offer that Sub becomes obligated to
purchase pursuant to the Offer as soon as practicable after the expiration of
the Offer.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "OFFER DOCUMENTS"). Each of Parent, Sub
and the Company shall promptly correct any information provided by it for use in
the Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of Parent and Sub shall
take all steps necessary to amend or supplement the Offer Documents and to cause
the Offer Documents as so amended or supplemented to be filed with the SEC and
to be disseminated to the Company's shareholders, in each case as and to the
extent required by applicable Federal securities laws. Parent and Sub shall
provide the
<PAGE>
4
Company and its counsel in writing with any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds sufficient to accept for payment, and pay for, any and
all shares of Company Common Stock that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer. Parent and Sub shall comply with
the obligations respecting prompt payment pursuant to Rule 14e-1(c) under the
Exchange Act.
SECTION 1.02. COMPANY ACTIONS. (a) The Company hereby approves
of and consents to the Offer, the Merger and the other transactions contemplated
by the Transaction Agreements (collectively, the "TRANSACTIONS"), subject, in
the case of the Merger, to receipt of the Company Shareholder Approval and
subject to withdrawal of such approval and consent if permitted by Section
5.02(b).
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended or
supplemented from time to time, the "SCHEDULE 14D-9") containing the
recommendations described in Section 3.04(b) and shall mail the Schedule 14D-9
to the holders of Company Common Stock. Each of the Company, Parent and Sub
shall promptly correct any information provided by it for use in the Schedule
14D-9 if and to the extent that such information shall have become false or
misleading in any material respect, and the Company shall take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's shareholders, in each case as and to the extent required by
applicable Federal securities laws. The Company shall provide Parent and its
counsel in writing with any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Stock as of a recent date
and of those persons becoming record holders
<PAGE>
5
subsequent to such date, together with copies of all lists of shareholders,
security position listings and computer files and all other information in the
Company's possession or control regarding the beneficial owners of Company
Common Stock, and shall furnish to Sub such information and assistance
(including updated lists of shareholders, security position listings and
computer files) as Parent may reasonably request in communicating the Offer to
the Company's shareholders. Subject to the requirements of applicable Law (as
defined in Section 3.05(a)), and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Transactions, Parent and Sub shall hold in confidence the information
contained in any such labels, listings and files, shall use such information
only in connection with the Offer and the Merger and, if this Agreement shall be
terminated, shall deliver to the Company all copies of such information then in
their possession.
SECTION 1.03. THE MERGER. On the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Texas
Business Corporation Act (the "TBCA"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.05). At the Effective
Time, the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "SURVIVING CORPORATION").
SECTION 1.04. CLOSING. The closing (the "CLOSING") of the
Merger shall take place at the offices of Cravath, Swaine & Moore, 825 Eighth
Avenue, New York, New York 10019 at 10:00 a.m. on the second business day
following the satisfaction (or, to the extent permitted by Law, waiver by all
parties) of the conditions set forth in Section 7.01, or at such other place,
time and date as shall be agreed in writing between Parent and the Company. The
date on which the Closing occurs is referred to in this Agreement as the
"CLOSING DATE".
SECTION 1.05. EFFECTIVE TIME. Prior to the Closing, the
Company shall prepare, and on the Closing Date the Company shall file with the
Secretary of State of the State of Texas, articles of merger (the "ARTICLES OF
MERGER") executed in accordance with the relevant provisions of the TBCA and
shall make all other filings or recordings required under the TBCA. The Merger
shall become effective upon issuance of the certificate of merger by the
Secretary of State of the State of Texas, or at such later time as Parent and
the Company shall
<PAGE>
6
agree and specify in the Articles of Merger in accordance with Section 10.03 of
the TBCA (the time the Merger becomes effective being the "EFFECTIVE TIME").
SECTION 1.06. EFFECTS. The Merger shall have the
effects set forth in Article 5.06 of the TBCA.
SECTION 1.07. ARTICLES OF INCORPORATION AND BYLAWS. (a) The
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be amended at the Effective Time so that Article Four,
Section 1 of such Articles of Incorporation reads in its entirety as follows:
"The total number of shares of all classes of stock which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, par value $0.01 per
share." and, as so amended, such Articles of Incorporation shall be the Articles
of Incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable Law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 1.08. DIRECTORS. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.09. OFFICERS. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified, as the case
may be.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any
<PAGE>
7
action on the part of the holder of any shares of Company Common Stock or any
shares of capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid
and non assessable share of common stock, par value $0.01 per share, of
the Surviving Corporation.
(b) CANCELATION OF TREASURY STOCK AND PARENT- OWNED STOCK.
Each share of Company Common Stock that is owned by the Company, Parent
or Sub shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and no Parent Common
Stock or other consideration shall be delivered or deliverable in
exchange therefor. Each share of Company Common Stock that is owned by
any subsidiary of the Company or Parent (other than Sub) shall
automatically be converted into one fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving
Corporation.
(c) CONVERSION OF COMPANY COMMON STOCK. (i) Subject to
Sections 2.01(b) and 2.01(d), each issued share of Company Common Stock
shall be converted into the right to receive an amount in cash equal to
the Offer Price, without interest (the "PER SHARE MERGER
CONSIDERATION").
(ii) The cash payable upon the conversion of shares of Company
Common Stock pursuant to this Section 2.01(c) is referred to
collectively as the "MERGER CONSIDERATION". As of the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate formerly representing any such
shares of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive cash in an amount equal to
the Per Share Merger Consideration multiplied by the number of shares
of Company Common Stock formerly represented by such certificate,
without interest, upon surrender of such certificate in accordance with
Section 2.02, subject to Section 2.01(d) hereof.
(d) DISSENT RIGHTS. Notwithstanding anything in this Agreement
to the contrary, shares (the "DISSENT SHARES") of Company Common Stock
that are outstanding immediately prior to the Effective Time
<PAGE>
8
and that are held by any person who is entitled to dissent from and
properly dissents from this Agreement pursuant to, and who complies in
all respects with, Articles 5.11, 5.12, 5.13 and 5.16 of the TBCA, in
each case to the extent applicable (the "DISSENT STATUTES"), shall not
be converted into Merger Consideration as provided in Section 2.01(c),
but rather the holders of Dissent Shares shall be entitled to payment
of the fair value of such Dissent Shares in accordance with the Dissent
Statutes; PROVIDED, HOWEVER, that if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to receive
payment of fair value under the Dissent Statutes, then the right of
such holder to be paid the fair value of such holder's Dissent Shares
shall cease and such Dissent Shares shall be deemed to have been
converted as of the Effective Time into, and to have become
exchangeable solely for the right to receive, Merger Consideration
as provided in Section 2.01(c). The Company shall serve prompt notice
to Parent of any objections or demands for payment of fair value of
Company Common Stock pursuant to the Dissent Statutes received by the
Company, and Parent shall have the right to participate in and direct
all negotiations and proceedings with respect to such objections or
demands. Prior to the Effective Time, the Company shall not, without
the prior written consent of Parent, make any payment with respect to,
or settle or offer to settle, any such objections or demands, or agree
to do any of the foregoing.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) PAYING AGENT.
Prior to the Effective Time, Parent shall select a bank or trust company
reasonably acceptable to the Company to act as paying agent (the "PAYING AGENT")
for the payment of the Merger Consideration upon surrender of certificates
representing Company Common Stock. At the Effective Time, Parent shall provide
to the Paying Agent the aggregate cash necessary to pay for the shares of
Company Common Stock converted into the right to receive cash pursuant to
Section 2.01(c) (such cash being hereinafter referred to as the "EXCHANGE
FUND").
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record of a certificate or certificates (the "CERTIFICATES") that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares
<PAGE>
9
were converted into the right to receive Merger Consideration pursuant to
Section 2.01, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions, not inconsistent with this Agreement, as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for Merger Consideration. Upon
surrender of a Certificate for cancelation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents, not inconsistent with this
Agreement, as may reasonably be required by Parent, Parent shall cause the
Paying Agent to pay the holder of such Certificates in exchange therefor cash in
an amount equal to the Per Share Merger Consideration multiplied by the number
of shares of Company Common Stock formerly represented by such Certificate
(other than Certificates representing Dissent Shares, Certificates representing
shares of Company Common Stock held by Parent or Sub or in the treasury of the
Company and Certificates representing shares of Company Common Stock held by any
subsidiary of the Company or Parent (other than Sub)), without interest, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.02, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
amount of cash, without interest, into which the shares of Company Common Stock
theretofore represented by such Certificate have been converted pursuant to
Section 2.01. No interest shall be paid or shall accrue on the cash payable upon
surrender of any Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be
<PAGE>
10
deemed to have been paid in full satisfaction of all rights pertaining to such
shares of Company Common Stock. After the Effective Time there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Company Common Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any certificates
formerly representing shares of Company Common Stock are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) LOST CERTIFICATES. In the event any Certificate shall have
been lost, stolen or destroyed, the Paying Agent shall be required to pay the
Per Share Merger Consideration for each share of Company Common Stock formerly
represented by such lost, stolen or destroyed certificate; PROVIDED, HOWEVER,
Sub may require the owner of such lost, stolen or destroyed certificate to
execute and deliver to the Paying Agent a form of affidavit claiming such
Certificate to be lost, stolen or destroyed in form and substance reasonably
satisfactory to Sub and the posting by such owner of a bond in such amount as
Sub may determine is reasonably necessary as indemnity against any claim that
may be made against Sub, Parent, the Company, the Surviving Corporation or the
Paying Agent in connection with the Certificate alleged to have been lost,
stolen or destroyed.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund that remains undistributed to the holders of Company Common Stock for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holder of Company Common Stock who has not theretofore complied with this
Article II shall thereafter look only to Parent for payment of its claim for
Merger Consideration.
(f) NO LIABILITY. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the
<PAGE>
11
property of any Governmental Entity (as defined in Section 3.05(b)), any such
shares, cash, dividends or distributions in respect of such Certificate shall,
to the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(g) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest
any cash included in the Exchange Fund, as directed by Parent, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Parent.
(h) WITHHOLDING RIGHTS. Parent or the Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable to any holder of Company Common Stock pursuant to this Agreement such
amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Code (as defined in Section 3.11(b)), or under
any applicable provision of state, local or foreign tax Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
SECTION 3.01. ORGANIZATION, STANDING AND POWER. The Company
and each of its subsidiaries (the "COMPANY SUBSIDIARIES") are duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which they are organized and have all requisite corporate power and authority
and possess all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable them to own, lease or otherwise hold their
properties and assets and to conduct their businesses as presently conducted,
other than such franchises, licenses, permits, authorizations and approvals the
lack of which, individually and in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect (as defined
below). The Company and each Company Subsidiary are duly qualified to do
business in each jurisdiction where the nature of their businesses or their
ownership or leasing of their properties make such qualification necessary,
except for failures to be so qualified which, individually and in the aggregate,
have not had and would not reasonably be expected to have a Company Material
Adverse Effect. The term "COMPANY MATERIAL ADVERSE EFFECT," as used in this
Agreement, means a material adverse effect on the business, assets, condition
<PAGE>
12
(financial or otherwise) or results of operations of the Company and the Company
Subsidiaries, taken as a whole, on the ability of the Company to perform its
obligations under the Transaction Agreements or on the ability of the Company to
consummate the Offer, the Merger and the other Transactions. The Company has
made available to Parent true and complete copies of the articles of
incorporation of the Company, as amended to the date of this Agreement (as so
amended, the "COMPANY CHARTER"), and the By-laws of the Company, as amended to
the date of this Agreement (as so amended, the "COMPANY BY-LAWS"), and the
comparable charter and organizational documents of each Company Subsidiary, in
each case as amended through the date of this Agreement.
SECTION 3.02. COMPANY SUBSIDIARIES; EQUITY INTERESTS. (a) The
letter, dated as of the date of this Agreement, from the Company to Parent and
Sub (the "COMPANY DISCLOSURE LETTER") lists each Company Subsidiary and its
jurisdiction of organization. All the outstanding shares of capital stock of
each Company Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in the Company Disclosure Letter, are
owned by the Company, by another Company Subsidiary or by the Company and
another Company Subsidiary, free and clear of all pledges, liens, charges,
mortgages, encumbrances and security interests of any kind or nature whatsoever
(collectively, "LIENS").
(b) Except for its interests in the Company Subsidiaries and
except for the ownership interests set forth in the Company Disclosure Letter,
the Company does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
in any person.
SECTION 3.03. CAPITAL STRUCTURE. (a) The authorized capital
stock of the Company consists of 20,000,000 shares of Company Common Stock. At
the close of business on November 11, 1999, (i) 5,116,314 shares of Company
Common Stock were issued and outstanding, (ii) 119,437 shares of Company Common
Stock were held by the Company in its treasury, (iii) 15,000 shares of Company
Common Stock were subject to outstanding Company Stock Options (as defined in
Section 6.04(e)) under the Company's Outside Directors Stock Option Plan, (iv)
65,800 shares of Company Common Stock were subject to outstanding Company Stock
Options under the Company's Stock Option Plan for Key Employees, (v) 589,927
shares of Company Common Stock were subject to outstanding
<PAGE>
13
Company Stock Options under the Company's 1995 Stock Compensation Plan, (vi)
32,000 shares of Company Common Stock were subject to outstanding Company Stock
Options under the Company's Non-Employee Directors Stock Option Plan and (vii)
401,800 additional shares of Company Common Stock were reserved for issuance
pursuant to the Company Stock Plans (as defined in Section 6.04(e)). Except as
set forth above, at the close of business on the date of this Agreement, no
shares of capital stock or other voting securities of the Company were issued,
reserved for issuance or outstanding. There are no outstanding Company SARs (as
defined in Section 6.04(e)) that were not granted in tandem with a related
Company Stock Option. All outstanding shares of Company capital stock are, and
all such shares that may be issued prior to the Effective Time will be when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any purchase option, call option, right of
first refusal, preemptive right, subscription right or any similar right under
any provision of the TBCA, the Company Charter, the Company By-laws or any
contract, lease, license, indenture, note, bond, agreement, permit, concession,
franchise or other instrument (a "CONTRACT") to which the Company is a party or
otherwise bound. There are not any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of Company Common Stock may vote ("VOTING COMPANY DEBT"). Except as set
forth above, as of the date of this Agreement, there are not any options,
warrants, rights, convertible or exchangeable securities, "phantom" stock
rights, stock appreciation rights, stock-based performance units, commitments,
Contracts, arrangements or undertakings of any kind to which the Company or any
Company Subsidiary is a party or by which any of them is bound (i) obligating
the Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, the Company or of any
Company Subsidiary or any Voting Company Debt, (ii) obligating the Company or
any Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, right, security, unit, commitment, Contract, arrangement or undertaking
or (iii) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights occurring to holders
of Company capital stock. As of the date of this Agreement, there are not any
<PAGE>
14
outstanding contractual obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any Company Subsidiary. Except as set forth in the Company Disclosure
Letter or the Filed Company SEC Documents (as defined in Section 3.08), no
person is entitled to registration rights with respect to any shares of Company
Common Stock.
(b) The Company Board or a committee administering the Company
Stock Plans has the power and authority to cause (x) the Company Stock Plans to
terminate as of the Effective Time and (y) the provisions in any other Company
Benefit Plan providing for the issuance, transfer or grant of any capital stock
of the Company or any interest in respect of any capital stock of the Company to
be deleted as of the Effective Time. Following the Effective Time no holder of a
Company Stock Option or Company SAR or any participant in any Company Stock Plan
or other Company Benefit Plan will have any right thereunder to acquire any
capital stock of the Company or the Surviving Corporation.
SECTION 3.04. AUTHORITY; EXECUTION AND DELIVERY;
ENFORCEABILITY. (a) The Company has all requisite corporate power and authority
to execute and deliver this Agreement and, subject to receipt of the Company
Shareholder Approval, to consummate the Transactions. The execution and delivery
by the Company of this Agreement and, except as set forth in the next sentence,
the consummation by the Company of the Transactions have been duly authorized by
all necessary corporate action on the part of the Company, subject, in the case
of the consummation of the Merger, to receipt of the Company Shareholder
Approval. The Company has duly executed and delivered this Agreement and,
assuming due and valid authorization, execution and delivery hereof by Parent
and Sub, this Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws, now or hereafter in effect, affecting creditor
rights generally and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought.
(b) The Board of Directors of the Company (the "COMPANY
BOARD"), at a meeting duly called and held, duly
<PAGE>
15
and unanimously adopted resolutions (i) approving the Transaction Agreements,
the Offer, the Merger and the other Transactions, (ii) determining that the
terms of the Offer and the Merger and the other Transactions are fair to and in
the best interests of the Company's shareholders, (iii) recommending that the
holders of Company Common Stock accept the Offer and tender their shares of
Company Common Stock pursuant to the Offer, (iv) directing that this Agreement
be submitted to the Company's shareholders for approval and (v) recommending
that the Company's shareholders approve this Agreement; PROVIDED, HOWEVER, that
the Company Board may subsequently withdraw its recommendations referred to in
this Section 3.04(b) if it is permitted to do so under Section 5.02(b). Such
resolutions are sufficient to render the provisions of Article 13.03 of the TBCA
inapplicable to Parent and Sub and the Transaction Agreements, the Offer, the
Merger and the other Transactions. To the Company's knowledge, no other state
takeover statute or similar statute or regulation applies or purports to apply
to the Company with respect to the Transaction Agreements, the Offer, the Merger
or any other Transaction.
(c) The only vote of holders of any class or series of Company
capital stock necessary to approve and adopt this Agreement and the Merger is
the approval of this Agreement by the affirmative vote of the holders of at
least a majority of the outstanding Company Common Stock (the "COMPANY
SHAREHOLDER APPROVAL") and is only necessary in the event that the number of
shares of Company Common Stock tendered pursuant to the Offer represents less
than 90% of the issued and outstanding shares of Company Common Stock. The
affirmative vote of the holders of Company capital stock, or any of them, is not
necessary to approve any Transaction Agreement other than this Agreement or to
consummate the Offer or any Transaction other than the Merger.
SECTION 3.05. NO CONFLICTS; CONSENTS. (a) Except as set forth
in the Company Disclosure Letter, the execution and delivery by the Company of
this Agreement do not, and the consummation of the Offer, the Merger and the
other Transactions and compliance with the terms of this Agreement will not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any material obligation or to loss of a material
benefit under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or
<PAGE>
16
result in the creation of any Lien upon any of the properties or assets of the
Company or any Company Subsidiary under, any provision of (i) the Company
Charter, the Company By-laws or the comparable charter or organizational
documents of any Company Subsidiary, (ii) any Contract to which the Company or
any Company Subsidiary is a party or by which any of their respective properties
or assets is bound or (iii) subject to the filings and other matters referred to
in Section 3.05(b) and the receipt of the Company Shareholder Approval, any
judgment, order or decree ("JUDGMENT") or statute, law (including common law),
ordinance, rule or regulation ("LAW") applicable to the Company or any Company
Subsidiary or their respective properties or assets, except in the case of
clause (ii) or (iii) where such conflicts, violations or defaults, individually
and in the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect.
(b) No consent, approval, license, permit, order or
authorization ("CONSENT") of, or registration, declaration or filing with, or
permit from, any Federal, state, local or foreign government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a "GOVERNMENTAL
ENTITY") is required to be obtained or made by or with respect to the Company or
any Company Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions, other
than (i) compliance with and filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (ii) the filing of a joint
notification pursuant to Section 721(a) of the Defense Production Act of 1950,
as amended (the "EXON-FLORIO ACT"), (iii) the filing with the SEC of (A) the
Schedule 14D-9, (B) a proxy or information statement relating to the approval of
this Agreement by the Company's shareholders
(the "PROXY STATEMENT"), if such approval is required by Law, (C) any
information statement (the "INFORMATION STATEMENT") required under Rule 14f-1 in
connection with the Offer and (D) such reports under Sections 13 and 16 of the
Exchange Act as may be required in connection with the Transaction Agreements,
the Offer, the Merger and the other Transactions, (iv) the filing of the
Articles of Merger with the Secretary of State of the State of Texas and
appropriate documents with the relevant authorities of the other jurisdictions
in which the Company is qualified to do business, (v) compliance with and such
filings as may be required under applicable Environmental Laws (as
<PAGE>
17
defined in Section 3.14(a)), (vi) such filings as may be required in connection
with the taxes described in Section 6.08 and (vii) such other consents and
filings (the "OTHER COMPANY FILINGS") the failure of which to obtain or make,
individually and in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect or in any manner impede, frustrate, prevent,
delay or nullify the consummation of the Transactions.
SECTION 3.06. SEC DOCUMENTS AND FINANCIAL STATEMENTS. The
Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company with the SEC since September
30, 1997 (the "COMPANY SEC DOCUMENTS"). As of its respective date, each
Company SEC Document complied in all material respects with the requirements
of the Exchange Act or the Securities Act of 1933, as amended (the
"SECURITIES ACT"), as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Company SEC Document, and did
not, at the time such Company SEC Document was filed with the SEC, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Company
SEC Document has been revised or superseded by a later-filed Company SEC
Document, none of the Company SEC Documents contains any untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The unaudited
financial statements of the Company for its fiscal year ended September 30,
1999 (the "1999 COMPANY FINANCIAL STATEMENTS") are set forth in Section 3.06
of the Company Disclosure Letter. The 1999 Company Financial Statements and
the consolidated financial statements of the Company included in the Company
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except as otherwise noted therein
including in the related notes and except, in the case of quarterly unaudited
statements, as permitted by Form 10-Q of the SEC and, in the case of 1999
Company Financial Statements, the absence of notes that would substantially
duplicate disclosure contained in the Filed Company SEC Documents) applied on
a consistent basis
<PAGE>
18
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of quarterly unaudited statements, to normal year-end audit adjustments).
Except as set forth in the 1999 Company Financial Statements and except for
liabilities and obligations incurred since the date of the 1999 Company
Financial Statements in the ordinary course of business or as set forth in the
Company Disclosure Letter, neither the Company nor any Company Subsidiary has
any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet or in the notes thereto. None of the Company
Subsidiaries is, or has at any time since September 30, 1997 been, subject to
the reporting requirements of Section 13(a) or 15(d) of the Exchange Act.
SECTION 3.07. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the Offer Documents, the Schedule 14D-9, the Other Filings (as
defined in Section 4.04) or the Information Statement will, at the time such
document is filed with the SEC or other Governmental Entity, at any time it is
amended or supplemented or at the time it is first published, sent or given to
the Company's shareholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) the Proxy Statement will, at
the date it is first mailed to the Company's shareholders or at the time of the
Company Shareholders Meeting (as defined in Section 6.01(b)), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Parent or Sub
for inclusion or incorporation by reference therein. The Schedule 14D-9, the
Information Statement and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
<PAGE>
19
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "FILED COMPANY SEC DOCUMENTS") or in the Company
Disclosure Letter, since September 30, 1999, the Company has conducted its
business only in the ordinary course of business, and there has not been:
(i) any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect, other than any
event, change, effect or development to the extent attributable to (A)
the economy or the securities markets in general, (B) this Agreement or
the transactions contemplated hereby or the announcement thereof or (C)
the Company's industry in general, and not specifically relating to the
Company or the Company Subsidiaries;
(ii) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect
to any Company capital stock or any repurchase for value by the Company
of any Company capital stock;
(iii) any split, combination or reclassification of any
Company capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of Company capital stock;
(iv) (A) any granting by the Company or any Company Subsidiary
to any director or officer of the Company or any Company Subsidiary of
any increase in compensation, except in the ordinary course of business
consistent with past practice or as was required under employment
agreements filed as exhibits to the Filed Company SEC Documents, (B)
any granting by the Company or any Company Subsidiary to any such
director or officer of any increase in severance or termination pay,
except as was required under any employment, severance or termination
agreements filed as exhibits to the Filed Company SEC Documents, or (C)
any entry by the Company or any Company Subsidiary into, or any
amendment of, any employment, consulting, deferred compensation,
indemnification, severance or termination agreement or
arrangement with any such director or officer;
<PAGE>
20
(v) any change in accounting methods, principles or practices
by the Company or any Company Subsidiary materially affecting the
consolidated assets, liabilities or results of operations of the
Company, except insofar as may have been required by a change in GAAP;
or
(vi) any material elections with respect to Taxes (as defined
in Section 3.09(g)) by the Company or any Company Subsidiary or
settlement or compromise by the Company or any Company Subsidiary of
any material Tax liability or refund.
SECTION 3.09. TAXES. (a) The Company and each Company
Subsidiary have timely filed, or have caused to be timely filed (taking into
account any extension of time within which to file) on their behalf, all Tax
Returns required to be filed by them, other than those the failure of which to
file, individually and in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect, and all such Tax Returns are
true, complete and accurate in all material respects. All Taxes shown to be due
on such Tax Returns, or otherwise owed, have been timely paid, other than
failures to pay which, individually and in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect.
(b) The most recent financial statements contained in the
Filed Company SEC Documents reflect an adequate reserve for all Taxes payable by
the Company and the Company Subsidiaries for all Taxable periods and portions
thereof through the date of such financial statements. To the knowledge of the
Company and the Company Subsidiaries, no deficiency with respect to any Taxes
has been threatened, proposed, asserted or assessed against the Company or any
Company Subsidiary, and no requests for waivers of the time to assess any such
Taxes are pending.
(c) The Federal income Tax Returns of the Company and each
Company Subsidiary consolidated in such Returns have been examined by and
settled with the United States Internal Revenue Service for all years through
the fiscal year ended September 30, 1994. All assessments for Taxes due with
respect to such completed and settled examinations or any concluded litigation
have been fully paid.
(d) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable and
<PAGE>
21
Liens for Taxes that are being contested in good faith by appropriate
proceedings and for which adequate reserves are provided in accordance with GAAP
in the 1999 Company Financial Statements) on the assets of the Company or any
Company Subsidiary. Neither the Company nor any Company Subsidiary is bound by
any tax sharing agreement with another person with respect to Taxes.
(e) Other than the consolidated group in which the Company is
the parent, neither the Company nor any Company Subsidiary has any liability for
the payment of Taxes of any other entity as a result of being a member of an
affiliated, consolidated, combined or unitary group or as a result of any
express or implied obligation to indemnify any other person with respect to the
payment of any Taxes.
(f) Neither the Company nor any Company Subsidiary has engaged
in any transactions giving rise to deferred gain under Treas. Reg. Section
1.1502-13 that has not actually been included in taxable income for Federal
income Tax purposes by the date hereof.
(g) For purposes of this Agreement:
"TAXES" includes all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether
imposed by a local, municipal, governmental, state, foreign, Federal or
other Governmental Entity, or in connection with any agreement with
respect to Taxes, including all interest, penalties and additions
imposed with respect to such amounts.
"TAX RETURN" means any Federal, state, local, provincial or
foreign Tax return, declaration, statement, report, schedule, form or
information return or any amended Tax return relating to Taxes.
SECTION 3.10. ABSENCE OF CHANGES IN BENEFIT PLANS. Except as
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, since September 30, 1998, there has not been any adoption or amendment
in any material respect by the Company or any Company Subsidiary of any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, thrift, savings, stock bonus, restricted
stock, cafeteria, paid time off, perquisite, fringe benefit, vacation,
severance, disability, death benefit,
<PAGE>
22
hospitalization, medical or other plan, arrangement or understanding (whether or
not legally binding) providing benefits to any current or former employee,
officer or director of the Company or any Company Subsidiary (collectively,
"COMPANY BENEFIT PLANS"). Except as disclosed in the Filed Company SEC Documents
or in the Company Disclosure Letter, there are not any employment, consulting,
deferred compensation, indemnification, severance or termination agreements or
arrangements between the Company or any Company Subsidiary and any current or
former employee, officer or director of the Company or any Company Subsidiary
(collectively, "COMPANY BENEFIT AGREEMENTS").
SECTION 3.11. ERISA COMPLIANCE; EXCESS PARACHUTE PAYMENTS.
(a) The Company Disclosure Letter contains a list and brief description of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "COMPANY PENSION PLANS"), "employee welfare benefit plans"
(as defined in Section 3(1) of ERISA) and all other Company Benefit Plans and
Company Benefit Agreements maintained, or contributed to, by the Company or any
Company Subsidiary, or to which the Company or any Company Subsidiary is a
party, for the benefit of any current or former employees, officers or directors
of the Company or any Company Subsidiary. The Company has made available to
Parent true, complete and correct copies of (i) each Company Benefit Plan and
Company Benefit Agreement (or, in the case of any unwritten Company Benefit Plan
or Company Benefit Agreement a description thereof), (ii) the most recent annual
report on Form 5500 filed with the Internal Revenue Service with respect to each
Company Benefit Plan (if any such report was required), (iii) the most recent
summary plan description for each Company Benefit Plan for which such summary
plan description is required and (iv) each trust agreement and group annuity
contract relating to any Company Benefit Plan.
(b) Except as disclosed in the Company Disclosure Letter, all
Company Pension Plans have received favorable determination letters from the
Internal Revenue Service with respect to "TRA" (as defined in Section 1 of Rev.
Proc. 93-39), to the effect that such Company Pension Plans are qualified and
exempt from Federal income taxes under Sections 401(a) and 501(a), respectively,
of the Internal Revenue Code of 1986, as amended (the "CODE"), and no such
determination letter has been revoked nor, to the knowledge of the
<PAGE>
23
Company, has revocation been threatened, nor has any such Company Pension Plan
been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs. There is no material pending or,
to the knowledge of the Company, threatened litigation relating to the Company
Benefit Plans.
(c) Except as disclosed in the Company Disclosure Letter, no
Company Pension Plan, other than any Company Pension Plan that is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA (a
"COMPANY MULTIEMPLOYER PENSION PLAN"), had, as of the respective last annual
valuation date for each such Company Pension Plan, any "unfunded benefit
liabilities" (as such term is defined in Section 4001(a)(18) of ERISA), based on
actuarial assumptions that have been furnished to Parent, and there has been no
material adverse change in the financial condition of any Company Pension Plan
since its last such annual valuation date. No liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by the Company or any
Company Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer plan of
any entity which is considered one employer with the Company under Section 4001
of ERISA or Section 414 of the Code (an "ERISA AFFILIATE"). None of the Company,
any Company Subsidiary, any officer of the Company or any Company Subsidiary or
any of the Company Benefit Plans which are subject to ERISA, including the
Company Pension Plans, any trusts created thereunder or any trustee or
administra tor thereof, has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) or any other
breach of fiduciary responsibility that could subject the Company, any Company
Subsidiary or any officer of the Company or any Company Subsidiary to the tax or
penalty on prohibited transactions imposed by such Section 4975 or to any
liability under Section 502(i) or 502(l) of ERISA. None of such Company Benefit
Plans and trusts has been terminated, nor has there been any "reportable event"
(as that term is defined in Section 4043 of ERISA) for which the 30-day
reporting requirement has not been waived with respect to any Company Benefit
Plan during the last five years, and no notice of a reportable event will be
required to be filed in connection with the Transactions. Neither the Company
nor any Company Subsidiary has incurred a "complete
<PAGE>
24
withdrawal" or a "partial withdrawal" (as such terms are defined in Sections
4203 and 4205, respectively, of ERISA) since the effective date of such Sections
4203 and 4205 with respect to any Company Multiemployer Pension Plan. All
contributions and premiums required to be made under the terms of any Company
Benefit Plan as of the date hereof have been timely made or have been reflected
on the most recent consolidated balance sheet filed or incorporated by reference
in the Filed Company SEC Documents. Neither any Company Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA or Section 412 of
the Code), whether or not waived.
(d) With respect to any Company Benefit Plan that is an
employee welfare benefit plan, except as disclosed in the Company Disclosure
Letter, (i) no such Company Benefit Plan is unfunded or funded through a
"welfare benefit fund" (as such term is defined in Section 419(e) of the Code),
(ii) each such Company Benefit Plan that is a "group health plan" (as such term
is defined in Section 5000(b)(1) of the Code), complies with the applicable
requirements of Section 4980B(f) of the Code and (iii) each such Company Benefit
Plan (including any such Plan covering retirees or other former employees) may
be amended or terminated without material liability to the Company and the
Company Subsidiary on or at any time after the Effective Time. Neither the
Company nor any Company Subsidiary has any obligations for retiree health and
life benefits under any Company Benefit Plan or Company Benefit Agreement.
(e) Except as disclosed in the Company Disclosure Letter, the
consummation of the Offer, the Merger or any other Transaction will not (x)
entitle any employee, officer or director of the Company or any Company
Subsidiary to severance pay, (y) accelerate the time of payment or vesting or
trigger any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Company Benefit Plans or Company
Benefit Agreements other than pursuant to the provisions of Section 6.04 hereof
or (z) result in any breach or violation of, or a default under, any of the
Company Benefit Plans or Company Benefit Agreements.
(f) Other than payments that may be made to the persons listed
in the Company Disclosure Letter (the "PRIMARY COMPANY EXECUTIVES"), any amount
or economic
<PAGE>
25
benefit that could be received (whether in cash or property or the vesting of
property) as a result of the Offer, the Merger or any other Transaction
(including as a result of termination of employment on or following the
Effective Time) by any employee, officer or director of the Company or any of
its affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any Company Benefit Plan or
Company Benefit Agreement or otherwise would not be characterized as an "excess
parachute payment" (as defined in Sec tion 280G(b)(1) of the Code), and no
disqualified individual is entitled to receive any additional payment from the
Company or any Company Subsidiary or any other person in the event that the
excise tax under Section 4999 of the Code is imposed on such disqualified
individual. Set forth in the Company Disclosure Letter is (i) the estimated
maximum amount that could be paid to each Primary Company Executive as a result
of the Offer, the Merger and the other Transactions under all Company Benefit
Plans and Company Benefit Agreements and (ii) the "base amount" (as defined in
Section 280G(b)(3) of the Code) for each Primary Company Executive calculated as
of the date of this Agreement.
SECTION 3.12. LITIGATION. The Company Disclosure Letter sets
forth a true and complete description of all pending, or, to the knowledge of
the Company, threatened, material suits, actions, proceedings or Judgments
against or affecting the Company or any Company Subsidiary and a summary of the
status of and potential liabilities arising from each such suit, action,
proceeding and Judgment. Except as set forth in the Company Disclosure Letter or
in the Filed Company SEC Documents, there is (i) no investigation or review by
any Governmental Entity or self-regulatory authority with respect to the Company
or any Company Subsidiary or any of their respective employees or
representatives (insofar as any such investigation or review relates to their
activities with the Company or any Company Subsidiary) actually pending or, to
the knowledge of the Company, threatened, nor has any Governmental Entity or
self-regulatory authority indicated to the Company or any Company Subsidiary an
intention to conduct the same, (ii) no material claim, action, suit or
proceeding (including any claim, action, suit or proceeding pertaining to
product liability, patent infringement or bodily injury) pending, or, to the
knowledge of the Company, threatened against or affecting the Company or any
Company Subsidiary, the business or assets of the Company or any Company
Subsidiary or any of the directors, shareholders,
<PAGE>
26
employees or representatives of the Company or any Company Subsidiary (insofar
as any such matters relate to their activities with the Company or any Company
Subsidiary) at law or in equity, or before any Governmental Entity, arbitrator
or arbitration panel and (iii) no outstanding Judgment by which the Company or
any Company Subsidiary or their respective business is bound or by which any of
the employees or representatives of the Company or any Company Subsidiary is
prohibited or restricted from engaging in or otherwise conducting the business
of the Company or any Company Subsidiary as presently conducted, except where
such investigations, reviews, claims, actions, suits, proceedings or Judgments,
individually and in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.13. COMPLIANCE WITH APPLICABLE LAWS. Except as
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, the Company and the Company Subsidiaries are in compliance in all
material respects with all applicable Laws (including the Truth-In-Negotiations-
Act, the Procurement Integrity Act, the Foreign Corrupt Practices Act, the Cost
Accounting Standards, the Regulations of applicable Governmental Entities
governing foreign military sales, export controls, illegal boycotts, national
security and any other Laws or orders incorporated expressly, by reference or by
operation of Law into, or otherwise applicable to, any Contract or other
agreement made with the United States of America (a "GOVERNMENT CONTRACT")).
Except as set forth in the Filed Company SEC Documents or in the Company
Disclosure Letter, neither the Company nor any Company Subsidiary has received
any written notice: (i) since September 30, 1997, of any administrative, civil
or criminal investigation or audit (other than Tax audits) by any Governmental
Entity (including any qui tam action brought under the Civil False Claims Act
alleging any irregularity, misstatement or omission arising under or relating to
any Government Contract) relating to the Company or any Company Subsidiary or
(ii) during the past two years, from any Governmental Entity alleging that the
Company or a Company Subsidiary is not in compliance in any material respect
with any applicable Law. Except as set forth in the Company Disclosure Letter,
since September 30, 1997, to the knowledge of the Company, neither the Company
nor any Company Subsidiary nor any of their respective officers or directors is
or has been the subject of any criminal investigation in respect of any
Government Contract. Each of the Company, the Company Subsidiaries and their
respective employees has in effect
<PAGE>
27
all approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights of or with all Governmental Entities ("PERMITS")
necessary for it to own, lease or operate its properties and assets and to carry
on its business and operations as now conducted, except for the failure to have
such Permits that, individually and in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect. There have
occurred no defaults under, or violations of, any such Permit, except for such
defaults and violations that, individually and in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse Effect.
Neither the Offer nor the Merger, in and of itself, would cause the revocation
or cancelation of any such Permit that individually or in the aggregate would
reasonably be expected to have a Company Material Adverse Effect. This Section
3.13 does not relate to matters with respect to Taxes, which are the subject of
Section 3.09, or to environmental matters, which are the subject of Section
3.14.
SECTION 3.14. ENVIRONMENTAL MATTERS. (a) Except as disclosed
in the Filed Company SEC Documents or in the Company Disclosure Letter, (i) the
Company and the Company Subsidiaries are in compliance in all material respects
with Environmental Laws, (ii) the Company and the Company Subsidiaries hold and
are in compliance in all material respects with all Permits required to conduct
their respective businesses and operations under the Environmental Laws, (iii)
during the past three years, neither the Company nor any Company Subsidiary has
received any written communication from a Governmental Entity that alleges that
the Company or a Company Subsidiary is not in compliance in any material respect
with, or has or may have material liability under, any Environmental Law, (iv)
neither the Company nor any Company Subsidiary has entered into or agreed to any
Governmental Entity decree, order or agreement and is not subject to any
judgment relating to compliance with, or to investigation or cleanup, or to
liability, under any Environmental Law, and (v) neither the Company nor any
Company Subsidiary, nor, to the knowledge of either the Company or any Company
Subsidiary, any predecessor of or former subsidiaries of same, has treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled, or released any Hazardous Substance, or owned or operated any property
or facility in a manner that has given or would reasonably be expected to give
rise to material liabilities, including any material liability for response
costs, corrective
<PAGE>
28
action costs, personal injury, property damage, natural resources damages or
attorney fees, pursuant to any Environmental Laws. "ENVIRONMENTAL LAWS" means
any applicable Federal, state or local statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, and all common law concerning health
and safety, pollution or protection of the environment or the handling, release,
remediation or exposure to Hazardous Substances. "HAZARDOUS SUBSTANCE" means all
explosive or radioactive substances or wastes, hazardous or toxic substances or
wastes, pollutants and contaminants including petroleum or any fraction thereof
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
(b) Except as set forth in the Company Disclosure Letter, no
Environmental Law imposes any obligation upon the Company or any Company
Subsidiary arising out of or as a condition to the Offer, the Merger or any
other Transaction, including any requirement to modify or to transfer any permit
or license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree. No Lien has been placed upon any of
the Company's or any of the Company Subsidiaries' properties under any
Environmental Law.
SECTION 3.15. CONTRACTS. (a) Except as filed as an exhibit to
the Filed Company SEC Documents or as set forth in the Company Disclosure
Letter, there are no Contracts that are material to the business, assets,
condition (financial or otherwise) or results of operations of the Company and
the Company Subsidiaries taken as a whole. Neither the Company nor any Company
Subsidiary is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice would cause
such a violation of or default under) any Contract to which it is a party or by
which it or any of its properties or assets is bound, except for violations or
defaults that, individually and in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth in the Company Disclosure Letter or filed as an exhibit to the Filed
Company SEC Documents, neither the Company nor any Company Subsidiary is a party
to any:
<PAGE>
29
(i) Contract that involves performance of services or delivery
of goods, materials, supplies or equipment by the Company or any
Company Subsidiary with a remaining cost to complete in excess of
$250,000;
(ii) employee collective bargaining agreement or other
Contract with any labor union or employment agreement or employment
Contract;
(iii) covenant of the Company or a Company Subsidiary not to
compete (other than pursuant to any radius restriction contained in any
lease, reciprocal easement or development, construction, operating or
similar agreement) or other covenant of the Company or a Company
Subsidiary restricting the development, manufacture, marketing or
distribution of the products and services of the Company or any Company
Subsidiary;
(iv) Contract or other arrangement with any current or former
officer, director or employee of the Company or a Company Subsidiary
(other than employment agreements covered by clause (ii) above);
(v) (A) continuing Contract for the future purchase of
materials, supplies or equipment (other than purchase Contracts and
orders for inventory in the ordinary course of business consistent with
past practice), (B) management, service, consulting or other similar
type of Contract or (C) advertising agreement or arrangement, in any
such case which has an aggregate future liability to any person (other
than the Company or a Company Subsidiary) in excess of $100,000 and is
not terminable by the Company or a Company Subsidiary by notice of not
more than 60 days for a cost of less than $50,000;
(vi) material license, option or other agreement relating in
whole or in part to Intellectual Property (as defined in Section 3.17),
including any license or other agreement under which the Company or a
Company Subsidiary is licensee or licensor of any such Intellectual
Property, except for agreements relating to computer software licensed
to the Company or a Company Subsidiary in the ordinary course of
business; or
(vii) other Contract or commitment to which the Company or any
Company Subsidiary is a party or by or to which it or any of its assets
or business is
<PAGE>
30
bound or subject which has an aggregate future liability to any person
(other than the Company or a Company Subsidiary) in excess of $100,000
and is not terminable by the Company or a Company Subsidiary by notice
of not more than 60 days for a cost of less than $50,000.
(b) Except as disclosed in the Filed Company SEC Documents or
set forth in the Company Disclosure Letter, there are no outstanding claims
against the Company or any Company Subsidiary, either by the U.S. government or
by any prime contractor, subcontractor, vendor or other third party, relating to
any Government Contract arising under the Contracts Disputes Act or otherwise.
Neither the Company nor any Company Subsidiary has any pending default
termination action, open written cure notice or show cause notice (as defined in
the Federal Acquisition Regulations Part 49, P. 49.607(a) and (b), respectively)
in respect of any Government Contract. Except as disclosed in the Filed Company
SEC Documents or set forth in the Company Disclosure Letter, there are no
pending written claims or requests for equitable adjustment under any Government
Contracts by any Governmental Entities. Neither the Company nor any Company
Subsidiary nor any of their respective directors and officers is (or during the
past five years has been) suspended or debarred from doing business with the
U.S. government or is (or during such period was) the subject of a finding of
nonresponsibility or ineligibility for U.S. government contracting. The Company
and each Company Subsidiary are in compliance in all material respects with all
their obligations relating to any equipment or fixtures owned by any
Governmental Entity and loaned, bailed or otherwise furnished to or held by the
Company or any Company Subsidiary.
SECTION 3.16. TITLE TO PROPERTIES. (a) Except as set forth in
the Company Disclosure Letter, the Company and each Company Subsidiary have good
and marketable title to, or valid leasehold interests in, all their properties
and assets except for such as are no longer used or useful in the conduct of
their businesses or as have been disposed of in the ordinary course of business
and except for defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with their ability to conduct their businesses as currently
conducted. All such assets and properties, other than assets and properties in
which the Company or any Company Subsidiary has leasehold interests, are free
and clear of all Liens other than
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31
those set forth in the Company Disclosure Letter and except for Liens that, in
the aggregate, do not and will not materially interfere with the ability of the
Company and the Company Subsidiaries to conduct their businesses as currently
conducted.
(b) Except as set forth in the Company Disclosure Letter, the
Company and each Company Subsidiary have complied in all material respects with
the terms of all material leases to which they are parties and under which they
are in occupancy, and all such leases are in full force and effect. The Company
and each Company Subsidiary enjoy peaceful and undisturbed possession under all
such material leases.
SECTION 3.17. INTELLECTUAL PROPERTY. Except as set forth in
the Company Disclosure Letter, the Company and the Company Subsidiaries own, or
are validly licensed or otherwise have the right to use, without payment to any
other person, all the patents, trademarks (registered or unregistered), trade
names, service marks, copyrights and applications therefor, other proprietary
intellectual property rights and computer programs (collectively, "INTELLECTUAL
PROPERTY") that is, individually or in the aggregate, material to the conduct of
the business of the Company and the Company Subsidiaries taken as a whole, and
the consummation of the Transactions will not conflict with, alter or impair any
such rights. All Intellectual Property held by the Company and the Company
Subsidiaries is valid and enforceable and (i) neither the Company nor any
Company Subsidiary is, nor will the Company or any Company Subsidiary be as a
result of the execution and delivery of this Agreement or the performance of the
Company's obligations hereunder, infringing on or in violation of, and no claims
are pending or, to the knowledge of the Company, threatened that the Company or
any Company Subsidiary is infringing on or otherwise violating, the rights of
any person with regard to any Intellectual Property and (ii) to the knowledge of
the Company, no person is infringing on or otherwise violating any right of the
Company or any Company Subsidiary with respect to any Intellectual Property
owned by or licensed to the Company or any of the Company Subsidiaries, in each
case other than such failures to be valid and enforceable, infringements,
violations or claims that, individually and in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any Company Subsidiary is bound by or a party to any
options, licenses or agreements of any kind relating to the Intellectual
Property of any
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32
other person, except as set forth in the Company Disclosure Letter and except
for agreements relating to computer software licensed to the Company or a
Company Subsidiary in the ordinary course of business.
SECTION 3.18. LABOR MATTERS. Except as set forth in the
Company Disclosure Letter, there are no collective bargaining or other labor
union agreements to which the Company or any Company Subsidiary is a party or by
which any of them is bound. To the knowledge of the Company, since September 30,
1997, neither the Company nor any Company Subsidiary has encountered any labor
union organizing activity, or had any actual or threatened employee strikes,
work stoppages, slowdowns or lockouts.
SECTION 3.19. BROKERS. No broker, investment banker, financial
advisor or other person, other than Frost Securities, Inc., the fees and
expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Offer, the Merger and the other Transactions based upon arrangements
made by or on behalf of the Company. The Company has furnished to Parent a true
and complete copy of all agreements between the Company and Frost Securities,
Inc. relating to the Offer, the Merger and the other Transactions.
SECTION 3.20. OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of Frost Securities, Inc., dated the date of this
Agreement, to the effect that, as of such date, the consideration to be received
in the Offer and the Merger by the holders of Company Common Stock is fair from
a financial point of view, a signed copy of which opinion has been delivered to
Parent.
SECTION 3.21. YEAR 2000 COMPLIANCE. (a) Except as set forth in
the Company Disclosure Letter, the computer systems of the Company and the
Company Subsidiaries are Year 2000 Compliant (as defined below). All inventory
of the Company and the Company Subsidiaries that is, consists of, includes or
uses computer software is Year 2000 Compliant. The best current estimates of the
Company of capital expenditures to be Year 2000 Compliant are set forth in the
Company Disclosure Letter. To the knowledge of the Company, any failure on the
part of the customers of and suppliers to the Company and the Company
Subsidiaries to be Year 2000 Compliant will not have a Company Material Adverse
Effect.
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33
(b) The term "YEAR 2000 COMPLIANT", with respect to a computer
system or software program, means that such computer system or program will: (i)
recognize, process, manage, represent, interpret and manipulate correctly date-
related data for dates earlier and later than January 1, 2000; (ii) provide date
recognition for any data element without limitation; (iii) function
automatically into and beyond the year 2000 without human intervention and
without any change in operations associated with the advent of the year 2000;
(iv) interpret data, dates and time correctly into and beyond the year 2000; (v)
not produce noncompliance in existing data, nor otherwise corrupt such data,
into and beyond the year 2000; (vi) process correctly after January 1, 2000,
data containing dates before that date; and (vii) recognize all "leap year"
dates, including February 29, 2000.
SECTION 3.22. POTENTIAL CONFLICTS OF INTEREST. Except as
disclosed in the Filed Company SEC Documents or set forth in the Company
Disclosure Letter, since September 30, 1997 there have been no transactions,
agreements, arrangements or understandings between the Company or any Company
Subsidiary, on the one hand, and their respective affiliates, on the other hand,
that would be required to be disclosed under Item 404 of Regulation S-K under
the Securities Act. Except as disclosed in the Filed Company SEC Documents or
set forth in the Company Disclosure Letter, (i) no officer of the Company or any
Company Subsidiary owns, directly or indirectly, any interest in (except stock
holdings of publicly held and traded companies solely for investment purposes
and not in excess of 1% of the outstanding shares of any such class of
securities) or is an officer, director, employee or consultant of any person
which is a competitor, lessor, lessee, customer or supplier of the Company and
(ii) no officer or director of the Company or any Company Subsidiary (A) owns,
directly or indirectly, in whole or in part, any Intellectual Property which the
Company or any Company Subsidiary is using or the use of which is necessary for
the business of the Company or the Company Subsidiaries; (B) has any claim,
charge, action or cause of action against the Company or any Company Subsidiary,
except for claims for accrued vacation pay, accrued benefits under the employee
benefit plans maintained by the Company or a Company Subsidiary and similar
matters and agreements existing on the date hereof; (C) has made, on behalf of
the Company or any Company Subsidiary, any payment or commitment to pay any
commission, fee or other amount to, or to purchase or obtain or otherwise
contract to purchase or obtain any
<PAGE>
34
goods or services from, any other person of which any officer or director of the
Company or any Company Subsidiary, or, to the Company's knowledge, a relative of
any of the foregoing, is a partner or shareholder (except stock holdings solely
for investment purposes in securities of publicly held and traded companies); or
(D) owes any money to the Company or any Company Subsidiary.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub, jointly and severally, represent and warrant
to the Company as follows:
SECTION 4.01. ORGANIZATION, STANDING AND POWER. Each of Parent
and Sub is duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has all requisite corporate
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to own, lease or
otherwise hold its properties and assets and to conduct its businesses as
presently conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually and in the
aggregate, has not had and would not reasonably be expected to have a material
adverse effect on the ability of Parent or Sub to perform their obligations
under the Transaction Agreements or a material adverse effect on the ability of
Parent or Sub to consummate the Offer, the Merger and the other Transactions (a
"PARENT MATERIAL ADVERSE EFFECT").
SECTION 4.02. SUB. (a) Since the date of its incorporation,
Sub has not carried on any business or conducted any operations other than the
execution of the Transaction Agreements, the performance of its obligations
hereunder and matters ancillary thereto.
(b) The authorized capital stock of Sub consists of 1,000
shares of common stock, par value $0.01 per share, all of which have been
validly issued, are fully paid and nonassessable and are owned by Parent free
and clear of any Lien.
SECTION 4.03. AUTHORITY; EXECUTION AND DELIVERY;
ENFORCEABILITY. Each of Parent and Sub has all requisite corporate power and
authority to execute and deliver each Transaction Agreement to which it is a
party and to consummate the Transactions. The execution and delivery by each of
Parent and Sub of each Transaction Agreement to which it is a party
<PAGE>
35
and the consummation by it of the Transactions have been duly authorized by all
necessary corporate action on the part of Parent and Sub. Parent, as sole
shareholder of Sub, has approved the Transaction Agreements. Each of Parent and
Sub has duly executed and delivered each Transaction Agreement to which it is a
party and, assuming due and valid authorization, execution and delivery thereof
by the Company, each such Transaction Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, except
that (i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws, now or hereafter in effect,
affecting creditor rights generally and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought.
SECTION 4.04. NO CONFLICTS; CONSENTS. (a) The execution and
delivery by each of Parent and Sub of each Transaction Agreement to which it is
a party do not, and the consummation of the Offer, the Merger and the other
Transactions and compliance with the terms of each Transaction Agreement to
which it is a party will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, any provision
of (i) the charter or organizational documents of Parent or any of its
subsidiaries, (ii) any Contract to which Parent or any of its subsidiaries is a
party or by which any of their respective properties or assets is bound or (iii)
subject to the filings and other matters referred to in Section 4.04(b), any
Judgment or Law applicable to Parent or any of its subsidiaries or their
respective properties or assets, except in the case of clause (ii) and (iii)
where such conflicts, violations and defaults, individually and in the
aggregate, would not reasonably be expected to have a Parent Material Adverse
Effect.
(b) No Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to Parent or any of its subsidiaries in connection with the execution,
delivery and performance of any Transaction Agreement to which Parent or Sub is
a party or the consummation of the Transactions, other than (i) compliance with
and filings under the HSR Act, (ii) the filing of a joint
<PAGE>
36
notification pursuant to the Exon-Florio Act, (iii) the filing with the SEC of
(A) the Offer Documents and (B) such reports under Sections 13 and 16 of the
Exchange Act as may be required in connection with the Transaction Agreements,
the Offer, the Merger and the other Transactions, (iv) the filing of the
Articles of Merger with the Secretary of State of the State of Texas, (v)
compliance with and such filings as may be required under applicable
Environmental Laws, (vi) such filings as may be required in connection with the
Taxes described in Section 6.08, (vii) such of the foregoing as may be required
in connection with the financing required to consummate the Offer and the
Merger, and to pay related fees and expenses (the "FINANCING"), and (viii) such
other consents and filings (the "OTHER PARENT FILINGS", and together with the
Other Company Filings, the "OTHER FILINGS") the failure of which to obtain or
make, individually and in the aggregate, would not reasonably be expected to
have a Parent Material Adverse Effect or in any manner impede, frustrate,
prevent, delay or nullify the consummation of the Transactions.
SECTION 4.05. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by Parent or Sub for inclusion or incorporation by
reference in (i) the Offer Documents, the Schedule 14D-9, the Other Filings or
the Information Statement will, at the time such document is filed with the SEC
or other Governmental Entity, at any time it is amended or supplemented or at
the time it is first published, sent or given to the Company's shareholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Proxy Statement will, at the date it is first mailed
to the Company's shareholders or at the time of the Company Shareholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Sub with respect
to statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference therein. The
Offer Documents will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
SECTION 4.06. BROKERS. No broker, investment banker, financial
advisor or other person is entitled to
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37
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the Offer, the Merger and the other Transactions based upon
arrangements made by or on behalf of Parent.
SECTION 4.07. FINANCING. Parent and Sub will have available
all the funds necessary for the acquisition of all shares of Company Common
Stock pursuant to the Offer and the Merger, as and when needed, and to perform
their respective obligations under the Transaction Agreements.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY
THE COMPANY. Except for matters set forth in the Company Disclosure Letter or
otherwise expressly permitted by this Agreement or agreed to in writing by
Parent, from the date of this Agreement to the Effective Time, the Company
shall, and shall cause each Company Subsidiary to, conduct its business
diligently and in the usual, regular and ordinary course of business and in
substantially the same manner as previously conducted and use all reasonable
efforts to preserve intact its current business organization, keep available the
services of its current officers and employees and keep its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time. The Company and each Company
Subsidiary shall maintain its assets and all parts thereof in as good working
order and condition as at present, ordinary wear and tear excepted, consistent
with past practices, and shall maintain in full force and effect current
insurance policies or other comparable insurance coverage with respect to the
assets and potential liabilities thereof. In addition, and without limiting the
generality of the foregoing, except for matters set forth in the Company
Disclosure Letter or otherwise expressly permitted by this Agreement or agreed
to in writing by Parent, from the date of this Agreement to the Effective Time,
the Company shall not, and shall not permit any Company Subsidiary to, make any
material change in personnel, operations or finance, or do any of the following
without the prior written consent of Parent:
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38
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distri butions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (C) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities other than
pursuant to the provisions of Section 6.04 hereof including any payment
of cash pursuant thereto;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber
or subject to any Lien (A) any shares of its capital stock, (B) any
Voting Company Debt or other voting securities, (C) any securities
convertible into or exchangeable for, or any options, warrants or
rights to acquire, any such shares, Voting Company Debt, voting
securities or convertible or exchangeable securities or (D) any
"phantom" stock, "phantom" stock rights, stock appreciation rights or
stock-based performance units, other than the issuance of Company
Common Stock upon the exercise of Company Stock Options outstanding on
the date of this Agreement and in accordance with their present terms.
(iii) amend the Company Charter, the Company By-laws or other
comparable charter or organizational documents other than pursuant to
Section 1.07 hereof;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing the assets of, or by any other
manner, any equity interest in or business or any corporation,
partnership, company, limited liability company, joint venture,
association or other business organization or division thereof or (B)
any assets that, individually, are in excess of $100,000 or, in the
aggregate, are in excess of $300,000, except purchases of inventory in
the ordinary course of business consistent with past practice;
(v) (A) grant to any officer or director of the Company or any
Company Subsidiary any increase in
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39
compensation, except in the ordinary course of business consistent with
past practice or to the extent required under employment agreements
filed as exhibits to the Filed Company SEC Documents, (B) grant to any
employee, officer or director of the Company or any Company Subsidiary
any increase in severance or termination pay, except to the extent
required under any agreement filed as an exhibit to the Filed Company
SEC Documents, (C) establish, adopt, enter into or amend any Company
Benefit Agreement, (D) establish, adopt, enter into or amend in any
material respect any collective bargaining agreement or Company Benefit
Plan or (E) take any action to accelerate any rights or benefits, or
make any material determinations not in the ordinary course of business
consistent with past practice, under any collective bargaining
agreement or Company Benefit Plan or Company Benefit Agreement, other
than pursuant to the provisions of Section 6.04 hereof including any
payment of cash pursuant thereto;
(vi) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except insofar as
may have been required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose of
or subject to any Lien any properties or assets that are material,
individually or in the aggregate, to the Company and the Company
Subsidiaries, taken as a whole, except (A) sales of inventory and
excess or obsolete assets in the ordinary course of business consistent
with past practice and (B) the sale of Vertex Satcom Systems, Inc. on
terms, and pursuant to a definitive agreement, approved in writing by
Parent (the "SATCOM SALE");
(viii) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any Company Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the
ordinary
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40
course of business consistent with past practice, or (B) make any
loans, advances or capital contributions to, or investments in, any
other person, other than to or in the Company or any direct or indirect
wholly owned subsidiary of the Company;
(ix) make or agree to make any new capital expendi ture or
expenditures that, individually, is in excess of $100,000 or, in the
aggregate, are in excess of $300,000 in any calendar quarter;
(x) make or change any material Tax election or settle or
compromise any material Tax liability or refund;
(xi) (A) pay, discharge, settle or satisfy any claims,
liabilities, obligations or litigation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge, settlement or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated
by, the 1999 Company Financial Statements or incurred since the date of
such financial statements in the ordinary course of business consistent
with past practice, (B) cancel any indebtedness that is material,
individually or in the aggregate, to the Company and the Company
Subsidiaries taken as a whole, or waive any claims or rights of
substantial value or (C) waive the benefits of, or agree to modify in
any manner, any confidentiality, standstill or similar agreement to
which the Company or any Company Subsidiary is a party;
(xii) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing a liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization other than for the liquidation of any Company Subsidiary
into the Company;
(xiii) make or renew, extend, amend, modify, or waive any
material provisions of any Contract or commitment or relinquish or
waive any material Contract rights or agree to the termination of any
material Contract, except in the ordinary course of business consistent
with prior practice;
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41
(xiv) institute, settle, or agree to settle any action or
proceeding pending before any court or other Governmental Entity; or
(xv) authorize, or commit or agree to take, any of the
foregoing actions.
(b) OTHER ACTIONS. The Company and Parent shall not, and shall
not permit any of their respective subsidiaries to, take any action that would,
or that could reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in any Transaction
Agreement to which it is a party that is qualified as to materiality becoming
untrue, (ii) any of such representations and warranties that is not so qualified
becoming untrue in any material respect or (iii) except as otherwise permitted
by Section 5.02, any Tender Offer Condition, or any condition to the Merger set
forth in Article VII, not being satisfied.
(c) ADVICE OF CHANGES. The Company shall promptly advise
Parent orally and in writing of any change or event that has had or would
reasonably be expected to have a Company Material Adverse Effect other than any
change or event in (i) the economy or the securities markets in general or (ii)
the Company's industry in general, and not specifically relating to the Company
or the Company Subsidiaries.
SECTION 5.02. NO SOLICITATION. (a) The Company shall, and
shall cause its Representatives (as defined below) to, cease immediately all
current discussions and negotiations regarding any proposal that constitutes, or
may reasonably be expected to lead to, a Company Takeover Proposal (as defined
in Section 5.02(e)). The Company shall not, nor shall it authorize or permit any
Company Subsidiary to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, financial advisor, attorney, accountant
or other advisor or representative (collectively, "REPRESENTATIVES") of, the
Company or any Company Subsidiary to, (i) directly or indirectly solicit,
initiate or encourage the submission of any Company Takeover Proposal, (ii)
enter into any agreement with respect to any Company Takeover Proposal or (iii)
directly or indirectly participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Company Takeover
Proposal; PROVIDED,
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42
HOWEVER, that prior to the earlier to occur of acceptance for payment of shares
of Company Common Stock pursuant to the Offer and approval of this Agreement by
the shareholders of the Company, the Company may, to the extent that a failure
to do so would violate the fiduciary obligations of the Company Board under
applicable Law, as determined in good faith by a majority of the Disinterested
Directors based on the advice of outside counsel, in response to a Superior
Company Proposal (as defined in Section 5.02(e)) that was not solicited by the
Company or its Representatives and that did not otherwise result from a breach
or a deemed breach of this Section 5.02(a), and subject to compliance with
Section 5.02(c), (x) furnish information with respect to the Company to the
person making such Superior Company Proposal pursuant to a confidentiality
agreement not less restrictive of the other party than the Confidentiality
Agreement (as defined in Section 6.02) and (y) participate in discussions or
negotiations regarding such Superior Company Proposal. "DISINTERESTED DIRECTOR"
means, with respect to any Company Takeover Proposal, any member of the Company
Board that is not an affiliate or Representative of the person making such
Company Takeover Proposal. Without limiting the foregoing, any violation of the
restrictions set forth in the preceding sentence by any Representative or
affiliate of the Company or any Company Subsidiary, whether or not such person
is purporting to act on behalf of the Company or any Company Subsidiary or
otherwise, shall be deemed to be a breach of this Section 5.02(a) by the
Company.
(b) Neither the Company, nor the Company Board nor any
committee thereof shall (i) withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Parent or Sub, the approval or recommendation
by the Company Board or any such committee of the Transaction Agreements, the
Offer or the Merger, (ii) approve or cause the Company or any Company Subsidiary
to enter into any letter of intent, agreement in principle, acquisition
agreement or similar agreement (each, an "ACQUISITION AGREEMENT") relating to
any Company Takeover Proposal or (iii) approve or recommend, or propose publicly
to approve or recommend, any Company Takeover Proposal. Notwithstanding the
foregoing, if, prior to the earlier to occur of acceptance for payment of shares
of Company Common Stock pursuant to the Offer and approval of this Agreement by
the shareholders of the Company, the Company Board receives a Superior Company
Proposal which was not solicited by the Company and which did not otherwise
result from a breach of Section 5.02(a), and the Company Board determines in
good faith,
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43
based on the advice of outside counsel, that the failure to do so
would violate its fiduciary obligations under applicable Law, the Company Board
may withdraw or modify its approval or recommendation of the Transaction
Agreements, the Offer or the Merger; PROVIDED that such determination shall be
made at a time that is after the third business day following the receipt by
Parent of written notice advising Parent that the Company Board is prepared to
accept a Superior Company Proposal, specifying the material terms and conditions
of such Superior Company Proposal and identifying the person making such
Superior Company Proposal.
(c) The Company promptly shall advise Parent orally and in
writing of any Company Takeover Proposal or any inquiry with respect to, or that
could reasonably be expected to lead to, any Company Takeover Proposal
(including any change to the terms of any such Company Takeover Proposal or
inquiry) and the identity of the person making any such Company Takeover
Proposal or inquiry. The Company shall (i) keep Parent fully informed of the
status of any such Company Takeover Proposal or inquiry (including any change to
the terms of any such Company Takeover Proposal or inquiry) and (ii) provide to
Parent copies of all correspondence and other written material sent or provided
by any third party to the Company, or by the Company to any third party, in
connection with any Company Takeover Proposal, as soon as practicable after
receipt or delivery thereof.
(d) Nothing contained in Section 5.02(a) or 5.02(b) shall
prohibit the Company from (x) taking and disclosing to its shareholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or (y)
making any disclosure to the Company's shareholders if, in the good faith
judgment of the Company Board, based on the advice of outside counsel, failure
so to disclose would constitute a violation of applicable Law; PROVIDED,
HOWEVER, that neither the Company, nor the Company Board nor any committee
thereof shall withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to the Transaction Agreements, the Offer or the Merger
(unless it is permitted to do so under Section 5.02(b)) or approve or recommend,
or propose publicly to approve or recommend, a Company Takeover Proposal.
(e) For purposes of this Agreement:
"COMPANY TAKEOVER PROPOSAL" means any inquiry, proposal or
offer for (i) a merger, consolidation, dissolution, recapitalization,
liquidation or other
<PAGE>
44
business combination involving the Company or any Company Subsidiary,
(ii) the acquisition by any person in any manner, directly or
indirectly, of a number of shares of any class of equity securities of
the Company or any Company Subsidiary equal to or greater than 20% of
the number of such shares outstanding before such acquisition or (iii)
the acquisition by any person in any manner, directly or indirectly, of
assets that constitute 20% or more of the net revenues, net income or
assets of the Company or any Company Subsidiary, in each case other
than the Transactions or the Satcom Sale (the transactions referred to
in clauses (i), (ii) and (iii) being referred to herein as "COMPANY
TAKEOVER TRANSACTIONS").
"SUPERIOR COMPANY PROPOSAL" means any bona fide proposal made
by a third party to acquire substantially all the equity securities or
assets of the Company, pursuant to a tender or exchange offer, merger,
consolidation, liquidation or dissolution, recapitalization, sale of
all or substantially all its assets or otherwise, (i) on terms which
the Company Board determines in its good faith judgment to be superior
from a financial point of view to the holders of Company Common Stock
than the Transactions (based on the written opinion, with only
customary qualifications, of the Company's independent financial
advisor, which has been provided to Parent), taking into account all
the terms and conditions of such proposal, the Transaction Agreements
and any proposal by Parent to amend the terms of the Transactions, (ii)
for which financing, to the extent required, is then committed or
which, in the good faith judgment of the Company Board, is reasonably
capable of being obtained by such third party and (iii) for which, in
the good faith judgment of the Company Board, no regulatory approvals
are required, including antitrust approvals, that could not reasonably
be expected to be obtained.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. PREPARATION OF PROXY STATEMENT; SHAREHOLDERS'
MEETING. (a) If the approval of this Agreement by the Company's shareholders is
required by Law, the Company shall, as soon as practicable following the
acceptance for payment and purchase of the shares of
<PAGE>
45
Company Common Stock by Sub pursuant to the Offer, prepare and file with the SEC
the Proxy Statement in preliminary form, and each of the Company and Parent
shall use its reasonable efforts to respond as promptly as practicable to any
comments of the SEC with respect thereto. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and shall supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement. If at any time prior to receipt of the Company Shareholder Approval
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its shareholders such an amendment or supplement. No filing of, or amendment
to, the Proxy Statement will be made by the Company without providing Parent the
opportunity to review and comment thereon. The Company shall not mail any Proxy
Statement, or any amendment or supplement thereto, to which Parent reasonably
objects. The Company shall use its reasonable efforts to cause the Proxy
Statement to be mailed to the Company's shareholders as promptly as practicable
after filing with the SEC.
(b) If the approval of this Agreement by the Company's
shareholders is required by Law, the Company shall, as soon as practicable
following the acceptance for payment and purchase of the shares of Company
Common Stock by Sub pursuant to the Offer, duly call, give notice of, convene
and hold a meeting of its shareholders (the "COMPANY SHAREHOLDERS' MEETING") for
the purpose of seeking the Company Shareholder Approval. The Company shall,
through the Company Board, recommend to its shareholders that they vote in favor
of the approval of this Agreement and the Company Board shall not condition its
submission to the shareholders of this Agreement on any basis; PROVIDED,
HOWEVER, that the Company Board may withdraw such recommendation if it is
permitted to do so under Section 5.02(b). Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 6.01(b) shall not be affected by the commencement,
public proposal, public disclosure or communication to the Company of any
Company Takeover Proposal. Notwithstanding the foregoing, if Sub or any other
subsidiary of Parent shall acquire at least 90% of the outstanding shares of
Company Common Stock, the parties
<PAGE>
46
shall, at the request of Parent, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the expiration
of the Offer without a shareholders' meeting in accordance with Article 5.16 of
the TBCA.
(c) Parent shall cause all shares of Company Common Stock
purchased pursuant to the Offer and all other shares of Company Common Stock
owned by Sub or any other subsidiary of Parent to be voted in favor of the
approval of this Agreement.
SECTION 6.02. ACCESS TO INFORMATION; CONFIDENTIALITY. From the
date hereof until the earlier of the Effective Time or the termination of this
Agreement, upon reasonable notice the Company shall, and shall cause each
Company Subsidiary to, afford to Parent, and to Parent's officers, employees,
accountants, counsel, financial advisors and other representatives, reasonable
access during reasonable business hours to (i) all their respective properties,
books, contracts, commitments, personnel and records and other information and
business documents, (ii) customers of the Company or any Company Subsidiary as
may reasonably be designated by Parent and (iii) the premises of the Company and
the Company Subsidiaries for the purpose of inspecting the assets and facilities
of any such entity and the condition thereof, provided that access to the
premises shall be permitted only with the prior consent of the Company (which
consent shall not be unreasonably withheld). During the period prior to the
Effective Time, the Company shall, and shall cause each Company Subsidiary to,
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws and (b) consistent with its
legal obligations, all other information concerning its business, properties and
personnel as Parent may reasonably request. Without limiting the generality of
the foregoing, the Company shall, within two business days of request therefor,
provide to Parent the information described in Rule 14a-7(a)(2)(ii) under the
Exchange Act and any information to which a shareholder of the Company would be
entitled under Article 2.44 of the TBCA (assuming such holder met the
requirements of such section). During the period prior to the Effective Time,
Parent will have the reasonable cooperation of the Company in confirming the
nature of the relationships between the Company or any Company Subsidiary and
their respective customers and suppliers, including whether or not such
relationships are satisfactory and whether or not such relationships
<PAGE>
47
are expected to continue after the Merger. The Company shall have the right to
have a representative present at all times of any such inspections, interviews
and communications conducted by Parent or its representatives. Neither any
investigation conducted by Parent or its representatives pursuant to this
Section 6.02 nor the results thereof shall affect any representation or warranty
of the Company contained in this Agreement or the ability of Parent to rely
thereon. All information exchanged pursuant to this Section 6.02 shall be
subject to the confidentiality agreement dated September 28, 1999, between the
Company and Parent (the "CONFIDENTIALITY AGREEMENT").
SECTION 6.03. REASONABLE EFFORTS; NOTIFICATION. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties shall use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer, the
Merger and the other Transactions, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging the Transaction Agreements or the consummation of the Transactions,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (iv) the execution
and delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of the Transaction Agreements;
PROVIDED, HOWEVER, that Parent shall not be required to consent to any action
described in paragraph (a) of Exhibit A to this Agreement. In connection with
and without limiting the foregoing, the Company and the Company Board shall (i)
take all action necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to any Transaction or the
Transaction Agreements, (ii) if any state takeover statute or similar statute or
<PAGE>
48
regulation becomes applicable to the Transaction Agreements, take all action
necessary to ensure that the Offer, the Merger and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by the
Transaction Agreements and otherwise to minimize the effect of such statute or
regulation on the Offer, the Merger and the other Transactions and (iii)
cooperate with Parent and Sub in the arrangements for obtaining the Financing.
Nothing in this Agreement shall be deemed to require Parent to waive any
substantial rights or agree to any substantial limitation on its operations or
to dispose of any asset or collection of assets of the Company, Parent or any of
their respective subsidiaries or affiliates. Notwithstanding the foregoing, the
Company shall not be prohibited under this Section 6.03(a) from taking any
action permitted by Section 5.02.
(b) The Company shall give prompt notice to Parent, and Parent
or Sub shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in any Transaction Agreement that is qualified as
to materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under any Transaction Agreement; PROVIDED,
HOWEVER, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under the Transaction Agreements.
SECTION 6.04. STOCK OPTIONS. (a) As soon as practicable
following the date of this Agreement, the Company Board (or, if appropriate, any
committee administering the Company Stock Plans) shall adopt such resolutions or
take such other actions as are required to adjust the terms of all outstanding
Company Stock Options and all outstanding Company SARs to provide that (i) each
outstanding Company Stock Option may be exercised, whether or not such Company
Stock Option is vested, immediately prior to the acceptance for payment of
shares of Company Common Stock pursuant to
<PAGE>
49
the Offer, contingent on and subject to the consummation of the Offer, PROVIDED
that the shares of Company Common Stock issued upon such exercise are tendered
into the Offer and not withdrawn and (ii) each Company Stock Option and Company
SAR outstanding that is not exercised prior to the acceptance for payment of
shares of Company Common Stock pursuant to the Offer shall be canceled effective
immediately prior to the acceptance for payment of shares of Company Common
Stock pursuant to the Offer with the holder thereof becoming entitled to receive
an amount of cash equal to the product of (x) the excess, if any, of (A) the Per
Share Merger Consideration over (B) the exercise price per share of Company
Common Stock subject to such Company Stock Option or Company SAR, multiplied by
(y) the number of shares of Company Common Stock issuable pursuant to the
unexercised portion of such Company Stock Option or Company SAR; PROVIDED,
HOWEVER, that no cash payment shall be made with respect to any Company SAR that
is related to a Company Stock Option in respect of which such a cash payment is
made. All amounts payable pursuant to this Section 6.04 shall be subject to any
required withholding of Taxes or proof of eligibility of exemption therefrom and
shall be paid at or as soon as practicable following the Effective Time, but in
any event within one business day following the Effective Time, without
interest.
(b) The Company shall use its best efforts to obtain all
consents of the holders of the Company Stock Options, if such consents are
determined to be necessary to effectuate the foregoing as mutually agreed by
Parent and the Company. The cancelation of a Company Stock Option in exchange
for the cash payment described in this Section 6.04 shall be deemed a release of
any and all rights the holder of such Company Stock Option had or may have had
in respect thereof, and any necessary consents from all such holders shall so
provide. Notwithstanding anything to the contrary contained in this Agreement,
payment shall, at Parent's request, be withheld in respect of any Company Stock
Option until all necessary consents are obtained.
(c) As soon as practicable following the date of this
Agreement, the Company Board (or, if appropriate, any committee administering
the Company Stock Plans) shall take or cause to be taken such actions as are
required to cause (x) the Company Stock Plans to terminate as of the Effective
Time and (y) the provisions in any other Company Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company to be deleted as of the Effective
Time. The Company shall ensure that following the Effective Time no holder of a
Company Stock Option or Company SAR or any participant in any Company Stock Plan
or other Company Benefit Plan shall have any right thereunder to
<PAGE>
50
acquire any capital stock of the Company or the Surviving Corporation.
(d) The Company shall take or cause to be taken all actions
required to cause the TIW Systems, Inc. Stock Bonus Plan to be amended as of
immediately prior to the Effective Time to provide that, in the event the
Company Common Stock ceases to be readily tradable (within the meaning of
Q/A-2(d)(1)(iv)(A) of Treas. Reg. Section 1.411(d)-4), distributions of benefits
under such plan shall be in the form of cash; PROVIDED that the foregoing shall
not apply in the event that prior to the Effective Time (i) such plan has
received a favorable determination letter from the Internal Revenue Service in
respect of the termination of the plan, (ii) such plan has been terminated and
(iii) all benefits payable under such plan have been paid in full to each plan
participant and beneficiary entitled to receive benefits in respect of the
termination of such plan.
(e) In this Agreement:
"COMPANY STOCK OPTION" means any option to
purchase Company Common Stock granted under any Company
Stock Plan.
"COMPANY SAR" means any stock appreciation right linked to the
price of Company Common Stock and granted under any Company Stock Plan.
"COMPANY STOCK PLANS" means the Company's 1995 Stock
Compensation Plan, the Company's Stock Option Plan for Key Employees,
the Company's Non-Employee Directors Stock Option Plan and the
Company's Outside Directors Stock Option Plan, in each case as amended
from time to time.
SECTION 6.05. INDEMNIFICATION. (a) For six years after the
Effective Time, the Surviving Corporation (or any successor to the Surviving
Corporation) shall honor all the Company's obligations to indemnify, defend and
hold harmless the present and former officers and directors] of the Company and
the Company Subsidiaries and the other individual identified as an indemnified
party in the Company Disclosure Letter (each an "INDEMNIFIED PARTY") against
losses, claims, damages, liabilities, costs, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement PROVIDED that any such
settlement is effected with the written consent of Parent or the
<PAGE>
51
Surviving Corporation, which consent shall not unreasonably be withheld)
arising out of actions or omissions occurring at or prior to the Effective Time
("LOSSES") to the extent such obligations of the Company exist under the TBCA,
the terms of the Company Charter or the Company By-laws, in each case as in
effect on the date of this Agreement, or under any Indemnification Agreement
between the Company or any Company Subsidiary, as applicable, and the
Indemnified Party that has been filed as an exhibit to the Filed Company SEC
Documents or that has been previously delivered to Parent and is listed in the
Company Disclosure Letter; PROVIDED that in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims.
(b) (i) Promptly after the receipt by any Indemnified Party of
notice of any claim, the Indemnified Party will give the Surviving Corporation
written notice of such claim or the commencement of such action or proceeding
and shall permit the Surviving Corporation to assume the defense of any such
claim or any proceeding or litigation resulting from such claim, unless the
action or proceeding seeks an injunction or other similar relief against the
Indemnified Party or there is a conflict of interest (requiring separate
representation under applicable principles of professional responsibility)
between the Indemnified Party and the Surviving Corporation in the conduct of
the defense of such action. Failure by the Surviving Corporation to notify the
Indemnified Party of the Surviving Corporation's election to defend any such
proceeding or action within a reasonable time, but in no event more than 10 days
after written notice thereof shall have been given to the Surviving Corporation,
shall be deemed a waiver by the Surviving Corporation of its right to defend
such action. Failure by the Indemnified Party to notify the Surviving
Corporation of any claim for indemnification shall not relieve the Surviving
Corporation of any liability that the Surviving Corporation may have to the
Indemnified Party, except to the extent the Surviving Corporation demonstrates
that the defense of such claim or action has been prejudiced thereby.
(ii) If the Surviving Corporation assumes the defense of any
such claim or litigation resulting therefrom with counsel reasonably acceptable
to the Indemnified Party, the obligations of the Surviving Corporation as to
such claim shall be limited to the defense or settlement of such claim or
litigation
<PAGE>
52
resulting therefrom and to holding the Indemnified Party harmless against any
Losses to the extent required by this Section 6.05. The Indemnified Party may
participate, at the Indemnified Party's expense, in the defense of such claim or
litigation PROVIDED that the Surviving Corporation shall direct and control the
defense of such claim or litigation. The Indemnified Party shall cooperate and
make available all books and records reasonably necessary and useful in
connection with the defense. The Surviving Corporation shall not, in the defense
of such claim or any litigation resulting therefrom, consent to entry of any
judgment or enter into any settlement, unless the Indemnified Party shall be
fully released and discharged, except with the written consent of the
Indemnified Party.
(iii) If the Surviving Corporation shall not assume the
defense of any such claim or litigation resulting therefrom, the Indemnified
Party may defend against such claim or litigation in such manner as the
Indemnified Party may deem appropriate and reasonably satisfactory to the
Surviving Corporation. The Surviving Corporation shall promptly reimburse the
Indemnified Party for the amount of all reasonable expenses, legal or otherwise,
incurred by the Indemnified Party in connection with the defense against or
settlement of such claim or litigation; PROVIDED, HOWEVER, that the Surviving
Corporation shall be required to reimburse such amounts only after receiving an
undertaking from the Indemnified Party to repay such amounts if it is determined
that the Indemnified Party is not entitled to indemnification therefor. The
Surviving Corporation shall not be liable for any Losses resulting from any
settlement or compromise of, or offer to settle or compromise, any claim or
litigation or other action without the prior written consent of the Surviving
Corporation, which consent shall not be unreasonably withheld.
(c) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision will be made so that the successors and assigns of the Surviving
Corporation shall expressly assume the obligations set forth in this Section
6.05.
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53
(d) The provisions of this Section 6.05 are (i) intended to be
for the benefit of, and to be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives and (ii) in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 6.06. FEES AND EXPENSES. (a) Except as provided below,
all fees and expenses incurred in connection with the Merger and the other
Transactions shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated.
(b) In the event that (1) (A) a Company Takeover Proposal
shall have been made known to the Company or shall have been made directly to
its shareholders or any person shall have announced an intention (whether or not
conditional) to make a Company Takeover Proposal, (B) thereafter this Agreement
is terminated pursuant to Section 8.01(b)(ii), 8.01(b)(iii) or 8.01(c) and (C)
within 12 months after such termination a Company Takeover Transaction is
consummated or the Company (or one or more Company Subsidiaries representing in
the aggregate 20% or more of the net revenues, net income or the assets of the
Company and the Company Subsidiaries, taken as a whole) enters into an
Acquisition Agreement with respect to, approves or recommends a Company Takeover
Transaction or (2) this Agreement is terminated by the Company pursuant to
Section 8.01(e) or by Parent or Sub pursuant to Section 8.01(d), then the
Company shall promptly, but in no event later than, in the case of clause (1),
the date of the earliest to occur of such consummation, approval or
recommendation of a Company Takeover Transaction or the entering into of such
Acquisition Agreement, or in the case of clause (2), the date of such
termination, pay to Parent a fee equal to $3,840,000 (three million eight
hundred forty thousand dollars) (the "TERMINATION FEE"), payable by wire
transfer of same day funds.
(c) If the Company is required to pay to Parent a fee pursuant
to Section 6.06(b), the Company shall reimburse Parent and Sub for all their
out-of-pocket expenses actually incurred in connection with the Transaction
Agreements, the Offer, the Merger and the other Transactions in an amount not to
exceed $640,000 (six hundred forty thousand dollars). Such reimbursement shall
be paid upon demand following termination of this Agreement.
<PAGE>
54
(d) The Company acknowledges that the agreements contained in
this Section 6.06 are an integral part of the Transactions, and that, without
these agreements, Parent and Sub would not enter into the Transaction
Agreements. Accordingly, if the Company fails promptly to make a payment due
pursuant to this Section 6.06, and, in order to obtain such payment, Parent or
Sub commences a suit which results in a judgment against the Company, the
Company shall pay to Parent and Sub their reasonable costs and expenses
(including attorneys' fees and expenses) in connection with such suit, together
with interest on the amount set forth in this Section 6.06 at the prime rate of
First Union National Bank in effect on the date such payment was required to be
made. The Company acknowledges and agrees that the payment of any amounts due
pursuant to this Section 6.06 shall not constitute the exclusive remedy of
Parent and Sub under the Transaction Agreements. Without limiting the generality
of the foregoing, in the event of a breach or deemed breach by the Company of
Section 5.02, Parent and Sub shall be entitled to the remedies set forth in
Section 9.10, including an injunction, and all other remedies available at law
or in equity to which Parent and Sub are entitled.
SECTION 6.07. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one
hand, and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger
and the other Transactions and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. Within three business days
after the Announcement Date, the Company shall issue a press release, in the
form previously delivered to Parent, reporting its results for the fiscal year
ended September 30, 1999, and, as promptly as practicable but in no event later
than three business days after the Announcement Date, the Company shall file
such press release with the SEC as an exhibit to a Current Report on Form 8-K.
SECTION 6.08. TRANSFER TAXES. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("TRANSFER TAXES") incurred
in connection with the Transactions shall be paid by either Sub or the Surviving
Corporation,
<PAGE>
55
and the Company shall cooperate with Sub and Parent in preparing, executing and
filing any Tax Returns with respect to such Transfer Taxes, including supplying
in a timely manner a complete list of all real property interests held by the
Company and any information with respect to such property that is reasonably
necessary to complete such Tax Returns.
SECTION 6.09. DIRECTORS. Promptly upon the acceptance for
payment of, and payment by Sub for, any shares of Company Common Stock pursuant
to the Offer, Sub shall be entitled to designate such number of directors on the
Company Board as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Company Board equal to at least that number
of directors, rounded up to the next whole number, which is the product of (a)
the total number of directors on the Company Board (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) the percentage
that (i) such number of shares of Company Common Stock so accepted for payment
and paid for by Sub plus the number of shares of Company Common Stock otherwise
owned by Sub or any other subsidiary of Parent bears to (ii) the number of such
shares outstanding, and the Company shall, at such time, cause Sub's designees
to be so elected; PROVIDED that in the event that Sub's designees are appointed
or elected to the Company Board, until the Effective Time the Company Board
shall have at least two directors who are Directors on the date of this
Agreement and who are not officers of the Company (the "INDEPENDENT DIRECTORS");
and PROVIDED FURTHER that in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining Independent
Director shall be entitled to designate a person to fill such vacancy who shall
be deemed to be an Independent Director for purposes of this Agreement or, if no
Independent Directors then remain, the other directors shall designate two
persons to fill such vacancies who are not current or former officers,
shareholders or affiliates of the Company, Parent or Sub, and such persons shall
be deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable Law, the Company shall take all action requested by Parent necessary
to effect any such election, including mailing to its shareholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company shall
make such mailing with the mailing of the Schedule 14D-9 (PROVIDED that Sub
shall have provided to the Company on a timely basis all information required to
be included in the
<PAGE>
56
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company shall promptly, at the option of Sub, either increase the
size of the Company Board or obtain the resignation of such number of its
current directors as is necessary to enable Sub's designees to be elected or
appointed to the Company Board as provided above. Notwithstanding anything in
this Agreement to the contrary, in the event Sub's designees are elected to the
Company Board, after such election and prior to the Effective Time, (i) the
affirmative vote of a majority of the Independent Directors shall be required in
addition to any required approval by the full Company Board to (A) amend or
terminate this Agreement on behalf of the Company, (B) waive any of the
Company's rights, benefits or remedies under this Agreement or (C) extend the
time for performance of Sub's obligations hereunder and (ii) the Independent
Directors shall have the power, acting together, to exercise any right of the
Company under this Agreement that the Company otherwise fails to exercise to the
extent that the failure to exercise such right would materially adversely affect
the holders of shares of Company Common Stock other than Parent, Sub and their
respective subsidiaries and affiliates.
SECTION 6.10. SHAREHOLDER LITIGATION. The Company shall give
Parent the opportunity to participate in the defense or settlement of any
shareholder litigation against the Company and its directors relating to any
Transaction and the Company shall not agree to any such settlement without
Parent's consent.
SECTION 6.11. COMPLIANCE OF SUB. Parent shall cause Sub to
comply with all of Sub's obligations under the Transaction Agreements. Parent
hereby guarantees the performance of Sub's obligations under the Transaction
Agreements.
ARTICLE VII
Conditions Precedent
SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligation of each party to effect the Merger is
subject
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57
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
<PAGE>
58
(a) SHAREHOLDER APPROVAL. If required by
Law, the Company shall have obtained the Company
Shareholder Approval.
(b) ANTITRUST. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired, and the period of time for any
applicable review process by the Committee on Foreign Investment in the
United States ("CFIUS") under the Exon-Florio Act shall have expired
and CFIUS shall not have taken any action or made any recommendation to
the President of the United States to block or prevent the consummation
of the Offer or the Merger. Any consents, approvals and filings under
any foreign antitrust Law, the absence of which would prohibit the
consummation of the Merger, shall have been obtained or made.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger shall be in
effect; PROVIDED, HOWEVER, that prior to asserting this condition,
subject to Section 6.03, the party asserting such condition shall have
used all reasonable efforts to prevent the entry of any such injunction
or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(d) PURCHASE OF COMMON STOCK. Sub shall have
previously accepted for payment and paid for all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer; provided that this
condition shall be deemed satisfied with respect to the obligation of Parent and
Sub to effect the Merger if Sub fails to accept for payment or pay for shares of
Company Common Stock pursuant to the Offer in violation of this Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after receipt of Company
Shareholder Approval PROVIDED that if shares of Company Common Stock
<PAGE>
59
are accepted for payment pursuant to the Offer, neither Parent nor Sub may
terminate this Agreement or abandon the Merger except pursuant to clause (a),
(b)(i) or (b)(iii) below:
(a) by mutual written consent of Parent, Sub
and the Company;
(b) by either Parent or the Company:
(i) if any court of competent jurisdiction
or other Governmental Entity issues an order, decree or ruling
or takes any other action permanently enjoining, restraining
or otherwise prohibiting the Merger, and such order, decree,
ruling or other action shall have become final and
nonappealable;
(ii) if (A) as a result of the failure of
any of the Tender Offer Conditions, (1) Sub shall have failed
to commence the Offer within 20 days following the date of
this Agreement or (2) the Offer shall have terminated or
expired in accordance with its terms without Sub having
purchased any shares of Company Common Stock pursuant to the
Offer or (B) Sub shall not have accepted for payment any
shares of Company Common Stock pursuant to the Offer prior to
March 11, 2000; PROVIDED, HOWEVER, that the right to terminate
this Agreement pursuant to this clause (ii) shall not be
available (x) to the Company as a result of the occurrence of
any event set forth in paragraph (d) of Exhibit A to this
Agreement or (y) to any party whose failure to fulfill any of
its obligations under the Transaction Agreements results in
the failure of any Tender Offer Condition or if the failure of
such condition results from facts or circumstances that
constitute a breach of any representation or warranty of such
party contained in any Transaction Agreement; or
(iii) if, upon a vote at a duly held meeting
to obtain the Company Shareholder Approval, the Company
Shareholder Approval is not obtained; PROVIDED, HOWEVER, that
this Agreement may not be terminated by Parent pursuant to
this clause (iii) if Parent or Sub is in breach of Section
6.01(c);
<PAGE>
60
(c) by Parent, if the Company breaches or fails to
perform in any material respect any of its representations, warranties
or covenants contained in any Transaction Agreement, which breach or
failure to perform (i) would give rise to the failure of a Tender Offer
Condition and (ii) cannot be or has not been cured within 30 days after
the giving of written notice to the Company of such breach;
(d) by Parent or Sub if either Parent or Sub is
entitled to terminate the Offer as a result of the occurrence of any
event set forth in paragraph (d) of Exhibit A to this Agreement; or
(e) by the Company if the Company Board withdraws or
modifies its approval or recommendation of the Transaction Agreements,
the Offer or the Merger in accordance with Section 5.02(b); PROVIDED
that, in order for the termination of this Agreement pursuant to this
paragraph (e) to be deemed effective, the Company shall have complied
with all the provisions of Section 5.02, including the notice
provisions therein, and with all applicable requirements, including
payment of the Termination Fee, of Section 6.06.
SECTION 8.02. EFFECT OF TERMINATION. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 8.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Sub or the Company or
their respective officers or directors, other than Section 3.19, Section 4.06,
the last two sentences of Section 6.02, Section 6.06, this Section 8.02 and
Article IX, which provisions shall survive such termination, and except to the
extent that such termination results from the material breach by a party of any
representation, warranty or covenant set forth in any Transaction Agreement.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the
parties at any time before or after receipt of the Company Shareholder Approval;
PROVIDED, HOWEVER, that after receipt of the Company Shareholder Approval, there
shall be made no amendment that by Law requires further approval by the
shareholders of the Company without the further approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
<PAGE>
61
SECTION 8.04. EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.03 and except as otherwise specifically provided in this
Agreement, waive compliance with any of the agreements or conditions contained
in this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
SECTION 8.05. PROCEDURE FOR TERMINATION, AMEND MENT, EXTENSION
OR WAIVER. Except as otherwise provided in Section 6.09 hereof, termination of
this Agreement pursuant to Section 8.01, an amendment of this Agreement pursuant
to Section 8.03 or an extension or waiver pursuant to Section 8.04 shall, in
order to be effective, require in the case of Parent, Sub or the Company, action
by its Board of Directors or the duly authorized designee of its Board of
Directors.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time. Without
limiting the generality of the foregoing, the covenants and agreements set forth
in Section 2.01(d) (Dissent Rights), Section 2.02 (Exchange of Certificates) and
Section 6.05 (Indemnification) shall survive the Effective Time to the extent
specified therein).
SECTION 9.02. NOTICES. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses
<PAGE>
62
(or at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
TriPoint Global Communications Inc.
565 Fifth Avenue
New York, New York 10017
Attention: Jack Haegele
Telephone: (212) 850-8500
Facsimile: (212) 850-8503
with a copy to:
TriPoint Global Communications Inc.
565 Fifth Avenue
New York, New York 10017
Attention: Stephen Green, Esq.
Telephone: (212) 850-8500
Facsimile: (212) 850-8503
and to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention: Faiza J. Saeed, Esq.
Telephone: (212) 474-1454
Facsimile: (212) 765-0995
(b) if to the Company, to:
Vertex Communications Corporation
2600 N. Longview Street
Kilgore, Texas 75662
Attention: J. Rex Vardeman
Telephone: (903) 984-0555
Facsimile: (903) 984-2090
with a copy to:
Thompson & Knight L.L.P.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Attention: William F. Pyne, Esq.
Telephone: (214) 969-1771
Facsimile: (214) 969-1751
<PAGE>
63
SECTION 9.03. DEFINITIONS. For purposes of this
Agreement:
An "AFFILIATE" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
"IN THE ORDINARY COURSE OF BUSINESS", with respect to any
action, means such action is:
(a) consistent with the past practices of such person and is
taken in the ordinary course of the normal day-to-day operations of
such person;
(b) not required to be authorized by the Board of Directors of
such person; and
(c) similar in nature and magnitude to actions customarily
taken, without any authorization by the Board of Directors, in the
ordinary course of the normal day-to-day operations of other persons
that are in the same line of business as such person.
A "PERSON" means any individual, firm, corporation,
partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity or other entity.
A "SUBSIDIARY" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least 50% of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
SECTION 9.04. INTERPRETATION; DISCLOSURE LETTERS. When a
reference is made in this Agreement to a Section, such reference shall be to a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "INCLUDE", "INCLUDES" or "INCLUDING" are used in this Agreement, they
shall be deemed to be followed by the words "WITHOUT LIMITATION". Any matter
disclosed in any section of the Company Disclosure Letter shall be deemed
disclosed only for the purposes of the specific Section of this Agreement to
which such section
<PAGE>
64
relates. If the same item is required to be disclosed in more than one section
of the Company Disclosure Letter, such item may be fully described in the
principal section to which such item relates and incorporated into another
section by a specific cross reference in such other section to the section in
which such item is fully described. Nothing in the Company Disclosure Letter
shall be deemed adequate to disclose an exception to a representation or
warranty made herein unless the Company Disclosure Letter identifies the
exception with reasonable particularity. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty concerns the
existence of the document or other item itself or the copy adequately describes
the matter at issue).
SECTION 9.05. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the Transactions are fulfilled to the extent possible.
SECTION 9.06. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 9.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement, taken together with the Company Disclosure Letter, (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
Transactions and (b) except for the provisions of Article II, and Section 6.05,
is not intended to confer upon any person other than the parties any rights or
remedies.
<PAGE>
65
SECTION 9.08. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof, except to the extent the laws of Texas are
mandatorily applicable to the Merger and to the rights of dissenting Company
shareholders, if any.
SECTION 9.09. ASSIGNMENT. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by opera tion of law or otherwise by any of the parties
without the prior written consent of the other parties, except that (i) Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or any assignee of Parent pursuant to
clause (ii) of this sentence, or to any direct or indirect wholly owned
subsidiary of Parent or such assignee, but no such assignment shall relieve Sub
of any of its obligations under this Agreement and (ii) Parent may assign, upon
notice to the Company prior to or immediately following such assignment, its
rights and obligations hereunder to any of its corporate affiliates, but no such
assignment shall relieve Parent of its obligations hereunder if its assignee
does not perform such obligations. Any purported assignment without such consent
shall be void. Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 9.10. ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of any Transaction Agreement in any New
York state court or any Federal court located in the State of New York, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any New York state court or any Federal court
located in the State of New York in the event any dispute arises out of this
Agreement or any Transaction, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for
<PAGE>
66
leave from any such court, (c) agrees that it will not bring any action relating
to this Agreement or any Transaction in any court other than any New York state
court or any Federal court sitting in the State of New York and (d) waives any
right to trial by jury with respect to any action related to or arising out of
any Transaction Agreement or any Transaction.
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have duly
executed this Agreement, all as of the date first written above.
TRIPOINT GLOBAL COMMUNICATIONS INC.,
by /s/ Jack Haegele
------------------------------
Name: Jack Haegele
Title: Chief Executive Officer
SIGNAL ACQUISITION CORPORATION,
by /s/ Jack Haegele
------------------------------
Name: Jack Haegele
Title: Chief Executive Officer
VERTEX COMMUNICATIONS CORPORATION,
by /s/ J. Rex Vardeman
------------------------------
Name: J. Rex Vardeman
Title: President and
Chief Executive Officer
<PAGE>
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after the termination or withdrawal of the Offer), to pay
for any shares of Company Common Stock tendered pursuant to the Offer unless (i)
there shall have been validly tendered and not withdrawn prior to the expiration
of the Offer that number of shares of Company Common Stock which would represent
at least a majority of the Fully Diluted Shares (the "MINIMUM TENDER
CONDITION"), (ii) any waiting period under the HSR Act applicable to the
purchase of shares of Company Common Stock pursuant to the Offer shall have
expired or been terminated and (iii) the period of time for any applicable
review process by CFIUS under the Exon-Florio Act shall have expired and CFIUS
shall not have taken any action or made any recommendation to the President of
the United States to block or prevent the consummation of the Offer or the
Merger. The term "FULLY DILUTED SHARES" means all outstanding securities
entitled generally to vote in the election of directors of the Company on a
fully diluted basis, after giving effect to the exercise or conversion of all
options, rights and securities exercisable or convertible into such voting
securities. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to commence the Offer, accept for payment
or, subject as aforesaid, to pay for any shares of Company Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, (x) with the consent of the Company or (y) without the consent of the
Company if, at any time on or after the date of this Agreement and before the
acceptance of such shares for payment or the payment therefor, any of the
following conditions exists:
(a) there shall be pending or threatened any suit,
action or proceeding by any Governmental Entity, or by any other person
that has a reasonable likelihood of success, (i) challenging the
acquisition by Parent or Sub of any Company Common Stock, seeking to
restrain or prohibit the making or consummation of the Offer or the
Merger or any other Transaction, or seeking to obtain from the Company,
Parent or Sub or any of their respective subsidiaries or affiliates any
damages that are
<PAGE>
2
material in relation to the Company and the Company Subsidiaries taken
as whole, (ii) seeking to prohibit or limit the ownership or operation
by the Company, Parent or any of their respective subsidiaries of any
material portion of the business or assets of the Company, Parent or
any of their respective subsidiaries or affiliates, or to compel the
Company, Parent or any of their respective subsidiaries or affiliates
to dispose of or hold separate any material portion of the business or
assets of the Company, Parent or any of their respective subsidiaries
or affiliates, as a result of the Offer, the Merger or any other
Transaction, (iii) seeking to impose limitations on the ability of
Parent or Sub to acquire or hold, or exercise full rights of ownership
of, any shares of Company Common Stock, including the right to vote the
Company Common Stock purchased by it on all matters properly presented
to the shareholders of the Company, or (iv) seeking to prohibit Parent
or any of its subsidiaries from effectively controlling in any material
respect the business or operations of the Company and the Company
Subsidiaries;
(b) any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction shall be enacted,
entered, enforced, promulgated, amended or issued with respect to, or
deemed applicable to, or any consent or approval withheld with respect
to, (i) Parent, the Company or any of their respective subsidiaries or
affiliates or (ii) the Offer, the Merger or any other Transaction, in
either such case by any Governmental Entity that is reasonably likely
to result, directly or indirectly, in any of the consequences referred
to in paragraph (a) above;
(c) since the date of execution of the Agreement,
there shall have been any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect, other than any
event, change, effect or development to the extent attributable to (i)
the economy or the securities markets in general, (ii) this Agreement
or the transactions contemplated hereby or the announcement thereof or
(iii) the Company's industry in general, and not specifically relating
to the Company or the Company Subsidiaries;
<PAGE>
3
(d)(i) it shall have been publicly disclosed or
Parent shall have otherwise learned that beneficial ownership
(determined for the purposes of this paragraph as set forth in Rule
13d-3 promulgated under the Exchange Act) of more than 35% of the
outstanding shares of the Company Common Stock has been acquired by
another person or (ii)(A) the Company or any of its directors or
officers shall have breached Section 5.02 of this Agreement (other than
an immaterial breach), (B) the Company Board shall have withdrawn or
modified its approval or recommendation of the Transaction Agreements,
the Offer or the Merger, (C) the Company or any of its directors or
officers shall have made any disclosure to the shareholders of the
Company permitted pursuant to Section 5.02(d) of this Agreement that
has the effect of (x) withdrawing, modifying or changing the approval
or recommendation of the Company Board or any committee thereof of the
Transaction Agreements, the Offer, the Merger or the other Transactions
in a manner adverse to Parent or Sub, (y) approving or recommending to
the shareholders of the Company a Company Takeover Proposal or (z)
approving or recommending that the shareholders of the Company tender
their shares of Company Common Stock into any tender offer or exchange
offer that is a Company Takeover Proposal or is related thereto, or (D)
the Company Board shall have failed to reaffirm publicly and
unconditionally its recommendation to the Company's shareholders that
they accept the Offer and give the Company Shareholder Approval by
midnight, New York City time, on the third business day following
Parent's written request to do so (which request may be made at any
time that a Company Takeover Proposal is pending), which public
reaffirmation must also include the unconditional rejection of such
Company Takeover Proposal;
(e) any representation or warranty of the Company in
any Transaction Agreement that is qualified as to materiality shall not
be true and correct or any such representation or warranty that is not
so qualified shall not be true and correct in any material respect, as
of the date of this Agreement and as of the scheduled or extended
expiration of the Offer, except to the extent such representation or
warranty expressly relates to an earlier date (in which case on and as
of such earlier date);
<PAGE>
4
(f) the Company shall have failed to perform in any
material respect any obligation or to comply in any material respect
with any agreement or covenant of the Company to be performed or
complied with by it under any Transaction Agreement; or
(g) this Agreement shall have been terminated in
accordance with its terms.
The foregoing conditions are for the sole benefit of Sub and
Parent and may be asserted by Sub or Parent regardless of the circumstances
giving rise to such condition or may be waived by Sub and Parent in whole or in
part at any time and from time to time in their sole discretion. The failure by
Parent, Sub or any other affiliate of Parent at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances, and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
<PAGE>
CONFORMED COPY
COMPANY SHAREHOLDER AGREEMENT dated
as of November 11, 1999, among TRIPOINT GLOBAL
COMMUNICATIONS INC., a Delaware corporation
("PARENT"), SIGNAL ACQUISITION CORPORATION, a Texas
corporation ("SUB"), and the individuals and other
parties listed in Schedule A hereto (each, a
"SHAREHOLDER" and, collectively, the "SHAREHOLDERS").
WHEREAS Parent, Sub, and Signal Acquisition Corporation, a
Texas corporation (the "COMPANY"), propose to enter into an Agreement and Plan
of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "MERGER AGREEMENT"; capitalized terms used but not defined
herein shall have the meanings set forth in the Merger Agreement);
WHEREAS each Shareholder is the record and beneficial owner
(as defined in Rule 13d-3 under the Securities and Exchange Act of 1934, as
amended (the "EXCHANGE ACT") of the number of shares of Company Common Stock set
forth opposite such Shareholder's name in Schedule A hereto (such shares of
Company Common Stock, together with any other shares of capital stock of the
Company acquired by such Shareholder after the date hereof and during the term
of this Agreement or that such Shareholder has or will have the right to acquire
during the term of this Agreement upon the exercise of Company Stock Options,
being collectively referred to herein as the "SUBJECT SHARES" of such
Shareholder); and
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has requested that each Shareholder enter into this
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER.
Each Shareholder hereby, severally and not jointly, represents and warrants to
Parent as of the date hereof in respect of himself, herself or itself as
follows:
(a) AUTHORITY; EXECUTION AND DELIVERY;
ENFORCEABILITY. The Shareholder has all requisite power and authority
to execute and deliver this
<PAGE>
2
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by the Shareholder of this Agreement and
consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Shareholder. The
Shareholder has duly executed and delivered this Agreement, and this
Agreement constitutes the legal, valid and binding obligation of the
Shareholder, enforceable against the Shareholder in accordance with its
terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws, now
or hereafter in effect, affecting creditor rights generally and (ii)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be
brought. The execution and delivery by the Shareholder of this
Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse
of time, or both) under, any provision of any Contract to which the
Shareholder is a party or by which any properties or assets of the
Shareholder are bound or, subject to the filings and other matters
referred to in the next sentence, any provision of any Judgment or Law
applicable to the Shareholder or the properties or assets of the
Shareholder. No Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or
with respect to the Shareholder in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, other than such reports under
Sections 13(d) and 16 of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated
hereby, compliance with and filings under the HSR Act, and the filing
of a joint notification pursuant to the Exon-Florio Act. The
Shareholder has complied with any applicable community property law and
no spousal signature or consent is required from any party other than
the signatories hereto with respect to the Shareholder in connection
with entering into this Agreement or performing the obligations of the
Shareholder hereunder. The Shareholder shall execute a power of
attorney in favor of at least two other Shareholders
<PAGE>
3
with respect to the matters covered by Sections 3(a) and 3(b) in the
event of incapacity of the Shareholder.
(b) THE SUBJECT SHARES. The Shareholder is the record
and beneficial owner of, or is the trustee of a trust that is the
record holder of, and whose beneficiaries are the beneficial owners of,
and has good and marketable title to, the Subject Shares set forth
opposite such Shareholder's name in Schedule A attached hereto, free
and clear of any Liens other than as set forth in Schedule A, which
Liens will be released upon payment for such Subject Shares pursuant to
the Offer or Section 4. The Shareholder does not own, of record or
beneficially, any shares of capital stock of the Company other than the
Subject Shares set forth opposite such Shareholder's name in Schedule A
attached hereto. The Shareholder has the sole right to vote such
Subject Shares, and none of such Subject Shares is subject to any
voting trust or other agreement, arrangement or restriction with
respect to the voting of such Subject Shares, except as contemplated by
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent
hereby represents and warrants to each Shareholder as follows: Parent has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery by Parent of this Agreement and consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of Parent. Parent has duly executed and delivered this Agreement, and this
Agreement constitutes the legal, valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws, now or hereafter in effect, affecting creditor
rights generally and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought.
The execution and delivery by Parent of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, any provision of (i)
the charter or organizational documents of Parent or
<PAGE>
4
any of its subsidiaries, (ii) any material Contract to which Parent or any of
its subsidiaries is a party or by which any of their respective properties or
assets is bound or (iii) subject to the filings and other matters referred to in
Section 4.04(b) of the Merger Agreement, any Judgment or Law applicable to
Parent or any of its subsidiaries or their respective properties or assets,
other than, in the case of clause (iii) above, any such items that, individually
and in the aggregate, have not had and would not reasonably be expected to have
a Parent Material Adverse Effect. No Consent of, or registration, declaration or
filing with, any Governmental Entity is required to be obtained or made by or
with respect to Parent in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, other than such reports under Sections 13(d) and 16 of the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, compliance with and filings under the HSR Act,
and the filing of a joint notification pursuant to the Exon-Florio Act.
SECTION 3. COVENANTS OF EACH SHAREHOLDER. Each Shareholder,
severally and not jointly, covenants and agrees as follows:
(a)(1) At any meeting of the shareholders of the Company
called to seek the Company Shareholder Approval or in any other
circumstances upon which a vote, consent or other approval (including
by written consent) with respect to the Merger Agreement, this
Agreement, the Offer, the Merger or any other Transaction is sought,
the Shareholder shall, including by executing a written consent
solicitation if requested by Parent, vote (or cause to be voted) the
Subject Shares of the Shareholder in favor of granting the Company
Shareholder Approval.
(2) IRREVOCABLE PROXY. Subject to the last sentence of this
paragraph, the Shareholder hereby irrevocably grants to, and appoints,
Parent, Stephen Green and Jack Haegele, or any of them, and any
individual designated in writing by any of them, and each of them
individually, as the Shareholder's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of
the Shareholder, to vote the Subject Shares of the Shareholder, or
grant a consent or approval in respect of the Subject Shares of the
Shareholder prior to the Termination Date (i) in favor of
<PAGE>
5
granting the Company Shareholder Approval or the approval of this
Agreement, the Offer, the Merger or any other Transaction and (ii)
against (A) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company, (B) any Company
Takeover Proposal and (C) any amendment of the Company Charter or the
Company By-laws or other proposal or transaction involving the Company
or any Company Subsidiary, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent, delay or
nullify any provision of the Merger Agreement or this Agreement, the
Offer, the Merger or any other Transaction or change in any manner the
voting rights of any class of Company capital stock. The Shareholder
understands and acknowledges that Parent is entering into the Merger
Agreement in reliance upon the Shareholder's execution and delivery of
this Agreement. The Shareholder hereby affirms that the irrevocable
proxy set forth in this Section 3(a) is given in connection with the
agreement of Parent to purchase the Subject Shares of the Shareholder,
and the agreement of the Shareholder to vote the Subject Shares of the
Shareholder, pursuant to this Agreement. The Shareholder hereby further
affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked, except as otherwise provided in this
Agreement. The Shareholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof.
Such irrevocable proxy is executed and intended to be irrevocable prior
to the Termination Date in accordance with the provisions of Article
2.29.C of the TBCA. The irrevocable proxy granted hereunder shall
automatically terminate upon the termination of this Agreement.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholder's vote, consent or other approval is sought, the
Shareholder shall vote (or cause to be voted) the Subject Shares of the
Shareholder in the manner specified in Section 3(a)(2). The Shareholder
shall not commit or agree to take any action inconsistent with the
foregoing.
<PAGE>
6
(c)(1) The Shareholder shall tender all the Subject Shares of
the Shareholder pursuant to the Offer. Such tender shall be made
promptly, and in any event no later than the third business day
following commencement of the Offer. The Shareholder shall not withdraw
any Subject Shares tendered pursuant to the Offer prior to the
Termination Date (as defined below). The obligation of the Shareholder
to tender and not withdraw Shares is conditioned only upon lawful
commencement of the Offer and otherwise is unconditioned.
(2) Prior to the termination of this Agreement, except as
otherwise provided herein, the Shareholder shall not (A) sell,
transfer, pledge, assign or otherwise dispose of (including by gift)
(collectively, "TRANSFER"), or enter into any Contract, option or other
arrangement (including any profit sharing arrangement) with respect to
the Transfer of, any Subject Shares to any person other than pursuant
to the Offer and the Merger or (B) enter into any voting arrangement,
whether by proxy, voting agreement or otherwise, with respect to any
Subject Shares and shall not commit or agree to take any of the
foregoing actions.
(d) The Shareholder shall not, nor shall it authorize or
permit any officer, director or employee of, or any investment banker,
attorney or other adviser or representative of, the Shareholder to, (i)
directly or indirectly solicit, initiate or encourage the submission of
any Company Takeover Proposal, (ii) enter into any agreement with
respect to any Company Takeover Proposal or (iii) directly or
indirectly participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Company
Takeover Proposal; PROVIDED, HOWEVER, that the Shareholder may furnish
information with respect to the Company to a person and participate in
discussions or negotiations with such person regarding a Superior
Company Proposal if at such time the Company is permitted to furnish
information and engage in discussions or negotiations with, and is
actually furnishing information to and engaging in discussions or
negotiations with, such person regarding such Superior Company Proposal
pursuant to Section 5.02(a) of the Merger Agreement. The
<PAGE>
7
Shareholder promptly shall advise Parent orally and in writing of any
Company Takeover Proposal or inquiry made to the Shareholder with
respect to or that could reasonably be expected to lead to any Company
Takeover Proposal (including any change to the terms of any such
Company Takeover Proposal or inquiry), the identity of the person
making any such Company Takeover Proposal or inquiry, and the material
terms of any such Company Takeover Proposal or inquiry.
(e) The Shareholder shall use all reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Offer, the Merger and the
other Transactions, provided that in doing so the Shareholder shall not
be required to relinquish any right or benefit that the Shareholder may
have under any written employment agreement with the Company or any
Company Subsidiary that has been filed as an exhibit to the Filed
Company SEC Documents. The Shareholder shall not issue any press
release or make any other public statement with respect to any
Transaction Agreement, the Merger or any other Transaction without the
prior consent of Parent, except as may be required by applicable Law.
SECTION 4. OPTION. (a) Each Shareholder hereby severally
grants to Parent an irrevocable option (the "OPTION") to purchase any of or all
the Subject Shares of such Shareholder that have not been validly tendered prior
to the expiration of the Offer, or that have been withdrawn prior to the
expiration of the Offer, at a purchase price per share equal to the Offer Price
in cash. The Option shall become exercisable, in whole or in part, only when the
Offer has expired and Sub has accepted shares of Company Common Stock for
purchase pursuant to the Offer. If the Option becomes exercisable, the Option
may be exercised by giving the notice referred to in Section 4(b) any time
during the period commencing with the acceptance by Sub of shares of Company
Common Stock for purchase pursuant to the Offer and ending 30 days thereafter
(the "OPTION PERIOD"); PROVIDED, HOWEVER, that if, on the expiration of the
Option Period, (i) any waiting period under the HSR Act applicable to the
purchase of shares of Company Common Stock pursuant to the Option shall not have
expired or been terminated, (ii) the period of time for any
<PAGE>
8
applicable review process by CFIUS under the Exon-Florio Act shall not have
expired or (iii) there shall be in effect any preliminary or permanent
injunction or other order issued by any Governmental Entity prohibiting the
exercise of the Option pursuant to this Agreement, then the Option Period shall
be extended until five business days after the later of the date of expiration
or termination of any applicable waiting period under the HSR Act, the
expiration of the period of time for any applicable review process under the
Exon-Florio Act, and the date of removal or lifting of any such injunction or
order.
(b) If Parent wishes to exercise the Option, it may do so by
giving written notice (the date of such notice being herein called the "NOTICE
DATE") to each Shareholder specifying that the Subject Shares are to be
purchased and specifying the place, time and date (which shall not be earlier
than one trading day, nor later than 10 trading days, from the Notice Date) for
the closing of the Purchase by Parent pursuant to such exercise.
SECTION 5. TERMINATION. Notwithstanding any other provision
contained herein, this Agreement and all rights and obligations of the parties
hereunder shall terminate upon the Termination Date, other than with respect to
the liability of any party for breach hereof prior to such termination. As used
herein, the term "TERMINATION DATE" shall mean the earlier to occur of (i) the
Effective Time and (ii) the termination of the Merger Agreement in accordance
with its terms.
SECTION 6. ADDITIONAL MATTERS. (a) Each Shareholder shall,
from time to time, execute and deliver, or cause to be executed and delivered,
such additional or further consents, documents and other instruments as Parent
may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement.
(b) No person executing this Agreement who is or becomes
during the term hereof a director or officer of the Company makes any agreement
or understanding herein in his or her capacity as a director or officer of the
Company. Each Shareholder signs solely in such Shareholder's capacity as the
record holder and beneficial owner of, or the trustee of a trust whose
beneficiaries are the beneficial owners of, such Shareholder's Subject Shares
and nothing herein shall limit or affect any actions taken by any Shareholder in
his capacity as an officer, director or affiliate of the
<PAGE>
9
Company to the extent specifically permitted by the Merger Agreement.
SECTION 7. GENERAL PROVISIONS. (a) AMENDMENTS. This
Agreement may not be amended except by an instrument in writing signed by each
of the parties hereto.
(b) NOTICE. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to Parent in accordance with
Section 9.02 of the Merger Agreement and to the Shareholders at their respective
addresses set forth in Schedule A hereto (or at such other address for a party
as shall be specified by like notice).
(c) INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "INCLUDE", "INCLUDES" and "INCLUDING" are
used in this Agreement, they shall be deemed to be followed by the words
"WITHOUT LIMITATION".
(d) SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement.
This Agreement shall become effective between Parent and any Shareholder when a
counterpart has been signed by Parent and delivered to such Shareholder and a
counterpart has been executed by such Shareholder and delivered to Parent. Each
party need not sign the same counterpart.
<PAGE>
10
(f) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(g) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof, except to the extent the laws of Texas are mandatorily applicable
to Section 3.
(h) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise, by Parent without the prior written
consent of each Shareholder or by any Shareholder without the prior written
consent of Parent, and any purported assignment without such consent shall be
void; PROVIDED, HOWEVER, that Parent may assign, upon notice to the Company
prior to or immediately following such assignment, its rights and obligations
hereunder to any of its corporate affiliates, but no such assignment shall
relieve Parent of its obligations hereunder if its assignee does not perform
such obligations. Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
(i) ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any New York state court or any
Federal court located in the State of New York, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (i) consents to submit itself to the personal jurisdiction
of any New York state court or any Federal court located in the State of New
York in the event any dispute arises out of this Agreement or any Transaction,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agrees that it will not
<PAGE>
11
bring any action relating to this Agreement or any Transaction in any court
other than a New York state court or any Federal court sitting in the State of
New York and (iv) waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any Transaction.
<PAGE>
IN WITNESS WHEREOF, each party has duly executed this
Agreement, all as of the date first written above.
TRIPOINT GLOBAL COMMUNICATIONS INC.,
by /s/ Jack Haegele
------------------------------
Name: Jack Haegele
Title: Chief Executive Officer
SIGNAL ACQUISITION CORPORATION,
by /s/ Jack Haegele
------------------------------
Name: Jack Haegele
Title: Chief Executive Officer
/s/ William L. Anton
-----------------------------------
WILLIAM L. ANTON
/s/ A. Don Branum
-----------------------------------
A. DON BRANUM
/s/ James D. Carter
-----------------------------------
JAMES D. CARTER
/s/ John G. Farmer
-----------------------------------
JOHN G. FARMER
/s/ Donald E. Heitzman, Sr.
-----------------------------------
DONALD E. HEITZMAN, SR.
/s/ Rein Luik
-----------------------------------
REIN LUIK
/s/ J. Rex Vardeman
-----------------------------------
J. REX VARDEMAN
<PAGE>
13
/s/ Bill R. Womble
-----------------------------------
BILL R. WOMBLE
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMPANY
NUMBER OF SHARES OF COMPANY COMMON STOCK SUBJECT TO
NAME AND ADDRESS OF SHAREHOLDER COMMON STOCK OWNED COMPANY STOCK OPTIONS* HELD
- ------------------------------- ------------------ ---------------------------
<S> <C> <C>
William L. Anton 90,930** 21,400
2600 Longview Street
Kilgore, Texas 75662
A. Don Branum 47,000** 65,000
2600 Longview Street
Kilgore, Texas 75662
James D. Carter 66,833** 60,000
2600 Longview Street
Kilgore, Texas 75662
John G. Farmer 0 13,000
300 Crescent Court, 5th Floor
Dallas, Texas 75201
Donald E. Heitzman, Sr. 5,000 19,000
1309 Cartwright Drive
Cedar Hill, Texas 75104
Rein Luik 69,630 0
10439 Lone Oak Lane
Los Altos Hills, California 94024
J. Rex Vardeman 152,570 65,000
2600 Longview Street
Kilgore, Texas 75662
Bill R. Womble 15,550** 15,000
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Total 447,513 258,400
======= =======
</TABLE>
- -----------------------
*No representations or warranties regarding the Shareholders' record ownership
of and/or title to the Company Stock Options held are made hereby.
**Includes 87,930 shares, 32,000 shares, 11,000 shares and 6,000 shares held by
brokers in margin accounts for the benefit of Messrs. Anton, Branum, Carter and
Womble, respectively.
<PAGE>
CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT ("Agreement") is made and entered into on
this the 28th day of September, 1999, by and between TRIPOINT GLOBAL
COMMUNICATIONS INC., a Delaware corporation ("Recipient"), and VERTEX
COMMUNICATIONS CORPORATION, a Texas corporation ("Vertex").
WITNESSETH:
WHEREAS, Recipient and Vertex desire to enter into negotiations relating
to a possible business combination or acquisition (a "Transaction") involving
Recipient and Vertex;
WHEREAS, in connection with Recipient's evaluation of the Transaction,
Recipient requires access to certain information of Vertex concerning the
business and affairs of Vertex that is either nonpublic, confidential or
proprietary in nature;
WHEREAS, Vertex is willing to provide limited access to the Evaluation
Material (as hereinafter defined) to Recipient and Recipient's authorized
agents, subject to the restrictions hereinafter set forth pertaining to the
protection and preservation of the Evaluation Material, in order to enable
Recipient to determine whether Recipient desires to pursue further negotiations
with Vertex; and
WHEREAS, the parties desire to set forth the terms and conditions upon
which the Evaluation Material is to be disclosed to Recipient and the rights and
obligations of the parties with respect to such Evaluation Material;
NOW, THEREFORE, for and in consideration of the above stated premises, the
mutual covenants set forth herein, and other good and valuable consideration,
the recipient and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1. Evaluation Material. As used herein, the term "Evaluation Material"
means all information that Vertex has furnished or is furnishing to Recipient
in connection with a Transaction, whether furnished before or after the date
of this Agreement, whether tangible or intangible, and whether verbally, in
writing, on computer disk or otherwise, including the customer list,
documents identifying past, present and future customers, the financial books
and records of Vertex and related financial statements and tax returns of
Vertex, and documents or other information pertaining to the assets,
liabilities and business operations of Vertex and its subsidiaries, as well
as all information generated by Recipient or by Recipient's Representatives
(as defined below) that contains, reflects, or is derived from the foregoing
furnished information, including all analyses, compilations, data, studies,
notes, interpretations, memoranda or other
- 1 -
<PAGE>
documents prepared by Recipient or Recipient's Representatives. Notwithstanding
the preceding, the term "Evaluation Material" shall not be construed to include,
and the confidentiality and use provisions of this Agreement shall not apply to:
(a) information that is or becomes generally available to the public other than
as a result of disclosure by Recipient or any of Recipient's Representatives,
(b) information known to Recipient prior to the time of disclosure by Vertex;
and (c) information that is obtained by Recipient from any other source than
Vertex or its affiliates, but only if such disclosure of information to
Recipient does not, to Recipient's knowledge, violate any contractual or legal
obligation to Vertex on the part of such source or does not, to Recipient's
knowledge, breach a confidential relationship of such source to Vertex.
2. Confidentiality of Evaluation Material. The Evaluation Material is
disclosed and delivered to Recipient in the strictest confidence and Recipient
agrees to receive and hold the Evaluation Material in the strictest confidence
and in accordance with the provisions and intentions of this Agreement. This
Agreement shall apply to all of the Evaluation Material disclosed to Recipient
by Vertex or its agents, without regard to whether such disclosure is by means
of written documents or otherwise. Recipient acknowledges that the Evaluation
Material is proprietary to Vertex and that Recipient has no rights or interest
in the Evaluation Material and shall not use any part of the Evaluation Material
for Recipient's own benefit except as specifically set forth in this Agreement.
3. Terms of Disclosure. Initially, the Evaluation Material shall be
disclosed by Vertex to Recipient for the sole purpose of evaluating the
feasibility of Recipient negotiating and executing an agreement with Vertex or
its shareholders to acquire, directly or indirectly, the assets or outstanding
shares of capital stock of Vertex or otherwise enter into a Transaction with
Vertex. Subject to the terms of this Agreement, Recipient may distribute or
otherwise disclose the Evaluation Material to a reasonable number of persons,
including Recipient's directors, officers, employees, lenders, prospective
lenders, attorneys, financial advisors, accountants and other experts
(collectively, "Recipient's Representatives"), on a need to know basis required
to enable Recipient to evaluate the Evaluation Material and the business of
Vertex in order to permit Recipient to determine whether and on what terms
Recipient desires to enter into a Transaction with Vertex (the "Permitted Use"),
provided such individuals are informed by Recipient of the confidential nature
of the Evaluation Material. Notwithstanding the preceding, Recipient
acknowledges and agrees that the sales or production personnel of Recipient
shall not be permitted access to the Evaluation Material without the prior
written consent of Vertex. In addition, Recipient agrees that it will not use
any part of the Evaluation Material for the purposes of marketing or product
development.
4. Restriction of Further Disclosure. Recipient shall notify Vertex in
advance in writing of any individual other than Recipient's Representatives to
whom Recipient desires to disclose any part of the Evaluation Material. If
Vertex notifies Recipient that Vertex objects to
- 2 -
<PAGE>
the dissemination of the Evaluation Material to such other individual, Recipient
shall not disseminate any part of the Evaluation Material to such other
individual. Neither party shall, without the prior written consent of the other
party, subject only to the exceptions expressly set forth in this Agreement: (a)
disclose to any third party the fact that Vertex has provided any of the
Evaluation Material to Recipient; (b) disclose to any third party that any
investigations, discussions or negotiations are taking place concerning a
Transaction involving Vertex and Recipient; or (c) disclose any of the terms,
conditions, status or other facts with respect to any such Transaction.
Notwithstanding anything to the contrary contained herein, each party may issue
any press release or make any public statement without approval of the other
party as may be required by law, provided the party issuing the press release or
making such statement shall give prior notice thereof to the other party and
consult with the other party as to the contents thereof. Recipient shall not,
without the prior written consent of Vertex, subject only to the exceptions
expressly set forth in this Agreement, (a) disclose to any third party any or
all of the Evaluation Material; (b) permit any third party to have access to the
Evaluation Material; or (c) use the Evaluation Material for any purpose other
than the Permitted Use.
5. Protection of Information. Recipient shall use commercially reasonable
efforts, including efforts commensurate with those used by Recipient for the
protection of its own confidential and proprietary information, to protect the
Evaluation Material disclosed to Recipient and Recipient's agents pursuant to
this Agreement; provided, however, Recipient shall have no obligation or
authority to initiate litigation or incur costs or other expenses on behalf of,
or for the benefit of, Vertex. Recipient shall be responsible to Vertex for all
authorized and unauthorized disclosures of the Evaluation Material by Recipient
or Recipient's Representatives or agents. Such responsibility of Recipient shall
be in addition to and not by way of limitation of any right or remedy Vertex
may have against Recipient's Representatives with respect to any such breach.
6. Compelled Disclosure. Recipient agrees that in the event that it or any
of Recipient's Representatives are requested or required (by law, deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process) to disclose any of the Evaluation Material, Recipient will
provide Vertex with prompt prior written notice of such request or requirement
so that Vertex may seek a protective order or other appropriate remedy and/or
consent in writing to such disclosure. In the event that such protective order
or other remedy is not obtained and Vertex has not consented in writing to such
disclosure, and Recipient or Recipient's Representatives are nonetheless,
advised in writing by Recipient's outside legal counsel, that they are legally
required to disclose the Evaluation Material, Recipient and Recipient's
Representatives may furnish only that portion of the Evaluation Material that
Recipient and Recipient's Representatives are advised in writing by outside
legal counsel is legally required; provided that Recipient will exercise
commercially reasonable efforts to assist Vertex in obtaining an order or
reasonable assurance that the confidential treatment will be
-3-
<PAGE>
accorded such Evaluation Material.
7. Return of Evaluation Material. In the event that Vertex requests in
writing the return of the Evaluation Material, Recipient shall deliver to the
President of Vertex all of the Evaluation Material theretofore disclosed to
Recipient in the form of documents and tangible items, and all copies,
summaries, records, and descriptions thereof and all other written information
which constitutes Evaluation Material, including all such written information in
the possession of Recipient's Representatives and agents. Notwithstanding the
preceding, that portion of the Evaluation Material that was generated by
Recipient or Recipient's Representatives may be destroyed by Recipient or
Recipient's Representatives (rather than being returned to Vertex); provided,
however, that Recipient shall promptly deliver to Vertex a certificate signed by
the President of Recipient certifying that such Evaluation Material has been
destroyed. Notwithstanding the return or destruction of the Evaluation Material
in accordance with this Section, Recipient and Recipient's Representations shall
continue to be bound by the other provisions of this Agreement.
8. No Representation as to Completeness. Each of Vertex and Recipient
acknowledges that neither Vertex nor any of its representatives makes any
express or implied representation or warranty as to the accuracy or completeness
of the Evaluation Material and that each of Vertex and its representatives
expressly disclaims any and all liability that may be based on the Evaluation
Material, errors therein, or omissions therefrom. Recipient acknowledges (i)
that Recipient is not entitled to rely on the accuracy or completeness of the
Evaluation Material, (ii) that neither Vertex nor any of its representatives
shall have any liability whatsoever to Recipient or any other entity based on
the Evaluation Material, and (iii) that Recipient instead shall be entitled to
rely solely on the representations and warranties, if any, made to Recipient in
any definitive agreement regarding the Transaction (a "Definitive Agreement").
The term "Definitive Agreement" does not include an executed letter of intent or
any other preliminary written agreement that the parties thereto state is not
intended to be legally binding, except in accordance with the terms of any such
letter of intent or other preliminary written agreement. In addition, a
Definitive Agreement does not include any written or oral acceptance of any
offer or bid submitted by Recipient or Vertex.
9. No Obligation. Each of Vertex and Recipient understands and agrees that
no contract or agreement providing for a Transaction shall be deemed to exist
until a Definitive Agreement has been executed and delivered, and each of Vertex
and Recipient hereby waives, in advance, any claims (including breach of
contract) in connection with a Transaction unless and until Recipient and Vertex
shall have entered into a Definitive Agreement. Each of Vertex and Recipient
also agrees that unless and until a Definitive Agreement between Recipient and
Vertex with respect to a Transaction has been executed and delivered, neither
Vertex nor Recipient nor any of their respective shareholders or affiliates have
any legal obligation of any kind whatsoever with respect to such Transaction by
virtue of this Agreement or any other written or oral
-4-
<PAGE>
expression with respect to such Transaction except, in the case of this
Agreement, for the matters specifically agreed to herein. Recipient understands
that (i) Vertex and its financial advisors shall be free to conduct any process
for any Transaction as they in their sole discretion shall determine (including
negotiating with any of the prospective parties to such Transaction and entering
into a Definitive Agreement without prior notice to Recipient or any other
person) and (ii) any procedures relating so such Transaction may be changed at
any time without notice to Recipient or any other person.
10. Right to Terminate Negotiations. Each of Vertex and Recipient reserves
the right, in such party's sole discretion, to reject any and all proposals made
regarding a Transaction and to terminate negotiations and discussions with the
other party at any time.
11. Securities Laws. Recipient acknowledges that (i) Recipient is aware
that, under certain circumstances, the United States securities laws prohibit a
person who has material, nonpublic information about a company from purchasing
or selling securities of that company, or from communicating that information to
any other person under circumstances in which it is reasonably foreseeable that
such person is likely to purchase or sell those securities and (ii) Recipient is
familiar with the Securities Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations promulgated thereunder, and agrees that Recipient will
neither use, nor cause any third party to use, any Evaluation Material in
contravention of the Exchange Act or any such rules and regulations, including
Rules 10b-5 and 14e-3.
12. Standstill. Recipient agrees that, prior to one year after the date
hereof, Recipient will not (and will ensure that its affiliates that control,
are controlled by or are under common control with it (as defined in the rules
under the Exchange Act) and any person acting on behalf of or in concert with
Recipient or any controlled affiliate will not), alone or with others, directly
or indirectly, take any of the following actions unless Recipient is first
invited in writing by the Board of Directors of Vertex to make such action:
a. Purchase or otherwise acquire (or enter into any agreement or
make any proposal to purchase or otherwise acquire) record or beneficial
ownership of any securities (which, for purposes of this Agreement,
includes, without limitation, indebtedness) of Vertex, any warrant or
option to purchase such securities, any security convertible into or
exchangeable for any such securities or any other right to acquire such
securities;
b. Propose to Vertex or its security holders, or make any
announcement with respect to, any Transaction between Recipient, any of
its affiliates or Recipient and any other person, on the one hand, and
Vertex or any of its security holders, on the other hand, or involving
Vertex or any of its securities or security holders;
- 5 -
<PAGE>
c. Effect or seek, offer or propose (whether publicly or otherwise)
to effect or participate in (i) any acquisition of the assets of Vertex or
any of its subsidiaries, (ii) any tender or exchange offer, merger or
other business combination involving Vertex or any of its subsidiaries, or
(iii) any recapitalization, restructuring, liquidation, dissolution or
other extraordinary transaction with respect to Vertex or any of its
subsidiaries;
d. Seek to control or influence Vertex, its management, Board of
Directors (including without limitation by affecting the composition of
the Board of Directors) or policies through the solicitation of proxies,
consents, or otherwise or make or in any participate in any solicitation
of proxies to vote, or seek to advise or influence any person with respect
to the voting of securities of Vertex;
e. Seek to advise or influence any person with respect to the voting
of securities of Vertex;
f. Assist, advise, encourage, or provide any information or
financing to any other persons seeking to acquire, directly or indirectly,
control of Vertex, its management, Board of Directors, policies,
securities, business or assets;
g. Make any request to waive, amend or terminate any provision of
this Agreement or to permit Recipient to take any action prohibited
herein; or
h. Take any initiative with respect to Vertex or its subsidiaries
which could require Vertex to make a public announcement regarding any
such prohibited initiative or action referred to in this Section.
Notwithstanding the foregoing, (i) if any third party that is not an
affiliate of Recipient publicly makes (x) a tender or exchange offer or other
bona fide offer (including an offer for a privately negotiated transaction) to
acquire directly or indirectly securities of Vertex under circumstances such
that, immediately after such acquisition, such third party would beneficially
own more than 15% of any class of such securities, or (y) a proposal or offer
for a merger, consolidation or other business combination directly or indirectly
involving Vertex or a proposal or offer to acquire directly or indirectly all or
substantially all of the assets of Vertex (any proposal or offer referred to in
clauses (x) or (y) being herein called a "Business Combination Proposal"), which
Business Combination Proposal is either (A) not withdrawn or terminated within
five days after such Business Combination Proposal is made or (B) accepted by
the Board of Directors of Vertex, the restrictions set forth in this Section
shall not be deemed to preclude Recipient from making a Business Combination
Proposal; provided that the restrictions set forth in this Section shall again
be applicable in accordance with their terms upon the withdrawal or termination
of the original Business Combination Proposal or the rejection thereof by the
Board of Directors of Vertex, except to the extent Recipient has previously
publicly announced a
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Business Combination Proposal as permitted by this sentence.
13. Remedies. Recipient acknowledges and agrees that, in the event of any
breach of this Agreement, Vertex would be irreparably and immediately harmed and
could not be made whole by monetary damages. Accordingly, Recipient agrees that,
in addition to any other remedy to which Vertex may be entitled at law or in
equity, Vertex shall be entitled to an injunction or injunctions (without the
posting of any bond or security and without proof of actual damages) to prevent
breaches of this Agreement and/or to compel specific performance of the
Agreement, and that neither Recipient nor Recipient's Representatives will
oppose the granting of such relief.
14. Fees and Expenses. Except as otherwise provided herein or as may
otherwise be agreed upon by the parties in writing, the parties shall each pay
all of their own fees and expenses incident to the negotiation, preparation,
execution and performance of this Agreement and the transactions contemplated
hereby, including without limitation the fees and expenses of their respective
counsel, accountants, and other experts and representatives, whether or not the
transactions contemplated by this Agreement are consummated.
15. Legal Fees and Costs. In the event any party must incur legal expenses
to enforce any provision of this Agreement, the prevailing party will be
entitled to recover such legal expenses, including without limitation,
attorneys' fees, costs and necessary disbursements, in addition to any other
relief to which such party shall be entitled.
16. Vertex Representatives. All contacts by Recipient or Recipient's
Representatives with Vertex, regarding the Evaluation Material or a Transaction
shall be made through either J. Rex Vardeman, the President and Chief Executive
Officer of Vertex, or James D. Carter, the Vice President and Chief Financial
Officer of Vertex, or such other person as Recipient is notified in writing to
contact.
17. Amendment. This Agreement may not be modified, altered, amended or
terminated except by the written agreement of all of the parties.
18. Integrated Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous representations, understandings and
agreements, oral or written, made between the parties or their affiliates
concerning the subject matter hereof, and all such prior or contemporaneous
representations, understandings and agreements are hereby terminated.
19. Waiver. No failure or delay by Vertex or Recipient in exercising any
right, power, or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power, or privilege
preclude any other or further exercise thereof.
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20. Invalid Provision. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. If
any of the provisions of this Agreement shall be deemed to be unenforceable by
reason of its extent, duration, scope or otherwise, then the parties contemplate
that the court making such determination shall enforce the remaining provisions
of this Agreement, shall reduce such extent, duration, scope or other provision
and shall enforce them in their reduced form for all purposes contemplated by
this Agreement.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to its rules
governing conflicts of law.
22. Counterpart Execution. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
23. Termination. This Agreement shall terminate on the third anniversary
of the date hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first above written.
TRIPOINT GLOBAL COMMUNICATIONS, INC. VERTEX COMMUNICATIONS CORPORATION
/s/ J. E. Haegele /s/ J. Rex Vardeman
By: By:
JACK HAEGELE J. REX VARDEMAN
Chief Executive Officer President and Chief Executive Officer
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