SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
July 31, 1995
(Date of earliest event reported)
TRANSCISCO INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9051 94-2989345
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
601 California Street, Suite 1301
San Francisco, California
(Address of principal executive offices)
94108
(zip code)
(415) 477-9700
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
On July 31, 1995, Transcisco Industries, Inc.
(the "Company") and its wholly owned subsidiaries,
Transcisco Rail Services, Transcisco Leasing Company and
Transcisco Trading Company (the "Subsidiaries"), entered
into a Loan and Security Agreement (the "Loan Agreement")
with Transamerica Business Credit Corporation
("Transamerica") pursuant to which Transamerica agreed to
provide a senior secured working capital facility and
term loan to the Company and the Subsidiaries in the
maximum principal amount of $10,000,000 to enable the
Company and the Subsidiaries to refinance certain
outstanding obligations to other lenders, to pay (on a
discounted basis) the remaining claims in Class F under
the Company's Joint Plan of Reorganization, to provide
working capital and for other purposes. The Loan
Agreement is incorporated herein as Exhibit 10.1.
On August 1, 1995, the Company and the
Subsidiaries entered into a Note and Warrant Purchase
Agreement (the "Purchase Agreement") with Furman Selz
SBIC, L.P. and James Dowling (collectively, the
"Purchasers") pursuant to which the Company agreed to
issue to the Purchasers the Series A Senior Subordinated
Notes, the Series B Senior Subordinated Notes and the
Warrants (the terms of each of which are set forth in the
Purchase Agreement and exhibits thereto, all of which are
incorporated herein as Exhibit 10.2) in
consideration of the payment by the Purchasers of the sum
of $3,000,000. The proceeds from the sale of the Notes
and the Warrants are to be used, together with other
funds of the Company and the Subsidiaries, to repay
certain obligations of the Company and the Subsidiaries.
On August 31, 1995, the Board of Directors of
the Company adopted a shareholder rights plan which
provides for the issuance of preferred stock purchase
rights to the Company's common stockholders of record as
of September 20, 1995, as set forth in the Rights
Agreement between the Company and First Interstate Bank
of California, as Rights Agent, incorporated herein by
reference as Exhibit 4.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
4.1 Rights Agreement, dated as of September 5,
1995, between the Company and First
Interstate Bank of California, as Rights
Agent, which includes as Exhibit B thereto
the Form of Rights Certificate, incorporated
herein by reference to Exhibit 1 to the
Company's Registration Statement on Form 8-
A, dated September 15, 1995.
10.1 Loan and Security Agreement, dated as of
July 31, 1995, among the Company and its
wholly owned subsidiaries, Transcisco Rail
Services, Transcisco Leasing Company and
Transcisco Trading Company, as borrowers, and
Transamerica Business Credit Corporation, as
lender.
10.2 Note and Warrant Purchase Agreement, dated
as of August 1, 1995, among the Company,
Transcisco Rail Services Company, Transcisco
Leasing Company and Transcisco Trading
Company and Furman Selz SBIC, L.P. and James
Dowling, which includes as Exhibit B-1
thereto the Form of Series A Senior
Subordinated Note, as Exhibit B-2 thereto
the Form of Series B Senior Subordinated
Note, as Exhibit C thereto the Form of
Warrant and as Exhibit D thereto the Form of
Registration Rights Agreement.
20.1 Press Release of the Company, dated
September 7, 1995.
20.2 Letter to the Company's stockholders, dated
September 29, 1995, describing the rights
under the Rights Agreement.
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
TRANSCISCO INDUSTRIES, INC.
By: /s/ Gregory S. Saunders
Name: Gregory S. Saunders
Title: Vice President and
Controller
Date: October 5, 1995
EXHIBIT INDEX
Exhibit Description Page
4.1 Rights Agreement, dated as of N/A
September 5, 1995, between
Transcisco Industries, Inc. and
First Interstate Bank of
California, as Rights Agent, which
includes as Exhibit B thereto the
Form of Rights Certificate,
incorporated herein by reference
to Exhibit 1 to the Company's
Registration Statement on Form 8-
A, dated September 15, 1995.
10.1 Loan and Security Agreement, dated 6
as of July 31, 1995, among the
Company and its wholly owned
subsidiaries, Transcisco Rail
Services, Transcisco Leasing
Company and Transcisco Trading
Company, as borrowers, and
Transamerica Business Credit
Corporation, as lender.
10.2 Note and Warrant Purchase 87
Agreement, dated as of August 1,
1995, among the Company,
Transcisco Rail Services Company,
Transcisco Leasing Company and
Transcisco Trading Company and
Furman Selz SBIC, L.P. and James
Dowling, which includes as Exhibit
B-1 thereto the Form of Series A
Senior Subordinated Note, as
Exhibit B-2 thereto the Form of
Series B Senior Subordinated Note,
as Exhibit C thereto the Form of
Warrant and as Exhibit D thereto
the Form of Registration Rights
Agreement.
20.1 Press Release of the Company, 185
dated September 7, 1995.
20.2 Letter to the Company's 188
stockholders, dated September 29,
1995, describing the rights under
the Rights Agreement.
___________________________________________________________________________
ITEM 3.1
LOAN AND SECURITY AGREEMENT
Dated as of July 31, 1995
among
TRANSCISCO INDUSTRIES, INC.
and its wholly owned subsidiaries,
TRANSCISCO RAIL SERVICES COMPANY, TRANSCISCO LEASING COMPANY,
and TRANSCISCO TRADING COMPANY,
as Borrowers
and
TRANSAMERICA BUSINESS CREDIT CORPORATION,
as Lender
TABLE OF CONTENTS
1. GENERAL DEFINITIONS . . . . . . . . . . . . . . 1
1.1 General Terms . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . 20
1.3 Other Terms . . . . . . . . . . . . . . . . . . 20
1.4 Certain Matters of Construction . . . . . . . . 20
2. LOANS: GENERAL TERMS . . . . . . . . . . . . . 20
2.1 Revolving Loans . . . . . . . . . . . . . . . . 20
2.2 Term Loan . . . . . . . . . . . . . . . . . . . 20
2.3 Interest Rate on Loans . . . . . . . . . . . . 21
2.4 Letter of Credit and Guaranty Obligations Fee . 21
2.5 Unused Facility Fee . . . . . . . . . . . . . . 22
2.6 Collateral Management Fee . . . . . . . . . . . 22
2.7 Voluntary and Involuntary Termination;
Prepayment Fee . . . . . . . . . . . . . . . . 22
2.8 Mandatory Prepayments . . . . . . . . . . . . . 23
2.9 Reserves Against Liabilities . . . . . . . . . 23
2.10 All Loans to Constitute One Loan . . . . . . . 24
2.11 Loan Purpose . . . . . . . . . . . . . . . . . 25
2.12 Term of Agreement . . . . . . . . . . . . . . . 25
2.13 Indemnity . . . . . . . . . . . . . . . . . . . 25
3. LOANS: DISBURSEMENTS . . . . . . . . . . . . . 27
3.1 Revolving Loans . . . . . . . . . . . . . . . . 27
3.2 Eligible Accounts . . . . . . . . . . . . . . . 28
3.3 Eligible Inventory . . . . . . . . . . . . . . 28
3.4 Letter of Credit and Guaranty Obligations . . . 28
3.5 Disbursements . . . . . . . . . . . . . . . . . 29
4. LOANS: PAYMENTS . . . . . . . . . . . . . . . 30
4.1 Payments . . . . . . . . . . . . . . . . . . . 30
4.2 Lockbox Account; Receipt and Application of
Payment . . . . . . . . . . . . . . . . . . . . 30
4.3 Collections, Lender's Right to Notify Account
Debtors . . . . . . . . . . . . . . . . . . . . 31
4.4 Application of Payments and Collections . . . . 31
4.5 Statement of Account . . . . . . . . . . . . . 32
5. COLLATERAL: GENERAL TERMS . . . . . . . . . . . 32
5.1 Security Interest . . . . . . . . . . . . . . . 32
5.2 Special Collateral . . . . . . . . . . . . . . 33
5.3 Priority . . . . . . . . . . . . . . . . . . . 33
5.4 Further Assurances . . . . . . . . . . . . . . 33
5.5 Special Provision Relating to Accounts . . . . 34
(a) Verification of Accounts; Inspection;
Audit . . . . . . . . . . . . . . . . . . 34
(b) Records and Schedules of Accounts . . . . 34
(c) Notice Regarding Disputed Accounts . . . . 34
5.6 Special Provision Relating to Inventory . . . . 34
(a) Sale of Inventory . . . . . . . . . . . . 34
(b) Safekeeping of Inventory . . . . . . . . . 34
(c) Records and Schedules of Inventory . . . . 35
(d) Returns of Inventory . . . . . . . . . . . 35
(e) Locations of Inventory; Notice to
Warehousemen . . . . . . . . . . . . . . . 35
6. WARRANTIES AND REPRESENTATIONS . . . . . . . . 36
6.1 General Warranties and Representations . . . . 36
(a) Corporate Existence and Qualification . . 36
(b) Ownership of Property; Liens . . . . . . . 36
(c) Restrictive Agreements . . . . . . . . . . 37
(d) Compliance with Laws, Agreements . . . . . 37
(e) No Default . . . . . . . . . . . . . . . . 37
(f) ERISA . . . . . . . . . . . . . . . . . . 37
(g) Taxes . . . . . . . . . . . . . . . . . . 39
(h) Location of Collateral . . . . . . . . . . 39
(i) Executive Offices . . . . . . . . . . . . 39
(j) Prior Names . . . . . . . . . . . . . . . 39
(k) Corporate Power; Authorization . . . . . . 39
(l) Governmental Approval . . . . . . . . . . 40
(m) Financials . . . . . . . . . . . . . . . . 40
(n) Margin Regulations . . . . . . . . . . . . 40
(o) Payment of Indebtedness . . . . . . . . . 40
(p) Use of Proceeds . . . . . . . . . . . . . 40
(q) Conduct of Business; Intellectual Property 41
(r) Capital Structure . . . . . . . . . . . . 41
(s) Hazardous Materials . . . . . . . . . . . 41
(t) Litigation . . . . . . . . . . . . . . . . 43
(u) Insurance Policies . . . . . . . . . . . . 43
(v) Schedule of Deposit Accounts . . . . . . . 43
(w) Labor Matters . . . . . . . . . . . . . . 44
(x) Employment and Labor Agreements . . . . . 44
(y) Contracts and Agreements . . . . . . . . . 44
(z) Solvent Financial Condition . . . . . . . 44
(aa) Brokers . . . . . . . . . . . . . . . . . 44
(ab) Investment Company Act . . . . . . . . . . 44
(ac) Consummation of Transactions Related to
the Plan . . . . . . . . . . . . . . . . 45
(ad) Compliance with Terms of Plan . . . . . . 45
(ae) Loss Carryovers . . . . . . . . . . . . . 45
6.2 Account Warranties and Representations . . . . 45
6.3 Inventory Representation and Warranties . . . . 47
6.4 Automatic Warranty and Reaffirmation of
Warranties and Representations; Survival of
Warranties and Representations . . . . . . . . 47
7. COVENANTS AND CONTINUING AGREEMENTS . . . . . . 48
7.1 Affirmative Covenants . . . . . . . . . . . . . 48
(a) Borrowing Base Certificate . . . . . . . . 48
(b) Financial Information . . . . . . . . . . 48
(c) Notices Regarding Accounts; Litigation . . 49
(d) Accounts with the United States . . . . . 49
(e) Charges; Liens . . . . . . . . . . . . . . 50
(f) Insurance . . . . . . . . . . . . . . . . 50
(g) Environmental Disclosure and Inspection . 50
(h) Communication With Accountants . . . . . . 52
7.2 Negative Covenants . . . . . . . . . . . . . . 52
(a) Mergers . . . . . . . . . . . . . . . . . 52
(b) Investments . . . . . . . . . . . . . . . 52
(c) Dividends . . . . . . . . . . . . . . . . 52
(d) Capital Structure . . . . . . . . . . . . 52
(e) Transactions with Affiliates . . . . . . . 52
(f) Adverse Transactions . . . . . . . . . . . 53
(g) Guaranties . . . . . . . . . . . . . . . . 53
(h) Deposit Accounts . . . . . . . . . . . . . 53
(i) Liens . . . . . . . . . . . . . . . . . . 53
(j) Loans . . . . . . . . . . . . . . . . . . 53
(k) Capital Expenditures . . . . . . . . . . . 54
(l) Affiliate Accounts . . . . . . . . . . . . 54
(m) Location of Collateral . . . . . . . . . . 54
(n) Indebtedness . . . . . . . . . . . . . . . 54
(o) Hazardous Materials . . . . . . . . . . . 54
(p) Fiscal Year . . . . . . . . . . . . . . . 55
(q) Change of Business . . . . . . . . . . . . 55
(r) Subsidiaries . . . . . . . . . . . . . . . 55
(s) Furman Selz Notes . . . . . . . . . . . . 55
(t) Disposition of Assets . . . . . . . . . . 55
(u) Names of Borrowers . . . . . . . . . . . . 55
7.3 Financial Covenants . . . . . . . . . . . . . . 55
7.4 Payment of Charges and Claims . . . . . . . . . 57
7.5 Insurance; Payment of Premiums . . . . . . . . 58
7.6 Survival of Obligations Upon Termination of
Agreement . . . . . . . . . . . . . . . . . . . 59
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . 59
8.1 Events of Default . . . . . . . . . . . . . . . 59
8.2 Termination of Agreement and Acceleration of
the Liabilities . . . . . . . . . . . . . . . . 61
8.3 Remedies . . . . . . . . . . . . . . . . . . . 61
8.4 Notice of Sale or Other Action . . . . . . . . 63
8.5 Default Rate of Interest . . . . . . . . . . . 63
8.6 Marshalling; Payments Set Aside . . . . . . . . 63
8.7 Right of Set Off . . . . . . . . . . . . . . . 64
9. CONDITIONS PRECEDENT. . . . . . . . . . . . . . 64
9.1 Excess Revolving Loan Availability . . . . . . 64
9.2 Execution and Delivery of Agreement . . . . . . 64
9.3 Loan Documents . . . . . . . . . . . . . . . . 64
9.4 No Material Adverse Change . . . . . . . . . . 64
9.5 Final Settlement and Payment of Class F Claims 65
9.6 Receipt of Furman Selz Subordinated Loan
Proceeds. . . . . . . . . . . . . . . . . . . 65
9.7 Conditions to Each Revolving Loan . . . . . . . 65
9.8 Conditions to the Initial Revolving Loan . . . 65
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . 66
10.1 Appointment of Lender as Borrowers' Lawful
Attorney . . . . . . . . . . . . . . . . . . . 66
10.2 Modification of Agreement; Sale of Interest . 66
10.3 Fees and Expenses . . . . . . . . . . . . . . 66
10.4 Waiver by Lender . . . . . . . . . . . . . . . 68
10.5 Severability . . . . . . . . . . . . . . . . . 68
10.6 Borrowers' Obligations . . . . . . . . . . . . 68
10.7 Subordination of Intercompany Indebtedness . . 68
10.8 Parties . . . . . . . . . . . . . . . . . . . 69
10.9 Conflict of Terms . . . . . . . . . . . . . . 69
10.10 Waivers by Borrowers . . . . . . . . . . . . 69
10.11 Authorized Signatures . . . . . . . . . . . . 69
10.12 Notices . . . . . . . . . . . . . . . . . . . 69
10.13 Publicity . . . . . . . . . . . . . . . . . . 71
10.14 Section Titles . . . . . . . . . . . . . . . 71
10.16 GUARANTOR WAIVERS BY BORROWERS . . . . . . 71
10.17 Reimbursement . . . . . . . . . . . . . . 73
10.18 GOVERNING LAW; CONSENT TO JURISDICTION AND
VENUE . . . . . . . . . . . . . . . . . . . 73
10.19 MUTUAL WAIVER OF JURY TRIAL . . . . . . . . . 74
SCHEDULES
Schedule 1 To Be Attached
Schedule 3.2 Eligible Account Criteria
Schedule 3.3 Eligible Inventory Criteria
Schedule 5.3 Permitted Liens
THIS LOAN AND SECURITY AGREEMENT ("Agreement") dated
as of July 31, 1995 between TRANSCISCO INDUSTRIES, INC., a
Delaware corporation having its principal place of business and
chief executive office at 601 California Street, San Francisco,
California 94108 ("Transcisco"), and its wholly owned
subsidiaries, TRANSCISCO RAIL SERVICES COMPANY ("TRS"), a
California corporation, TRANSCISCO LEASING COMPANY ("TLC"), a
Delaware corporation, and TRANSCISCO TRADING COMPANY ("TTC"), a
Delaware corporation (Transcisco, TRS, TLC, and TTC are each a
"Borrower" and collectively referred to as "Borrowers"), and
TRANSAMERICA BUSINESS CREDIT CORPORATION, a Delaware corporation
having an office at 8750 West Bryn Mawr Avenue, Suite 720,
Chicago, Illinois 60631 ("Lender"), is based upon the following
facts:
RECITALS
A. Borrowers have requested that Lender provide a senior
secured working capital facility and term loan in the maximum
aggregate principal amount of $10,000,000 (the "Aggregate
Facilities Amount") to enable Borrowers to refinance certain
outstanding obligations to their present lenders, to pay, on a
discounted basis, the "Class F Claims" under the "Plan," as such
terms are defined below, to provide working capital for
operations, and for other purposes.
B. Lender is willing to provide such working capital
facility and term loan to Borrowers in accordance with and on the
terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the terms and
conditions contained herein, and of any extension of credit
heretofore, now or hereafter made by Lender to any Borrower, and
for other good and valuable consideration, the adequacy of which
each party acknowledges, the parties hereto hereby agree as
follows:
1. GENERAL DEFINITIONS.
1.1 General Terms. In addition to the defined terms
appearing above or defined in subsequent Sections of this
Agreement, capitalized terms used in this Agreement shall have
(unless otherwise provided elsewhere in this Agreement) the
following respective meanings:
Accounts: all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Borrower and, in
any event, including: (a) all accounts receivable, other
receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents
or Instruments) now owned or hereafter received or acquired by or
belonging or owing to such Borrower, whether arising out of goods
sold, rented, or leased or services rendered by it or from any
other transaction (including any such obligation which may be
characterized as an account or contract right under the Code);
(b) all of such Borrower's rights in, to, and under all purchase
orders or receipts now owned or hereafter acquired by it for
goods or services; (c) all of such Borrower's rights to any goods
represented by any of the foregoing (including an unpaid seller's
rights of rescission, replevin, reclamation, and stoppage in
transit and rights to returned, reclaimed, or repossessed goods);
(d) all monies due or to become due to such Borrower under all
purchase orders and contracts for the sale, rental, or lease of
goods or the performance of services or both by such Person or in
connection with any other transaction (whether or not yet earned
by performance) now or hereafter in existence, including the
right to receive the proceeds of said purchase orders and
contracts; and (e) all collateral security and guaranties of any
kind, now or hereafter in existence, given by any other Person
with respect to any of the foregoing.
Account Debtor: any Person who is or who may become
obligated to any Borrower under, with respect to, or on account
of, an Account.
Affiliate: any Person which, directly or indirectly,
owns or controls, on an aggregate basis, including all beneficial
ownership and ownership or control as a trustee, guardian, or
other fiduciary, at least five percent (5%) of the outstanding
capital stock having ordinary voting power to elect a majority of
the board of directors (irrespective of whether, at the time,
stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) of a Borrower or any Subsidiary, or which is
controlled by or is under common control with a Borrower, or any
stockholders of a Borrower or any Subsidiary; provided, that in
no case shall Lender be deemed to be an Affiliate of any Borrower
for purposes of this Agreement. For the purpose of this
definition, "control" means the possession, directly or
indirectly, of the power to direct or to cause the direction of
management and policies, whether through the ownership of voting
securities, by contract or otherwise.
Aggregate Facilities Amount: as defined in
Recital A.
Agreement: this Loan and Security Agreement,
including all amendments, modifications, and supplements hereto
and any appendices, exhibits, or schedules to any of the
foregoing, as the same may be in effect at the time such
reference becomes operative.
Average Inventory Days: with respect to any 90-day
period, the average daily book value of all Inventory of the
Borrowers on a consolidated basis during such period, divided by
the aggregate cost of all goods sold by the Borrowers during such
period, multiplied by ninety (90).
Average Payable Days: with respect to any 90-day
period, the average daily balance of all accounts payable of the
Borrowers on a consolidated basis during such period, divided by
the aggregate cost of all goods sold by the Borrowers during such
period, multiplied by ninety (90).
Average Receivable Days: with respect to any 90-day
period, the average daily balance of all Accounts of the
Borrowers on a consolidated basis during such period, divided by
the aggregate of all net sales during such period, multiplied by
ninety (90).
Bankruptcy Case: the case commenced on July 30, 1991
by the Bankruptcy Court's entry of an Order for Relief under
Chapter 11 of the United States Bankruptcy Code with respect to
Transcisco.
Bankruptcy Court: the United States Bankruptcy Court
for the Northern District of California.
Borrower: Any of the Borrowers.
Borrowers: Transcisco Industries, Inc., a Delaware
corporation, and its wholly owned subsidiaries, Transcisco Rail
Services Company, a California corporation, Transcisco Leasing
Company, a Delaware corporation, and Transcisco Trading Company,
a Delaware corporation.
Borrowing Base: at any time, the sum of: (a) sixty
percent (60%) of the aggregate value of the Eligible Inventory of
TRS and TLC; provided, that in no event shall the portion of the
Borrowing Base described in this CLAUSE (A) exceed $2,000,000;
plus (b) eighty-five percent (85%) of the aggregate value of the
Eligible Accounts of TRS and TLC; provided, that in no event
shall the portion of the Borrowing Base described in this
CLAUSE (B) and attributable to the Eligible Accounts of TLC
exceed $350,000. Lender, in its sole discretion exercised in a
commercially reasonable manner, shall be entitled to alter the
percentages and dollar amounts of Eligible Inventory and Eligible
Accounts constituting the Borrowing Base from time to time as
Lender considers appropriate; provided, that Lender shall provide
Borrowers with not less than twenty (20) Business Days prior
written notice of any alteration of the percentages and dollar
amounts set forth in this paragraph or otherwise in effect from
time to time.
Borrowing Base Certificate: a certificate of
Transcisco containing information respecting the Collateral and
the borrowing availability hereunder, in the form of EXHIBIT A.
Business Day: any day that is not a Saturday, a
Sunday, or a day on which either (i) banks are required or
permitted to be closed in the State of California, or (ii) the
offices of Lender in Chicago, Illinois are closed.
Capital Expenditures: for any period, the cash
expenditures, whether paid in cash or accrued as a liability,
including payments and accruals on capitalized leases, made or
incurred by Borrowers on a consolidated basis during that period
that are or should be included in "capital expenditures,"
"additions to property, plant or equipment," or comparable items
in the statement of changes of financial position appearing on
the Financials.
Cash and Cash Equivalents: at any time, any assets
of a Borrower which are in the form of, or are readily
convertible into, money, including cash, checks and other
negotiable instruments, deposits with any bank or financial
institution (whether as demand deposits or time deposits, and
whether or not evidenced by certificates of deposit), and readily
marketable securities of any type.
Cash Collateral Account: as defined in SECTION 3.4(C).
Change of Control Date: any date on which the
ownership or control, beneficially and of record, of the issued
and outstanding voting Stock of Transcisco changes to such an
extent that, as a result of such change of control and all other
relevant transfers of such Stock, the Loss Carryovers are reduced
or limited pursuant to section 382 of the IRC and regulations
promulgated thereunder.
Charges: all taxes, levies, assessments, charges,
Liens, claims, or encumbrances upon or relating to (a) the
Collateral, (b) the Liabilities, (c) the employees, payroll,
income or gross receipts of Borrowers, (d) the ownership or use
of any of the assets of Borrowers, or (e) and any other aspect of
Borrowers' business.
Chattel Paper: all "chattel paper," as such term is
defined in the Code, now owned or hereafter acquired by any
Borrower, wherever located.
Class F Claims: All Claims in Class F, as such terms
are defined under the Plan.
Closing Date: the first date on which (a) all
conditions precedent set forth in Section 9 have been satisfied
in a manner acceptable to Lender or waived in writing by Lender
as provided therein, (b) Lender disburses the principal amount of
the Term Loan to Borrowers, and (c) Lender makes or is prepared
to make the first Revolving Loan to Borrowers.
Code: the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of Illinois;
provided, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or
priority of, or the remedies with respect to, Lender's security
interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than the State of
Illinois, the term "Code" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the
provisions of any Loan Document relating to such attachment,
perfection, priority or remedies and for purposes of definitions
related to such provisions.
Collateral: all of the property and interests in
property described in SECTIONS 5.1 AND 5.2 and all other property
and interests in property which shall, from time to time, secure
the Liabilities.
Collateral Availability: at any time, the remainder
of (a) the Borrowing Base less (b) the aggregate outstanding
principal amount of Revolving Loans and Letter of Credit and
Guaranty Obligations; provided, that in no event shall the
Collateral Availability exceed the Maximum Commitment.
Collateral Management Fee: as defined in SECTION 2.6.
Collection Account: the depository account
established by, and under the exclusive control of, Lender to
receive payments and other collections, as provided in SECTION 4.2.
Default: any event that, with the passage of time,
the giving of notice, or both, would become an Event of Default
unless cured or waived as specifically provided in this Agreement.
Documents: all "documents," as such term is defined
in the Code, now owned or hereafter acquired by any Borrower,
wherever located, including all bills of lading, dock warrants,
dock receipts, warehouse receipts, or other documents of title.
Dowling: James Dowling.
EBITDA: on a consolidated basis, Borrowers' net
income plus interest, cash taxes as measured by income,
depreciation, and amortization (excluding, for each item, gains
and losses resulting from transactions occurring outside the
ordinary course of business).
Eligible Accounts: as defined in SECTION 3.2.
Eligible Inventory: as defined in SECTION 3.3.
Employee Benefit Plan: any "employee benefit plan"
within the meaning of ERISA Section 3(3).
Environmental Claim: any written accusation,
allegation, notice of violations, claim, demand, abatement, or
other judicial or administrative order or direction (conditional
or otherwise) by any governmental authority or any Person for any
damage, including personal injury (including sickness, disease,
or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination, harm to natural
resources, or other adverse effects on the environment, or for
fines, penalties, or restrictions, resulting from or based upon
(a) the existence, or the continuation of the existence, of a
Release (whether sudden or non-sudden or accidental or non-
accidental) of, or exposure to, any Hazardous Material, in, into
or onto the environment at, in, by, from, or related to any Real
Property, or the migration of any such Release, (b) the use,
handling, transportation, storage, treatment, or disposal of
Hazardous Materials in connection with the operation of any Real
Property, (c) the violation, or alleged violation, of any
Environmental Laws or governmental authorizations relating to
environmental matters with respect to any Real Property, or (d)
any abatement, removal, remedial, corrective, or response action
in connection with any Hazardous Material, Environmental Law, or
order or demand of a governmental authority.
Environmental Laws: all statutes, ordinances, codes,
policies, judicial or administrative orders, rules, regulations,
or decrees, or any judicial interpretations thereof, relating to
(a) fines, injunctions, penalties, damages, contribution, cost
recovery compensation, losses, or injuries resulting from the
Release or threatened Release of Hazardous Materials, (b) the
management, Release, possession, generation, use, storage,
transportation or disposal of Hazardous Materials,
(c) occupational safety and health, industrial hygiene, or land
use in connection with the protection of natural resources, the
environment, or health or welfare, in any manner applicable to
Borrowers or any of their Subsidiaries or any of their respective
properties, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. SECTION 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. SECTION
1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. SECTION 6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. SECTION 1251 et seq.), the Clean Air Act (42 U.S.C. SECTION 7401
et seq.), the Toxic Substances Control Act (15 U.S.C. SECTION 2601 et
seq.), the Occupational Safety and Health Act (29 U.S.C. SECTION 651
et seq.), and the Emergency Planning and Community Right-To-Know-
Act (42 U.S.C. SECTION 11001 et seq.), each as amended or
supplemented, and any analogous future or present local, state,
and Federal statutes and regulations promulgated pursuant
thereto.
Environmental Report: an environmental audit,
assessment, appraisal, inspection, or review, including all
reports, documents, data, information, correspondence, or
memoranda arising out of any Response Action performed to
complete the tasks set forth on SCHEDULE 7.1(G)(I).
Equipment: all of Borrowers' now owned or hereafter
acquired "equipment," as such term is defined in the Code,
wherever located, and, in any event, including all machinery,
equipment, furnishings, tools, trade fixtures, vehicles, and
computers and other electronic data-processing and other office
equipment, and any and all additions, substitutions, and
replacements of any of the foregoing, together with all
attachments, components, parts, equipment, and accessories
installed on or affixed to any of the foregoing.
ERISA: the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
ERISA Affiliate: any Person that is now or at any
time in the future required to be treated as a single employer
with a Borrower under IRC Sections 414(b) or (c).
Event of Default: as defined in SECTION 8.1.
Excess Cash Flow: with respect to each Fiscal Year,
(i) EBITDA for such Fiscal Year minus (to the extent not already
deducted in the calculation of EBITDA) (ii) the sum of
(A) interest expense (excluding amortization of financing costs
payable in connection with the Loans) for such Fiscal Year,
(B) cash taxes paid during such Fiscal Year, and (C) amortization
payments (other than payments of Excess Cash Flow) and interest
on the Loans paid during such Fiscal Year. Excess Cash Flow
shall be determined as of the date which Borrowers shall have
furnished their annual audited consolidated financial statements
for the preceding Fiscal Year and shall be based upon such
statements; provided, that if Borrowers fail to furnish such
audited financial statements on any date required under this
Agreement, Lender may, at its option, calculate such Excess Cash
Flow in the manner described above, based on the information then
available to Lender.
Excess Revolving Loan Availability: at any
particular time, the lesser of (a) Collateral Availability and
(b) the Unused Line of Credit.
Financials: (i) those financial statements of
Borrowers described in SECTION 6.1(M), all of which financial
statements have been certified as accurate and complete by the
chief financial officer of Borrowers and, if audited, certified
by Borrowers' independent certified public accountants; and
(ii) the financial statements and information of Borrowers
identified in, and required to be delivered to Lender pursuant
to, SECTION 7.1(B).
Fiscal Month: any of the monthly accounting periods
of Borrowers constituting a Fiscal Year.
Fiscal Quarter: any of the quarterly accounting
periods of Borrowers constituting a Fiscal Year.
Fiscal Year: any fiscal year of Borrowers.
Fixed Charge Ratio: on a consolidated basis, as
measured quarterly as of the last day of each applicable Fiscal
Quarter for the preceding four (4) Fiscal Quarters, including the
Fiscal Quarter in which such measurement date occurs, the ratio
of (a) the remainder of (i) EBITDA less (ii) the sum of Capital
Expenditures and cash taxes, to (b) the sum of (i) all amounts
actually paid in respect of that portion of Indebtedness
constituting (A) debt for borrowed money, (B) that portion of
obligations with respect to capital leases that is properly
classified as a balance sheet liability in accordance with GAAP,
(C) notes payable and drafts accepted representing extensions of
credit, whether or not representing obligations for borrowed
money, (D) any obligation owed for all or any part of the
deferred purchase price of property or services, which purchase
price is (y) due more than three months from the date of
incurrence of the obligation in respect thereof, or (z) evidenced
by a note or similar written instrument, and (E) all indebtedness
secured by any Lien on any property or asset owned or held by any
Borrower, regardless of whether such secured indebtedness shall
have been assumed by such Borrower or is nonrecourse to the
credit of such Borrower, plus (ii) interest charges accrued but
not paid in respect of any Indebtedness.
Fixtures: all "fixtures," as such term is defined in
the Code, now or hereafter owned or acquired by any Borrower,
wherever located, and, in any event, including all of the
fixtures, systems, machinery, apparatus, equipment, and fittings
of every kind and nature whatsoever and all appurtenances and
additions thereto and substitutions therefor or replacements
thereof, now or hereafter attached or affixed to or constituting
a part of, or located in or upon, real property wherever located
(including all clean room, heating, electrical, mechanical,
lighting, lifting, plumbing, ventilating, air-conditioning and
air cooling, refrigerating, incinerating and power, loading and
unloading, signs, escalators, elevators, boilers, communication,
switchboards, sprinkler and other fire prevention and
extinguishing fixtures, systems, machinery, apparatus, and
equipment, and all engines, motors, dynamos, machinery, pipes,
pumps, tanks, conduits, and ducts constituting a part of any of
the foregoing, together with all extensions, improvements,
betterments, renewals, substitutes, and replacements of, and all
additions and appurtenances to any of the foregoing property).
Furman Selz: Furman Selz SBIC, L.P., a Delaware
limited partnership.
Furman Selz Notes: collectively, those certain
Series A Senior Subordinated Notes due July 31, 2000 in the
original aggregate principal amount of $2,000,000, those certain
Series B Senior Subordinated Notes due July 31, 2000 in the
original aggregate principal amount of $1,000,000, each dated
August 1, 1995 and executed by Borrowers in favor of Furman Selz
and Dowling, respectively, as more particularly described on
SCHEDULE 1.1(A), and all promissory notes delivered in
substitution or exchange therefor, in each case as the same may
be modified and supplemented and in effect from time to time, in
connection with the Subordinated Loan.
Furman Selz Subordination Agreement: that certain
Subordination Agreement dated as of July 31, 1995, executed by
Lender, Furman Selz, and Dowling, as the same may be amended,
modified, and supplemented and in effect from time to time.
Furman Selz Warrants: those certain Stock
Subscription Warrants issued as of August 1, 1995 in favor of
Furman Selz and Dowling as more particularly described on
SCHEDULE 1.1(B), and all documents, instruments, and securities
delivered in substitution or exchange therefor, in each case as
the same may be amended, modified and supplemented and in effect
from time to time, in connection with the Subordinated Loan.
GAAP: generally accepted accounting principles in
the United States of America as in effect from time to time,
provided, that if there is a change in GAAP, such change shall
not, by itself, cause a Default or an Event of Default.
General Intangibles: all "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired
by any Borrower and, in any event, including all of such
Borrower's right, title, and interest in or under any contract,
franchise, or license and in intangible personal property of
every kind and nature (other than Accounts, Chattel Paper,
Documents, and Instruments), including choses in action, causes
of action, corporate or other business records, business names,
customer lists, copyrights, patents, patent applications,
trademarks, trade names, trade styles, logos and other source or
business identifiers, and all applications therefor and reissues,
extensions, or renewals thereof and rights thereto, interests in
and rights to distributions from partnerships, joint ventures,
and other business associations, licenses, permits, trade
secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information,
procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill
associated with any trademark or trademark registration), all
rights and claims in or under insurance policies (including
insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights, or intangible
rights, all liability, life, key person, and business
interruption insurance, and all unearned premiums),
uncertificated securities, deposit accounts and other bank
accounts, rights to receive tax refunds, rebates, and other
payments, rights of indemnification, and any guarantee claims,
security interests, or other security held by or granted to a
Borrower to secure payment by an Account Debtor of any Accounts.
All licenses, patents, patent applications, copyrights,
trademarks, and trade names now owned by Borrowers are listed in
SCHEDULE 6.1(Q).
Governing Rate: the higher of: (a) the highest of
the rates of interest publicly announced from time to time by The
First National Bank of Chicago, Bank of America, N.A., or
Citibank, N.A. or their respective successors in interest, as
their respective corporate base, reference, prime or similar
benchmark rate (whether or not such rate is actually charged by
such bank); or (b) the latest published annualized rate of
interest for 90-day dealer commercial paper, which normally
appears in the "Money Rates" section of the Wall Street Journal.
Governmental Authorization: any permit, license,
authorization, consent order, or consent decree of or from any
Federal, state or local governmental authority, agency or court.
Guarantor: any Person that shall at any time
guarantee to Lender the payment and performance of all or any
portion of the Liabilities.
Guaranty Agreement: Any Guaranty and Security
Agreement, or any other document pursuant to which a Guarantor
guarantees to Lender the payment and performance of all or any
portion of the Liabilities.
Hazardous Materials: (a) any oil, petroleum or
petroleum derived substance, any drilling fluids, produced
waters, and other wastes associated with the exploration,
development, refinement, or production of crude oil, including
crude oil and any fraction thereof, any flammable substances or
explosives, any radioactive materials, any hazardous wastes or
substances, any toxic wastes or substances or any other materials
or pollutants which (i) pose a hazard to any property of a
Borrower or any of its Subsidiaries or to any Persons on or about
such property or (ii) cause such property to be in violation of
any Environmental Laws; (b) asbestos in any form which is or
could become friable, urea formaldehyde foam insulation,
electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty
parts per million; (c) any chemical, material, or substance
regulated or defined as or included in the definition "hazardous
substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous wastes," or
"toxic substances" or any other formulations intended to define,
list, or classify substances by reason of deleterious properties
such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity," or words of similar import under any applicable
Environmental Laws; and (d) any other chemical, material, or
substance, exposure to which is prohibited, limited, or regulated
by any governmental authority pursuant to any Environmental Law.
Hungerford: Mark C. Hungerford.
Hungerford Indemnity Claims: any claim for
indemnity, contribution, subrogation, reimbursement, exoneration,
or similar claim by Hungerford against Transcisco arising out or
related to the purported class action commenced on November 23,
1987 by Shirley B. Daniels and Barney and Rachel Milione in the
Superior Court of California, County of San Francisco, and all
related litigation.
Indebtedness: all liabilities, obligations, and
indebtedness of any and every kind and nature, including the
Liabilities and all obligations to trade creditors, whether
heretofore, now or hereafter owing, arising, due, or payable from
a Borrower to any Person and howsoever evidenced, created,
incurred, acquired, or owing, whether primary, secondary, direct,
contingent, fixed, or otherwise. Without limiting the generality
of the foregoing, Indebtedness specifically includes:
(a) all obligations or liabilities of any Person
that are secured by any Lien, claim, encumbrance, or security
interest upon property owned by a Borrower, even though such
Borrower has not assumed or become liable for the payment
thereof;
(b) all obligations or liabilities created or
arising under any lease of real or personal property or
conditional sale or other title retention agreement with respect
to property used or acquired by a Borrower, even though the
rights and remedies of the lessor, seller, or lender thereunder
are limited to repossession of such property;
(c) all unfunded pension fund obligations and
liabilities; and
(d) all deferred taxes.
Instruments: all "instruments," as such term is
defined in the Code, now owned or hereafter acquired by any
Borrower, wherever located, including all certificated
securities, all certificates of deposit, and all notes and other
evidences of indebtedness, other than instruments that
constitute, or are a part of a group of writings that constitute,
Chattel Paper.
Intangible Assets: collectively, organizational
expenses, financing expenses, prepaid expenses, goodwill
(including any amounts however designated, representing the
excess of the purchase price paid for assets or stock acquired
subsequent to the date hereof over the value assigned thereto on
the books of Borrowers), Intellectual Property, and other
intangible assets of Borrowers.
Intellectual Property: all patents, trademarks,
tradenames, and copyrights owned by any Borrower, and all rights
under the patent licenses, trademark licenses, and copyright
licenses to which any Borrower is a party, all as listed in
SCHEDULE 1.1(C).
Intercompany Indebtedness: with respect to any
Borrower, all present and future obligations and all indebtedness
owing to it by every other Borrower.
Inventory: all "inventory," as such term is defined
in the Code, now or hereafter owned or acquired by any Borrower,
wherever located, and, in any event, including inventory,
merchandise, goods, and other personal property which are held by
or on behalf of such Borrower for sale or lease or are furnished
or are to be furnished under a contract of service or which
constitute raw materials, spare parts, work in process, or
materials or supplies used or consumed or to be used or consumed
in such Borrower's business or in the processing, production,
packaging, promotion, delivery, or shipping of the same, and all
finished goods or goods in transit, along with all such property
the sale or other disposition of which has given rise to Accounts
and which has been returned to or repossessed or stopped in
transit by such Borrower.
IRC: the Internal Revenue Code of 1986, as the same
may be amended from time to time.
Lender: Transamerica Business Credit Corporation, a
Delaware corporation, and its successors and assigns.
Letter of Credit: any commercial or standby letter
of credit issued at the request and for the account of a Borrower
for which Lender has incurred Letter of Credit and Guaranty
Obligations.
Letter of Credit and Guaranty Obligations: all
outstanding obligations incurred by Lender at the request of a
Borrower, whether direct or indirect, contingent or otherwise,
due or not due, in connection with (a) the issuance or guarantee,
by Lender or another, of Letters of Credit, or (b) the issuance
of guaranties for the benefit of a Borrower. The amount of such
Letter of Credit and Guaranty Obligations shall equal the maximum
amount that may be payable by Lender thereon or pursuant to such
Letter of Credit or guaranty.
Liabilities: all of Borrowers' liabilities,
obligations, and indebtedness to Lender of any and every kind and
nature (including the Letter of Credit and Guaranty Obligations,
interest, charges, expenses, attorneys' fees, and other sums
chargeable to any Borrower by Lender and future advances made to
or for the benefit of any Borrower), whether arising under this
Agreement, under any of the other Loan Documents, or acquired by
Lender from any other source, whether heretofore, now or
hereafter owing, arising, due, or payable from any Borrower to
Lender and howsoever evidenced, created, incurred, acquired, or
owing, whether primary, secondary, direct, contingent, fixed, or
otherwise, including obligations of performance.
Lien: any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien (including
judgment liens, liens of mechanics, suppliers, and other Persons
for the provision of goods or services, and all other liens
arising under statute, common law, or judicial interpretation),
Charge, claim (including reclamation claims), security interest,
easement, encumbrance, preference, priority, or other security
agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any
financing lease having substantially the same economic effect as
any of the foregoing, and the filing of, or agreement to give,
any financing statement perfecting a security interest under the
Code or comparable law of any jurisdiction).
Loans: the Term Loan and the Revolving Loans.
Loan Documents: this Agreement, the Term Loan Note,
the Revolving Credit Note, all Supplemental Documentation, and
all agreements, instruments, and documents, including notes,
guaranties, mortgages, deeds of trust, chattel mortgages,
pledges, powers of attorney, consents, assignments, contracts,
notices, security agreements, leases, financing statements,
subordination agreements, trust account agreements, and all other
written matter whether heretofore, now, or hereafter executed by
or on behalf of a Borrower or delivered to Lender or any
Participant in the loans and advances made hereunder, with
respect to this Agreement or to Lender.
Loss Carryovers: the federal income tax net
operating loss carryovers of Transcisco as reported on the
consolidated federal income tax returns of Transcisco for the
Fiscal Year ended March 31, 1995, which are $30,000,000 for
regular minimum tax purposes and $29,000,000 for alternative
minimum tax purposes.
Master Collection Account: the depository account
established in the name of Lender as account number 52-95416 at
First National Bank of Chicago for the purpose of posting
payments and other collections, as provided in SECTION 4.2.
Material Adverse Effect: shall mean a material
adverse effect on (a) the financial condition or operations of
Borrowers and their Subsidiaries taken as a whole, (b) the
ability of Borrowers to perform under this Agreement and the
other Loan Documents, (c) the Collateral, or (d) Lender's rights
and remedies under this Agreement and the other Loan Documents.
Maximum Commitment: the maximum aggregate principal
amount of up to $7,835,000 governing accommodations provided
under the Revolving Loan Facility.
Multiemployer Plan: a "multiemployer plan" within
the meaning of ERISA Section 4001(a)(3).
Net Worth: with respect to Borrowers, on a
consolidated basis, at any time for the determination thereof,
the sum of their capital stock, capital in excess of par or
stated value of shares of its capital stock, retained earnings,
and any other account which, in accordance with GAAP, constitutes
stockholder's equity, less treasury stock.
Notes: the Term Loan Note and the Revolving Credit
Note.
Notice of Revolving Loan: as defined in SECTION 3.1(A).
OSHA: the Occupational Safety and Health Act and all
rules and regulations from time to time promulgated thereunder.
Participant: any Person, now or from time to time
hereafter, participating with Lender in the Revolving Loans made
by Lender to Borrower pursuant to SECTION 10.2 of this Agreement.
PBGC: the Pension Benefit Guaranty Corporation or
any Person succeeding to the functions thereof.
Permitted Investment: any of the following investments:
(a) investments in property to be used in the
ordinary course of business of Borrowers;
(b) so long as and only to the extent there are no
Revolving Loan Liabilities outstanding, investments in direct
obligations of the United States of America, or any agency
thereof or obligations guaranteed by the United States of
America, provided that such obligations mature within one year
from the date of acquisition thereof;
(c) so long as and only to the extent there are no
Revolving Loan Liabilities outstanding, investments in
certificates of deposit maturing within one year from the date of
acquisition issued by a bank or trust company organized under the
laws of the United States or any state thereof having capital
surplus and undivided profits aggregating at least $100,000,000;
and
(d) so long as and only to the extent there are no
Revolving Loan Liabilities outstanding, investments in commercial
paper given the highest rating by a national credit rating agency
and maturing not more than two hundred seventy (270) days from
the date of creation thereof.
Permitted Liens: the Liens, encumbrances and claims
listed in SCHEDULE 5.3.
Permitted Loans: term loans made by one or more
Borrowers to their respective officers, but only to the extent
(a) made to enable such officers to purchase the stock of
Transcisco pursuant to the Stock Purchase Plan, (b) made upon
fair and reasonable terms, and (c) the aggregate outstanding
principal balance of all such loans does not exceed $100,000 at
any time.
Permitted Dividends: dividends declared by any of
TRS, TLC, or TTC and paid to Transcisco, but only to the extent
(a) declared and paid to enable Transcisco to meet its ordinary,
reasonable, and necessary business expenses, (b) made in the
ordinary course of Borrowers' business, consistent with their
past practices, (c) consistent with the projected earnings of the
Borrower(s) paying such dividends for the Fiscal Year in which
such dividends are paid, and (d) such dividends do not exceed, in
the aggregate, $850,000 during any Fiscal Quarter.
Permitted Intercompany Indebtedness: indebtedness of
any Borrower to any other Borrower for borrowed money and
interest thereon, so long as such indebtedness (i) is incurred in
the ordinary course of business of the indebted Borrower in order
to meet its ordinary and necessary business expenses, (ii) bears
a reasonable rate of interest, (iii) is accurately reflected on
the relevant Borrowers' books and records, and (iv) is repaid (or
otherwise satisfied by netting of contra accounts or similar
offset) periodically in the ordinary course of business no less
frequently than quarterly.
Person: any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution,
public benefit corporation, entity, or government (whether
Federal, state, county, city, municipal, or otherwise, including
any instrumentality, division, agency, body, or department
thereof).
Plan: collectively, the Joint Plan of Reorganization
Dated June 21, 1993 confirmed by the Bankruptcy Court by order
dated October 20, 1993 in the Bankruptcy Case, as amended by the
Stipulation to Amend Joint Plan of Reorganization Dated June 21,
1993 (11 U.S.C. SECTION 1127(b)) approved by the Bankruptcy Court on
November 23, 1994, along with the disclosure statement approved
by the Bankruptcy Court in connection with the above, and all
other amendments and modifications to such documents and orders
approved pursuant to final orders issued by a court of competent
jurisdiction.
Prohibited Transaction: a "prohibited transaction"
within the meaning of ERISA Section 406 or IRC Section 4975.
Projections: the monthly cash flow projections
required pursuant to SECTION 7.1(B)(VI).
Prepayment Fee: the prepayment fee payable in
accordance with the provisions of SECTION 2.7.
Real Property: any and all real property (including
all buildings, fixtures, and other improvements located thereon)
now, hereafter or heretofore owned, leased, operated, or used by
Borrowers and any of their Subsidiaries.
Release: any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal,
discharge, dispersal, dumping, leaching, or migration of
Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels,
containers, or other closed receptacles containing any Hazardous
Materials) or into or out of any Real Property, including the
movement of any Hazardous Material through the air, soil, surface
water, groundwater, or property.
Reportable Event: a "reportable event" described in
Section 4043 of ERISA.
Response Action: such response, remedial, removal,
corrective, abatement, permitting, and compliance action as is
appropriate and sufficient to (a) satisfy any applicable or
relevant and appropriate Environmental Laws with respect to all
the Borrowers' businesses and properties, (b) comply with any
Environmental Laws or obtain any Governmental Authorizations to
conduct or operate any of the Borrowers' operations or
businesses, (c) investigate or assess any Release, (d) dispose of
any accumulated debris, wastes, or off-specification materials at
any of the Real Property, or (e) remove any out-of-service
underground storage tanks present at any of the Real Property.
Revolving Credit Note: the Revolving Credit Note
delivered by Borrowers to Lender in the principal amount of
$7,835,000 in the form set forth as EXHIBIT B, and all promissory
notes delivered in substitution or exchange therefor, in each
case as the same may be amended, modified and supplemented and in
effect from time to time.
Revolving Loan Facility: the senior secured working
capital and letter of credit facility under which Lender will
provide revolving advances for the benefit of Borrowers as
evidenced by this Agreement and all other agreements,
instruments, and documents executed in connection herewith.
Revolving Loan Liabilities: all of Borrowers'
liabilities, obligations, and indebtedness to Lender of any and
every kind and nature arising out of or related to Borrowers'
Revolving Loans, including outstanding principal advances,
interest, charges, expenses, attorneys' fees, and other amounts
chargeable to Borrowers by Lender in connection with its
Revolving Loans.
Revolving Loans: as defined in SECTION 3.1(A).
Schedule of Accounts: as defined in SECTION 5.5(B).
Schedule of Documents: the schedule, including all
appendices, exhibits or schedules thereto, listing certain
documents and information required to be delivered in connection
with this Agreement and the other Loan Documents and the
transactions contemplated hereunder and thereunder, substantially
in the form attached hereto as SCHEDULE 1.
Schedule of Inventory: as defined in SECTION 5.6(C).
Solvent: with respect to any Person, (a) the present
fair value of such Person's assets is in excess of the total
amount of such Person's liabilities, (b) such Person is able to
pay its debts as they become due, and (c) such Person does not
have unreasonably small capital to carry on its business.
Special Collateral: as defined in SECTION 5.2.
Stock: all shares, options, warrants, interests,
participation, or other equivalents (regardless of how
designated) of or in a corporation or equivalent entity, whether
voting or nonvoting, including common stock, preferred stock, and
convertible debentures, and all agreements, instruments, and
documents convertible, in whole or in part, into any one or more
or all of the foregoing.
Stock Purchase Plan: that certain Stock Purchase
Plan adopted by the Board of Directors of Transcisco on March 30,
1995, pursuant to which Transcisco may grant rights to purchase
common stock of Transcisco to its officers, consultants, or
employees.
Subordinated Debt: that portion of the Indebtedness,
including all intercompany accounts and borrowings, which is
subordinated in a manner satisfactory in form and substance to
Lender as to right and time of payment of principal and interest
thereon to any and all of the Liabilities.
Subordinated Loan: the transactions evidenced by
that certain Note and Warrant Purchase Agreement among the
Borrowers, Furman Selz, and Dowling dated as of August 1, 1995,
the Furman Selz Notes, the Furman Selz Warrants, and all
documents, instruments, and securities delivered in substitution
or exchange therefor, in each case as the same may be amended,
modified, and supplemented and in effect from time to time, in
connection with the transactions contemplated thereby.
Subsidiary: any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of
any other 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, directly or indirectly, owned by a
Borrower or one or more Subsidiaries.
Supplemental Documentation: all agreements,
instruments, documents, financing statements, warehouse receipts,
bills of lading, notices of assignment of accounts, schedules of
accounts assigned, mortgages, deeds of trust, and other written
matter necessary or requested by Lender to perfect and maintain
perfected Lender's security interest in the Collateral.
Tangible Net Worth: at any date, the remainder of
(a) the sum of (i) the Net Worth plus (ii) the principal amount
of Subordinated Debt, minus (b) the sum of (i) the value of the
Intangible Assets and (ii) the amount of expenses not accrued at
such time but prepaid by any of the Borrowers.
Term Loan: the senior secured five-year term loan in
the principal amount of $2,165,000 evidenced by the Term Loan
Note.
Term Loan Liabilities: all of Borrowers'
liabilities, obligations, and indebtedness to Lender of any and
every kind and nature arising out of or related to the Term Loan,
including outstanding principal advances, interest, charges,
expenses, attorneys' fees, and other amounts chargeable to
Borrowers by Lender in connection with the Term Loan.
Term Loan Note: that certain Term Loan Note dated as
of July 31, 1995 executed by Borrowers in favor of Lender, and
all promissory notes delivered in substitution or exchange
therefor, in each case as the same may be amended, modified and
supplemented and in effect from time to time.
Termination Date: the earliest of: (a) July 31,
2000; (b) the date that Borrowers elect to terminate this
Agreement and repay the Liabilities in full in accordance with
the terms of SECTIONS 2.7 AND 2.11; and (c) the date Lender
elects to terminate Borrowers' right to receive Revolving Loans
and Letter of Credit and Guaranty Obligations in accordance with
SECTION 8.2.
TLC: Transcisco Leasing Company, a Delaware corporation.
Transaction Costs: the costs, fees, and expenses
incurred by any Borrower, directly or indirectly through
reimbursement or indemnity obligations, owing to Persons other
than Borrower, in connection with negotiating, documenting, and
consummating the transactions evidenced by (i) the Furman Selz
Notes and the Furman Selz Warrants, (ii) the Loan Documents, and
(ii) the agreements and documents executed in connection with
final payment and settlement of the Class F Claims.
Transcisco: Transcisco Industries, Inc., a Delaware corporation.
TRS: Transcisco Rail Services Company, a California corporation.
TTC: Transcisco Trading Company, a Delaware corporation.
Uni-Temp Licenses: all rights of any of the
Borrowers in and to any Intellectual Property relating in any way
to the use, manufacture, or marketing of goods or services
embodying the Uni-Temp heating technology.
Unused Facility Fee: as defined in SECTION 2.5.
Unused Line of Credit: at any particular time,
(a) the difference between (i) the Maximum Commitment and
(ii) the sum of the aggregate outstanding principal balance of
Revolving Loans and the aggregate amount of outstanding Letter of
Credit and Guaranty Obligations.
Welfare Plan: any "welfare plan" within the meaning
of ERISA Section 3(1).
1.2 Accounting Terms. Any accounting term used in this
Agreement shall, unless otherwise specifically provided herein,
have the meaning customarily given such term in accordance with
GAAP, and all financial computations hereunder shall be computed,
unless otherwise specifically provided herein, in accordance with
GAAP consistently applied. That certain terms or computations
are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing.
1.3 Other Terms. All other undefined terms contained in
this Agreement shall, unless the context indicates otherwise,
have the meanings provided for by the Code as in effect in the
State of Illinois to the extent the same are used or defined
therein.
1.4 Certain Matters of Construction. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended,
modified or supplemented, and not to any particular section,
subsection or clause contained in this Agreement. Any reference
to a "SECTION," "EXHIBIT," or "SCHEDULE" shall refer to the
relevant Section of or Exhibit or Schedule to this Agreement,
unless specifically indicated to the contrary. Wherever from the
context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine, or neuter gender
shall include the masculine, the feminine, and the neuter. The
term "including" shall not be limiting or exclusive, unless
specifically indicated to the contrary.
2. LOANS: GENERAL TERMS
2.1 Revolving Loans. Upon and subject to the terms and
conditions of this Agreement, Lender will make available to
Borrowers, from time to time prior to the Termination Date upon
their request, the Maximum Commitment, consisting of
(a) Revolving Loans pursuant to SECTION 3.1 and (b) Letter of
Credit and Guaranty Obligations pursuant to SECTION 3.4. If
Lender makes advances to Borrowers from such line of credit, all
advances shall be repayable as provided in SECTION 4.1, and shall
be used by Borrowers only for legal and proper working capital
requirements (including the payment of any portion of the Class F
Claims) consistent with all applicable laws and statutes.
2.2 Term Loan. Upon and subject to the terms and
conditions of this Agreement, Lender will make available to
Borrowers on the Closing Date the Term Loan in the original
principal amount of $2,165,000, evidenced by the Term Loan Note
substantially in the form of EXHIBIT C, dated as of the Closing
Date. The Term Loan shall be repayable as provided in the Term
Loan Note and SECTION 4.1 hereof, and the advances thereunder
shall be used by Borrowers only for legal and proper working
capital requirements (including the payment of any portion of the
Class F Claims) consistent with all applicable laws and statutes.
2.3 Interest Rate on Loans.
(a) Subject to the provisions of SECTION 8.5, the
Loans shall bear interest, payable in arrears on the last day of
each month and at maturity, calculated daily on the basis of a
360-day year, (i) with respect to the Revolving Loans, at a
variable per annum rate equal to the Governing Rate plus one and
three-quarters percent (1.75%), and (ii) with respect to the Term
Loan, at a variable per annum rate equal to the Governing Rate
plus two percent (2.0%). Any change in the Governing Rate shall
be effective as of the date of the relevant change.
(b) In no contingency or event whatsoever shall the
interest rate charged with respect to the Revolving Loan
Liabilities or the Term Loan Liabilities pursuant to the terms of
this Agreement exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto (the "Maximum Lawful
Rate"). In the event that such a court determines that Lender
has received interest hereunder in excess of the Maximum Lawful
Rate, Lender shall promptly refund such excess interest to
Borrowers. Should any interest payable hereunder thereafter fall
below the Maximum Lawful Rate, interest shall continue to accrue
at the Maximum Lawful Rate until such time as Lender has received
an amount of interest equal to what Lender would have received
but for the operation of this SECTION 2.2(B), at which time the
interest payable shall again accrue at the rate otherwise
provided for under SECTION 2.2(A) until such rate under SECTION
2.2(A) again exceeds the Maximum Lawful Rate, in which event the
terms of this SECTION 2.2(B) shall again apply.
2.4 Letter of Credit and Guaranty Obligations Fee. In
the event that Lender shall incur any Letter of Credit and
Guaranty Obligations for the account of a Borrower, Borrowers
shall pay Lender, as compensation to Lender for such Letter of
Credit and Guaranty Obligations: (a) all fees and charges paid
by Lender on account of such Letter of Credit and Guaranty
Obligations to the issuer or like party; and (b) subject to the
provisions of SECTION 8.5, until Borrowers have paid or otherwise
satisfied such Letter of Credit and Guaranty Obligations,
commencing with the month in which such Letter of Credit and
Guaranty Obligations are incurred by Lender and monthly
thereafter for each month during which such Letter of Credit and
Guaranty Obligations shall remain outstanding, a monthly fee in
an amount equal to the quotient of (i) an amount equal to (A) the
sum of the daily outstanding amount of all such Letter of Credit
and Guaranty Obligations on each day during the previous calendar
month, multiplied by (B) a rate equal to two percent (2%) per
annum, divided by (ii) three hundred sixty (360). Fees payable
in respect of Letter of Credit and Guaranty Obligations shall be
paid to Lender, in arrears, on the first day of each month.
2.5 Unused Facility Fee. As additional compensation for
Lender's costs and risks in making the Revolving Loan Facility
available to Borrowers, Borrowers shall pay to Lender, in arrears
on the last date of each month and at maturity, a facility fee
(the "Unused Facility Fee") for Borrowers' non-use of available
funds in an amount equal to one-quarter of one percent (0.25%)
per annum of Borrowers' Unused Line of Credit.
2.6 Collateral Management Fee. As additional
consideration for Lender's ongoing administration and management
costs in making the Term Loan and the Revolving Loan Facility
available to Borrowers, Borrowers shall pay to Lender, in arrears
on the last day of each month and at maturity, a collateral
management fee (the "Collateral Management Fee") in an amount
equal to one-quarter of one percent (0.25%) per annum of the
daily average of all Liabilities outstanding during such month.
2.7 Voluntary and Involuntary Termination; Prepayment Fee.
(a) Upon at least ninety (90) days prior written
notice to Lender, Borrowers may, at their option, terminate this
Agreement; provided, that no such termination shall be effective
until Borrowers have paid all of the Liabilities in immediately
available funds.
(b) At the effective date (the "Prepayment Date") of
(i) the voluntary termination described in SECTION 2.7(A), or
(ii) any involuntary termination of this Agreement, Borrowers
shall pay to Lender, in addition to all other Liabilities, as
liquidated damages for the loss of the bargain and not as a
penalty, a Prepayment Fee for the obligations arising under the
Loans by paying to Lender on the Prepayment Date the following
amounts:
If Prepayment is Made Between
the Following Dates, Inclusive: The Fee Shall Be:
(i) Closing Date and $300,000 (i.e., three percent
July 31, 1996 (3%) of the Aggregate
Facilities Amount)
(ii) August 1, 1996 and $200,000 (i.e., two percent
July 31, 1997 (2%) of the Aggregate
Facilities Amount)
(iii) August 1, 1997 and $100,000 (i.e., one percent
July 31, 1998 (1%) of the Aggregate
Facilities Amount)
(ii) Any time thereafter No premium shall be due
(c) Borrowers may elect to terminate this Agreement
in its entirety only; no section may be terminated singly.
2.8 Mandatory Prepayments. In addition to the regularly
scheduled payments of principal on the Term Loan set forth in the
Term Loan Note, Borrowers shall be required, without any
prepayment fee or premium, to make payments ("Mandatory
Prepayments") annually in an amount equal to thirty percent (30%)
of Borrowers' Excess Cash Flow. Each Excess Cash Flow payment
shall be due and payable within the lesser of (a) one hundred
twenty (120) Business Days after the conclusion of the applicable
Fiscal Year, or (b) ten (10) days after the delivery to Lender of
Borrowers' annual audited consolidated financial statements, and
shall be accompanied by a statement of Borrowers' Chief Financial
Officer showing in reasonable detail the calculations employed in
determining the amount of such payment. The Mandatory
Prepayments shall be applied, without premium or penalty, to all
principal installments due under the Term Loan in inverse order
of maturity, until the Term Loan is repaid in full.
2.9 Reserves Against Liabilities.
(a) Lender shall have the right to refuse to make
Revolving Loans or incur Letter of Credit and Guaranty
Obligations when the refusal is necessary to enable Lender, in
its sole discretion, exercised in a commercially reasonable
manner, to establish reserves against Collateral Availability, or
to decrease the ratios used in calculating the Borrowing Base;
provided, that in no event shall Borrowers be required, in
connection with any such reserve hereunder, to fund such reserve
or other deposit accounts prior to actual payment of any claim or
claims for which such reserve is established. In the event any
such reserve is established or any such ratio is decreased for
any reason after the Closing Date, such reserve or such decrease
shall become effective immediately for purposes of calculating
the Collateral Availability; provided, that Lender shall provide
Borrowers with not less than twenty (20) Business Days prior
written notice of the establishment of any such reserve or the
decrease of any such ratio before Lender shall have the right to
declare an Event of Default under SECTION 8.1(B) resulting from
the establishment of such reserve or the decrease of such ratio.
Without limiting the generality of the foregoing, Lender shall
establish separate initial reserves as follows:
(i) To support Transcisco's ability to
satisfy any Hungerford Indemnity Claims hereafter
asserted by or owing to Hungerford, or any successor,
assignee, or third party beneficiary of Hungerford, or
any other Person asserting any such claim derivatively
through him, Lender shall establish a reserve in the
initial amount of $800,000 as of the Closing Date, to
be adjusted by five incremental increases of $40,000
each, such increases to take effect on the first
Business Day of each of the five successive calendar
months following the Closing Date, until the total
amount thereof reaches $1,000,000 (the "Indemnity
Reserve"); and
(ii) To support Borrowers' ability to
fund all estimated costs and expenses of performing the
Response Action for the tasks set forth on SCHEDULE
7.1(G)(I), Lender shall establish a reserve in the
initial amount of $287,000 as of the Closing Date (the
"Remediation Reserve").
(b) From time to time during the term of this
Agreement, upon the written request of any Borrower, Lender may,
in its sole discretion, exercised in a commercially reasonable
manner, (i) make adjustments to the amounts of the Indemnity
Reserve, the Remediation Reserve, or other reserves in effect
from time to time pursuant to this SECTION 2.9, and (ii) make
Revolving Loans to enable such Borrower to satisfy the claims or
obligations giving rise to the applicable reserve.
2.10 All Loans to Constitute One Loan. Notwithstanding
any other provision of this Agreement, all Loans under this
Agreement and the other Loan Documents shall constitute one loan
to Borrowers, and all Liabilities of Borrowers under this
Agreement and the other Loan Documents shall constitute one
general obligation of Borrowers secured, except as otherwise
provided in SECTION 5.1(H), by Lender's security interest in all
the Collateral and by all other security interests, Liens,
claims, and encumbrances heretofore, now, or at any time
hereafter granted to or obtained by Lender with respect to
property or assets of any Borrower. All the rights of Lender set
forth in this Agreement shall apply to any modification of or
supplement to this Agreement and the other Loan Documents.
2.11 Loan Purpose. Borrowers shall use the proceeds of
the Revolving Loans solely to (a) discharge and satisfy the
outstanding balance of the Class F Claims in accordance with the
terms and conditions of the Plan on the Closing Date,
(b) refinance the obligations of TRS to Congress Financial
Corporation (Western) on the Closing Date, (c) fund Borrowers'
working capital and letter of credit requirements after the
Closing Date, and (d) fund the satisfaction of the claims and
obligations giving rise to the Reserves Against Liabilities
established pursuant to SECTION 2.9 on and after the Closing
Date. Borrowers' use of such proceeds shall be only for legal
and proper corporate purposes (duly authorized by Borrowers'
Boards of Directors) consistent with all applicable laws,
statutes, and regulations.
2.12 Term of Agreement. Subject to Lender's right to
cease making Revolving Loans to Borrowers, as set forth in
SECTION 3.1 or otherwise, the provisions of this Agreement shall
be in effect until the Termination Date; provided, that in the
event of a prepayment of the entire outstanding amount of the
Revolving Loans prior to the Termination Date with funds borrowed
from any Person other than Lender, Borrowers shall simultaneously
therewith pay to Lender, in immediately available funds, all
outstanding Liabilities in full, in accordance with the terms of
the agreements creating and instruments evidencing such
Liabilities, together with the Prepayment Fee, if any.
Notwithstanding termination of this Agreement, Borrowers'
indemnification liabilities to Lender, as set forth in SECTION
2.12(F), shall survive such termination.
2.13 Indemnity.
(a) Each Borrower shall indemnify and hold Lender
and Lender's respective Affiliates, officers, directors,
employees, attorneys and agents (each, an "Indemnified Person"),
harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities, and expenses
(including reasonable attorneys' fees and disbursements and other
costs of investigations or defense, including those incurred upon
any appeal) (each, an "Indemnified Claim") which may be
instituted or asserted against or incurred by such Indemnified
Person as the result of credit having been extended under this
Agreement and the other Loan Documents or in connection with or
arising out of the transactions contemplated hereunder or
thereunder; provided, that Borrowers shall not be liable for any
indemnification to such Indemnified Person to the extent that any
Indemnified Claim results from such Indemnified Person's gross
negligence or willful misconduct. Without limiting the
generality of the foregoing, Indemnified Claims shall include any
claim, action, suit, proceeding, loss, cost, damage, liability,
deficiency, fine, penalty, punitive damage, or expense (including
reasonable attorneys' and consultants' fees, investigation and
laboratory fees, court costs, and litigation expenses), directly
or indirectly resulting from, arising out of, or based upon
(i) any claim for brokerage commissions, finder's fees, or
investment banking fees in connection with the transactions
contemplated by this Agreement, or (ii) any Environmental Laws or
Release of any Hazardous Materials relating to any Real Property,
which indemnity shall include (A) any damage, liability, fine,
penalty, punitive damage, cost, or expense arising from or out of
any Indemnified Claim for personal injury (including sickness,
disease, death, pain, or suffering), tangible or intangible
property damage, compensation for lost wages, business income, or
profits or other economic loss, damage to the natural resources
or the environment, nuisance, pollution, contamination, leak,
spill, release, or other adverse effect on the environment,
(B) the cost of any required or necessary repair, cleanup,
treatment, remediation, or detoxification of any of the Real
Property and the preparation and implementation of any closure,
disposal, or remedial or other required actions in connection
with any of the Real Property, and (C) any Environmental Claim.
(b) None of Lender or any other Indemnified Person
shall be responsible or liable to any other party hereto, any
successor, assignee, or third party beneficiary of such Person,
or any other Person asserting any Indemnified Claim derivatively
through such party, for indirect, punitive, exemplary, or
consequential damages which may be alleged as a result of credit
having been extended under this Agreement or the other Loan
Documents.
(c) Upon the receipt by Lender or any Indemnified
Person of any Indemnified Claim which Lender or such Indemnified
Person believes is covered by the indemnity under this SECTION
2.12, Lender or such Indemnified Person shall promptly give
notice thereof to Borrowers, together with a description of the
Indemnified Claim and the sum of money, if known, involved;
provided, that the failure to give such notice or to give it in
any particular form or by any particular time shall not limit the
obligation of Borrowers under this SECTION 2.12 or otherwise.
Upon receipt of any such notice from Lender or any other such
Indemnified Person, Borrowers shall proceed to contest such
asserted Indemnified Claim, and shall make all decisions with
respect to the defense of any such asserted Indemnified Claim;
provided, that any counsel selected by Borrowers shall be
reasonably satisfactory to Lender or such other Indemnified
Person and, if the representation of such Indemnified Person by
such counsel would result in a conflict of interest with such
counsel's representation of any other Person, and in any event
upon Borrowers' consent, such Indemnified Person may obtain
separate counsel; and further provided, that Borrowers shall have
the right to settle or compromise any asserted Indemnified Claim
covered by the indemnity under this SECTION 2.12 only with the
consent of Lender or the other Indemnified Person requesting
indemnification, which consent shall not unreasonably be
withheld.
(d) Borrowers, for themselves and on behalf of their
respective successors and assigns, hereby waive, release, and
forever discharge any now existing or hereafter created or
arising right or claim against Lender or its assigns for
contribution, reimbursement, indemnity, or other similar rights
against Lender or its assigns in any way related to an
Environmental Claim, including any right to contribution that may
exist in any Borrower's favor pursuant to any Environmental Law
or under any common law theory.
(e) Borrowers hereby acknowledge and agree that:
(i) Lender is not now, and has not ever been, in control of the
Real Property or Borrowers' affairs; and (ii) Lender does not
have the capacity to influence Borrowers' conduct with respect to
the ownership, operation, or management of any of the Real
Property.
(f) The indemnity provided for in this SECTION 2.12
shall be an ongoing obligation of each Borrower that shall
survive termination of the financial accommodations provided for
under this Agreement and the other Loan Documents.
3. LOANS: DISBURSEMENTS
3.1 Revolving Loans.
(a) Provided that there does not then exist a
Default or an Event of Default, upon the request of Borrowers
therefor, Lender will make revolving loans ("Revolving Loans") to
Borrowers, repayable as provided in SECTION 4.1. Any such
Revolving Loan shall not exceed the lesser of (i) the Collateral
Availability and (ii) the Unused Line of Credit. Until all
amounts outstanding in respect of the Revolving Loans shall
become due and payable on the Termination Date, Borrower may from
time to time borrow, repay, and reborrow under this SECTION
3.1(A). Each Revolving Loan shall be made on notice, given not
later than 12:00 p.m. noon (Chicago time) on the Business Day of
the proposed Revolving Loan, by Borrowers to Lender. Each such
notice (a "Notice of Revolving Loan") shall be in writing or by
telephone to Lender, as directed by Lender from time to time,
confirmed immediately in writing by Borrowers, in substantially
the form of EXHIBIT E hereto, specifying therein the requested
date and amount of such Revolving Loan. Lender shall, not later
than 3:00 p.m. (Chicago time) on the date of the proposed
Revolving Loan, upon fulfillment of the applicable conditions set
forth in SECTION 9, wire transfer to a bank designated by
Borrowers and reasonably acceptable to Lender, the amount of such
Revolving Loan.
(b) The Revolving Loans shall be evidenced by the
Revolving Credit Note to be executed and delivered by Borrowers
on or before the Closing Date. The Revolving Credit Note shall
be payable to the order of Lender and shall represent the
obligation of each Borrower to pay the amount of the Revolving
Loan Liabilities. The date and amount of each Revolving Loan and
payment of principal with respect thereto shall be recorded on
the books and records of Lender, which books and records shall
constitute prima facie evidence of the accuracy of the
information therein recorded.
3.2 Eligible Accounts. Upon delivery to Lender of a
Schedule of Accounts, Lender shall make a determination, in the
exercise of its sole discretion, exercised in a commercially
reasonable manner, as to which Accounts listed thereon shall be
deemed "Eligible Accounts" for purposes of determining the
amounts to be advanced, if any, pursuant to SECTION 3.1(A). In
making such determination, Lender shall apply the general
criteria listed in SCHEDULE 3.2.
3.3 Eligible Inventory. Upon delivery to Lender of a
Schedule of Inventory, Lender shall make a determination, in the
exercise of its sole discretion, exercised in a commercially
reasonable manner, as to which Inventory listed thereon shall be
deemed "Eligible Inventory" for purposes of determining the
amounts to be advanced, if any, pursuant to SECTION 3.1(A). In
making such determination, Lender shall apply the general
criteria listed in SCHEDULE 3.3.
3.4 Letter of Credit and Guaranty Obligations.
(a) Lender agrees, subject to the terms and
conditions hereinafter set forth, to incur, from time to time on
written request of one or more Borrowers, Letter of Credit and
Guaranty Obligations supporting obligations of such Borrowers
arising in the ordinary course of business; provided, that the
amount of all Letter of Credit and Guaranty Obligations incurred
by Lender pursuant to this SECTION 3.4(A) at any one time
outstanding (whether or not then due and payable) shall not
exceed an amount equal to the lesser of: (i) $1,000,000; and (ii)
Collateral Availability; and provided further, that Lender shall
be under no obligation to incur Letter of Credit and Guaranty
Obligations in respect of any Letter of Credit or guaranty having
an expiry date which is later than one year following the date of
issuance thereof. At the time of each request by Borrowers that
a Letter of Credit or guaranty be issued, Lender, at its option,
may require Borrowers to execute and deliver to Lender an
application for such Letter of Credit in the form customarily
prescribed by Lender to issue Letters of Credit (the
"Applications") or such other documents as Lender may require
with respect to any guaranty. This Agreement supersedes any
terms of the Applications which are inconsistent with the terms
hereof.
(b) In the event that Lender shall make any payment
on or pursuant to any Letter of Credit and Guaranty Obligation,
such payments shall then be deemed to constitute a Revolving Loan
under SECTION 3.1(A).
(c) In the event that any Letter of Credit and
Guaranty Obligation, whether or not then due and payable, shall
for any reason be outstanding on the Termination Date, Borrowers
will pay to Lender Cash or Cash Equivalents in an amount equal to
the outstanding Letter of Credit and Guaranty Obligations. Such
Cash or Cash Equivalents shall be held by Lender in a cash
collateral account (the "Cash Collateral Account"). The Cash
Collateral Account shall be in the name of Lender (as a cash
collateral account), and shall be under the sole dominion and
control of Lender and subject to the terms of this SECTION 3.4.
Each Borrower hereby pledges, and grants to Lender a security
interest in, all such Cash or Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as
security for the payment of all amounts due in respect of the
Letter of Credit and Guaranty Obligations, whether or not then
due and payable.
(d) From time to time after funds are deposited in
the Cash Collateral Account, Lender may apply such Cash or Cash
Equivalents then held in the Cash Collateral Account to the
payment of any amounts, in such order as Lender may elect, as
shall be or shall become due and payable by Borrowers to Lender
with respect to such Letter of Credit and Guaranty Obligations.
(e) Neither Borrowers nor any Person or entity
claiming on behalf of or through Borrowers shall have any right
to withdraw any of the Cash or Cash Equivalents held in the Cash
Collateral Account, except that, upon the termination of any
Letter of Credit and Guaranty Obligations in accordance with its
terms and the payment of all amounts payable by Borrowers to
Lender in respect thereof, any funds remaining in the Cash
Collateral Account in excess of the then remaining Letter of
Credit and Guaranty Obligations shall be returned to Borrowers.
(f) Lender shall not have any obligation to invest
the funds in the Cash Collateral Account or deposit such funds in
an interest-bearing account, and interest and earnings thereon,
if any, shall be the property of Borrowers.
3.5 Disbursements. Each Borrower hereby authorizes and
directs Lender to disburse for and on the behalf of such Borrower
and Borrower's account, the proceeds of the Revolving Loans made
by Lender to Borrowers, pursuant to this Agreement, to such
Person as an officer or director of Borrowers shall direct,
whether in writing or orally. Lender may, at its option, make
Revolving Loans for the account of Borrowers to the extent that
any amounts are due and owing from Borrowers on account of the
Liabilities.
4. LOANS: PAYMENTS
4.1 Payments. Except as otherwise provided in
SECTION 4.2, all payments to Lender shall be payable at Lender's
address set forth above or at such other place or places as
Lender may designate from time to time in writing to Borrowers.
That portion of the Liabilities consisting of:
(a) interest payable pursuant to this Agreement
shall be due on the first Business Day of each month (for the
preceding month), and shall be charged through the last calendar
day of each month;
(b) costs, fees and expenses payable pursuant to
this Agreement shall be payable as and when provided in this
Agreement and, if not specified, on demand;
(c) principal payable on account of Revolving Loans
pursuant to SECTION 3.1 shall be due and payable to the extent
and on the date of any collections received by Lender with
respect to any proceeds of the Collateral and not applied to
interest;
(d) principal payable on account of the Term Loan
shall be due and payable to the extent and on the terms set forth
in the Term Loan Note and, to the extent not previously paid, on
the Termination Date; and
(e) the balance of the Liabilities, if any, shall be
payable as and when provided in this Agreement or the other Loan
Documents and, if not specified, on the Termination Date.
With respect to the payment of any Liability, including interest,
costs, fees, or expenses which become due hereunder, each
Borrower authorizes and directs Lender, at Lender's option, to
cause such Liability to be paid on such due date by charging such
Liability as a Revolving Loan against the Revolving Loan
Facility. Lender shall notify Borrowers of such payments
pursuant to SECTION 4.5.
4.2 Lockbox Account; Receipt and Application of Payment.
With respect to all cash, checks, notes, drafts, or other similar
items of payment relating to or constituting the Collateral, or
the proceeds thereof (including proceeds of Loans received after
the Closing Date), Borrowers shall, no later than the first
Business Day following receipt thereof: (a) deposit or cause the
same to be deposited, in kind, in the Collection Account, for
application on account of the Liabilities as provided below; and
(b) forward to Lender, on a daily basis, copies of all such items
and deposit slips related thereto, together with a collection
report in form and substance satisfactory to Lender. All cash,
notes, checks, drafts, or similar items of payment by or for the
account of Borrowers shall be the sole and exclusive property of
Lender immediately upon the receipt of such items by Borrowers.
For purposes of computing borrowing availability under this
Agreement, all payments shall be deemed received by Lender upon
the later of (i) notice to Lender of deposit of such payment in
the Collection Account and (ii) the crediting of such deposit for
Lender's account in immediately available funds. All amounts
deposited in the Collection Account shall be swept on a daily
basis to the Master Collection Account. For purposes of
computing interest and fees under this Agreement, all payments
shall be deemed received by Lender two (2) Business Days after
the later of (x) notice to Lender of deposit of such payment in
the Master Collection Account and (y) the crediting of such
deposit for Lender's account in immediately available funds.
Notwithstanding the generality of the foregoing, all such items
of payment shall, solely for purposes of determining the
occurrence of an Event of Default, be deemed received upon
deposit thereof in the Collection Account and notice to Lender of
such deposit, unless the same is subsequently dishonored for any
reason. All payments made by or on behalf of and all credits due
to Borrowers may be applied and reapplied in whole or in part to
any of Borrowers' Liabilities to the extent and in the manner
Lender deems advisable, provided that Lender will not charge
Borrowers additional interest in the event of Lender's
reapplication of payments made by or credits due Borrowers.
4.3 Collections, Lender's Right to Notify Account
Debtors. Each Borrower hereby authorizes Lender, now and at any
time or times hereafter, whether or not an Event of Default has
occurred, (a) to open such Borrower's mail and collect any and
all amounts due to such Borrower from Account Debtors, (b) to
notify any or all Account Debtors that the Accounts have been
assigned to Lender and that Lender has a security interest
therein, and (c) to direct such Account Debtors to make all
payments due from them to such Borrower upon the Accounts,
including the Special Collateral, directly to Lender or to a
lockbox designated by Lender. Each Borrower irrevocably makes,
constitutes and appoints Lender (and all Persons designated by
Lender for that purpose) as such Borrower's true and lawful
attorney (and agent-in-fact) to endorse such Borrower's name on
any checks, notes, drafts, or any other form of payment relating
to the Collateral or proceeds of the Collateral that come into
Lender's possession or under Lender's control. Any such notice,
in Lender's sole discretion, may be sent on such Borrower's
stationery and, upon request of Lender, such Borrower shall
cosign such notice with Lender.
4.4 Application of Payments and Collections. Each
Borrower irrevocably waives the right to direct the application
of any and all payments and collections at any time or times
hereafter received by Lender from or on behalf of such Borrower.
Each Borrower irrevocably agrees that Lender shall have the
continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter
by Lender or its agents against the Liabilities in such manner as
Lender may deem advisable, notwithstanding any entry by Lender on
its books and records.
4.5 Statement of Account. Lender shall provide Borrowers
with a statement of account relating to the Liabilities on a
monthly basis. Each such statement of account shall be presumed
correct and accurate and shall, except for Lender's right to
reapply payments, constitute an account stated between Borrowers
and Lender, unless thereafter waived in writing by Lender or
unless, within thirty (30) days after Borrowers' receipt thereof,
Borrowers deliver to Lender, by registered or certified mail,
written objection thereto specifying the error or errors
contained therein.
5. COLLATERAL: GENERAL TERMS
5.1 Security Interest. To secure the prompt payment to
Lender of the Liabilities, each Borrower hereby grants to Lender
a continuing first priority security interest in and to, and a
first Lien upon, subject only to those Permitted Liens listed in
SCHEDULE 5.3, all of the following property and interests in
property of such Borrower, whether now owned or existing,
hereafter acquired or arising, or in which such Borrower now or
hereafter has any rights, and wheresoever located (all of which
being hereinafter collectively referred to as the "Collateral"):
(a) Accounts;
(b) Inventory;
(c) Equipment;
(d) Fixtures;
(e) General Intangibles; provided, that
notwithstanding any other provision hereof, this Agreement is not
intended and shall not be construed to transfer or convey to
Lender any right, title, or interest of any Borrower in the
UniTemp Licenses to the extent that the assignment, pledge, grant
of a security interest, or enforcement of such hereunder in
respect thereof would cause a breach under any valid and
enforceable nonassignment clause or similar provision contained
in documents or instruments governing the disposition of such
right, title, or interest;
(f) Chattel Paper, Instruments, and Documents;
(g) all deposit accounts, cash, cash equivalents,
instruments, monies, residues and property of any kind now or at
any time hereafter in the possession or under the control of
Lender, a bailee of Lender, or any Participant;
(h) Real Property; provided, that notwithstanding
anything to the contrary in this Agreement or the other Loan
Documents, the security interest of Lender in and to the Real
Property owned by TRS and located at 2425 Industrial Boulevard,
Waycross, Ware County, Georgia, as described more particularly in
that certain Deed to Secure Debt, Assignment of Rents, and
Security Agreement executed by TRS and Lender as of even date
herewith, shall secure repayment only of the Term Loan and
related obligations, as set forth in such Deed;
(i) all accessions to, substitutions for, and all
replacements, products and proceeds of the foregoing, including
proceeds of insurance policies insuring the Collateral; and
(j) all books and records (including customer lists,
credit files, computer programs, printouts and other computer
materials and records) of such Borrower pertaining to any of the
foregoing.
5.2 Special Collateral. Immediately upon any Borrower's
receipt of that portion of the Collateral which is or becomes
evidenced by an agreement, Instrument and/or Document, including,
without limitation, promissory notes, trade acceptances,
documents of title, and warehouse receipts (the "Special
Collateral"), such Borrower shall deliver the original thereof to
Lender, together with appropriate endorsements or other specific
evidence (in form and substance acceptable to Lender) of
assignment thereof to Lender.
5.3 Priority. Each Borrower warrants and represents to
Lender that the Collateral is not subject to any Liens, except as
disclosed and listed as permitted in SCHEDULE 5.3, and that all
such Liens are junior and subordinate to Lender's Liens upon the
Collateral, except as consented to by Lender in writing and as
disclosed in SCHEDULE 5.3.
5.4 Further Assurances. At Lender's request, Borrowers
shall execute and deliver to Lender, at any time hereafter, all
Supplemental Documentation that Lender may reasonably request, in
form and substance acceptable to Lender, and pay the costs of any
recording or filing of the same. Each Borrower hereby
irrevocably makes, constitutes, and appoints Lender (and all
Persons designated by Lender for that purpose) as such Borrower's
true and lawful attorney (and agent-in-fact) to sign the name of
such Borrower on any Supplemental Documentation and to deliver
any Supplemental Documentation to such Persons as Lender, in its
sole discretion, may elect. A carbon, photographic, or other
reproduction of this Agreement or of a financing statement shall
be sufficient as a financing statement.
5.5 Special Provision Relating to Accounts.
(a) Verification of Accounts; Inspection; Audit.
Any of Lender's officers, employees or agents shall have the
right, at any time hereafter, in Lender's name or in the name of
any Borrower, or, if acceptable to Lender, in the name of a third
party, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone or otherwise. Lender
(by any of its officers, employees or agents) shall have the
right, at any time during Borrowers' usual business hours, to
inspect the Collateral and all records related thereto (and to
make extracts from such records) and the premises upon which any
of the Collateral is located, and the right, at any time, to
discuss Borrowers' affairs and finances and the Collateral with
any attorney, accountant, Account Debtor or creditor of any
Borrower.
(b) Records and Schedules of Accounts. Each
Borrower shall keep accurate and complete records of its Accounts
and shall furnish to Lender (i) weekly, in form and substance
acceptable to Lender, a report detailing, by Account Debtor,
certain information regarding the Accounts, as requested by
Lender (each such report, a "Schedule of Accounts"), and
(ii) upon demand, copies of proofs of delivery and customer
statements, the original copy of all documents, including
repayment histories and present status reports, relating to the
Accounts so scheduled, and such other matters and information
relating to the status of the Accounts as Lender shall reasonably
request.
(c) Notice Regarding Disputed Accounts. In the
event any amounts due and owing in excess of $25,000 are in
dispute between any Account Debtor and any Borrower, or any
Accounts from such Account Debtor in excess of said amount are
canceled due to a return of Inventory, such Borrower shall, upon
learning of such dispute or cancellation, provide Lender with
written notice thereof at the time of submission of the next
Schedule of Accounts pursuant to SECTION 5.5(B), explaining in
detail the reason for the dispute or cancellation, all claims
related thereto and the amount in controversy.
5.6 Special Provision Relating to Inventory.
(a) Sale of Inventory. Until an Event of Default
occurs, Borrowers may sell Inventory in the ordinary course of
business, which shall not include a transfer in partial or total
satisfaction of Indebtedness.
(b) Safekeeping of Inventory. Each Borrower shall
be responsible for:
(i) the safekeeping of Inventory;
(ii) any loss or damage thereto or destruction
thereof occurring or arising in any manner or fashion from any
cause; and
(iii) any act of default by any carrier,
bailee, warehouseman, or forwarding agency thereof or other
Person in any way dealing with or handling Inventory.
(c) Records and Schedules of Inventory. Each
Borrower shall keep and report accurate records of Inventory in
accordance with GAAP and on a basis consistent from one
accounting period to the next and for periods no less frequently
than monthly, and shall furnish to Lender, on or before the
fifteenth (15th) day of each month, in form and substance
satisfactory to Lender, a report detailing the Inventory, as of
the end of the preceding month based upon such Borrower's
Inventory records (each such report, a "Schedule of Inventory").
The Schedule of Inventory shall describe in reasonable detail:
(i) the location of Inventory; (ii) the Inventory values at each
location; (iii) that portion of Inventory which such Borrower
believes constitutes Eligible Inventory; and (iv) that portion of
Inventory consisting of parts, supplies, and such other
categories as Lender may request. The Schedule of Inventory
shall also include the cost of sales and amount sold of such
Inventory. Borrowers' Inventory records shall be based upon and
evidence the results of physical Inventory counts conducted no
less frequently than annually. Upon the request of Lender,
Borrowers shall deliver to Lender copies of the results of any
physical Inventory count showing in reasonable detail the
locations and values for specific items of Inventory and such
other information and supporting documents regarding Inventory
that Lender deems necessary.
(d) Returns of Inventory. If any Account Debtor
returns any Inventory to a Borrower at any time after shipment
and such return is attempted before the occurrence of an Event of
Default, such Borrower shall notify Lender of such return and the
cancellation of the Account as required by SECTION 5.5(C).
Borrowers shall not accept any such returned Inventory generating
an Account on which a given Account Debtor is obligated for an
amount in excess of $10,000 in the aggregate on any single day
without prior notice to Lender. In the event such attempted
return occurs after the occurrence of an Event of Default, each
Borrower shall segregate all returned Inventory from all other
property of such Borrower or in such Borrower's possession and
shall conspicuously label such returned Inventory as the property
of Lender. With respect to any return or attempted return of
Inventory, each Borrower shall notify Lender of the same
immediately, specifying the reason for such return and the
location and condition of the returned Inventory.
(e) Locations of Inventory; Notice to Warehousemen.
Each Borrower shall store Inventory only at those locations which
are either listed as locations in SCHEDULE 6.1(H) or have been
previously disclosed in writing to and consented to by Lender.
Each Borrower shall send to any bailee, warehouseman or similar
Person holding any Inventory written notice informing such Person
of Lender's security interest in such Inventory and directing
such Person to issue receipts for all such Inventory in the name
of Lender.
6. WARRANTIES AND REPRESENTATIONS
6.1 General Warranties and Representations. To induce
Lender to provide the financial accommodations to Borrowers
provided for herein and in the other Loan Documents, Borrowers
make the following warranties and representations to Lender, each
of which will be correct and true on the Closing Date and on the
date that each subsequent Revolving Loan or Letter of Credit and
Guaranty Obligation is requested by any Borrower:
(a) Corporate Existence and Qualification. Each
Borrower: (i) is a corporation duly organized and existing and
is in good standing under the laws of the State of Delaware
(except for TRS, which is a corporation duly organized and
existing and is in good standing under the laws of the State of
California); (ii) is qualified or licensed to do business in all
other countries, states and provinces, the laws of which require
it to be so qualified or licensed, except where the failure to so
qualify would not have a Material Adverse Effect; (iii) has the
requisite corporate power and authority and the legal right to
own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease, and to
conduct its business as now, heretofore and proposed to be
conducted; and (iv) is in compliance with its Certificate of
Incorporation and By-laws.
(b) Ownership of Property; Liens.
(i) Each Borrower holds (A) good and marketable
fee simple title to all real estate, fixtures, and improvements
described as owned, and good and valid leasehold interests to all
of the property described as leased, in SCHEDULE 6.1(B)-1, and
(B) good and marketable title to, or valid leasehold interests
in, all other properties and assets, except as specifically
disclosed in SCHEDULE 6.1(B)-2, or where the failure to have such
title or interest would not in the aggregate have a Material
Adverse Effect, and none of such leases or any other properties
and assets is subject to any Liens, except for Permitted Liens.
Each Borrower has received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements,
bills of sale and other documents, and has duly effected all
recordings, filings, and other actions necessary to establish,
protect, and perfect its respective right, title, and interest in
and to all such property except where the failure to have
received such documents or effected such actions will not, in the
aggregate, have a Material Adverse Effect.
(ii) The locations of all the Real Property are
listed in SCHEDULE 6.1(B)-1, and each Borrower holds no other
interest in real estate, fixtures, or improvements, and is lessee
or lessor under no other lease, other than as set forth therein.
(c) Restrictive Agreements. None of the Borrowers
is a party to any contract or agreement or subject to any charge,
corporate restriction, judgment, decree, or order affecting
(i) its respective financial condition or operations, (ii) its
ability to perform under this Agreement and the other Loan
Documents, (iii) its ability to grant security interests in and
liens upon the Collateral, or (iv) Lender's rights and remedies
under this Agreement and the other Loan Documents, except to the
extent that any such contract, agreement, charge, restriction,
judgment, decree, or order would not have a Material Adverse
Effect.
(d) Compliance with Laws, Agreements. Except as set
forth in SCHEDULE 6.1(D), (i) none of the Borrowers is in
violation of any applicable statute, regulation or ordinance of
any governmental entity, or of any agency thereof, including OSHA
and all Environmental Laws, in any respect affecting (A) its
respective financial condition or operations, (B) its ability to
perform under this Agreement and the other Loan Documents,
(C) the Collateral, or (D) Lender's rights and remedies under
this Agreement and the other Loan Documents, except to the extent
any such violation would not have a Material Adverse Effect, and
(ii) the execution, delivery, and performance by each Borrower of
this Agreement and the other Loan Documents shall not, by the
lapse of time, the giving of notice, or otherwise, constitute a
violation of any applicable law or a breach of any provision
contained in such Borrower's Certificate of Incorporation or
Bylaws or contained in any agreement, instrument, or document to
which any Borrower is now a party or by which it is bound, except
to the extent any such violation would not have a Material
Adverse Effect.
(e) No Default. Neither any Borrower nor, to each
Borrower's knowledge, any third party, is in default under or
with respect to any contract, agreement, lease, or other
instrument to which such Borrower is a party, except for defaults
which (either individually or collectively with other defaults
arising out of the same event or events) would not have a
Material Adverse Effect, or as listed in SCHEDULE 6.1(E). No
Default or Event of Default has occurred and is continuing.
(f) ERISA. Neither any Borrower nor any ERISA
Affiliate, nor any other Person to which any Borrower or any
ERISA Affiliate is a successor or parent corporation within the
meaning of ERISA Section 4069(b), has engaged in a transaction
described in ERISA Section 4069. There is no lien under Section
302(f) of ERISA in favor of any Pension Plan of any Borrower or
in favor of any Pension Plan of any ERISA Affiliate. All Pension
Plans that are either maintained by any Borrower or ERISA
Affiliate or to which any Borrower or ERISA Affiliate has or will
on the Closing Date have any obligation to contribute are listed
in SCHEDULE 6.1(F). With respect to each Pension Plan listed in
SCHEDULE 6.1(F) and all Welfare Plans of each Borrower or any
ERISA Affiliate and all Welfare Plans to which each Borrower or
any ERISA Affiliate is obligated to contribute:
(i) except as disclosed in SCHEDULE 6.1(F), in
the case of any Pension Plan, there is no liability for tax
imposed by Section 4971 of the IRC by reason of any "accumulated
funding deficiency," as defined in Section 302 of ERISA, nor are
there any "unfunded vested benefits," as defined in Section
4006(a)(3)(E)(iii) of ERISA in the case of any Pension Plan other
than a Multiemployer Plan and in Section 4211 of ERISA in the
case of a Multiemployer Plan (limited to Borrowers' knowledge in
the case of any Multiemployer Plan);
(ii) except as disclosed in SCHEDULE 6.1(F), to
each Borrower's knowledge, neither such Borrower nor any ERISA
Affiliate has or will on the Closing Date have any obligation to
contribute to any Multiemployer Plan;
(iii) except as disclosed in SCHEDULE 6.1(F),
each plan and all its fiduciaries are in compliance in all
material respects with ERISA, the IRC, and any other applicable
Federal or state laws (limited to Borrowers' knowledge in the
case of any Multiemployer Plan);
(iv) no Reportable Events have occurred that,
in the aggregate, could reasonably be expected to result in a
Material Adverse Effect (limited to Borrowers' knowledge in the
case of any Multiemployer Plan);
(v) neither any Borrower nor any ERISA
Affiliate has engaged or participated in any Prohibited
Transactions that could result in liability (either to an
Employee Benefit Plan or/and its participants under Section 409
of ERISA, or/and for any taxes under Section 4975 of the IRC or
Section 502(i) of ERISA) that could reasonably be anticipated to
result, in the aggregate, in a Material Adverse Effect;
(vi) there are no delinquencies with respect to
any returns, reports, or premiums required to be filed with or
paid to any governmental agency, authority, or instrumentality,
including the IRS, the Department of Labor, and the PBGC, that
could reasonably be anticipated to result, in the aggregate, in a
Material Adverse Effect (limited to Borrowers' knowledge after
reasonable inquiry in the case of any Multiemployer Plan);
(vii) no contributions due from any Borrower or
ERISA Affiliate are delinquent or, if there are any
delinquencies, the adverse consequences of such delinquencies,
such as financial penalties or, in the case of insurance
premiums, potential losses of coverage, would not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect;
(viii) with respect to each plan that is a
Pension Plan, other than a Multiemployer Plan, neither any
Borrower nor any ERISA Affiliate has incurred any liability to
the PBGC, and there is no plan or present intention of any
Borrower or any ERISA Affiliate to take any action or actions
that could reasonably be expected to result in liability under
ERISA Section 4062 or any successor provision to the PBGC or to a
trustee appointed under ERISA section 4042; and
(ix) to each Borrower's knowledge, with respect
to each plan that is a Pension Plan and a Multiemployer Plan,
neither such Borrower nor any ERISA Affiliate has incurred any
unpaid withdrawal liability, and no event has occurred that, with
the giving of notice under ERISA Section 4219, would result in
either withdrawal liability under ERISA Section 4201 or a
Material Adverse Effect.
(g) Taxes. Each Borrower has filed all Federal,
state, and material local tax returns and other reports it is
required by law to file and has paid, to the extent due and
payable, all Charges.
(h) Location of Collateral. The offices or
locations where each Borrower keeps the Collateral and books and
records, including computer programs, printouts and other
computer materials and records concerning the Collateral, are at
the locations listed in SCHEDULE 6.1(H).
(i) Executive Offices. The addresses specified in
SCHEDULE 6.1(H) include and designate each Borrower's chief
executive offices, chief place of business and other offices and
places of business and are such Borrower's sole offices and
places of business.
(j) Prior Names. None of the Borrowers has, during
the preceding five (5) years, been known as or used any other
corporate or fictitious names.
(k) Corporate Power; Authorization. Each Borrower
has the right and power and is duly authorized and empowered to
enter into, execute, deliver, and perform this Agreement and the
other Loan Documents, and its officers executing and delivering
this Agreement and the other Loan Documents are duly authorized
and empowered to do so.
(l) Governmental Approval. All material
governmental licenses and permits held by each Borrower are
listed in SCHEDULE 6.1(L). Except as set forth in SCHEDULE
6.1(L), each Borrower has, and is current and in good standing
with respect to, all governmental approvals, permits,
certificates, inspections, consents, Governmental Authorization,
and franchises necessary to continue to conduct its business as
heretofore conducted and to own or lease and operate the
properties now owned or leased by it.
(m) Financials. The unaudited consolidating
financial statements of Borrowers, including balance sheet and
statements of income and changes in financial position, as of
December 31, 1993, March 31, 1994, and, on an interim basis,
June 30, 1995, and the pro forma opening balance sheet of
Borrowers dated as of July 31, 1995, have each been prepared in
accordance with GAAP and fairly present the assets, liabilities,
and financial condition and results of operations of Borrowers,
and such other Persons described therein as of the dates thereof;
there are no omissions or other facts or circumstances which are
or may be material and there has been no material and adverse
change in the assets, liabilities, or financial condition of
Borrowers since the date of the Financials; there exists no
equity or long term investments in, or outstanding advances to,
any Person not reflected in the Financials; there are no actions
or proceedings which are pending or, to Borrowers' knowledge,
threatened, against Borrowers or any other Person which might
result in a Material Adverse Effect; except for trade payables
arising in the ordinary course of their business since the dates
reflected in the Financials, Borrowers have no actions or
proceedings pending and no Indebtedness and have not guaranteed
the obligations of any other Person.
(n) Margin Regulations. None of the Borrowers'
execution and delivery of this Agreement and the other Loan
Documents shall directly or indirectly violate or result in a
violation of Section 7 of the Securities and Exchange Act of
1934, as amended, or any regulations issued pursuant thereto,
including Regulations G, U, T, and X of the Board of Governors of
the Federal Reserve System, and none of the Borrowers owns or
intends to purchase or carry any "margin security" as defined in
said Regulations.
(o) Payment of Indebtedness. None of the Borrowers
is in default in the payment when due of any Indebtedness, and,
since the date of the Financials, each Borrower's accounts
payable have been paid in accordance with historical practice.
(p) Use of Proceeds. Each Borrower's use of the
proceeds of any advances and re-advances made by Lender pursuant
to this Agreement are, and will continue to be, legal and proper
corporate uses duly authorized by such Borrower's Board of
Directors and such uses are consistent with all applicable laws
and statutes, as in effect as of the date hereof.
(q) Conduct of Business; Intellectual Property.
(i) Each Borrower has sufficient personnel and
possesses adequate assets, licenses, patents, patent
applications, copyrights, trademarks, trade names, service
marks, and other Intangible Assets to continue to conduct
its business as heretofore conducted without any known
conflict with the rights of others (except where such
conflict would not have a Material Adverse Effect), and all
such licenses, patents, patent applications, copyrights,
trademarks, trade names, and service marks are listed in
SCHEDULE 6.1(Q). The consummation of the transactions
contemplated hereby will not alter or impair in any material
respect any of such rights of any Borrower, including the
rights of any Borrower in and to the Uni-Temp Licenses.
(ii) The Uni-Temp Licenses are in full force and
effect. None of the Borrowers is in default in the
performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in the Uni-
Temp Licenses, and to the knowledge of Borrowers, no other
party to the Uni-Temp Licenses is in default in the
performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained therein.
The Borrowers' execution, delivery, and performance of this
Agreement and the obligations of Borrowers and their
Subsidiaries hereunder will not violate any provision of the
Uni-Temp Licenses, or conflict with, result in a breach of,
result in or permit their termination or acceleration of
rights or obligations under, or constitute (with due notice
or lapse of time or both) a default under, the Uni-Temp
Licenses.
(r) Capital Structure. SCHEDULE 6.1(R) sets forth
the capital structure of Borrowers, including, with respect to
each Borrower as of the Closing Date, (i) the number, nature and
holder of all its outstanding capital Stock, (ii) the number of
its authorized, issued and treasury shares, and (iii) the
options, warrants or similar rights to acquire from such
Borrower, or agreements or other obligations by such Borrower,
absolute or contingent, to issue or sell such Borrower's capital
Stock.
(s) Hazardous Materials. Except as disclosed in
SCHEDULE 7.1(G)(I):
(i) the operations of each Borrower (including,
without limitation, all operations and conditions at or in any
Real Property) comply in all material respects with all
Environmental Laws;
(ii) Each Borrower has obtained all material
Governmental Authorizations under Environmental Laws necessary to
its operations, and all such Governmental Authorizations are in
good standing in all material respects, and each Borrower is in
compliance with all material terms and conditions of such
Governmental Authorizations;
(iii) (a) None of the Borrowers has received
(1) any notice or claim to the effect that such Borrower is or
could reasonably be expected to be subject to a material
liability to any Person as a result of the Release or threatened
Release of any Hazardous Materials or (2) any letter or request
for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42
U.S.C. SECTION 9604 et seq.) or comparable state laws, and (b) to each
Borrower's knowledge, none of its operations is the subject of
any Federal or state investigation evaluating whether any
remedial action is needed to respond to a Release or threatened
Release of any Hazardous Material at any location of Real
Property;
(iv) none of the operations of any Borrower is
the subject of any pending judicial or administrative proceeding
alleging the violation of or liability under any Environmental
Laws which, if adversely determined, could reasonably be expected
to have a Material Adverse Effect;
(v) Each Borrower and all its present Real
Property as well as, to the knowledge of such Borrower, all its
past Real Property and operations, are not subject to any
outstanding written order or agreement with any governmental
authority or private party (other than lease agreements entered
into in the ordinary course of business containing standard
provisions relating to environmental matters) respecting (a) any
liabilities which have arisen or may arise under any
Environmental Laws or (b) any Environmental Claims;
(vi) None of the Borrowers nor, to the
knowledge of Borrowers, any predecessor of any Borrower has filed
any notice under any Environmental Law indicating past or present
treatment, storage, or disposal of Hazardous Materials at any
Real Property, and none of the operations of Borrowers involve
the treatment or disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent, at any Real
Property, and none of the Borrowers nor, to the knowledge of
Borrowers, any predecessor in title to any Borrower or any third
party at any time occupying any Real Property has at any time
used, generated, disposed of, stored, transported to or from,
released, or threatened the release of any Hazardous Materials,
in any form, quantity, or concentration on, from, under, or
affecting such Real Property in a manner that could reasonably be
expected to result in material liability of or material claim
against any Borrower;
(vii) no Hazardous Materials exist on, under,
or about any Real Property in a manner that could give rise to an
Environmental Claim having a Material Adverse Effect, and no
Borrower has filed any notice or report of a Release of any
Hazardous Materials that could reasonably be expected to give
rise to an Environmental Claim having a Material Adverse Effect;
(viii) none of the Borrowers and, to the
knowledge of Borrowers, none of their predecessors have disposed
of any Hazardous Materials in a manner that would give rise to an
Environmental Claim having a Material Adverse Effect;
(ix) no underground storage tanks or surface
impoundments are on or at any Real Property that would reasonably
be expected to give rise to any Environmental Claim materially
adversely effecting such Real Property;
(x) no Lien in favor of any governmental
authority for (A) any liability under Environmental Laws, or
(B) damages arising from or costs incurred by such governmental
authority in response to a Release has been filed or attached to
any Real Property;
(xi) the "estimated cost range" set forth in
SCHEDULE 7.1(G)(I) is an estimate, as of the Closing Date, of the
cost to perform the Response Action with respect to each of the
tasks set forth thereon, prepared in accordance with good and
prudent engineering practices so as to reflect the best estimate
of such cost; and
(xii) there is no present, and none of the
Borrowers has any knowledge of any impending, restriction on the
ownership, occupancy, use, or transferability in connection with
any (A) Environmental Law or (B) Release.
(t) Litigation. Except as listed in SCHEDULE
6.1(T), there is no pending or threatened action, suit or
proceeding against or affecting any Borrower or any Subsidiary of
any Borrower, or the property of any Borrower or of any
Subsidiary of any Borrower, in any court, or before any
arbitrator of any kind, or before or by any governmental body,
which action, suit or proceeding might have a Material Adverse
Effect.
(u) Insurance Policies. SCHEDULE 6.1(U) lists all
insurance of any nature maintained for current occurrences by any
Borrower, as well as a summary of the terms of such insurance.
All such policies are in full force and effect and provide
coverage of such risks and for such amounts as is customarily
maintained for businesses of the scope and size of each Borrower.
(v) Schedule of Deposit Accounts. SCHEDULE 6.1(V)
lists all banks and other financial institutions at which each
Borrower maintains or will maintain deposit and/or other
accounts, and such Schedule correctly identifies the name and
address of each depository, the name in which the account is
held, the purpose of the account, and the complete account
number.
(w) Labor Matters. There are no strikes or, to any
Borrower's knowledge, other labor disputes, against any Borrower
pending or, to any Borrower's knowledge, overtly threatened, that
would have a Material Adverse Effect. Hours worked by and
payment made to the employees of each Borrower have not been in
violation of the Fair Labor Standards Act or any other applicable
law dealing with such matters, which violation would have a
Material Adverse Effect. All payments due from each Borrower on
account of employee health and welfare insurance which would have
a Material Adverse Effect if not paid will be paid or, if not
due, will be accrued as a liability on the books of such
Borrower.
(x) Employment and Labor Agreements. Except as
listed in SCHEDULE 6.1(X), there are no employment agreements and
no agreements for the payment of deferred compensation,
severance, or change in control pay covering the officers and
managers of any Borrower, and there are no collective bargaining
agreements or other labor agreements covering any employees of
any Borrower. A true and complete copy of each such agreement
has been furnished to Lender.
(y) Contracts and Agreements. SCHEDULE 6.1(Y) lists
all outstanding material contracts and agreements to which any
Borrower will be party as of the Closing Date, except (i) the
Leases listed in SCHEDULE 6.1(B)-1, (ii) contracts entered into
in the ordinary course of Borrowers' business with any customer,
(iii) purchase orders covering inventory ordered in the ordinary
course of business, (iv) contracts entered into in the ordinary
course of Borrowers' business (other than with vendors) which do
not involve an aggregate expenditure in any year of more than
$50,000, (v) written sales commissions agreements, and
(vi) contracts with vendors entered into in the ordinary course
of business. Except as listed in SCHEDULE 6.1(Y), no such
contract or agreement has been amended.
(z) Solvent Financial Condition. Borrowers on a
consolidated basis are now and, after giving effect to the
Subordinated Loan, the Term Loan, and the initial Revolving Loans
to be made hereunder, at all times will be, Solvent.
(aa) Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in
connection with the transactions contemplated by this Agreement.
(ab) Investment Company Act. No Borrower is an
"investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of
1940, as the same may be amended from time to time.
(ac) Consummation of Transactions Related to the
Plan. Borrowers have delivered to Lender correct and complete
executed copies of (i) the Plan, all schedules and exhibits
thereto, and all other agreements, documents, and certificates
related thereto, and (ii) all agreements, documents, and
certificates which have been executed and delivered in connection
with the final settlements and payments of the Class F Claims.
All such items are listed in SCHEDULE 6.1(AC). No other order,
agreement, or document affects any material term of the Plan or
of such settlements.
(ad) Compliance with Terms of Plan. SCHEDULE
6.1(AD) lists all remaining obligations of any Borrower under the
Plan remaining to be satisfied as of the Closing Date (and taking
into account the consummation of final settlements and payments
of the Class F Claims), including the timing and amount of any
and all payments due to any Person under the Plan. Transcisco is
and, with respect to obligations coming due in the future,
reasonably expects to continue to be, in compliance with all
obligations under the Plan.
(ae) Loss Carryovers. The application of the Loss
Carryovers and any additional net operating losses of Transcisco
for the period beginning April 1, 1995 and ending on the Closing
Date are not subject to limitation under Section 382 of the IRC.
The losses and credits of Transcisco, including the Loss
Carryovers, will not be subject to limitation under either
Section 382 or 383 of the IRC as a result of a change in
ownership of Transcisco upon any combination of (i) the
transactions contemplated by this Agreement, (ii) the
consummation of the Subordinated Loan, or (iii) the issuance of
the Warrant Shares upon exercise of the Warrants, as such terms
are defined in the documents governing the Subordinated Loan.
For purposes of this SECTION 6.1(AE), the calculation of any
change in ownership of Transcisco shall take into account any
possible changes in ownership of Stock as a result of transfers
of Stock by Hungerford and his Affiliates or the exercise of any
outstanding options to purchase or transfer Stock.
Lender and each Borrower agree that any matter disclosed in any
Schedule shall be deemed to be included in any other Schedule
that would require the disclosure of such matter.
6.2 Account Warranties and Representations. Except as
specifically disclosed to and acknowledged by Lender in writing,
Borrowers warrant and represent that with respect to Accounts:
(a) those Accounts designated as Eligible Accounts
on any Schedule of Accounts meet each requirement set forth in
SCHEDULE 3.2 at the time such Schedule of Accounts is provided to
Lender, and Lender may rely thereon in determining which Accounts
may be Eligible Accounts;
(b) all Accounts are genuine, are in all respects
what they purport to be, are not evidenced by a judgment and are
evidenced by executed original instruments, agreements,
contracts, or documents, which will be delivered to Lender upon
request therefor;
(c) all Accounts are undisputed and arise from bona
fide transactions completed in accordance with the terms and
provisions contained in any documents related thereto;
(d) the amounts of the face values shown on any
Schedule of Accounts provided to Lender, and all invoices and
statements delivered to Lender with respect to any Account, are
not subject to any retainages or holdbacks of any type, are
actually and absolutely owing to the listed Borrower, and are not
contingent for any reason;
(e) there are no setoffs, counterclaims, or disputes
existing or asserted with respect thereto, and none of the
Borrowers has made any agreement with any Account Debtor
thereunder for any deduction therefrom, except for allowances
allowed by Borrowers in the ordinary course of their business for
prompt payment, all of which discounts or allowances are
reflected in the calculation of the face amount of the invoices
to which such discounts or allowances relate;
(f) to the knowledge of the Borrower submitting each
Schedule of Accounts, there are no facts, events, or occurrences
which in any way impair the validity or enforcement thereof or
tend to reduce the amount payable thereunder from the invoice
face amount shown on any Schedule of Accounts and on all
contracts, invoices, and statements delivered to Lender with
respect thereto;
(g) to the knowledge of the Borrower submitting each
Schedule of Accounts, all Account Debtors thereunder (i) had the
capacity to contract at the time any contract or other document
giving rise to the Account was executed and (ii) are Solvent;
(h) they are not subject to any Lien, security
interest, or other encumbrance, including any Lien on account of
Hazardous Materials, other than the security interest of Lender
and any other Permitted Liens, the priority of which is, or has
been, subordinated to the security interest of Lender in a manner
acceptable to Lender;
(i) None of the Borrowers has any knowledge of any
fact or circumstance which would impair the validity or
collectibility thereof;
(j) to the knowledge of the Borrower submitting each
Schedule of Accounts, there are no proceedings or actions which
are threatened or pending against any Account Debtor thereunder
which might result in any Material Adverse Effect; and
(k) no Account has been assigned or pledged to any
other Person.
6.3 Inventory Representation and Warranties. Except as
specifically disclosed to and acknowledged by Lender in writing,
Borrowers warrant and represent that with respect to Inventory:
(a) Lender may rely on all statements, warranties or
representations made in any Schedule of Inventory in determining
which items of Inventory listed in such Schedule of Inventory are
to be deemed Eligible Inventory;
(b) all Inventory is located on the premises listed
in SCHEDULE 6.1(H), or is Inventory in transit for sale or
delivery in the ordinary course of business;
(c) no Inventory is subject to any Lien whatsoever,
except for Permitted Liens; and
(d) no Inventory is stored with a bailee,
warehouseman, or similar party, except as specified in
SCHEDULE 6.1(H).
6.4 Automatic Warranty and Reaffirmation of Warranties
and Representations; Survival of Warranties and Representations.
Each request for a Revolving Loan or Letter of Credit and
Guaranty Obligation made by any Borrower pursuant to this
Agreement or the other Loan Documents shall constitute (a) a
warranty and representation by such Borrower to Lender that there
does not then exist a Default or an Event of Default, except as
otherwise notified by such Borrower and (b) a reaffirmation as of
the date of said request of the representations and warranties of
such Borrowers contained in SECTIONS 6.1, 6.2 AND 6.3 with
respect to Collateral then existing. All representations and
warranties of Borrowers contained in this Agreement and the other
Loan Documents shall survive the execution, delivery, and
acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto. Upon the date
hereof and at such other times as Lender in its sole discretion
may request, one or more Borrowers shall deliver to Lender a
Certificate of Validity of Collateral in the form of EXHIBIT D,
executed by such Borrowers' chief executive officers and chief
financial officers or such other officers of such Borrowers as
Lender may require.
7. COVENANTS AND CONTINUING AGREEMENTS
7.1 Affirmative Covenants. Each Borrower covenants and
agrees that, from and after the date hereof and until the
Liabilities are fully satisfied, it shall:
(a) Borrowing Base Certificate. Deliver to Lender,
on a daily basis, a Borrowing Base Certificate, together with
such supporting records and documents of sales, credits, and
collections as Lender may reasonably request.
(b) Financial Information. Keep books of account
and prepare financial statements and shall cause to be furnished
to Lender the following (all of the foregoing and following to be
kept and prepared in accordance with GAAP):
(i) as soon as available, but not later than
ninety (90) days after the close of each Fiscal Year, audited
consolidating financial statements of Borrowers as at the end of
such year certified by a firm of independent certified public
accountants of recognized standing, reasonably acceptable to
Lender and selected by Borrowers, together with (A) a statement
in reasonable detail showing the calculations used in determining
the financial covenants under SECTION 7.3, and (B) a certificate
of such certified public accountants certifying to Lender that,
based upon their examination of the affairs of Borrowers
performed in connection with the preparation of said financial
statements, they are not aware of the existence of any condition
or event which constitutes or would, upon notice or lapse of time
or both, constitute an Event of Default or, if they are aware of
such condition or event, the nature thereof;
(ii) as soon as available, but not later than
thirty (30) days prior to the close of each Fiscal Year,
Borrowers' annual business and financial plans in form and
substance satisfactory to Lender, as approved by Borrowers'
Boards of Directors, which plans shall include the budget and
cash flow projections for Borrowers for the following Fiscal
Year;
(iii) as soon as available, but not later than
twenty (20) days after the end of each Fiscal Month, unaudited
interim consolidating financial statements of Borrowers
(including an accounts payable aging) as at the end of the
portion of the Fiscal Year then elapsed, together with, no later
than five (5) days after the delivery of such financial
statements, (A) monthly cash flow projections for Borrowers,
commencing with August, 1995 and continuing through the end of
the then current Fiscal Year, showing comparisons of projected
results to actual results for prior months and revisions made to
such projections to reflect the actual results from prior months
(collectively, the "Projections"); (B) a statement in reasonable
detail showing the calculations used in determining the financial
covenants under SECTION 7.3, and (C) the certification of
Borrowers' principal financial officer that all such financial
statements were prepared in accordance with GAAP (subject to
normal year-end adjustments and the absence of footnotes) and
fairly present the financial position and results of operations
of Borrowers for such period;
(iv) as soon as available, but not later than
within fifteen (15) days of the end of Fiscal Month, monthly
agings of accounts receivable of Borrowers for the immediately
preceding month, together with the reconciliation of such agings
to the Borrowing Base and interim consolidating financial
statements;
(v) copies of all accountants' reports and
definitive final reports prepared by Borrowers concerning
proposed major corporate actions and annual strategic plans;
(vi) promptly after the filing thereof, copies of
any material regular, periodic, and special reports and any
initial and final registration statements filed or required to be
filed by any Borrower or Subsidiary with the Securities and
Exchange Commission, any federal, state, or local governmental
authority that may be substituted therefor, or any national
securities exchange; and
(vii) such other data and information (financial
and otherwise) as Lender, from time to time, may reasonably
request, bearing upon or related to the Collateral, Borrowers'
financial condition, or results of operations.
(c) Notices Regarding Accounts; Litigation.
Promptly upon, but in no event later than five (5) Business Days
after, any Borrower's learning thereof, inform Lender, in
writing, of: (i) any material delay in such Borrower's
performance of any of its obligations to any Account Debtor or of
any assertion of any material claims, offsets, or counterclaims
by any Account Debtor and of any material allowances, credits, or
other monies granted by such Borrower to any Account Debtor;
(ii) all material adverse information relating to the financial
condition of any Account Debtor; (iii) any facts relating to any
Account which would render untrue any representation or warranty
made pursuant to SECTION 6.2 with respect to such Account;
(iv) any litigation affecting such Borrower, whether or not the
claim is considered by such Borrower to be covered by insurance,
and of the institution of any suit or administrative proceeding
which litigation, suit, or administrative proceeding, if
adversely determined, would have a Material Adverse Effect.
(d) Accounts with the United States. If any of the
Accounts arises out of a contract with the United States of
America, or any department, agency, subdivision, or
instrumentality thereof, promptly notify Lender thereof in
writing and execute any instruments and take any other action
required or requested by Lender to perfect Lender's security
interest in such Accounts under the provisions of the Federal
Assignment of Claims Act.
(e) Charges; Liens. Subject to the provisions of
SECTION 7.4, pay, and cause its Subsidiaries to pay, promptly
when due, all of the Charges, and promptly discharge any Liens,
encumbrances, or other claims against the Collateral.
(f) Insurance. Maintain, and cause each of its
Subsidiaries to maintain, such insurance as is required by
SECTION 7.5.
(g) Environmental Disclosure and Inspection.
(i) Comply with, and perform its operations
using good housekeeping practices and prudent procedures so as to
minimize any risk of liability under, Environmental Laws, and use
all reasonable efforts to cause all other Persons on or occupying
such property, including (A) its employees, agents, contractors,
and subcontractors, and (B) all tenants under any lease or
occupancy agreement affecting any portion of the Real Property,
so to comply and perform with respect to such Persons' duties or
business operations, except to the extent that any failure so to
comply or perform could not reasonably be expected to have a
Material Adverse Effect.
(ii) Promptly advise Lender in writing and in
reasonable detail of (A) upon obtaining knowledge thereof, any
Release of any Hazardous Material required to be reported to any
Federal, state, or loan governmental or regulatory agency under
all applicable Environmental Laws, (B) upon obtaining knowledge
thereof, any and all written communications with respect to
Environmental Claims or any Release of Hazardous Material
required to be reported to any Federal, state, or local
governmental or regulatory agency, (C) any remedial action taken
by such Borrower or, to the extent a Borrower has any such
knowledge, any other Person in response to (1) any Hazardous
Material on, under or about any Real Property, the existence of
which could reasonably be expected to result in an Environmental
Claim having a Material Adverse Effect, or (2) any Environmental
Claim that could reasonably be expected to have a Material
Adverse Effect, (D) such Borrower's discovery that any occurrence
or condition on any property adjoining or in the vicinity of any
Real Property could reasonably be expected to cause such Real
Property or any part thereof to be subject to any restrictions on
the ownership, occupancy, transferability, or use thereof under
any Environmental Laws, and (E) any request for information from
any governmental agency that indicates such agency is
investigating whether such Borrower may be potentially
responsible for a Release of Hazardous Materials.
(iii) Promptly notify Lender of any proposed
acquisition of stock, assets, or property by such Borrower that
could reasonably be expected to expose such Borrower to, or
result in, Environmental Claims that could have a Material
Adverse Effect and any proposed action to be taken by such
Borrower to commence manufacturing, industrial or other
operations of a kind not engaged in by it on the Closing Date
that could reasonably be expected to subject such Borrower to
additional laws, rules, or regulations (other than non-material
or insignificant additional laws, rules, or regulations) related
to Hazardous Waste or environmental matters covered by
Environmental Laws, including laws, rules, and regulations
requiring additional environmental permits or licenses (other
than non-material or insignificant permits or licenses).
(iv) At its own expense, provide copies to
Lender of such documents or information or any Environmental
report to which such Borrower has access as Lender may reasonably
request in relation to any matters disclosed pursuant to this
SECTION 7.1(F).
(v) Reimburse Lender if Lender at any time
believes that such Borrower may be exposed to an Environmental
Claim at any Real Property that could reasonably be expected to
have a Material Adverse Effect, and Lender, in its reasonable
discretion (after consultation with Borrowers), retains an
independent professional consultant to review any relevant
Environmental Report prepared by or for Borrowers and to conduct
its own investigation of any relevant Real property. Each
Borrower hereby grants to Lender, its agents, employees,
consultants, and contractors, an irrevocable license and right to
enter into or onto the Real Property to perform such tests,
investigations, borings, installation of monitoring wells and
equipment, and sampling on such property as are reasonably
necessary to conduct such a review and/or investigation, all upon
reasonable notice and at such reasonable times during normal
business hours and as often as may be reasonably requested, so
long as such activities do not unreasonably interfere with
Borrowers' business operations. Lender agrees to deliver a copy
of any such Environmental Report to Borrowers, provided, that
each Borrower acknowledges and agrees that (A) such Borrower will
indemnify and hold harmless Lender from any costs, losses, or
liabilities relating to Borrowers' use of or reliance on such
Environmental Report, (B) Lender makes no representation or
warranty with respect to such Environmental Report and (iii) by
delivering such Environmental Report to a Borrower, Lender is not
requiring or recommending the execution of any suggestions or
recommendations contained in such Environmental Report.
(vi) In accordance with all Environmental
Laws, arrange, conduct, supervise, complete, or otherwise
implement at their own expense the Response Action to complete,
(A) within three hundred sixty (360) days of the Closing Date,
removal, characterization, and corrective action for all
underground storage tanks located on the property owned by TRS
and located at 901 North Lake, Miles City, Montana, regardless of
whether such tanks were used by any of the Borrowers, as set
forth on SCHEDULE 7.1(G)(I); and (B) within one hundred eighty
(180) days of the Closing Date, all the remaining tasks set forth
on SCHEDULE 7.1(G)(I); provided, that Lender shall have the right
to conduct reasonable monitoring of all Response Action, and
Borrowers shall deliver to Lender, within sixty (60) days of the
date set forth above for the completion of the applicable
Response Action, Environmental Reports demonstrating that such
tasks have been completed.
(h) Communication With Accountants. Each Borrower
shall cooperate with Lender to permit reasonable access to
Borrowers' independent certified public accountants and hereby
authorizes those accountants to disclose to Lender any and all
financial statements and other supporting financial data,
including matters relating to the conduct of the annual audit and
copies of any management letter with respect to such Borrower's
business, pending litigation, financial condition, and other
affairs. On or before the Closing Date, each Borrower shall
deliver to Lender a letter addressed to such accountants in the
form of SCHEDULE 7.1(H).
7.2 Negative Covenants. Without Lender's prior written
consent, which Lender may or may not in its sole discretion give,
each Borrower covenants that it shall not:
(a) Mergers. Merge or consolidate with or acquire
any Person.
(b) Investments. Make any investment other than a
Permitted Investment.
(c) Dividends. Declare or pay dividends, except for
Permitted Dividends, upon any of Borrowers' Stock, or make any
distributions of Borrowers' property or assets.
(d) Capital Structure. Redeem, retire, purchase, or
otherwise acquire, directly or indirectly, any of Borrowers'
Stock, or make any material change in Borrowers' capital
structure or in any of their business objectives, purposes, and
operations which might in any way adversely affect the repayment
of the Liabilities.
(e) Transactions with Affiliates. Except as
permitted pursuant to SECTION 7.2(J) and SECTION 7.2(N) or as
otherwise disclosed to Lender in writing on or before the Closing
Date, enter into, or be a party to, any transaction with any
Affiliate or stockholder of any Borrower, except in the ordinary
course of and pursuant to the reasonable requirements of
Borrowers' business and upon fair and reasonable terms which have
been fully disclosed to, and approved by, Lender and are no less
favorable to Borrowers than would be obtained in a comparable
arm's length transaction with a Person not an Affiliate or
stockholder of Borrowers.
(f) Adverse Transactions. Enter into any
transaction which materially and adversely affects the Collateral
or Borrowers' ability to repay the Indebtedness or permit or
agree to any extension, compromise, or settlement or make any
change or modification of any kind or nature with respect to any
Account, including any of the terms relating thereto.
(g) Guaranties. Guarantee or otherwise in any way
become liable with respect to the obligations or liabilities of
any Person except by endorsement of instruments or items of
payment for deposit to the general accounts of Borrowers or for
delivery to Lender on account of the Liabilities.
(h) Deposit Accounts. Make deposits to or
withdrawals from any of its deposit accounts for the benefit of
any Affiliate.
(i) Liens. Except as otherwise expressly permitted
herein or in the other Loan Documents, encumber, pledge,
mortgage, grant a security interest in, assign, sell (except for
the sale of inventory and property in the ordinary course of
business), lease, or otherwise dispose of or transfer, whether by
sale, merger, consolidation, liquidation, dissolution, or
otherwise, any of Borrowers' assets.
(j) Loans. Except for Permitted Loans, make any
loans, advances of money and/or extensions of credit to any
person, including officers, directors, employees, stockholders,
or Affiliates of Borrowers (other than salary and routine travel
or expense account advances made in the ordinary course of
business) or permit the annual salary and all other direct and
indirect remuneration to its officers to exceed amounts currently
scheduled to be paid to such officers, and in any subsequent
Fiscal Year such Borrower shall not pay any salary or other
remuneration, directly or indirectly, to its officers in excess
of one hundred ten percent (110%) of the amount paid to such
Persons during the preceding Fiscal Year without the prior
written consent of Lender.
(k) Capital Expenditures. Make Capital Expenditures
which exceed, (i) for the Fiscal Year ending on March 31, 1996,
an aggregate amount of $1,000,000, (ii) for the Fiscal Year
ending on March 31, 1997, an aggregate amount of $1,100,000,
(iii) for the Fiscal Year ending on March 31, 1998, an aggregate
amount of $1,200,000, (iv) for the Fiscal Year ending on March
31, 1999, an aggregate amount of $1,300,000, (v) for the Fiscal
Year ending on March 31, 2000, an aggregate amount of $1,400,000,
and (vi) for the Fiscal Year ending on March 31, 2001, an
aggregate amount of $1,500,000.
(l) Affiliate Accounts. Permit the aggregate of all
Accounts owing from their Affiliates at any time to exceed $5,000.
(m) Location of Collateral. Remove its books and
records or the Collateral from the locations listed in SCHEDULE
6.1(H), or keep any of such books and records and/or the
Collateral at any other office(s) or location(s) unless (i) such
Borrower gives Lender written notice thereof and of the new
location of said books and records or the Collateral at least
thirty (30) days prior thereto and (ii) the other office or
location is within the continental United States of America.
(n) Indebtedness. Create, incur, assume, or have
outstanding any Indebtedness, except for: (i) Indebtedness owing
to Lender; (ii) Indebtedness incurred by such Borrower in the
ordinary course of business, other than Indebtedness for borrowed
money; (iii) Indebtedness disclosed in the Financials;
(iv) Indebtedness existing on the date hereof and listed in
SCHEDULE 7.2(N); (v) Subordinated Debt; or (vi) Permitted
Intercompany Indebtedness.
(o) Hazardous Materials.
(i) (A) Store, use, dispose, or transport any
Hazardous Materials in noncompliance with any applicable
Environmental Laws, except to the extent such noncompliance would
not reasonably be expected to have a Material Adverse Effect or
(B) delay in promptly taking any and all necessary remedial
action in response to the Release of any Hazardous Materials on,
under, or about any Real Property, except to the extent failure
to take such action could not reasonably be expected to have a
Material Adverse Effect. In the event a Borrower undertakes any
remedial action with respect to any Hazardous Material on, under,
or about any Real Property, such Borrower shall conduct and
complete such remedial action in compliance with all applicable
Environmental Laws, and in accordance with the policies, orders,
and directives of all Federal, state, and local governmental
authorities except when such Borrower is contesting in good faith
its liability for such presence, storage, use, disposal,
transportation, or discharge of any Hazardous Material, or except
to the extent noncompliance therewith would not reasonably be
expected to have a Material Adverse Effect.
(ii) Install or permit to be installed any
asbestos in any Real Property, except in compliance with all
Environmental Laws. With respect to any asbestos currently
present in such property, such Borrower shall, and shall cause
its Subsidiaries to, promptly and in accordance with all
applicable Environmental Laws and prudent industry practices,
maintain such asbestos in good and safe condition except to the
extent that the failure to do so could not reasonably be expected
to have a Material Adverse Effect.
(p) Fiscal Year. Change its Fiscal Year, as
currently in effect.
(q) Change of Business. Enter into any new business
or make any material change in any of Borrowers' business
objectives, purposes or operations.
(r) Subsidiaries. Hereafter create any Subsidiary
or divest itself of any material assets by transferring them to
any Subsidiary.
(s) Furman Selz Notes. Make any payment under the
Furman Selz Notes except to the extent required thereunder and
permitted under the Furman Selz Subordination Agreement.
(t) Disposition of Assets. Sell, lease or otherwise
dispose ("Transfer") of any of its assets, to or in favor of any
Person, except (i) Transfers of Inventory in the ordinary course
of such Borrower's business, (ii) Transfers of old Equipment, or
(iii) other Transfers expressly authorized by this Agreement.
(u) Names of Borrowers. Use any corporate names
(other than its own) or any fictitious names, tradestyles or
"d/b/a" except as set forth in SCHEDULE 6.1(Q).
7.3 Financial Covenants. Each Borrower covenants and
agrees that, from and after the date hereof and until the
Liabilities are fully satisfied, it shall:
(a) Maintain Tangible Net Worth, measured as of
the end of each Fiscal Quarter set forth below, of not less than
the amount set forth below for such measurement date:
Measurement Date Tangible Net Worth
Fiscal Quarter Ending September 1995 $10,400,000
Fiscal Quarter Ending December 1995 10,900,000
Fiscal Quarter Ending March 1996 11,400,000
Fiscal Quarter Ending June 1996 12,000,000
Fiscal Quarter Ending September 1996 12,500,000
Fiscal Quarter Ending December 1996 13,200,000
Fiscal Quarter Ending March 1997 13,500,000
Fiscal Quarter Ending June 1997 14,000,000
Fiscal Quarter Ending September 1997 14,500,000
Fiscal Quarter Ending December 1997 15,100,000
Fiscal Quarter Ending March 1997 15,300,000
Fiscal Quarter Ending June 1998 15,800,000
Fiscal Quarter Ending September 1998 16,300,000
Fiscal Quarter Ending December 1998 16,900,000
Fiscal Quarter Ending March 1999 17,100,000
Fiscal Quarter Ending June 1999 17,600,000
Fiscal Quarter Ending September 1999 18,100,000
Fiscal Quarter Ending December 1999 18,700,000
Fiscal Quarter Ending March 2000 18,900,000
Fiscal Quarter Ending June 2000 19,400,000
Fiscal Quarter Ending September 2000 19,400,000
(b) Maintain a ratio of Indebtedness to Tangible
Net Worth, measured as of the first Business Day of each calendar
month during each of the Fiscal Years set forth below, no greater
than the ratio set forth below for each such calendar month in
the corresponding Fiscal Year:
Fiscal Year Ratio
Fiscal Year 1995 (beginning 9/95) 2.00 : 1.00
Fiscal Year 1997 2.00 : 1.00
Fiscal Year 1998 2.00 : 1.00
Fiscal Year 1999 1.75 : 1.00
Fiscal Year 2000 1.75 : 1.00
(c) Maintain a Fixed Charge Ratio, measured as of
the end of each Fiscal Quarter set forth below, of not less than
the amount set forth below during the corresponding period:
Measurement Date Fixed Charge Ratio
Fiscal Quarter Ending September 1995 1.5 : 1.0
Fiscal Quarter Ending December 1995 1.4 : 1.0
Fiscal Quarter Ending March 1996 2.0 : 1.0
Fiscal Quarter Ending June 1996 1.5 : 1.0
Each Fiscal Quarter thereafter 2.0 : 1.0
(d) Maintain Average Inventory Days, measured as
of the first Business Day of each month with respect to the 90-
day period immediately prior to such Business Day, of not greater
than fifty (50).
(e) Maintain Average Payable Days, measured as of
the first Business Day of each month with respect to the 90-day
period immediately prior to such Business Day, of not greater
than forty-five (45).
(f) Maintain Average Receivable Days, measured as
of the first Business Day of each month with respect to the 90-
day period immediately prior to such Business Day, of not greater
than seventy (70).
7.4 Payment of Charges and Claims.
(a) Except for Liens in favor of Lender, if any
Borrower, at any time or times hereafter, shall fail to pay any
Charges when due or promptly obtain the discharge of such Charges
or of any Lien, claim or encumbrance asserted against the
Collateral subject to the provisions of SECTION 7.4(B) below,
Lender may, without waiving or releasing any obligation or
liability of Borrowers hereunder or any Event of Default, in its
sole discretion, at any time or times thereafter, make such
payment, or any part thereof, or obtain such discharge and take
any other action with respect thereto which Lender deems
advisable. All sums so paid by Lender and any expenses,
including attorneys' fees, court costs, expenses, and other
reasonable charges relating thereto, shall be payable, upon
demand, by Borrowers to Lender and shall be additional
Liabilities hereunder secured by the Collateral.
(b) Borrowers may in good faith contest, by proper
legal actions or proceedings, the validity or amount of any
Charges or claims, and provided that Borrowers give Lender
advance notice of their intention to contest the validity or
amount of any such Charge or claim, Lender will forebear from
making any payment or otherwise obtaining the discharge of such
Charge or claim if at the time of the commencement of any such
action or proceeding, and during the pendency thereof, (i) no
Event of Default shall have occurred and be continuing,
(ii) reserves with respect thereto are maintained on the books of
Borrowers in an amount reasonably acceptable to Lender,
(iii) such contest operates to suspend collection of the
contested Charges or claims and is maintained and prosecuted
continuously with diligence, (iv) none of the Collateral will be
subject to forfeiture or loss of any Lien in favor of Lender by
reason of the institution or prosecution of such contest, (v) no
Lien shall exist for such Charges or claims during such action or
proceeding, (vi) Borrowers shall promptly pay or discharge such
contested Charges and all additional charges, interest,
penalties, and expenses, if any, and shall deliver to Lender
evidence reasonably acceptable to Lender of such compliance,
payment or discharge, if such contest is terminated or
discontinued adversely to Borrowers, and (vii) Lender has not
advised Borrowers in writing that Lender reasonably believes that
non-payment or non-discharge thereof would have a Material
Adverse Effect.
7.5 Insurance; Payment of Premiums. Each Borrower shall,
at its sole cost and expense, keep and maintain the Collateral
(other than Accounts, cash and other items not generally insured)
insured for such Collateral's full insurable value against loss
or damage by fire, theft, explosion, water damage, and all other
hazards and risks ordinarily insured against by other owners or
users of such properties in similar businesses and shall notify
Lender promptly of any occurrence causing a material loss or
decline in value of the Collateral and the estimated (or actual,
if available) amount of such loss or decline. All policies of
insurance on the Collateral shall be in form and with insurers
reasonably acceptable to Lender and all such policies shall be in
such amounts as may be satisfactory to Lender. Each Borrower
shall deliver to Lender the original (or certified copy) of each
policy of insurance and evidence of payment of all premiums
therefor. Such policies of insurance shall contain an
endorsement, in form and substance acceptable to Lender, showing
loss payable to Lender, as its interests may appear. Such
endorsement, or an independent instrument furnished to Lender,
shall provide that the insurance companies will give Lender at
least thirty (30) days prior written notice before any such
policy or policies of insurance shall be altered or canceled and
that no act or default of any Borrower or any other person shall
affect the right of Lender to recover under such policy or
policies of insurance in case of loss or damage, and Lender shall
be included as an additional insured on all liability policies.
Each Borrower hereby directs all insurers under such policies of
insurance to pay all proceeds payable thereunder directly to
Lender, as its interests may appear. Each Borrower irrevocably
makes, constitutes and appoints Lender (and all officers,
employees or agents designated by Lender) as such Borrower's true
and lawful attorney (and agent-in-fact) for the purpose, upon the
occurrence and during the continuation of an Event of Default, of
making, settling, and adjusting claims under such policies of
insurance, endorsing the name of such Borrower on any check,
draft, instrument, or other items of payment for the proceeds of
such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance. In the
event any Borrower, at any time hereafter, shall fail to obtain
or maintain any of the policies of insurance required above or to
pay any premium in whole or in part relating thereto, then
Lender, without waiving or releasing any obligations or default
by Borrowers hereunder, may at any time thereafter (but shall be
under no obligation to) obtain and maintain such policies of
insurance and pay such premium and take any other action with
respect thereto which Lender deems advisable. All sums so
disbursed by Lender, including reasonable attorneys' fees, court
costs, expenses, and other charges relating thereto, shall be
payable on demand by Lender and shall constitute additional
Liabilities hereunder secured by the Collateral.
7.6 Survival of Obligations Upon Termination of
Agreement. Except as otherwise expressly provided for in this
Agreement and in the other Loan Documents, no termination or
cancellation (regardless of cause or procedure) of this Agreement
or the other Loan Documents shall in any way affect or impair the
powers, obligations, duties, rights, and Liabilities of Borrowers
or Lender relating to (a) any transaction or event occurring
prior to such termination or cancellation, (b) the Collateral, or
(c) any of the undertakings, agreements, covenants, warranties,
and representations of Borrowers or Lender contained in this
Agreement or the other Loan Documents. All such undertakings,
agreements, covenants, warranties, and representations shall
survive such termination or cancellation.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES.
8.1 Events of Default. The occurrence of any one or more
of the following events, regardless of the reason therefor, shall
constitute an "Event of Default" hereunder:
(a) Borrowers fail to pay any of the Liabilities as
and when due and payable; or
(b) Lender notifies any Borrower in writing that the
outstanding balance of Revolving Loans exceeds the limitation set
forth under SECTION 3.1(A), after accounting for any reserves
then in effect pursuant to SECTION 2.9, and such condition is not
corrected within two (2) Business Days after such notice; or
(c) Any Borrower fails to satisfy any financial
covenant applicable to such Borrower as set forth in SECTION 7.3
hereof or any other term, provision, condition, covenant,
warranty, or representation applicable to such Borrower and
contained in this Agreement or in the other Loan Documents, and
which by its nature is incapable of being cured; or
(d) Any Borrower or Guarantor fails to perform,
keep, or observe any term, provision, condition, covenant,
warranty, or representation applicable to such Borrower or
Guarantor and contained in this Agreement or in the other Loan
Documents, other than those referred to in SUBSECTIONS (A), (B)
AND (C) above, which is required to be performed, kept, or
observed by such Borrower or Guarantor, and such failure is not
cured to Lender's satisfaction within five (5) Business Days
after Lender gives such Borrower written notice identifying such
failure; or
(e) a default shall have occurred under any of the
Furman Selz Notes; or
(f) a default shall occur under any agreement,
document, or instrument, other than this Agreement or the other
Loan Documents, to which a Borrower is a party, the consequences
of which could have a Material Adverse Effect, and which default
is not cured within ten (10) Business Days after Borrowers become
aware of such default; or
(g) any statement, report, financial statement, or
certificate made or delivered to Lender by any Borrower or any of
Borrowers' officers, employees, or agents is untrue, incomplete,
or incorrect in any material respect at the time when made and
the same shall remain untrue, incomplete, or incorrect for five
(5) Business Days after such Borrower shall receive written
notice of such fact from Lender or five (5) Business Days after
Borrowers become aware of such default; or
(h) the commencement by any Borrower or Guarantor of
a voluntary case under the Federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable Federal
or state bankruptcy, insolvency, or similar law; the consent by
any Borrower or Guarantor to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator, agent, or
other similar official for such Borrower or Guarantor or for any
material part of such Borrower's or Guarantor's property; the
making by any Borrower or Guarantor of an assignment for the
benefit of creditors; the commencement of any case or proceeding
by any Borrower or Guarantor for such Borrower's or Guarantor's
dissolution, liquidation, or termination; or the taking of any
action by or on behalf of any Borrower or Guarantor in
furtherance of any of the foregoing; or
(i) the filing of a petition with a court having
jurisdiction over any Borrower or Guarantor to commence an
involuntary case for such Borrower or Guarantor under the Federal
bankruptcy laws, as now constituted or hereafter amended, or any
other applicable Federal or state bankruptcy, insolvency, or
similar law; or the appointment of a receiver, liquidator,
assignee, custodian, trustee, agent, sequestrator, or other
similar official for a Borrower's or Guarantor's affairs; and the
failure to obtain the dismissal of such petition or appointment
within, or the continuance of such decree or order unstayed and
in effect for, a period of thirty (30) days from the date of such
filing or appointment or the entry of such order or decree; or
(j) there shall occur any material uninsured damage
to, or loss, theft, or destruction of, any of the Collateral; or
(k) any Borrower ceases to conduct its business as
now conducted or is enjoined, restrained, or in any way prevented
by court or administrative order from conducting all or any
material part of its business affairs; or
(l) any Borrower fails to (i) furnish Lender, within
fifteen (15) days thereafter, with written notice upon the
occurrence of any of the following events: (A) the happening of a
Reportable Event with respect to any pension plan of a Borrower
governed by ERISA, as to which the requirement of notice has not
been waived by PBGC, (b) the termination of any such plan,
(c) the appointment of a trustee by an appropriate United States
District Court to administer any such plan, or (d) the
institution of any proceedings by the Pension Benefit Guaranty
Corporation to terminate any such plan or to appoint a trustee to
administer any such plan; or (ii) notify Lender promptly upon
receipt by such Borrower of any notice of the institution of any
proceeding or other action which may result in the termination of
such plan; or
(m) a Default or any other event shall have occurred
which would have a Material Adverse Effect, which event continues
for five (5) days after notice to any Borrower; or
(n) a Change of Control Date shall have occurred; or
(o) Steven L. Pease for any reason ceases to remain
engaged in the actual management of Borrowers performing duties
substantially similar to those to be performed by him as of the
Closing Date and a replacement reasonably satisfactory to Lender
is not appointed within ninety (90) days; or
(p) the Transaction Costs, other than Transaction
Costs actually paid by Borrowers prior to June 30, 1995, exceed,
in the aggregate, $300,000.
During any period of grace afforded any Borrower
under this SECTION 8.1 after which an act or omission of such
Borrower will become an Event of Default, Lender shall have no
obligation to make Revolving Loans or to incur Letter of Credit
and Guaranty Obligations.
8.2 Termination of Agreement and Acceleration of the
Liabilities. Upon the occurrence and continuation of an Event of
Default, all of the Liabilities may, at the option of Lender and
without demand, notice, or legal process of any kind, be
declared, and immediately shall become, due and payable, and
Lender, at its option, may terminate this Agreement; provided,
that all of the Liabilities shall immediately become due and
payable, and this Agreement shall be terminated, upon the
occurrence and continuation of an Event of Default set forth in
SECTION 8.1(G) or SECTION 8.1(H); and further provided, that
Lender's rights and remedies under this Agreement shall survive
any such termination.
8.3 Remedies. If any Event of Default shall have
occurred and be continuing, Lender shall have the following
rights and remedies:
(a) in addition to any other rights and remedies
contained in this Agreement and in the other Loan Documents, all
the rights and remedies of a secured party under the Code or
other applicable law, all of which rights and remedies shall be
cumulative and non-exclusive, to the extent permitted by law;
(b) the right to (i) demand payment of the Accounts;
(ii) enforce payment of the Accounts, by legal proceedings or
otherwise; (iii) exercise all of Borrowers' rights and remedies
with respect to the collection of the Accounts and Special
Collateral; (iv) settle, adjust, compromise, extend, or renew the
Accounts; (v) settle, adjust, or compromise any legal proceedings
brought to collect the Accounts; (vi) if permitted by applicable
law, sell or assign the Accounts and Special Collateral upon such
terms, for such amounts, and at such time or times as Lender
deems advisable; (vii) discharge and release the Accounts and
Special Collateral; (viii) take control, in any manner, of any
item of payment or proceeds referred to in SECTION 4.2;
(ix) prepare, file, and sign Borrowers' names on any Proof of
Claim in bankruptcy or similar document against any Account
Debtor; (x) prepare, file, and sign Borrowers' names on any
notice of lien, assignment or satisfaction of lien, or similar
document in connection with the Accounts and Special Collateral;
(xi) do all acts and things necessary, in Lender's sole
discretion, to fulfill Borrowers' obligations under this
Agreement; (xii) endorse the names of Borrowers upon any chattel
paper, document, instrument, invoice, freight bill, bill of
lading or similar document or agreement relating to the Accounts,
Inventory or Special Collateral; (xiii) open Borrowers' mail and
collect any and all amounts due each Borrower from Account
Debtors; and (xiv) use the information recorded on or contained
in any data processing equipment and computer hardware and
software relating to the Accounts, Inventory, or Special
Collateral to which Borrowers have access; and
(c) the right to (i) require Borrowers to assemble
the Collateral and make it available to Lender at a place to be
designated by Lender, in its sole discretion; (ii) sell or to
otherwise dispose of all or any Collateral at public or private
sale or sales, with such notice as may be required by law, in
lots or in bulk, for cash or on credit, all as Lender, in its
sole discretion, may deem advisable; (iii) adjourn such sales
from time to time with or without notice; and (iv) conduct such
sales on Borrowers' premises or elsewhere and use Borrowers'
premises without charge for such sales for such time or times as
Lender may see fit. Lender is hereby granted a license or other
right to use, without charge, Borrowers' labels, patents,
copyrights, rights of use of any name, trade secrets, trade
names, trademarks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral, and Borrowers' rights under
all licenses and all franchise agreements shall inure to Lender's
benefit. Lender shall have the right to sell, lease, or
otherwise dispose of the Collateral, or any part thereof, for
cash, credit, or any combination thereof, and Lender may purchase
all or any part of the Collateral at public or, if permitted by
law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the
Liabilities. The proceeds realized from the sale of any
Collateral shall be applied first to the reasonable costs,
expenses, and attorneys' fees and expenses incurred by Lender for
collection and for acquisition, completion, protection, removal,
storage, sale, and delivery of the Collateral; second to interest
due upon any of the Liabilities; and third to the principal of
the Liabilities. If any deficiency shall arise, Borrowers shall
remain liable to Lender therefor.
8.4 Notice of Sale or Other Action. Any notice required
to be given by Lender of a sale, lease, other disposition of the
Collateral, or any other intended action by Lender (other than
notice to any Account Debtor as described below), if given five
(5) Business Days prior to such proposed action or less than five
(5) Business Days in the case of Collateral consisting of
perishable goods or goods that threaten to decline speedily in
value, shall constitute commercially reasonable and fair notice
thereof to Borrowers; provided, that any notice to any Account
Debtor in accordance with SECTION 4.3 may be given immediately
upon an Event of Default.
8.5 Default Rate of Interest. To compensate Lender for
additional unreimbursed costs resulting from an occurrence and
declaration by Lender of an Event of Default, including costs
associated with the uncertainty of future funding and additional
supervisory and administrative efforts, upon and after the
occurrence of an Event of Default, the Liabilities, including the
Term Loan, the Revolving Loans, and the Letter of Credit and
Guaranty Obligations, shall continue to bear interest, calculated
daily on the basis of a 360-day year, at the per annum rate set
forth in SECTION 2.2 and SECTION 2.3, respectively, plus
additional post-default interest of two percent (2%) per annum
during the continuance of such Event of Default until the earlier
of (a) payment of the Liabilities in full, or (b) the cure, to
the satisfaction of Lender in its sole discretion, of such Event
of Default.
8.6 Marshalling; Payments Set Aside. Lender shall be
under no obligation to marshal any assets in favor of any
Borrower or other party or against or in payment of any or all of
the Liabilities. To the extent that Borrowers make a payment or
payments to Lender or Lender enforces its security interests or
exercises its rights of set-off, and such payment or payments or
the proceeds of such enforcement or set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a
trustee, receiver, or any other party under any bankruptcy law,
state or Federal law, common law, or equitable cause, then to the
extent of such recovery, the obligation or part thereof
originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not
been made or such enforcement or set-off had not occurred.
8.7 Right of Set Off. Except as otherwise provided in
this Agreement, upon the occurrence and during the continuance of
any Event of Default, Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by applicable
law, to set off and apply any and all funds in the possession of
Lender, all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by Lender to or for the credit or the account of
any Borrower, against any and all of the Liabilities now or
hereafter existing under this Agreement, the Term Loan Note, and
the Revolving Credit Note held by Lender that are then due and
payable, whether by maturity or acceleration.
9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement
and without affecting in any manner the rights or obligations of
Lender hereunder, neither Borrowers nor Lender shall have any
rights under this Agreement and this Agreement shall not become
effective, until the following conditions have been satisfied, in
Lender's sole discretion, or waived in writing by Lender:
9.1 Excess Revolving Loan Availability. Lender shall
have determined on a pro forma basis, in its sole discretion,
that immediately after the conditions described in this SECTION 9
have been satisfied, and Lender has made the initial loans and
advances to Borrower contemplated hereby, the sum of
(x) Borrowers' Excess Revolving Loan Availability, without regard
to any reserves established pursuant to SECTION 2.9, plus
(y) Borrowers' cash on hand, minus (z) Borrower's closing costs
incurred or to be incurred in connection with this Agreement as
estimated by Lender, will not be less than $750,000.
9.2 Execution and Delivery of Agreement. This Agreement
or counterparts thereof shall have been duly executed by, and
delivered to, Borrowers and Lender.
9.3 Loan Documents. Lender shall have received such
documents, instruments, and agreements as Lender shall request in
connection with the transactions contemplated by this Agreement,
including all documents, instruments, agreements, and schedules
listed in the Schedule of Documents, each in form and substance
satisfactory to Lender.
9.4 No Material Adverse Change. Since March 31, 1995 and
through the Closing Date, there shall have been (a) no material
adverse change in the business, financial, or other conditions of
Borrowers, or in the Collateral, or in the prospects or
projections of Borrowers, (b) no material increase in the
liabilities (absolute or contingent) of Borrowers, whether or not
disclosed or required to be reserved against on any pro forma
balance sheet, (c) no material decrease in the assets of
Borrowers (other than as reflected in the pro forma balance sheet
provided to Lender by Borrowers on June 30, 1995), and (d) no
distribution by Borrowers of their capital Stock either by
dividends or otherwise.
9.5 Final Settlement and Payment of Class F Claims.
Final settlement and payment of all Class F Claims shall have
been consummated to the reasonable satisfaction of Lender.
9.6 Receipt of Furman Selz Subordinated Loan Proceeds.
Transcisco shall have received not less than $3,000,000, in cash,
in exchange for the Furman Selz Notes.
9.7 Conditions to Each Revolving Loan. It shall be a
further condition to the funding of the initial Revolving Loan
and each subsequent Revolving Loan after the initial Revolving
Loan that the following statements shall be true on the date of
each such funding or advance:
(a) all of the representations and warranties of
Borrowers contained herein shall be correct in all material
respects and as of the date of each such Revolving Loan as though
made on and as of such date, except (i) to the extent that any
such representation or warranty expressly relates to an earlier
date, and (ii) for changes therein permitted or contemplated by
this Agreement. All of the representations and warranties of
Borrowers contained in any of the other Loan Documents shall be
correct in all material respects as of the date delivered, except
to the extent that any such representation or warranty expressly
relates to an earlier date.
(b) No event shall have occurred and be continuing,
or would result from the funding of the Revolving Loan, which
constitutes or would constitute an Event of Default.
(c) The aggregate unpaid principal amount of any
such Revolving Loan shall not exceed the lesser of (i) Collateral
Availability or (ii) the Unused Line of Credit.
The acceptance by any Borrower of the proceeds of any
Revolving Loan shall be deemed to constitute, as of the date of
such acceptance, (i) a representation and warranty by such
Borrower that the conditions in this SECTION 9.8 have been
satisfied, and (ii) a confirmation by such Borrower of the
granting and continuance of Lender's Lien pursuant hereto.
9.8 Conditions to the Initial Revolving Loan. It shall
be a condition to the initial Revolving Loan that the conditions
contained in SECTIONS 9.1 THROUGH 9.8 shall have been fulfilled
and that Borrowers shall have delivered to Lender a Notice of
Revolving Loan and a Borrowing Base Certificate dated as of the
Closing Date.
10. MISCELLANEOUS
10.1 Appointment of Lender as Borrowers' Lawful Attorney.
Each Borrower irrevocably designates, makes, constitutes, and
appoints Lender (and all persons designated by Lender) as such
Borrower's true and lawful attorney (and agent-in-fact) and
Lender, or Lender's agent, may, without notice to such Borrower:
(a) at such time or times hereafter as Lender or
said agent, in its sole discretion, may determine, in such
Borrower's or Lender's name, endorse such Borrower's name on any
checks, notes, drafts or any other payment relating to or
proceeds of the Collateral which come into the possession of
Lender or under Lender's control; and
(b) sign the name of such Borrower on any of the
Supplemental Documentation and deliver any of the Supplemental
Documentation to such Persons as Lender, in its sole discretion,
may elect.
10.2 Modification of Agreement; Sale of Interest. This
Agreement and the other Loan Documents may not be modified,
altered or amended, except by an agreement in writing signed by
Borrowers and Lender. None of the Borrowers may sell, assign, or
transfer this Agreement, or the other Loan Documents or any
portion thereof, including any of Borrowers' rights, title,
interests, remedies, powers, or duties hereunder or thereunder.
Each Borrower hereby consents to Lender's participation, sale,
assignment, transfer, or other disposition, at any time or times
hereafter, of this Agreement, or the other Loan Documents, or of
any portion hereof or thereof, including Lender's rights, title,
interests, remedies, powers, or duties hereunder or thereunder.
10.3 Fees and Expenses. Borrowers shall reimburse Lender
for all reasonable out-of-pocket expenses of Lender in connection
with the negotiation, preparation, execution, interpretation, and
administration of this Agreement and the other Loan Documents
(including the reasonable fees and expenses of all of Lender's
counsel retained in connection with the transactions contemplated
hereby). If, at any time or times, regardless of the existence
of an Event of Default, Lender shall employ counsel or other
professional advisors, including environmental and management
consultants, for advice or other representation or shall incur
reasonable legal, appraisal, accounting, consulting, or other
costs and expenses in connection with:
(a) any interpretation, amendment, modification, or
waiver of, or consent with respect to, this Agreement or the
other Loan Documents;
(b) any litigation, contest, dispute, suit,
proceeding, or action (whether instituted by Lender, a Borrower,
or any other Person) in any way relating to the Collateral, this
Agreement, or the other Loan Documents, including any litigation,
contest, dispute, suit, case, proceeding, or action, and any
appeal or review thereof, in connection with a case commenced by
or against a Borrower or any other Person that may be obligated
to Lender by virtue of this Agreement or the other Loan
Documents, under the Bankruptcy Code (11 U.S.C. SECTION 101 et seq.),
or any other applicable Federal, state, or foreign bankruptcy or
other similar law, provided that Borrowers shall not be liable
for any such costs and expenses of Lender to the extent that a
court of competent jurisdiction determines in a final order that
such costs and expenses resulted directly from such Lender's
gross negligence or willful misconduct;
(c) any attempt to enforce any rights of Lender or
any Participant against a Borrower, or any other Person that may
be obligated to Lender by virtue of this Agreement or the other
Loan Documents, including the Account Debtors; or
(d) any attempt to appraise, inspect, verify,
protect, collect, sell, liquidate, or otherwise dispose of the
Collateral, including a $500 per day per auditor charge and all
of Lender's actual out-of-pocket expenses in connection with any
audit of the Collateral by Lender,
then, and in any such event, the reasonable fees of such
attorneys and other professional advisors and consultants arising
from such services, including those of any appellate proceedings,
and all reasonable expenses, costs, charges, and other fees
incurred by such counsel or other professionals in any way or
respect arising in connection with or relating to any of the
events or actions described in this SECTION 10.3, shall be
payable, on demand, by Borrowers to Lender and shall be
additional Liabilities secured by the Collateral. Without
limiting the generality of the foregoing, such reasonable
expenses, costs, charges, and fees may include: paralegal fees,
costs, and expenses; accountants' fees, costs, and expenses;
appraisers' fees, costs, and expenses; management and other
consultants' fees, costs, and expenses; court costs and expenses;
photocopying and duplicating expenses; court reporter fees,
costs, and expenses; long distance telephone charges; air express
charges; telegram charges; secretarial overtime charges; and
expenses for travel, lodging, and food paid or incurred in
connection with the performance of such legal or other
professional services.
10.4 Waiver by Lender. Lender's failure, at any time or
times hereafter, to require strict performance by Borrowers of
any provision of this Agreement shall not waive, affect or
diminish any right of Lender thereafter to demand strict
compliance and performance. Any suspension or waiver by Lender
of an Event of Default by Borrowers under this Agreement or the
other Loan Documents shall not suspend, waive, or affect any
other Event of Default by Borrowers under this Agreement or the
other Loan Documents, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of
the undertakings, agreements, warranties, covenants, and
representations of Borrowers contained in this Agreement or the
other Loan Documents, and no Event of Default by a Borrower under
this Agreement or the other Loan Documents, shall be deemed to
have been suspended or waived by Lender, unless such suspension
or waiver is by an instrument in writing signed by an officer of
Lender and directed to Borrowers specifying such suspension or
waiver.
10.5 Severability. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law. If, however, any
provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of
this Agreement, unless the ineffectiveness of such provision
materially and adversely alters the benefits accruing to a party
hereunder.
10.6 Borrowers' Obligations. Notwithstanding any other
provision of this Agreement or the other Loan Documents, each of
the Borrowers shall be jointly and severally liable to Lenders
for all of the Liabilities.
10.7 Subordination of Intercompany Indebtedness. Each
Borrower hereby agrees that all Intercompany Indebtedness is
unconditionally and irrevocably subordinated to full and final
payment of the Liabilities. In no circumstances shall any
Intercompany Indebtedness be entitled to any collateral security;
provided, that in the event any such collateral security exists,
the lien or security interest in such collateral security
securing such Intercompany Indebtedness shall be and hereby is
subordinated to any now existing or hereafter arising lien or
security interest securing the Liabilities. Such Borrower shall
not assert, collect, or accept payment on any Intercompany
Indebtedness (other than Permitted Intercompany Indebtedness
during a period when no Event of Default has occurred and is
continuing), or enforce any claim or lien or security interest
with respect to any Intercompany Indebtedness, unless and until
the Liabilities have been paid in full. Any payment or transfer
so made (except with respect to Permitted Intercompany
Indebtedness during a period when no Event of Default has
occurred and is continuing), or collateral security so given by
any Borrower and received by any other Borrower shall be held in
trust by such recipient Borrower for the benefit of Lender, and
such recipient Borrower shall immediately turn over, in kind, any
such payment to Lender for Application in reduction of, or (in
the case of property other than cash) as security for, the
Liabilities.
10.8 Parties. This Agreement, the other Loan Documents,
and all security interests or Liens created hereby shall be
binding upon and inure to the benefit of the successors and
assigns of each of the Borrowers. This provision, however, shall
not be deemed to modify SECTION 10.2 hereof.
10.9 Conflict of Terms. The other Loan Documents and all
Schedules and Exhibits hereto are incorporated in this Agreement
by this reference thereto. Except as otherwise provided in this
Agreement and except as otherwise provided in the other Loan
Documents by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is
in conflict with, or inconsistent with, any provision in the
other Loan Documents, the provision contained in this Agreement
shall govern and control.
10.10 Waivers by Borrowers. Except as otherwise provided
herein, each Borrower waives: (a) presentment, demand and
protest and notice of presentment, protest, default, non-payment,
maturity, release, compromise, settlement, extension, or renewal
of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper, and guaranties at any time
held by Lender on which such Borrower may in any way be liable,
and each Borrower hereby ratifies and confirms whatever Lender
may do in this regard; (b) all rights to notice of a hearing
prior to Lender's taking possession or control of, or to Lender's
replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing
Lender to exercise any of Lender's remedies; and (c) the benefit
of all valuation, appraisement, and exemption laws. Each
Borrower acknowledges that it has been advised by counsel with
respect to this Agreement and the transactions evidenced by this
Agreement.
10.11 Authorized Signatures. Until Lender is notified by
Borrowers to the contrary in writing as provided by
SECTION 10.10, the signature upon this Agreement or any of the
other Loan Documents of a person designated in Borrowers'
incumbency resolutions of even date herewith shall bind each
Borrower and be deemed to be the acts of Borrowers affixed
pursuant to and in accordance with resolutions duly adopted by
Borrowers' Boards of Directors.
10.12 Notices. Except as otherwise provided herein,
whenever this Agreement provides that any notice, demand,
request, consent, approval, declaration, or other communication
shall or may be given to or served upon any of the parties by
another, or whenever any of the parties desires to give or serve
upon another any communication with respect to this Agreement,
each such notice, demand, request, consent, approval,
declaration, or other communication shall be in writing and shall
be delivered (a) in person with receipt acknowledged, or (b) by
facsimile with receipt confirmed, or (c) by registered or
certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to Lender at:
Transamerica Business Credit Corporation
8750 West Bryn Mawr Avenue, Suite 720
Chicago, Illinois 60631
Attention: Keith J. Mason
Facsimile: (312) 380-6169
With copies to:
Murphy, Weir & Butler
101 California Street, 39th Floor
San Francisco, California 94111
Attention: Hill Blackett, III, Esq.
Facsimile: (415) 421-7879
(b) If to Borrowers, at:
Transcisco Industries, Inc.
601 California Street
San Francisco, California 94108
Attention: President and CEO
Facsimile: (415) 788-0583
With copies to:
Skadden, Arps, Slate, Meagher & Flom
333 West Wacker Drive
Chicago, Illinois 60606
Attention: Randall J. Rademaker, Esq.
Facsimile: (312) 407-0411]
or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may
be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval,
declaration, or other communication hereunder shall be deemed to
have been duly given or served on the date on which personally
delivered or sent by facsimile, with receipt acknowledged or
confirmed, or five (5) Business Days after the same shall have
been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, consent,
approval, declaration, or other communication to the persons
designated above to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request,
consent, approval, declaration, or other communication.
10.13 Publicity. Except as required by law or as otherwise
provided below, (a) this Agreement and its contents and (b) the
financing transactions contemplated by this Agreement, shall not
be disclosed publicly without the prior written consent of Lender
and Transcisco. Without limiting the generality of the
foregoing, except as required by law, Borrowers shall not use or
refer to Lender in any disclosure made in connection with the
transactions described in this Agreement without the prior
written consent of Lender. Each Borrower hereby consents to
Lender issuing a press release or publishing a tombstone or
similar advertising material relating to the financing
transactions contemplated by this Agreement.
10.14 Section Titles. The section titles contained in this
Agreement are and shall be without substantive meaning or content
of any kind whatsoever and are not a part of the agreement
between the parties hereto.
10.15 Entire Agreement. This Agreement constitutes the
entire and final agreement among Borrowers and Lender with
respect to the subject matter hereof, and supersedes any and all
representations or statements, either written or oral, express or
implied, other than those expressly set forth in this Agreement,
made to any party hereto by any Person. This Agreement and the
other Loan Documents are intended, by the parties hereto and
thereto, to be a complete and exclusive statement of the terms
and conditions hereof and thereof.
10.16 GUARANTOR WAIVERS BY BORROWERS. IF AND TO THE EXTENT
THAT ANY OBLIGATION OF ANY BORROWER TO LENDER SHALL BE CONSIDERED
AN OBLIGATION OF GUARANTY OR SURETYSHIP, THEN THE FOLLOWING
WAIVERS SHALL APPLY WITH RESPECT TO EACH SUCH PERSON SOLELY TO
THE EXTENT THAT SUCH PERSON IS DEEMED TO ACT IN THE CAPACITY OF A
GUARANTOR AND SHALL NOT EFFECT A WAIVER OF RIGHTS IN SUCH
PERSON'S CAPACITY AS A BORROWER (FOR PURPOSES OF THIS SECTION,
EACH SUCH PERSON SHALL BE REFERRED TO AS A "BORROWER-GUARANTOR"):
(a) SUCH BORROWER-GUARANTOR EXPRESSLY WAIVES THE RIGHT TO
REQUIRE LENDER FIRST TO PURSUE ANY OTHER PERSON, THE COLLATERAL,
OR ANY OTHER SECURITY OR GUARANTY THAT MAY BE HELD FOR THE
LIABILITIES, OR TO APPLY ANY SUCH SECURITY OR GUARANTY TO THE
LIABILITIES BEFORE SEEKING FROM SUCH BORROWER-GUARANTOR PAYMENT
IN FULL OF ITS LIABILITIES TO LENDER OR PROCEEDING AGAINST SUCH
BORROWER-GUARANTOR FOR SAME;
(b) SUCH BORROWER-GUARANTOR ACKNOWLEDGES THAT:
(i) IF A DEFAULT OR EVENT OF DEFAULT OCCURS AND SUCH
BORROWER-GUARANTOR PAYS TO LENDER ALL OR PART OF THE LIABILITIES,
SUCH BORROWER-GUARANTOR WOULD HAVE A RIGHT TO PROCEED AGAINST
OTHER BORROWERS TO THE EXTENT OF THE OBLIGATIONS SO PAID BY SUCH
BORROWER-GUARANTOR AND TO HAVE THE BENEFIT OF ANY SECURITY HELD
BY LENDER FOR THE LIABILITIES TO THE EXTENT OF THE LIABILITIES SO
PAID BY BORROWER-GUARANTOR. SUCH RIGHT IS COMMONLY KNOWN AS THE
"RIGHT OF SUBROGATION."
(ii) IF AN EVENT OF DEFAULT OCCURS, LENDER, AMONG
OTHER THINGS, MAY ENFORCE ANY LIEN UPON ANY INTEREST IN REAL
PROPERTY ("REAL PROPERTY LIEN") BY MEANS OF JUDICIAL ACTION OR BY
NON-JUDICIAL ACTION COMMONLY KNOWN AS A "NON-JUDICIAL
FORECLOSURE," "TRUSTEE'S SALE," OR "POWER OF SALE FORECLOSURE."
(iii) IF AN EVENT OF DEFAULT OCCURS, AND LENDER
ENFORCES ANY REAL PROPERTY LIEN BY MEANS OF A NON-JUDICIAL
FORECLOSURE, TRUSTEE'S SALE, OR POWER OF SALE FORECLOSURE, SUCH
BORROWER-GUARANTOR'S RIGHT OF SUBROGATION TO PROCEED AGAINST
OTHER BORROWERS WOULD BE EXTINGUISHED BY THE OPERATION OF
CALIFORNIA CODE OF CIVIL PROCEDURE ("CCP") SECTION 580d OR
SIMILAR LAWS, AND, IN SUCH CASE, SUCH BORROWER-GUARANTOR MIGHT
HAVE A DEFENSE AGAINST PAYMENT.
(iv) IF AN EVENT OF DEFAULT OCCURS, AND LENDER
ENFORCES ANY REAL PROPERTY LIEN BY MEANS OF JUDICIAL ACTION, SUCH
BORROWER-GUARANTOR'S RIGHT TO PROCEED AGAINST OTHER BORROWERS
MIGHT BE LIMITED BY THE OPERATION OF CCP SECTION 580a OR SIMILAR
LAWS, IN WHICH CASE SUCH BORROWER-GUARANTOR MIGHT HAVE A COMPLETE
OR PARTIAL DEFENSE AGAINST PAYMENT.
NEVERTHELESS, BORROWER-GUARANTOR EXPRESSLY,
KNOWINGLY, AND INTENTIONALLY WAIVES AND RELINQUISHES ANY AND ALL
RIGHTS, DEFENSES, OR BENEFITS BORROWER-GUARANTOR MIGHT HAVE UNDER
CCP SECTIONS 580a OR 580d OR SIMILAR LAWS. IN ADDITION,
BORROWER-GUARANTOR ALSO EXPRESSLY, KNOWINGLY, AND INTENTIONALLY
WAIVES AND RELINQUISHES ANY AND ALL RIGHTS, DEFENSES, OR BENEFITS
BORROWER-GUARANTOR MAY HAVE BASED UPON AN ELECTION OF REMEDIES BY
LENDER WHICH IN ANY MANNER IMPAIRS, AFFECTS, REDUCES, RELEASES,
DESTROYS, OR EXTINGUISHES SUCH BORROWER-GUARANTOR'S SUBROGATION
RIGHTS OR SUCH BORROWER-GUARANTOR'S RIGHTS TO PROCEED AGAINST
OTHER BORROWERS OR AGAINST ANY OTHER PERSON OR ANY SECURITY FOR
THE LIABILITIES BY WAY OF SUBROGATION, INDEMNITY, CONTRIBUTION,
REIMBURSEMENT, OR OTHERWISE. IN PARTICULAR, SUCH BORROWER-
GUARANTOR AGREES THAT THIS AGREEMENT WILL REMAIN FULLY EFFECTIVE,
AND SUCH BORROWER-GUARANTOR WILL BE LIABLE TO LENDER FOR ANY
LIABILITIES EVEN IF LENDER ENFORCES ITS REAL PROPERTY LIEN BY
MEANS OF A NON-JUDICIAL FORECLOSURE, TRUSTEE'S SALE, OR POWER OF
SALE FORECLOSURE AND THE EFFECT OF SUCH SALE IS TO PREVENT SUCH
BORROWER-GUARANTOR FROM TAKING ANY ACTION AGAINST OTHER BORROWERS
TO RECOVER ANY AMOUNTS PAID BY SUCH BORROWER-GUARANTOR TO LENDER
UNDER THIS AGREEMENT OR OTHERWISE LIMITS OR DESTROYS SUCH
BORROWER-GUARANTOR'S RIGHT OF SUBROGATION.
SUCH BORROWER-GUARANTOR ALSO AGREES THAT THIS
AGREEMENT WILL REMAIN FULLY EFFECTIVE, AND SUCH BORROWER-
GUARANTOR WILL BE LIABLE TO LENDER FOR ANY LIABILITIES EVEN IF
LENDER SELLS AN INTEREST IN REAL PROPERTY BY JUDICIAL FORECLOSURE
ACTION AND SUCH BORROWER-GUARANTOR'S RIGHTS AGAINST OTHER
BORROWERS ARE LIMITED BY THE OPERATION OF CCP SECTIONS 580a OR
580d OR SIMILAR LAWS; AND
(c) SUCH BORROWER-GUARANTOR AGREES THAT LENDER SHALL BE
UNDER NO OBLIGATION TO: (i) MARSHAL ANY ASSETS IN FAVOR OF SUCH
PERSON, (ii) TO PROCEED FIRST AGAINST ANY OTHER PERSON OR ANY
PROPERTY OF ANY OTHER PERSON OR AGAINST ANY COLLATERAL,
(iii) ENFORCE FIRST ANY OTHER GUARANTY OBLIGATIONS WITH RESPECT
TO, OR SECURITY FOR, THE LIABILITIES, (iv) PURSUE ANY OTHER
REMEDY IN LENDER'S POWER THAT SUCH BORROWER-GUARANTOR MAY NOT BE
ABLE TO PURSUE ITSELF AND THAT MAY LIGHTEN SUCH BORROWER-
GUARANTOR'S BURDEN, ANY RIGHT TO WHICH SUCH BORROWER-GUARANTOR
HEREBY EXPRESSLY WAIVES.
EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS
ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS
IN ITS FUTURE DEALINGS WITH SUCH BORROWER. EACH BORROWER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING
WAIVERS WITH ITS LEGAL COUNSEL.
10.17 Reimbursement. To the extent that any Borrower shall
be required to repay a portion of any Liabilities which shall
exceed the greater of (x) the amount of such borrowing actually
received by such Borrower and (y) the amount which such Borrower
would otherwise have paid if each Borrower had repaid the
aggregate amount of such borrowing in the same proportion as such
Borrower's net worth immediately after the Closing Date bears to
the Borrowers' Net Worth immediately after the Closing Date, then
such Borrower shall be reimbursed by the other Borrower(s) for
the amount of such excess, pro rata, based upon their respective
individual net worths immediately after the Closing Date. This
Section is intended only to define the relative rights of
Borrowers, and nothing set forth in this Section is intended to
or shall impair the joint and several obligation of Borrowers to
pay to Lender the Liabilities as and when the same shall become
due and payable in accordance with the terms hereof.
10.18 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY, AND PERFORMANCE, THIS AGREEMENT AND THE
OBLIGATIONS SET FORTH HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA; PROVIDED, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED
IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF SUCH
JURISDICTION SHALL GOVERN THE METHOD, MANNER, AND PROCEDURE FOR
FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM, OR INCONSISTENT WITH, THE LAWS OF ILLINOIS. EACH
BORROWER CONSENTS TO PERSONAL JURISDICTION, WAIVES ANY OBJECTION
AS TO JURISDICTION OR VENUE, AND AGREES NOT TO ASSERT ANY DEFENSE
BASED ON LACK OF JURISDICTION OR VENUE, IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA. SERVICE OF PROCESS ON ANY
BORROWER, LENDER, OR ANY ASSIGNEE LENDER IN ANY ACTION ARISING
OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS SHALL BE
EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN
SECTION 10.12. NOTHING HEREIN SHALL PRECLUDE LENDER OR BORROWERS
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION.
10.19 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES
ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE
MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE
THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the date first written above.
BORROWERS:
TRANSCISCO INDUSTRIES, INC., a
Delaware corporation
By /s/ Greg Saunders
Title Vice President, Controller
TRANSCISCO RAIL SERVICES COMPANY, a
California corporation
By /s/ Greg Saunders
Title Vice President, Controller
TRANSCISCO LEASING COMPANY, a
Delaware corporation
By /s/ Greg Saunders
Title Vice President, Controller
TRANSCISCO TRADING COMPANY
Delaware corporation
By /s/ Greg Saunders
Title Vice President, Controller
LENDER:
TRANSAMERICA BUSINESS CREDIT CORPORATION, a
Delaware corporation
By /s/ David G. Wanders
Title S. V. P.
___________________________________________________________________________
NOTE AND WARRANT PURCHASE AGREEMENT
Among
TRANSCISCO INDUSTRIES, INC.,
TRANSCISCO RAIL SERVICES COMPANY,
TRANSCISCO LEASING COMPANY, and
TRANSCISCO TRADING COMPANY
and
FURMAN SELZ SBIC, L.P.
and
JAMES DOWLING
Dated as of August 1, 1995
TABLE OF CONTENTS
Page
I. THE NOTES AND THE WARRANTS . . . . . . . . . . . . . . . 1
SECTION 1.01 Purchase and Sale of the Notes and the
Warrants . . . . . . . . . . . . . . . . 1
SECTION 1.02 Closing Date . . . . . . . . . . . . . . 2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . 2
SECTION 2.01 Organization, Qualifications and
Corporate Power . . . . . . . . . . . . . 2
SECTION 2.02 Authorization of Agreement, Etc . . . . . 4
SECTION 2.03 Validity . . . . . . . . . . . . . . . . 5
SECTION 2.04 Capital Stock . . . . . . . . . . . . . . 5
SECTION 2.05 Financial Statements . . . . . . . . . . 6
SECTION 2.06 Events Subsequent to March 31, 1995 . . . 6
SECTION 2.07 Actions Pending . . . . . . . . . . . . . 7
SECTION 2.08 Title to Properties . . . . . . . . . . . 7
SECTION 2.09 Use of Real Property . . . . . . . . . . 8
SECTION 2.10 Taxes . . . . . . . . . . . . . . . . . . 8
SECTION 2.11 Loss Carryovers . . . . . . . . . . . . . 8
SECTION 2.12 Environmental Matters . . . . . . . . . . 9
SECTION 2.13 Governmental Approvals . . . . . . . . . 9
SECTION 2.14 Use of Proceeds . . . . . . . . . . . . . 9
SECTION 2.15 Offering of the Securities . . . . . . . 10
SECTION 2.16 Other Contracts and Commitments . . . . . 10
SECTION 2.17 Compliance with Law . . . . . . . . . . . 10
SECTION 2.18 Employee Benefit Plans . . . . . . . . . 11
SECTION 2.19 Intellectual Property Rights . . . . . . 12
SECTION 2.20 Uni-Temp Licenses . . . . . . . . . . . . 12
SECTION 2.21 SBIC Representations . . . . . . . . . . 13
SECTION 2.22 SEC Filings . . . . . . . . . . . . . . . 13
SECTION 2.23 Burdensome Restrictions . . . . . . . . . 14
SECTION 2.24 Insurance . . . . . . . . . . . . . . . . 14
SECTION 2.25 Brokers . . . . . . . . . . . . . . . . . 14
SECTION 2.26 Registration Rights . . . . . . . . . . . 14
SECTION 2.27 Investment Company Act . . . . . . . . . 14
SECTION 2.28 Compensation . . . . . . . . . . . . . . 14
SECTION 2.29 Bank Debt . . . . . . . . . . . . . . . . 15
SECTION 2.30 Disclosure . . . . . . . . . . . . . . . 15
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . 15
IV. CONDITIONS TO THE OBLIGATION OF THE PURCHASER . . . . . 16
SECTION 4.01 Conditions to the Obligation of the
Purchasers with Respect to the Closing . 16
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 21
VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.01 Expenses . . . . . . . . . . . . . . . . 24
SECTION 6.02 Survival of Agreements . . . . . . . . . 24
SECTION 6.03 Brokerage . . . . . . . . . . . . . . . . 25
SECTION 6.04 Parties in Interest . . . . . . . . . . . 25
SECTION 6.05 Notices . . . . . . . . . . . . . . . . . 25
SECTION 6.06 Law Governing . . . . . . . . . . . . . . 26
SECTION 6.07 Entire Agreement . . . . . . . . . . . . 26
SECTION 6.08 Counterparts . . . . . . . . . . . . . . 26
INDEX TO EXHIBITS
Description
EXHIBIT A Pro Rata Percentages
EXHIBIT B-1 Form of Series A Senior Subordinated Note
EXHIBIT B-2 Form of Series B Senior Subordinated Note
EXHIBIT C Form of Warrant
EXHIBIT D Form of Registration Rights Agreement
INDEX TO SCHEDULES
Description
2.01(b) Subsidiaries, Etc.
2.04(a) Warrants, Etc.
2.05 Pro Forma Capitalization
2.06 Events Subsequent to March 31, 1995
2.07 Litigation
2.08 Title to Properties
2.12 Environmental Matters
2.18 Employee Benefit Plans
2.28 Compensation Arrangements
NOTE AND WARRANT PURCHASE AGREEMENT, dated as of August
1, 1995, among TRANSCISCO INDUSTRIES, INC., a Delaware
corporation (the "Company"), TRANSCISCO RAIL SERVICES COMPANY, a
California corporation ("TRSC"), TRANSCISCO LEASING COMPANY, a
Delaware corporation ("TLC") and TRANSCISCO TRADING COMPANY, a
Delaware corporation ("TTC") (each of TRSC, TLC and TTC a
"Subsidiary" and collectively, the "Subsidiaries") and FURMAN
SELZ SBIC, L.P., a Delaware limited partnership ("Furman Selz")
and JAMES DOWLING ("Dowling") and collectively with Furman Selz,
the "Purchasers").
WHEREAS the Company and the Subsidiaries wish to issue
and sell to each of the Purchasers on the Closing Date (as
hereinafter defined) their pro rata share (based on the
percentages set forth on Exhibit A) ("Pro Rata") of (i) an
aggregate $2,000,000 principal amount of Series A Senior
Subordinated Notes Due 2000 of the Company and the Subsidiaries,
substantially in the form attached hereto as Exhibit B-1 (the "A
Notes") and (ii) an aggregate $1,000,000 principal amount of
Series B Senior Subordinated Notes Due 2000 of the Company and
the Subsidiaries, substantially in the form attached hereto as
Exhibit B-2 (the "B Notes", and together with the A Notes, the
"Notes"); and
WHEREAS the Company wishes to issue and sell to the
Purchasers on the Closing Date, Pro Rata, of a warrant or
warrants to subscribe for up to 1,000,000 shares of Common Stock,
par value $.01 per share, of the Company ("Common Stock"),
substantially in the form attached hereto as Exhibit C (the
"Warrants"); and
WHEREAS the proceeds of the sale of the Notes and the
Warrants will be used, together with other funds of the Company
and the Subsidiaries, to repay certain obligations of the Company
and the Subsidiaries; and
WHEREAS the Purchasers wish to purchase said Notes and
Warrants on the terms and subject to the conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, the parties hereby agree as
follows:
I.
THE NOTES AND THE WARRANTS
SECTION 1.01 Purchase and Sale of the Notes and the
Warrants. (a) Subject to the terms and conditions set forth
herein, on the Closing Date (i) the Company and the Subsidiaries
shall issue and sell to the Purchasers, Pro Rata, and the
Purchasers shall purchase from the Company and the Subsidiaries,
Pro Rata, the A Notes, registered in the names of Purchasers, at
a purchase price equal to 99% of the principal amount thereof;
(ii) the Company and the Subsidiaries shall issue and sell to the
Purchasers, Pro Rata, and the Purchasers shall purchase from the
Company and the Subsidiaries, Pro Rata, the B Notes, registered
in the names of Purchasers, at a purchase price equal to 99% of
the principal amount thereof; and (iii) the Company shall issue
and sell to the Purchasers, Pro Rata, and the Purchasers shall
purchase from the Company, Pro Rata, the Warrants, having an
exercise price (the "Warrant Exercise Price") of $1.50 per share,
registered in the names of Purchasers, at an aggregate purchase
price of $30,000; and (x) the Company and the Subsidiaries shall
issue and deliver to the Purchasers the Notes and (y) the Company
shall issue and deliver the Warrants. The Notes and the Warrants
are herein sometimes collectively referred to as the
"Securities".
(b) As payment in full for the Securities being
purchased by it hereunder, and against delivery thereof as
aforesaid, each Purchaser shall deliver to the Company, on behalf
of the Company, and to the Subsidiaries on the Closing Date a
certified or official bank check in New York Clearing House
funds, payable to the order of the Company, in the amount of
their Pro Rata share of $3,000,000 or shall transfer such sum to
the account of the Company by wire transfer.
SECTION 1.02 Closing Date. The closing of the sale
and purchase of the Securities shall take place at the offices of
Dechert Price & Rhoads, 477 Madison Avenue, New York, New York
10022, at 10:00am, New York time, concurrently with the execution
hereof (such date and time of closing being herein called the
"Closing Date").
II.
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SUBSIDIARIES
The Company and the Subsidiaries, jointly and
severally, represent and warrant to, and agree with, the
Purchasers as follows:
SECTION 2.01 Organization, Qualifications and
Corporate Power. (a) The Company is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware, and is duly licensed or qualified
to do business as a foreign corporation, and is in good standing
in each other jurisdiction in which it owns or leases any real
property or in which the nature of business transacted by it
makes such licensing or qualification necessary and where the
failure to be so licensed or qualified would have a material
adverse effect on the business, operations or financial condition
of the Company. The Company has the corporate power and
authority to own and hold its properties and to carry on its
business as currently conducted, to execute, deliver and perform
this Agreement, the Notes, the Warrants and the Registration
Rights Agreement annexed hereto as Exhibit C (the "Registration
Rights Agreement") and to issue, sell and deliver the shares of
Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares").
(b) Except as set forth on Schedule 2.01(b) hereof,
and except for the capital stock of the Subsidiaries, the Company
does not own of record or beneficially, directly or indirectly,
(i) any shares of outstanding capital stock or securities
convertible into capital stock of any other corporation or (ii)
any participating interest in any partnership, joint venture or
other non-corporate business enterprise. Except as set forth in
said Schedule 2.01(b), the Company owns, directly or indirectly,
all the outstanding capital stock of each Subsidiary (except for
directors' qualifying shares, if any), free and clear of all
liens, charges, pledges, security interests or other
encumbrances. The capital stock of each Subsidiary is duly
authorized and validly issued and outstanding, fully paid and
nonassessable. No Subsidiary has issued or sold any shares of
its capital stock or any securities or obligations convertible
into or exchangeable for, or given any person any right to
acquire from such Subsidiary, any shares of its capital stock,
and no such securities or obligations are outstanding. Each
Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation listed in said Schedule 2.01(b) and is duly
licensed or qualified to do business as a foreign corporation and
is in good standing in each other jurisdiction in which it owns
or leases any real property or in which the nature of the
business transacted by it makes such licensing or qualification
necessary and where the failure to be so licensed or qualified
would have a material adverse effect on the business, operations
or financial condition of such Subsidiary, and has the corporate
power and authority to own and hold its properties and to carry
on its business as currently conducted. Complete and correct
copies of the Articles of Incorporation and By-Laws of the
Company and each Subsidiary as in effect on the date hereof have
been delivered to Purchasers. Other than the capital stock of
the subsidiaries set forth on Schedule 2.01(b), no Subsidiary
owns of record or beneficially, directly or indirectly, (i) any
shares of outstanding capital stock or securities convertible
into capital stock of any other corporation or (ii) any
participating interest in any partnership, joint venture or other
non-corporate business enterprise.
SECTION 2.02 Authorization of Agreement, Etc. (a) The
execution, delivery and performance by the Company of this
Agreement, the Notes, the Warrants and the Registration Rights
Agreement, and the performance by the Company of its obligations
hereunder and thereunder, and the issuance, sale and delivery of
the Warrant Shares upon exercise of the Warrants, have been duly
authorized by all requisite corporate action and will not violate
any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or By-laws of the
Company, or any provision of any indenture, agreement or other
instrument by which the Company or any of the Subsidiaries or any
of their respective properties or assets is bound or affected, or
conflict with, result in a breach of, result in or permit the
termination of or acceleration of rights or obligations under, or
constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties
or assets of the Company or any of the Subsidiaries.
(b) The Warrant Shares have been duly reserved for
issuance upon exercise of the Warrants and, when issued and paid
for in accordance with the terms of the Warrants, will be duly
authorized, validly issued and outstanding, fully paid and
nonassessable shares of Common Stock. Neither the issuance, sale
and delivery of the Warrants nor the issuance, sale and delivery
of the Warrant Shares upon exercise thereof are subject to any
preemptive rights of stockholders of the Company or to any right
of first refusal or other similar right in favor of any person.
(c) The execution, delivery and performance by each of
the Subsidiaries of this Agreement and the Notes, and the
performance by each Subsidiary of its obligations hereunder and
thereunder, have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of
any court or other agency of government, the Articles of
Incorporation or By-laws of any Subsidiary, or any provision of
any indenture, agreement or other instrument by which the
Subsidiaries or any of their respective properties or assets is
bound or affected, or conflict with, result in a breach of,
result in or permit the termination of or acceleration of rights
or obligations under, or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or
other instrument, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of
the properties or assets of any of the Subsidiaries.
SECTION 2.03 Validity. (a) This Agreement has been
duly executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable
in accordance with its terms (subject, as to enforcement of
remedies to applicable bankruptcy, reorganization, insolvency and
similar laws, to moratorium laws from time to time in effect and
to general equity principals). The Notes, the Warrants and the
Registration Rights Agreement, when executed and delivered in
accordance with this Agreement, will constitute the legal, valid
and binding obligations of the Company, enforceable in accordance
with their respective terms (subject, as to enforcement of
remedies to applicable bankruptcy, reorganization, insolvency and
similar laws, to moratorium laws from time to time in effect and
to general equity principles).
(b) This Agreement and the Notes have been duly
executed and delivered by the Subsidiaries and constitute the
legal, valid and binding obligation of each Subsidiary,
enforceable in accordance with its terms (subject, as to
enforcement of remedies to applicable bankruptcy, reorganization,
insolvency and similar laws, to moratorium laws from time to time
in effect and to general equity principals).
SECTION 2.04 Capital Stock. The authorized capital
stock of the Company consists of (i) 1,000,000 shares of
Preferred Stock, par value $.01 per share, of which no shares are
issued and outstanding and (ii) 15,000,000 shares of Common
Stock, par value $.01 per share, of which 5,466,268 shares are
validly issued and outstanding, fully paid and nonassessable. Of
such shares of Common Stock, 489,976 shares are being held in
escrow ("Escrow Shares") for the benefit of the Company's Class F
Claimants (as such term is defined in the Company's Articles of
Incorporation as in effect on the date hereof). Effective at the
Closing hereunder, 304,822 shares of the Escrow Shares will be
returned to the Company and will be held as treasury shares.
Except as contemplated hereby and as set forth in Schedule
2.04(a) hereto, (i) no subscription, warrant, option, convertible
security or other right (contingent or other) to purchase or
acquire any shares of any class of capital stock of the Company
is authorized or outstanding; (ii) there is no commitment of the
Company to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of its capital
stock any evidences of indebtedness or assets and (iii) the
Company has no obligation (contingent or other) to purchase,
redeem or otherwise acquire any shares of its capital stock or
any interest therein or to pay any dividend or make any other
distribution in respect thereof. The execution, delivery and
performance by the Company of this Agreement, the Notes, the
Warrants and the Registration Rights Agreement, and the
performance by the Company of its obligations hereunder and
thereunder will not cause the acceleration or vesting of any of
the options set forth in Schedule 2.04(a) or otherwise give rise
to any rights or obligations under any so-called "change-of-
control" provisions.
SECTION 2.05 Financial Statements. The Company has
furnished to the Purchasers (i) the audited consolidated balance
sheets of the Company and the Subsidiaries as of March 31, 1995,
December 31, 1993 and 1992 and the related audited consolidated
statements of operations, shareholders' equity (net capital
deficiency), and cash flows of the Company and the Subsidiaries
for the fiscal year ended March 31, 1995, the three-month period
ended March 31, 1994, and for each of the two years in the period
ended December 31, 1993, certified by the principal financial
officer of the Company and (ii) the unaudited consolidated
balance sheet of the Company and the Subsidiaries as of June 30,
1995 and the related unaudited consolidated statements of
operations, shareholders' equity (net capital deficiency), and
cash flows of the Company and the Subsidiaries for the fiscal
quarter then ended. Such financial statements are complete and
correct, have been prepared in accordance with generally accepted
accounting principles, consistently applied, and fairly present
the consolidated financial position of the Company and the
Subsidiaries as of such respective dates, and the consolidated
results of their respective operations and cash flows for the
respective periods then ended. Immediately after giving effect
to the transactions contemplated hereby, the Company will have
the capitalization as set forth in Schedule 2.05.
SECTION 2.06 Events Subsequent to March 31, 1995.
Since March 31, 1995, the businesses of the Company and the
Subsidiaries have been operated in the ordinary course and there
has not been any material adverse change in the assets,
liabilities, income, business, operations or prospects of the
Company or the Subsidiaries. Since March 31, 1995, except as set
forth in Schedule 2.06 hereto or as contemplated hereby, neither
the Company nor any of the Subsidiaries has (i) issued any stock,
bonds or other securities, (ii) borrowed any amount or incurred
any liabilities (absolute or contingent), except current
liabilities incurred, and liabilities under contracts entered
into, in the ordinary course of business, (iii) discharged or
satisfied any lien or incurred or paid any obligation or
liability (absolute or contingent) other than current liabilities
shown on its balance sheet as of March 31, 1995 referred to in
Section 2.05 hereof and current liabilities incurred since that
date in the ordinary course of business, (iv) declared or made
any payment or distribution to stockholders or purchased or
redeemed any shares of its capital stock or other securities or
interests, (v) mortgaged, pledged or subjected to lien any of its
assets, tangible or intangible, other than liens of current real
property taxes not yet due and payable, (vi) sold, assigned or
transferred any of its tangible assets, except in the ordinary
course of business, or cancelled any debts or claims, (vii) sold,
assigned or transferred any patents, trademarks, trade names,
copyrights, trade secrets or other intangible assets, (viii) made
any changes in officer compensation, or (ix) entered into any
transaction except in the ordinary course of business.
SECTION 2.07 Actions Pending. Except as set forth in
Schedule 2.07 hereof, there are no (a) actions, suits, customer
claims in excess of $5,000, proceedings or investigations at law
or in equity or by or before any governmental instrumentality or
other agency now pending or to the Company's or any Subsidiaries'
knowledge, threatened against or affecting the Company or the
Subsidiaries, or (b) judgments, decrees, injunctions or orders of
any court, governmental department, commission, agency,
instrumentality or arbitrator against or affecting the Company or
the Subsidiaries.
SECTION 2.08 Title to Properties. The Company and each
Subsidiary have good and marketable title to all of their
respective owned properties and assets, free and clear of all
mortgages, pledges, security interests, liens, charges and other
encumbrances, except for Permitted Encumbrances (as defined
below). As of the Closing and after giving effect to the
transactions contemplated hereby, the Company and each Subsidiary
will have good and marketable title to all their respective
properties and assets free and clear of mortgages, pledges,
security interests, liens, charges and other encumbrances, except
under the Bank Debt (as defined in Section 4.01(d)) and for
Permitted Encumbrances. As of the Closing and after giving
effect to the transactions contemplated hereby, the Company and
the Subsidiaries will enjoy peaceful and undisturbed possession
under all leases relating to real property and all other leases
(other than immaterial leases which can be replaced on
substantially the same terms) necessary for the operation of
their properties and business; and all such leases are valid and
subsisting and in full force and effect. As used herein,
"Permitted Encumbrances" means any mortgages, pledges, security
interests, liens, charges and other encumbrances (i) as described
in Schedule 2.08 hereto, (ii) liens for current taxes,
assessments and other governmental charges not overdue, (iii)
mechanic's, materialmen's and similar liens which may have arisen
in the ordinary course of business and which, in the aggregate,
would not be material to the financial condition of the Company
or such Subsidiary, (iv) security interests securing indebtedness
not in default for the purchase price of or lease rental payments
on property purchased or leased under capital lease arrangements
in the ordinary course of business, and (v) minor imperfections
of title, if any, not material in amount and not materially
detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed
operations of the Company and its Subsidiaries, taken as a whole.
SECTION 2.09 Use of Real Property. Neither the Company
nor any Subsidiary has received notice of violation of any
applicable zoning or building regulation, ordinance or other law,
order, regulation or requirement relating to the operations of
the Company or any Subsidiary and there is no such violation.
All plants and other buildings that are located on the real
properties reflected in the balance sheet as of March 31, 1995
referred to in Section 2.05 hereof comply in all material
respects with all applicable ordinances, codes, regulations and
requirements, and no law or regulation presently in effect or
condition precludes or materially restricts continuation of the
present use of such properties.
SECTION 2.10 Taxes. The Company and each Subsidiary
has filed or caused to be filed all Federal, state, local and
foreign tax returns that are required to be filed and has paid or
caused to be paid all taxes shown as due on all such returns or
on any assessment received by it.
SECTION 2.11 Loss Carryovers. The federal income tax
net operating loss carryovers of the Company as reported on the
consolidated federal income tax returns of the Company for the
taxable year ended March 31, 1995 are $30,000,000 for regular
minimum tax purposes and $29,000,000 for alternative minimum tax
purposes (the "Loss Carryovers"). The application of such Loss
Carryovers and any additional net operating losses of the Company
for the period beginning April 1, 1995 and ending on the Closing
Date are not subject to limitation under Section 382 of the
Internal Revenue Code of 1986, as amended (the "Code"). The
losses and credits of the Company, including the Loss Carryovers,
will not be subject to limitation under either Section 382 or 383
of the Code as a result of the change in ownership of the Company
upon consummation of the transactions contemplated by this
Agreement or the issuance of the Warrant Shares upon exercise of
the Warrants. For purposes of the immediately preceding
sentence, the calculation of any change in ownership of the
Company shall take into account any possible changes in ownership
of stock of the Company as a result of (i) transfers of stock by
that certain group consisting of Mark Hungerford, Katy
Hungerford, Southern Cross Trust and Ozura Corporation who
together filed a Form 13D with the Securities and Exchange
Commission pursuant to the Securities and Exchange Act of 1934,
as amended, or (ii) the exercise of any options or rights to
purchase stock of the Company currently outstanding or to be
issued or granted pursuant to the transactions contemplated
hereby, including but not limited to those options and stock
purchase rights set forth on Schedule 2.04(a).
SECTION 2.12 Environmental Matters. The Company and
the Subsidiaries have complied with each and are not in violation
of any, federal, state or local law, regulation, permit,
provision or ordinance relating to the generation, storage,
transportation, treatment or disposal of hazardous, toxic or
polluting substances, except where such noncompliance or
violation would not result in any material adverse effect on the
business, operations or financial condition of the Company and
the Subsidiaries, taken as a whole, or their properties or
assets, taken as a whole. The Company and the Subsidiaries have
obtained and adhered to all necessary permits and other approvals
necessary to store, dispose, and otherwise handle hazardous,
toxic and polluting substances, the failure of which to obtain or
adhere to would result in any material adverse effect on the
business, operations or financial condition of the Company and
the Subsidiaries, taken as a whole, or their properties or
assets, taken as a whole. The Company and the Subsidiaries have
reported, to the extent required by federal, state and local law,
all past and present sites where hazardous, toxic or polluting
substances, if any, from the Company and the Subsidiaries have
been treated, stored or disposed. Neither the Company nor any
Subsidiary has transported any hazardous, toxic or polluting
substances or arranged for the transportation of such substances
to any location which is the subject of federal, state or local
enforcement actions or other investigations which may lead to
claims against the Company or the Subsidiaries for clean-up
costs, remedial work, damages to natural resources or for
personal injury claims, including, but not limited to, claims
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended which claims would result in a
material adverse effect on the business, operations or financial
condition of the Company and the Subsidiaries, taken as a whole,
or their properties or assets, taken as a whole.
SECTION 2.13 Governmental Approvals. No registration
or filing with, or consent or approval of, or other action by,
any Federal, state or other governmental agency or
instrumentality is or will be necessary for the valid execution,
delivery and performance of this Agreement, the Notes, the
Warrants and the execution and delivery of the Registration
Rights Agreement, or the issuance, sale and delivery of the
Warrant Shares.
SECTION 2.14 Use of Proceeds. The Company and the
Subsidiaries will apply the proceeds of the issuance and sale of
the Securities, together with other funds, to finance (i) the
repurchase in full of all debt owed to the Class F Claimants at
an aggregate repurchase price of less than $9 million, and (ii)
the repayment in full of all debt owed to Congress Financial
Corporation (Western) by TRSC pursuant to a secured line of
credit (the "Congress Debt"). After giving effect to the
transactions contemplated hereby, the Company shall have
discharged all its obligations to the Class F Claimants.
SECTION 2.15 Offering of the Securities. Neither the
Company, the Subsidiaries nor any person authorized or employed
by the Company or the Subsidiaries as agent, broker, dealer or
otherwise in connection with the offering or sale of the
Securities or any similar security of the Company or the
Subsidiaries has offered the Securities or any such security for
sale to, or solicited any offers to buy the Securities or any
similar security of the Company or the Subsidiaries from, or
otherwise approached or negotiated with respect thereto with, any
person or persons other than the Purchasers, and neither the
Company, the Subsidiaries nor any person acting on their behalf
has taken or will take any action (including, without limitation,
any offer, issuance or sale of any security of the Company or the
Subsidiaries under circumstances which might require the
integration of such offer, issuance or sale with the offer,
issuance and sale of the Securities under the Securities Act of
1933, as amended (the "Securities Act") or the rules and
regulations of the Securities and Exchange Commission (the
"Commission") thereunder) which might subject the offering,
issuance or sale of the Securities to the registration provisions
of the Securities Act.
SECTION 2.16 Other Contracts and Commitments. Neither
the Company nor any of the Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument
to which it is a party that may result in any material adverse
change in the business, operations or financial condition of the
Company and the Subsidiaries, taken as a whole.
SECTION 2.17 Compliance with Law. Neither the Company
nor any of the Subsidiaries is in default under any order of any
court, governmental authority or arbitration board or tribunal to
which the Company or such Subsidiary is or was subject or in
violation of any laws, ordinances, governmental rules or
regulations (including, but not limited to, those relating to
environmental, safety, building, product safety or health
standards or employment matters) to which the Company or such
Subsidiary is or was subject, in each case, that would result in
any material adverse effect on the business, operations or
financial condition of the Company and the Subsidiaries, taken as
a whole, or their properties or assets, taken as a whole. The
businesses of the Company and the Subsidiaries are being
conducted in compliance with all applicable laws, ordinances,
rules and regulations applicable to them, the non-compliance with
which would have a material adverse effect on the business,
operations or financial condition of the Company and the
Subsidiaries, taken as a whole, or their properties or assets,
taken as a whole. Neither the Company nor any of the
Subsidiaries has failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the
ownership of its properties or to the conduct of the business of
the Company or such Subsidiary, which failure would have a
material adverse effect on the business, operations or financial
condition of the Company and the Subsidiaries, taken as a whole,
or their properties or assets, taken as a whole.
SECTION 2.18 Employee Benefit Plans. (a) The Company
(which term shall include, for purposes of this Section 2.18,
each of the Subsidiaries) has complied and currently is in
compliance, both as to form and operation, with the applicable
provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the Internal Revenue Codes of
1954 and/or 1986, as amended, respectively (the "Code"), with
respect to each "employee benefit plan" as defined under Section
3(3) of ERISA ("Plan") which the Company (i) has ever adopted,
maintained, established or to which the Company has ever been
required to contribute or to which the Company has ever
contributed or (ii) currently maintains or to which the Company
currently contributes or is required to contribute or (iii)
currently participates in or is required to participate in.
(b) The Company has never maintained, adopted or
established, contributed or been required to contribute to, or
otherwise participated in or been required to participate in, a
"multiemployer plan" (as defined in Section 3(37) of ERISA). No
amount is due or owing from the Company on account of a "multi-
employer plan" (as defined in Section 3(37) of ERISA) or on
account of any withdrawal therefrom.
(c) Notwithstanding anything else set forth herein,
the Company has not incurred any liability with respect to a
Plan, including, without limitation, under ERISA (including,
without limitation, Title I or Title IV of ERISA and other than
liability for premiums due to the Pension Benefit Guaranty
Corporation), the Code or other applicable law, which has not
been satisfied in full, and no event has occurred, and there
exists no condition or set of circumstances which could result in
the imposition of any liability with respect to a Plan,
including, without limitation, under ERISA (including, without
limitation, Title I or Title IV of ERISA), the Code or other
applicable law with respect to the Plan.
(d) Except as set forth on Schedule 2.18, the Company
has not committed itself, orally or in writing, to (i) provide or
cause to be provided to any person any payments or benefits in
addition to, or in lieu of, those payments or benefits set forth
under any Plan, or (ii) continue the payment of, or accelerate
the payment of, benefits under any Plan, except as expressly set
forth thereunder. Complete and correct copies of all written
arrangements described in the preceding sentence as in effect on
the date hereof have been delivered to Purchasers.
(e) Except as set forth on Schedule 2.18, the Company
has not committed itself, orally or in writing, to provide or
cause to be provided any severance or other post-employment
benefit, salary continuation, termination, disability, death,
retirement, health or medical benefit, or similar benefit to any
person (including, without limitation, any former or current
employee) except as set forth under any Plan. Complete and
correct copies of all written arrangements described in the
preceding sentence as in effect on the date hereof have been
delivered to Purchasers.
SECTION 2.19 Intellectual Property Rights. The
Company and the Subsidiaries own or possess all patents,
trademarks, services marks, trade names, copyrights, licenses,
authorizations and other intangible property, and all rights with
respect to the foregoing, necessary for the conduct of their
respective businesses as now conducted, without any known
material conflict with the rights others. The consummation of
the transactions contemplated hereby will not alter or impair in
any material respect any of such rights of the Company or the
Subsidiaries, including without limitation, the rights of the
Company and the Subsidiaries under licensing and sub-licensing
agreements of the Uni-Temp heating technology (the "Uni-Temp
Licenses").
SECTION 2.20 Uni-Temp Licenses. The Uni-Temp Licenses
are in full force and effect. Neither the Company nor any of the
Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in the Uni-Temp Licenses, and to the knowledge of the
Company and the Subsidiaries, no other party to the Uni-Temp
Licenses is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained therein. The execution, delivery and performance by
the Company or any of the Subsidiaries of this Agreement and the
performance by the Company or any Subsidiary of its obligations
hereunder will not violate any provision of the Uni-Temp
Licenses, or conflict with, result in a breach of, result in or
permit the termination or acceleration of rights or obligations
under, or constitute (with due notice or lapse of time or both) a
default under, the Uni-Temp Licenses.
SECTION 2.21 SBIC Representations. (a) Neither the
Company nor any Subsidiary does in any manner or form
discriminate, foster discrimination or permit discrimination
against any person belonging to any minority race or believing in
any minority creed or religion.
(b) The Company, together with its Subsidiaries and
affiliates, (i) is not dominant in its field of operation and
(ii) does not have net worth in excess of $18 million and did not
have average net income after Federal income taxes (excluding any
carryover losses) for the preceding two completed fiscal years in
excess of $6 million, for purposes of the Small Business
Investment Act of 1958, as amended (the "SBIA") and the
regulations of the Small Business Administration ("SBA")
promulgated thereunder.
(c) To the Company's knowledge, none of its
stockholders is a small business investment corporation.
SECTION 2.22 SEC Filings. Since January 1, 1993, the
Company has timely filed all required reports, statements,
schedules and registration statements with the Commission
required to be filed by the Company pursuant to the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), all of
which complied in all material respects with all applicable
requirements of the Exchange Act. The Company has delivered to
Purchasers (i) its annual reports on Form 10-K for its fiscal
years ended December 31, 1993 and March 31, 1995, (ii) its
quarterly report on Form 10-Q for its fiscal quarter ended
December 31, 1994 and (iii) its proxy or information statements
relating to meetings of, or action taken without a meeting by,
the stockholders of the Company held since January 1, 1993 (the
items described in clauses (i), (ii) and (iii) are collectively
referred to as "SEC Filings"). The Company has not made any SEC
Filing since the filing of its annual report on Form 10-K for its
fiscal year ending March 31, 1995. As of their respective dates,
none of the SEC Filings, including without limitation, any
financial statements or schedules included therein, at the time
filed, contained any untrue statements of a material fact or
omitted 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.
Since March 31, 1995, neither the Company nor any Subsidiary has
entered into any transaction that would be required to be
disclosed in any SEC Filing pursuant to Item 404 of Regulation S-
K promulgated by the Commission pursuant to the Securities Act if
such SEC Filing was made as of the date hereof.
SECTION 2.23 Burdensome Restrictions. Neither the
Company nor any Subsidiary is obligated under any contract or
agreement or subject to any charter or other corporate
restriction which materially adversely affects the Company's or
any Subsidiary's business, properties, assets, prospects or
condition (financial or otherwise).
SECTION 2.24 Insurance. All policies of liability,
theft, fidelity, business interruption, life, fire, product
liability, workmen's compensation, health and other forms of
insurance held by the Company and its Subsidiaries are valid and
enforceable policies and are outstanding and duly in force and
all premiums with respect thereto are paid to date. The amounts
of coverage under such policies of insurance for the assets and
properties of the Company and its Subsidiaries are adequate
against risks usually insured against by persons operating
similar businesses and operating similar properties.
SECTION 2.25 Brokers. Neither the Company nor the
Subsidiaries nor any of their respective officers, directors,
employees or stockholders has employed any broker or finder in
connection with the transactions contemplated by this Agreement.
SECTION 2.26 Registration Rights. Except as
contemplated by the Registration Rights Agreement, no person has
any right to cause the Company or any Subsidiary to effect the
registration under the Securities Act of any shares of Common
Stock or any other securities (including debt securities) of the
Company or any Subsidiary.
SECTION 2.27 Investment Company Act. The Company is
not an "investment company" as that term is defined in, and is
not otherwise subject to regulation under, the Investment Company
Act of 1940, as amended.
SECTION 2.28 Compensation Arrangements. Except as set
forth in Schedule 2.28 hereto, (i) neither the Company nor any of
the Subsidiaries is a party to any employment or deferred
compensation agreements that require payments by the Company or
any Subsidiary to any individual in excess of $100,000, or in the
aggregate, in excess of $500,000, in each case, in any year (ii)
neither the Company nor any of the Subsidiaries has any bonus,
incentive or profit-sharing plans that would require payments by
the Company and its Subsidiaries to any individual in an amount
equal to or exceeding $50,000 in any one year, and (iii) there
are no existing material arrangements or proposed material
transactions between the Company or any of the Subsidiaries and
any officer or director or holder of more than 5% of the capital
stock of the Company or any of the Subsidiaries. Complete and
correct copies of all written arrangements described in the
preceding sentence as in effect on the date hereof have been
delivered to Purchasers and shall be amended to the satisfaction
of Purchasers prior to the Closing.
SECTION 2.29 Bank Debt. The representations and
warranties made by the Company and the Subsidiaries in the Credit
Agreement by and among Transamerica Business Credit Corporation
(the "Bank"), the Company and the Subsidiaries dated as of July
31, 1995 (the "Credit Agreement") are true and correct.
SECTION 2.30 Disclosure. Neither this Agreement nor
any other document, certificate, instrument or statement
furnished or made to the Purchasers by or on behalf of the
Company or any Subsidiary in connection with the transactions
contemplated hereby contain any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading.
There is no fact known to the Company or any Subsidiary which
materially adversely affects the business, operations, affairs,
prospects, condition, properties or assets of the Company and the
Subsidiaries which has not been set forth in this Agreement or in
the other documents, certificates, instruments or written
statements furnished to the Purchasers by or on behalf of the
Company and the Subsidiaries.
III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers, Pro Rata, represent and warrant
to the Company and the Subsidiaries that each of them is
acquiring the Securities and will acquire the Warrant Shares for
its own account for the purpose of investment and not with a view
to or for sale in connection with any distribution thereof. Each
Purchaser further represents that it understands that (i) the
Securities have not been, and the Warrant Shares, when issued,
sold and delivered upon exercise of the Warrants, will not be,
registered under the Securities Act by reason of their issuance
in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof, (ii) the
Securities and the Warrant Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration and (iii) the
Securities and the Warrant Shares will bear a legend to such
effect. Each Purchaser further understands that the exemption
from registration afforded by Rule 144 under the Securities Act
depends on the satisfaction of various conditions and that, if
applicable, Rule 144 affords the basis of sales of the Securities
and the Warrant Shares only in limited amounts under certain
conditions. Each Purchaser further represents and covenants that
it is an "accredited investor", within the meaning of Rule 501(a)
of the Securities Act.
IV.
CONDITIONS TO THE OBLIGATION OF THE PURCHASERS
SECTION 4.01 Conditions to the Obligation of the
Purchasers with Respect to the Closing. The obligation of each
Purchaser to purchase and pay for the Securities being purchased
by it on the Closing Date is, at its option, subject to the
satisfaction, on or before such date, of the following
conditions:
(a) Opinion of Counsel. The Purchasers shall have
received from Skadden, Arps, Slate, Meagher & Flom and Greene,
Radovsky, Maloney & Share, counsel for the Company, opinion dated
the Closing Date, in form and substance satisfactory to the
Purchasers and their counsel, to the effect that:
(i) The Company is a corporation duly
incorporated, validly existing and in good standing
under the laws of the State of Delaware. The Company
has the corporate power and authority to own and hold
its properties and to carry on its business as
currently conducted, to execute, deliver and perform
this Agreement, the Notes, the Warrants and the
Registration Rights Agreement and to issue, sell and
deliver the Warrant Shares.
(ii) Each Subsidiary is a corporation duly
organized, validly existing and in good standing under
the laws of the State of its jurisdiction of
incorporation; except as set forth on Schedule 2.01(b)
to this Agreement, the Company owns, directly or
indirectly, all the outstanding capital stock of each
Subsidiary (except for directors' qualifying shares, if
any), free and clear of all liens, charges, pledges,
security interests or other encumbrances; and the
capital stock of each Subsidiary is duly authorized and
validly issued and outstanding, fully paid and
nonassessable.
(iii) The authorized capital stock of the Company
consists of (i) 1,000,000 shares of Preferred Stock,
par value $.01 per share, of which no shares are issued
and outstanding and (ii) 15,000,000 shares of Common
Stock, par value $.01 per share, of which 5,466,268
shares are validly issued and outstanding, fully paid
and nonassessable. Of such shares, 489,976 shares are
Escrow Shares held for the benefit of the Company's
Class F Claimants.
(iv) The execution, delivery and performance by
the Company of this Agreement, the Notes, the Warrants
and the Registration Rights Agreement have been duly
authorized by all requisite corporate action, and each
has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms
(subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency and similar
laws, to moratorium laws from time to time in effect
and to general equity principles), except that such
counsel need express no opinion as to the
indemnification provisions of the Registration Rights
Agreement.
(v) The execution, delivery and performance by
the Subsidiaries of this Agreement and the Notes have
been duly authorized by all requisite corporate action,
and each has been duly executed and delivered by the
Subsidiaries and constitutes the legal, valid and
binding obligation of the Subsidiaries, enforceable in
accordance with its terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization,
insolvency and similar laws, to moratorium laws from
time to time in effect and to general equity
principles).
(vi) The execution, delivery and performance by
the Company of this Agreement, the Notes, the Warrants
and the Registration Rights Agreement and the issuance,
sale and delivery of the Warrant Shares will not
violate any provision of law, any order of any court or
other agency of government, the Articles of
Incorporation or By-laws of the Company, or, to the
best knowledge of such counsel, after due inquiry, any
provision of any indenture, agreement or other
instrument by which the Company or any of the
Subsidiaries or any of their respective properties or
assets is bound or affected, or conflict with, result
in a breach of, result in or permit the termination of
or acceleration of rights or obligations under, or
constitute (with due notice or lapse of time or both) a
default, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever
upon any of the properties or assets of the Company or
any of the Subsidiaries, under any such indenture,
agreement or other instrument.
(vii) The execution, delivery and performance
by the Subsidiaries of this Agreement and the Notes
will not violate any provision of law, any order of any
court or other agency of government, the Articles of
Incorporation or By-laws of the Subsidiaries, or, to
the best knowledge of such counsel, after due inquiry,
any provision of any indenture, agreement or other
instrument by which the Subsidiaries or any of their
respective properties or assets is bound or affected,
or conflict with, result in a breach of, result in or
permit the termination of or acceleration of rights or
obligations under, or constitute (with due notice or
lapse of time or both) a default, or result in the
creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the
properties or assets of the Subsidiaries, under any
such indenture, agreement or other instrument.
(viii) The issuance, sale and delivery of the
Warrant Shares upon exercise of the Warrants have been
duly authorized by all requisite corporate action, and
the Warrant Shares have been duly reserved for issuance
upon exercise of the Warrants and, when issued and paid
for in accordance with the provisions of the Warrants,
will be duly authorized, validly issued and
outstanding, fully paid and nonassessable shares of
Common Stock. Neither the issuance, sale and delivery
of the Warrants nor the issuance, sale and delivery of
the Warrant Shares upon exercise thereof are subject to
any preemptive rights of stockholders of the Company
or, to the best knowledge of such counsel, after due
inquiry, to any right of first refusal or other similar
right in favor of any person.
(ix) The issuance, sale and delivery of the
Securities to each Purchaser on the Closing Date, under
the circumstances contemplated by this Agreement, are
exempt from the registration requirements of the
Securities Act, and the issuance, sale and delivery of
the Warrant Shares upon exercise of the Warrants will
be exempt from such requirements, provided, in each
case, that such Purchaser is an "accredited investor"
within the meaning of Rule 501(a) of the Securities
Act.
(b) Representations and Warranties to Be True and
Correct. The representations and warranties contained in Article
II hereof shall be true and correct on and as of the Closing Date
with the same effect as though such representations and
warranties had been made on and as of such date, and the
President of the Company shall have certified to such effect to
the Purchasers in writing.
(c) Performance. The Company and the Subsidiaries
shall have performed and complied with all agreements and
conditions contained herein required to be performed or complied
with by it prior to or at the Closing Date, and the President of
the Company shall have certified to such effect to the Purchasers
in writing.
(d) Bank Debt; Use of Proceeds. The Company, the
Subsidiaries and the Bank shall have executed and delivered the
Credit Agreement. The Credit Agreement and all documentation
relating thereto shall have been delivered to Purchasers not
later than five (5) business days prior to the Closing Date and
shall be in form and substance satisfactory to Purchasers.
Concurrent herewith, the Company and the Subsidiaries shall have
borrowed $5,500,000 under the Credit Agreement, which funds,
together with the purchase price for the Securities purchased
hereunder, shall be used to repay all of the Company's
obligations to the Class F Claimants and the Subsidiaries'
obligations under the Congress Debt.
(e) Class F Claimants. Concurrently herewith, the
Company shall have discharged all its obligations to the Class F
Claimants, and 304,822 shares of the Escrow Shares shall be been
released from escrow and returned to the Company as treasury
shares.
(f) All Proceedings to Be Satisfactory. All corporate
and other proceedings to be taken by the Company and the
Subsidiaries in connection with the transactions contemplated
hereby and all documents incident thereto shall be satisfactory
in form and substance to the Purchasers and their counsel,
Dechert Price & Rhoads, and the Purchasers and said counsel shall
have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request.
(g) Registration Rights Agreement. The Company shall
have executed and delivered the Registration Rights Agreement.
(h) Supporting Documents. On or prior to the Closing
Date, the Purchasers and their counsel shall have received copies
of the following supporting documents:
(i) (A) copies of the Articles of Incorporation
of the Company and each Subsidiary, and all amendments
thereto, certified as of a recent date by the
Secretaries of State of the States of their respective
jurisdictions and (B) a certificate of each said
Secretaries dated as of a recent date as to the due
incorporation and good standing of the Company and the
Subsidiaries and listing all documents of the Company
and the Subsidiaries on file with said Secretaries;
(ii) a certificate of the Secretary or an
Assistant Secretary of the Company and each Subsidiary
dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of the By-laws of
the Company or the Subsidiary, as the case may be, as
in effect on the date of such certification; (B) that
attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of the
Company or the Subsidiary, as the case may be,
authorizing the execution, delivery and performance of
this Agreement, the Notes, the Warrants and the
Registration Rights Agreement, the issuance, sale and
delivery of the Securities and the reservation,
issuance and delivery of the Warrant Shares, as the
case may be, and that all such resolutions are still in
full force and effect and are all the resolutions
adopted in connection with the transactions
contemplated by this Agreement, the Notes, the Warrants
and the Registration Rights Agreement, as the case may
be; (C) that the Articles of Incorporation of the
Company or the Subsidiary, as the case may be, have not
been amended since the date of the last amendment
referred to in the certificate delivered pursuant to
clause (i)(B) above; and (D) as to the incumbency and
specimen signature of each officer of the Company or
the Subsidiary, as the case may be, executing this
Agreement, the Securities and the Registration Rights
Agreement, and any certificate or instrument furnished
pursuant hereto, as the case may be, and a
certification by another officer of the Company or
Subsidiary, as the case may be, as to the incumbency
and signature of the officer signing the certificate
referred to in this paragraph (ii); and
(iii) such additional supporting documents and
other information with respect to the operations and
affairs of the Company and the Subsidiaries as the
Purchasers or their counsel may reasonably request.
All such documents shall be satisfactory in form and substance to
the Purchasers and their counsel.
V.
COVENANTS
The Company, the Subsidiaries and the Purchasers covenant
and agree as follows:
(a) Financial Statements, Reports, Etc. So long as
the Purchasers shall hold of record any Securities or any Warrant
Shares issued or issuable pursuant to the Warrants, in each case
acquired by it pursuant to this Agreement, the Company shall
furnish to each Purchaser, or, in the event the Company is not
subject to the reporting requirements of the Securities Exchange
Act of 1934 and any subsequent holder of Securities shall hold
25% or more in principal amount of the Securities or 25% or more
of the Warrant Shares issued or issuable pursuant to the
Warrants, the Company shall furnish to each such subsequent
holder:
(i) within 90 days after the end of each fiscal
year of the Company, a consolidated balance sheet of
the Company and its subsidiaries, as of the end of such
fiscal year, and the related consolidated statements of
income, changes in stockholders' equity and cash flows
of the Company and its subsidiaries for the fiscal year
then ended, together with supporting notes thereto,
certified without qualification as to scope of audit by
a firm of independent public accountants of recognized
national standing selected by the Company and
reasonably acceptable to the Purchasers;
(ii) within 45 days after the end of each fiscal
quarter in each fiscal year (other than the last fiscal
quarter in each fiscal year), a consolidated balance
sheet of the Company and its subsidiaries and the
related consolidated statements of income and cash
flows of the Company and its subsidiaries, unaudited
but certified by the principal financial officer of the
Company, such balance sheet to be as of the end of such
fiscal quarter and such statements of income and cash
flows to be for such fiscal quarter, for the
corresponding fiscal quarter of the immediately
preceding fiscal year, for the period from the
beginning of the fiscal year to the end of such fiscal
quarter and for the period from the beginning of the
immediately preceding year to the end of the
corresponding fiscal quarter in such fiscal year, in
each case subject to normal year-end adjustments;
(iii) within 30 days after the end of each month
in each fiscal year (other than the last month in each
fiscal year), a consolidated balance sheet of the
Company and its subsidiaries and the related
consolidated statement of income, unaudited but
certified by the principal financial officer of the
Company, such balance sheets to be as of the end of
such month and such statements of income to be for such
month and for the period from the beginning of the
fiscal year to the end of such month, in each case
subject to normal year-end adjustments;
(iv) within 30 days following the beginning of
each fiscal year of the Company (and with respect to
any revision thereof, promptly after such revision has
been prepared), a proposed operating budget for the
Company and the Subsidiaries, including anticipated
monthly income statements and cash flow statements
during such fiscal year and a projected balance sheet
as of the end of such fiscal year, setting forth in
each case the assumptions (which assumptions and
projections shall represent and be based upon the good
faith judgment in respect thereof of the chief
executive officer of the Company) behind the
projections contained in such financial statements, and
each monthly statement of income furnished pursuant to
(iii) above shall reflect variances from such operating
budget, as the same may from time to time be revised;
(v) promptly upon filing, copies of all
registration statements, prospectuses, periodic reports
and other documents filed by the Company with the
Commission;
(vi) promptly, from time to time, such other
information regarding the operations, business, affairs
and financial condition of the Company or any
subsidiary as the Purchasers or such other holders may
reasonably request (the term "subsidiary" as used
herein being defined to mean any corporation or other
business entity a majority of whose outstanding voting
stock entitled to vote for the election of directors is
at the time owned by the Company and/or one or more
other subsidiaries); and
(vii) within 45 days after the end of each fiscal
quarter in each fiscal year, a certificate signed by
the Chief Executive Officer of the Company and each
Subsidiary certifying that the Company and the
Subsidiaries are in compliance with all covenants
contained herein and in the Notes.
(b) Small Business Administration Forms. The Company
shall execute Forms 480 ("Size Status Declaration") and 652-D
("Assurance of Compliance") of the SBA and any other documents
that may be required by the SBA or any other governmental agency
having jurisdiction over the activities of the Purchasers, or
which Purchasers may reasonably require in connection therewith.
(c) Use of Proceeds. The Company and the Subsidiaries
shall use the proceeds received from the sale of the Securities
pursuant to this Agreement as set forth in Section 2.14. The
Company and the Subsidiaries shall give Purchasers, their agents
and representatives, reasonable access during normal business
hours to the books, records, facilities, personnel and
accountants of the Company and the Subsidiaries so that
Purchasers may review the Company's compliance with the
provisions of this section.
(d) Board of Directors. So long as Furman Selz owns
of record either (i) 25% in aggregate principal amount of the A
Notes issued to Furman Selz pursuant to this Agreement; (ii) 25%
in aggregate principal amount of the B Notes issued pursuant to
this Agreement; or (iii) 25% of the Warrants issued pursuant to
this Agreement (for purposes of this clause (iii) record
ownership of Warrant Shares issued to Furman Selz pursuant to
exercise of the Warrants shall be considered continued ownership
of the Warrants) (the amounts in clauses (i), (ii) and (iii)
above are hereinafter referred to as a "Qualifying Amount"); then
Furman Selz shall have the right to designate one director (the
"Designee") to the Company's board of directors (the "Board").
The Company and the Board shall use its best efforts, at any time
and from time to time so long as Furman Selz owns of record a
Qualifying Amount of Securities or Warrant Shares, to cause such
Designee to be elected to the Board. The best efforts of the
Board shall include, but not be limited to, (i) increasing by one
the number of directors on the Board, (ii) the appointment at
Closing of such Designee to the Board as a Class I Director in
accordance with Section 223 of the Delaware General Corporate
Law, (ii) the inclusion of the Designee on any proxy statement or
other materials prepared and delivered to the Company's
stockholders with respect to any election of Class I Directors,
such inclusion to comply with any applicable legal requirements
and (iii) the recommendation to the Company's stockholders that
the Designee be elected as a director of the Board.
(e) Put Right for Warrants. If for ten of the twelve
months immediately preceding July 31, 2000, the Common Stock does
not have a daily average trading volume of at least 8,000 shares,
as reported each day in The Wall Street Journal (or other
national business publication) and any Warrants remain
outstanding, then the holders of the Warrants shall have the
option (the "Put Right") commencing on August 1, 2000 and
expiring on September 30, 2000 (the "Put Period") to sell to the
Company, and the Company shall have the obligation to purchase
any or all outstanding Warrants at a price equal to the fair
market value of the Warrants (as such term is defined in Section
1(b) of the Warrants). To exercise its Put Right, such holder
shall notify the Company in writing during the Put Period of its
intention to exercise such Put Right. Within ten days following
delivery of such Notice, a closing shall take place whereby such
holder shall surrender the Warrants, and the Company shall pay to
the holder in cash the fair market value of the Warrants pursuant
to which the Put Right is exercised and shall issue to such
holder replacement Warrants for the balance, if any, of Warrants
to which such holder has not exercised the Put Right. This Put
Right shall be subordinated to the Senior Debt of the Company (as
such term is defined in the Notes) on the same terms as the
Notes.
(f) Upon notice given as provided in the Notes, the
Company may, at its option, prepay the outstanding principal
amount of Notes in whole or in part, in multiples of $100,000,
from time to time, at the principal amount thereof so to be
prepaid, together with interest accrued thereon to the date fixed
for such prepayment; provided, however, that any such prepayment
shall first be applied against the principal amount outstanding
and interest accrued thereon of the A Notes, and the balance, if
any, shall be applied against the principal amount outstanding
and interest accrued thereon of the B Notes.
VI.
MISCELLANEOUS
SECTION 6.01 Expenses. The Company and the
Subsidiaries will pay their own expenses in connection with the
transactions contemplated hereby, whether or not such
transactions shall be consummated, and the Company shall pay the
out-of-pocket fees, costs and expenses of Furman Selz and its
counsel and accountants in connection with this Agreement, the
Notes, the Warrants, the Registration Rights Agreement and the
transactions contemplated hereby and thereby.
SECTION 6.02 Survival of Agreements. All covenants,
agreements, representations and warranties made herein to each
Purchaser shall survive the execution and delivery of this
Agreement and the issuance, sale and delivery of the Securities
pursuant hereto until the earlier to occur of (i) the expiration
date of the Warrants and (ii) the date on which no Securities or
Warrant Shares are issued and outstanding and owned of record by
such Purchaser, and all statements contained in any certificate
or other instrument delivered by the Company and any Subsidiary
hereunder shall be deemed to constitute representations and
warranties made by the Company and such Subsidiary.
SECTION 6.03 Brokerage. Each party hereto will
indemnify and hold harmless the others against and in respect of
any claim for brokerage or other commissions relative to this
Agreement or to the transactions contemplated hereby, based in
any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 6.04 Parties in Interest. All covenants and
agreements contained in this Agreement by or on behalf of either
party hereto shall bind and inure to the benefit of the
respective successors and assigns of such party hereto, whether
so expressed or not.
SECTION 6.05 Notices. All notices, requests, consents
and other communications hereunder shall be in writing and shall
be mailed by first-class registered mail, postage prepaid, or
sent by recognized courier service addressed as follows:
(a) if to the Company or any Subsidiary, at
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to Furman Selz at:
230 Park Avenue
New York, NY 10169
Attention: Brian P. Friedman
if to Dowling at:
620 Fir Court
Norwood, NJ 07648
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esq.
(c) if to any subsequent holder of Securities or
Warrant Shares, to such holder at its address appearing on
the records of the Company;
or, in any such case, at such other address or addresses as shall
have been furnished in writing by such party to the others.
SECTION 6.06 LAW GOVERNING. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
SECTION 6.07 Entire Agreement. This Agreement
constitutes the entire Agreement of the parties with respect to
the subject mater hereof and may not be modified or amended
except in writing.
SECTION 6.08 Counterparts. 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
one and the same instrument.
IN WITNESS WHEREOF, the Company, the Subsidiaries and
the Purchasers have executed this Agreement as of the day and
year first above written.
TRANSCISCO INDUSTRIES, INC.
By /s/ Greg Saunders
Vice President, Controller
[Corporate Seal]
Attest:
/s/ Greg Saunders
Asst. Secretary
TRANSCISCO RAIL SERVICES COMPANY
By /s/ Greg Saunders
Vice President, Controller
[Corporate Seal]
Attest:
/s/ Greg Saunders
Asst. Secretary
TRANSCISCO LEASING COMPANY
By /s/ Greg Saunders
Vice President, Controller
[Corporate Seal]
Attest:
/s/ Greg Saunders
Asst. Secretary
TRANSCISCO TRADING COMPANY
By /s/ Greg Saunders
Vice President, Controller
[Corporate Seal]
Attest:
/s/ Greg Saunders
Asst. Secretary
PURCHASERS:
FURMAN SELZ SBIC, L.P.
By FURMAN SELZ SBIC INVESTMENTS INC.,
General Partner
By: /s/ Brian J. Friedman
President
/s/ James Dowling
James Dowling
Pro Rata Percentages
Purchaser Percentage
Furman Selz 96 2/3%
Dowling 3 1/3%
____________________________________________________________________________
EXHIBIT B-1
SERIES A NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
IT HAS BEEN REGISTERED UNDER THAT ACT OR, IN THE OPINION OF
COUNSEL, AN EXEMPTION FROM REGISTRATION IS AVAILABLE
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED
HEREIN OR EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO
THE EXTENT SET FORTH IN A SUBORDINATION AGREEMENT (THE
"SUBORDINATION AGREEMENT"), DATED AS OF AUGUST ___, 1995, TO
CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS
CREDIT CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH
HOLDER OF THIS DOCUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND
BY THE SUBORDINATION AGREEMENT.
TRANSCISCO INDUSTRIES, INC.
Series A Senior Subordinated Note
Due July 31, 2000
Registered New York, New York
$[up to 2,000,000] August ___, 1995
TRANSCISCO INDUSTRIES, INC., a Delaware corporation
(the "Corporation"), TRANSCISCO RAIL SERVICES COMPANY, a
California corporation ("TRSC"), TRANSCISCO LEASING COMPANY, a
Delaware corporation ("TLC") and TRANSCISCO TRADING COMPANY, a
Delaware corporation ("TTC") (each of TRSC, TLC and TTC each a
"Subsidiary" and collectively, the "Subsidiaries"), for value
received, hereby jointly and severally promise to pay to the
order of [FURMAN SELZ SBIC, L.P., a Delaware limited partnership
or JAMES DOWLING] or registered assigns, the principal sum of [up
to Two Million Dollars ($2,000,000)], on July 31, 2000 and to pay
interest as set forth below.
The payment of principal and interest on this Note
shall be in such currency of the United States of America as at
the time of payment shall be legal tender for payment of public
and private debts.
1. Notes. This Note is issued pursuant to a certain
Note and Warrant Purchase Agreement, dated as of August ___, 1995
(the "Purchase Agreement"), among the Corporation, the
Subsidiaries, Furman Selz SBIC, L.P. and James Dowling, providing
for, among other things, the issuance of (i) Series A Senior
Subordinated Notes Due 2000 in an aggregate principal amount of
$2,000,000, (ii) Series B Senior Subordinated Notes Due 2000 in
an aggregate principal amount of $1,000,000 (the "B Notes" and,
together with this Note, the "Senior Subordinated Notes"), and
(iii) warrants (the "Warrants") to subscribe to up to 1,000,000
shares of the Common Stock, par value $.01 per share, of the
Corporation. This Series A Senior Subordinated Note Due 2000 and
any such Note subsequently issued upon exchange or transfer
thereof are hereinafter collectively called the "Notes".
2. Interest. Interest shall accrue on the unpaid
principal balance of this Note at an annual rate of 10% from the
date hereof until and including July 31, 1997; and thereafter at
an annual rate of 12%. Accrued but unpaid interest shall be due
and payable on the unpaid principal balance of this Note on each
of July 31, 1996, July 31, 1997, and each January 31 and July 31
of each year thereafter, beginning on January 31, 1998. One-half
of the interest due and payable on July 31, 1996 shall be
deferred and shall be payable on July 31, 1998 and one-half of
the interest due and payable on July 31, 1997 shall be deferred
and shall be payable on July 31, 1999. Any interest deferred
pursuant to the preceding sentence shall compound and accrue
interest at the applicable rate until paid. All interest
hereunder shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
3. Payments of Interest and Principal. All payments
of principal and interest hereunder shall be paid to the holder
hereof by wire transfer in immediately available funds. Wire
transfer payments of interest and principal on this Note is
conditioned upon the holder providing to the Corporation duly
authorized instructions for the wire transfer of such amounts to
the holder's designated account. If principal or interest on
this Note becomes due and payable on a day that is not a Business
Day, the due date thereof shall be extended to the next
succeeding Business Day. For purposes of this Note, "Business
Day" means any day other than a Saturday, a Sunday or a legal
holiday under the laws of the State of New York.
4. Transfer or Exchange of Notes. The Corporation
shall keep at its office or agency maintained as provided in
subsection (a) of Section 12 a register in which the Corporation
shall provide for the registration of Notes and for the
registration of transfer and exchange of Notes. The holder of
this Note may, at its option, and either in person or by duly
authorized attorney, surrender the same for registration of
transfer or exchange, as a whole or in part, in multiples of
$100,000, at the office or agency of the Corporation maintained
as provided in subsection (a) of Section 12, and, without expense
to such holder (except for taxes or governmental charges imposed
in connection therewith), receive from the Corporation and the
Subsidiaries in exchange therefor a Note or Notes in such
denomination or denominations as such holder may request, dated
as of the date to which interest has been paid on the Note or
Notes so surrendered for transfer or exchange, for the same
aggregate principal amount as the then unpaid principal amount of
the Note or Notes so surrendered for transfer or exchange, and
registered in the name of such person or persons as may be
designated by such holder; provided, however, that this Note
shall not by transferred to any person whose primary line of
business is the manufacture of railroad car components or the
leasing of railroad cars or to any person that is not a United
States citizen incorporated or organized under the laws of the
United States or a State thereof. Every Note presented or
surrendered for registration of transfer or exchange shall be
duly endorsed, or shall be accompanied by a written instrument of
transfer, satisfactory in form to the Corporation, duly executed
by the holder of such Note or his attorney, duly authorized in
writing. Every Note so made and delivered in exchange for this
Note shall in all other respects be in the same form and have the
same terms as this Note. No transfer or exchange of any Note
shall be valid unless made in the foregoing manner at such office
or agency.
5. Loss, Theft, Destruction or Mutilation of Note.
Upon receipt of evidence satisfactory to the Corporation of the
loss, theft, destruction or mutilation of this Note, and, in the
case of any such loss, theft or destruction, upon receipt of an
affidavit of loss from the holder hereof reasonably satisfactory
to the Corporation, or, in the case of any such mutilation, upon
surrender and cancellation of this Note, the Corporation and the
Subsidiaries will make and deliver, in lieu of this Note, a new
Note of like tenor and unpaid principal amount and dated as of
the date to which interest has been paid on this Note.
6. Persons Deemed Owners; Holders. The Corporation
and the Subsidiaries may deem and treat the person in whose name
any Note is registered as the owner and holder of such Note for
the purpose of receiving payment of principal of and premium, if
any, and interest on such Note and for all other purposes
whatsoever, whether or not such Note shall be overdue. With
respect to any Note at any time outstanding, the term "holder,"
as used herein, shall be deemed to mean the person in whose name
such Note is registered as aforesaid at such time.
7. Prepayments. Prepayments on this Note may be made
only in accordance with the provisions of the Purchase Agreement
and Sections 8 through 11 hereof.
8. Notice of Prepayment and Other Notices. The
Corporation shall give written notice of prepayment of this Note
or any portion hereof pursuant to Section 7 not less than 30 nor
not more than 60 days prior to the date fixed for such
prepayment. Such notice and all other notices to be given to any
holder of this Note shall be given by registered or certified
mail to the person in whose name this Note is registered at its
address designated on the register maintained by the Corporation
on the date of mailing such notice of prepayment or other notice.
9. Interest After Date Fixed for Prepayment. If this
Note or a portion hereof is called for prepayment as provided
pursuant to Section 7, this Note or such portion shall cease to
bear interest on and after the date fixed for such prepayment
unless, upon presentation for the purpose of prepayment, the
Corporation and the Subsidiaries shall fail to pay this Note or
such portion, as the case may be, on such date, in which event
this Note or such portion, as the case may be, and, so far as may
be lawful, any overdue installment of interest thereon, shall
bear interest on and after the date fixed for such prepayment and
until paid at the rate of 12% per annum.
10. Surrender of Notes; Notation Thereon. Upon any
prepayment of a portion of the principal amount of this Note
pursuant to Section 7, the holder hereof, at its option, may
require the Corporation and the Subsidiaries to execute and
deliver at the expense of the Corporation and the Subsidiaries
(other than for transfer taxes, if any), upon surrender of this
Note, a new Note registered in the name of such person or persons
as may be designated by such holder for the principal amount of
this Note then remaining unpaid, dated as of the date to which
interest has been paid on the principal amount of this Note then
remaining unpaid, or may present this Note to the Corporation for
notation hereon of the payment of the portion of the principal
amount of this Note so prepaid.
11. Allocation of Payments. In the case of a
prepayment pursuant to Section 7 of less than all the Notes at
the time outstanding, the aggregate principal amount to be
prepaid shall be allocated (in units of $1,000 or integral
multiples thereof) among the holders of all the Notes at the time
outstanding in proportion, as nearly as practicable, to the
respective aggregate unpaid principal amounts of the Notes (not
theretofore called for prepayment) then held by them,
respectively, with adjustment, to the extent practicable, to
equalize for any prior unequal prepayments.
12. Affirmative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so
long as any Note shall be outstanding:
(a) Maintenance of Office. The Corporation will
maintain an office or agency in San Francisco, California (or
such other place in the United States of America as the
Corporation may designate in writing to the registered holder
hereof), where the Notes may be presented for registration of
transfer and for exchange as herein provided, where notices and
demands to or upon the Corporation in respect of the Notes may be
served and where, at the option of the holders thereof, the Notes
may be presented for payment. Until the Corporation otherwise
notifies the holders of the Notes, said office shall be the
principal office of the Corporation in San Francisco, California.
(b) Payment of Taxes. The Corporation will promptly
pay and discharge or cause to be paid and discharged, before the
same shall become in default, all lawful taxes and assessments
imposed upon the Corporation or any subsidiary or upon the income
and profits of the Corporation or any subsidiary, or upon any
property, real, personal or mixed, belonging to the Corporation
or any subsidiary, or upon any part thereof by the United States
or any State thereof, as well as all lawful claims for labor,
materials and supplies which, if unpaid, would become a lien or
charge upon such property or any part thereof; provided, however,
that the Corporation shall not be required to pay and discharge
or to cause to be paid and discharged any such tax, assessment,
charge, levy or claim so long as both (x) the Corporation has set
aside adequate reserves for such tax, assessment, charge, levy or
claim and (y)(i) the Corporation shall be contesting the validity
thereof in good faith by appropriate proceedings or (ii) the
Corporation shall, in its good faith judgment, deem the validity
thereof to be questionable and the party to whom such tax,
assessment, charge, levy or claim is allegedly owed shall not
have made written demand for the payment thereof.
(c) Corporate Existence. The Corporation will do or
cause to be done all things necessary and lawful to preserve and
keep in full force and effect its corporate existence, rights and
franchises and the corporate existence, rights and franchises of
its subsidiaries under the laws of the United States or any State
thereof or the District of Columbia; provided, however, that
nothing in this subsection (c) shall prevent (i) a consolidation
or merger of, or a sale, transfer or disposition of all or any
substantial part of the property and assets of, the Corporation
not prohibited by the provisions of Section 13, or (ii) the
abandonment or termination of any rights or franchises of the
Corporation, if such consolidation, merger, sale, transfer,
disposition, abandonment or termination is, in the good faith
business judgment of the Corporation, in the best interests of
the Corporation and not disadvantageous to the holder of this
Note.
(d) Maintenance of Property. The Corporation will,
and the Corporation will cause its subsidiaries to, at all times
maintain and keep, or cause to be maintained and kept, in good
repair, working order and condition all significant properties of
the Corporation and its subsidiaries used in the conduct of the
business of the Corporation and its subsidiaries, and will, and
will cause its subsidiaries to, from time to time make or cause
to be made all needful and proper repairs, renewals,
replacements, betterments and improvements thereto, so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that
nothing in this subsection (d) shall require (i) the making of
any repair or renewal or (ii) the continuance of the operation
and maintenance of any property or (iii) the retention of any
assets (the sale or other disposition of which would not be
prohibited by Section 13), if such action (or inaction) is, in
the good faith business judgment of the Corporation, in the best
interests of the Corporation.
(e) Insurance. The Corporation will, and the
Corporation will cause its subsidiaries to (i) keep adequately
insured, by financially sound and reputable insurers, all
property of a character usually insured by corporations engaged
in the same or a similar business similarly situated against loss
or damage of the kinds customarily insured against by such
corporations and (ii) carry, with financially sound and reputable
insurers, such other insurance (including, without limitation,
liability insurance) in such amounts as are available at
reasonable expense and to the extent believed necessary in the
good faith business judgment of the Corporation.
(f) Keeping of Books. The Corporation will at all
times keep proper books of record and account in which proper
entries will be made of its transactions in accordance with
generally accepted accounting principles consistently applied.
(g) Transactions with Affiliates. Neither the
Corporation nor any of its subsidiaries will enter into any
transaction or series of transactions with any director, officer,
stockholder, employee or affiliate of the Corporation or its
subsidiaries (other than (i) a transaction or series of
transactions that involves, individually, less than $25,000,
provided that the aggregate of all such transactions or series of
transactions involves less than $500,000 and (ii) transactions by
and among any of the Company and/or any Subsidiary), except on
terms and conditions that, in the reasonable judgment of the
Board of Directors of the Corporation (as evidenced by the
approval of not less than 66 2/3% of the then-existing
Directors), are no less favorable to the Corporation or its
direct or indirect subsidiaries, as the case may be, than the
terms and conditions which the Corporation or such subsidiary, as
the case may be, could obtain in a transaction with an
unaffiliated person on an arm's length basis.
(h) Notice of Default. If any one or more events
which constitute, or which with notice or lapse of time or both
would constitute, an Event of Default under Section 15 shall
occur, or if the holder of any Note shall demand payment or take
any other action permitted upon the occurrence of any such Event
of Default, the Corporation shall immediately after it becomes
aware that any such event would with or without notice or lapse
of time or both constitute such an Event or that such demand has
been made or that any such action has been taken, give notice to
the holder of this Note, specifying the nature of such event or
of such demand or action, as the case may be.
13. Negative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so
long as any Note shall be outstanding:
(a) Consolidation, Merger and Sale. The Corporation
will not consolidate or merge with or into, or sell or otherwise
dispose of all or substantially all of its property to, any other
corporation, unless
(i) the Corporation shall have obtained the written
consent of the holders of more than 66 2/3% in principal
amount of the Notes then outstanding;
(ii) the Corporation or such other corporation shall
not otherwise be in default in the performance or observance
of any covenant, agreement or condition of the Notes; and
(iii) the holder of this Note shall have received, in
connection therewith, an opinion of counsel for the
Corporation (or other counsel reasonably satisfactory to the
holder) in form and substance satisfactory to the holder, to
the effect that any such consolidation, merger, sale or
conveyance and any such assumption complies with the
provisions of this paragraph (a).
Following the consummation of such merger, sale,
conveyance or other disposition, the Corporation will, upon the
written request of the holder of any Note, provide such holder
with a copy of the agreement or agreements pursuant to which such
consolidation, merger, sale, conveyance or other disposition was
effected as promptly as possible.
(b) Restricted Payments. The Corporation shall not
and shall cause each of its subsidiaries not to (i) declare or
pay any dividend on, or authorize or make any distribution in
respect of, shares of any class of its or their stock (except
dividends or distributions payable in shares of its stock and
except for dividends paid by direct or indirect wholly-owned
subsidiaries), or (ii) authorize or make any purchase, redemption
or acquisition for value of, any shares of any class of its their
stock.
(c) Restrictions on Senior Subordinated Debt. The
Corporation shall not incur, and shall cause its subsidiaries not
to incur, directly or indirectly, any Debt (as defined below)
which is senior in right of payment to the Senior Subordinated
Notes and is subordinate or junior in any respect in right of
payment to any other Debt. As used herein, "Debt" of a person
means at any date, without duplication, whether or not
contingent, (i) all obligations for borrowed money of such
person, (ii) all obligations of such person evidenced by bonds,
debentures, notes, letters of credit or similar instruments,
(iii) all obligations of such person to pay the deferred purchase
price of property or services, except accounts payable and other
liabilities arising in the ordinary course of business, (iv) all
reimbursement obligations of such person, (v) all obligations of
such person as lessee under capital leases, (vi) all debt of
others secured by a lien on any asset of such person and (vii)
any Debt of others guaranteed by such person.
(d) Disposition of Assets Not in the Ordinary Course.
In the event the Corporation or any subsidiary sells, transfers,
assigns or otherwise disposes of any asset not in the ordinary
course of business, the Corporation shall, or cause such
subsidiary to, (i) use the proceeds of such disposition to repay
any Debt which is senior in right of payment to the Notes, (ii)
reinvest such proceeds in the Corporation or any wholly-owned
subsidiary of the Corporation, or (iii) prepay the Senior
Subordinated Notes.
(e) Limitation on Payment Restrictions Affecting
Subsidiaries. The Corporation shall not, and shall not permit
any subsidiary of the Corporation to, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance
or restriction which by its terms expressly restricts the ability
of any such subsidiary to (i) pay dividends or make any other
distributions on such subsidiary's capital stock or pay any Debt
owed to the corporation or any subsidiary of the Corporation,
(ii) make any loans or advances to the Corporation or any
subsidiary of the Corporation or (iii) transfer any of its
property or assets to the Corporation or any subsidiary of the
Corporation, except for any restrictions existing under
agreements in effect at the time of, or entered into concurrently
with, the issuance of this Note, including the restrictions
contained in the Credit Agreement (as defined below), to the
extent that such restrictions are set forth in such agreement as
in effect on the date of the issuance of this Note. As used
herein, "Credit Agreement" means that certain Credit Agreement
between Transamerica Business Credit Corporation (the "Bank"),
the Corporation and the Subsidiaries dated August ___, 1995.
14. Modification by Holders; Waiver. The Corporation
and the Subsidiaries may, with the written consent of the holders
of not less than 66 2/3% in principal amount of the Notes then
outstanding, modify the terms and provisions of the Notes or the
rights of the holders of the Notes or the obligations of the
Corporation and the Subsidiaries thereunder, and the observance
by the Corporation and the Subsidiaries of any term or provision
of the Notes may be waived with the written consent of the
holders of not less than 66 2/3% in principal amount of the Notes
then outstanding; provided, however, that no such modification or
waiver shall:
(a) change the maturity of any Note or reduce the
principal amount thereof or reduce the rate or extend the
time of payment of interest thereon or reduce the amount or
change the time of payment of premium payable on any
prepayment thereof without the consent of the holder of each
Note so affected; or
(b) give any Note any preference over any other Note;
or
(c) reduce the applicable aforesaid percentages of
Notes, the consent of the holders of which is required for
any such modification.
Any such modification or waiver shall apply equally to
all the holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Corporation and the
Subsidiaries, whether or not such Note shall have been marked to
indicate such modification or waiver, but any Note issued
thereafter shall bear a notation referring to any such
modification or waiver. Promptly after obtaining the written
consent of the holders as herein provided, the Corporation shall
transmit a copy of such modification or waiver to all the holders
of the Notes at the time outstanding.
15. Events of Default; Acceleration. If any one or
more of the following events, herein called Events of Default,
shall occur, for any reason whatsoever, and whether such
occurrence shall, on the part of the Corporation or any
Subsidiary, be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of a court of competent
jurisdiction or any order, rule or regulation of any
administrative or other governmental authority and such Event of
Default shall be continuing:
(a) default shall be made in the payment of the
principal of any Note or the premium thereon, if any, when
and as the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by
acceleration or otherwise and such default shall continue
for a period of five days; or
(b) default shall be made in the payment of any
installment of interest on any Note according to its terms
when and as the same shall become due and payable and such
default shall continue for a period of ten days; or
(c) default or breach shall be or shall have been made
in the due observance or performance of any representation,
covenant, condition or agreement on the part of the
Corporation or the Subsidiaries to be observed or performed
pursuant to the Purchase Agreement or the terms hereof and
such default shall continue for 15 days after written notice
thereof, specifying such default and requesting that the
same be remedied, shall have been given to the Corporation
by the holder or holders of at least 25% of the principal
amount of the Notes then outstanding (the Corporation to
give forthwith to all other holders of Notes at the time
outstanding written notice of the receipt of such notice
specifying the default referred to therein); or
(d) the entry of a decree or order for relief by a
court having jurisdiction in the premises in respect of the
Corporation or any subsidiary in an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Corporation or any
subsidiary or for any substantial part of any of their
respective property, or ordering the winding-up or
liquidation of any of their affairs and the continuance of
any such decree or order unstayed and in effect for a period
of 30 consecutive days; or
(e) the commencement by the Corporation or any
subsidiary of a voluntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other
similar laws, or the consent by the Corporation or any
subsidiary to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Corporation
or any subsidiary or for any substantial part of any of
their respective property, or the making by the Corporation
or any subsidiary of any assignment for the benefit of
creditors, or the failure of the Corporation or any
subsidiary generally to pay its debts as such debts become
due, or the taking of corporate action by the Corporation or
any subsidiary in furtherance of or which might reasonably
be expected to result in any of the foregoing; or
(f) (i) failure to make any payment in respect of any
Debt of the Corporation or its subsidiaries having an
aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all
creditors under any combined or syndicated credit
arrangement) of more than $50,000 when due (whether by
scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the
document relating thereto; or (ii) failure by the
Corporation or its subsidiaries to perform or observe any
other condition or covenant, or any other event shall occur
or condition exist, under any agreement or instrument
relating to any such Debt referred to in clause (i) above,
and such failure continues after the applicable grace or
notice period, if any, specified in the document relating
thereto if the effect of such failure, event or condition is
to cause, or to permit the holder or holders of such Debt or
beneficiary or beneficiaries of such Debt (or a trustee or
agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Debt to be declared to be due
and payable prior to its stated maturity; or
(g) final judgment for the payment of money in excess
$50,000 shall be rendered against the Corporation or any
subsidiary and the same shall remain undischarged for a
period of 30 days during which execution shall not be
effectively stayed;
(h) a Change of Control (as defined below) shall have
occurred;
then, the holder or holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding may, at its
or their option, by written notice to the Corporation and the
Subsidiaries, declare all the Notes to be, and all the Notes
shall thereupon be and become, forthwith due and payable together
with interest accrued thereon without presentment, demand,
protest or further notice of any kind, all of which are expressly
waived to the extent permitted by law; provided, however, that
upon the occurrence of any of the events specified in subsections
(d) or (e) of this Section 15, all the Notes shall thereupon be
and become, forthwith due and payable together with interest
accrued thereon without any action required by the holders
thereof whatsoever. As used herein, "Change of Control" means
(i) the Corporation merges or consolidates with another
corporation (other than the consolidation or merger of a wholly-
owned subsidiary with or into the Corporation or with or into any
other wholly-owned subsidiary, and other than a merger involving
the Corporation in which the holders of at least 51% of the
outstanding Common Stock, on a fully-diluted basis, immediately
prior to such merger hold at least 51% of the outstanding capital
stock of the surviving corporation in any such merger or
consolidation, on a fully-diluted basis, immediately after the
merger); (ii) any "person" or "group" (as such terms are used in
Section 13(d) of the Exchange Act and the regulations promulgated
hereunder) is or becomes a beneficial owner, directly or
indirectly, of securities of the Corporation having a majority of
the total number of votes that may be cast for the election of
directors of the Corporation; (iii) the Corporation and its
subsidiaries on a consolidated basis sells all or substantially
all of their consolidated assets; (iv) as the result of, or in
connection with, any cash tender or exchange offer, merger or
other business combination, sale of assets or contested election,
or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Corporation
before the Transaction cease to constitute a majority of the
Board of Directors of the Corporation or any successor to the
Corporation; or (v) any director is elected to the Corporation's
Board of Directors without being nominated thereto by a majority
of the Corporation's Independent Directors (as such term is
defined in the Corporation's By-Laws as in effect on the date
hereof).
At any time after any declaration of acceleration has
been made as provided in this Section 15 (except as provided
under subsections (d) or (e) thereunder), the holders of at least
66 2/3% in principal amount of the Notes then outstanding may, by
notice to the Corporation, rescind such declaration and its
consequences, if (i) the Corporation and the Subsidiaries have
paid all overdue installments of interest on the Notes and all
principal (and premium, if any) that has become due otherwise
than by such declaration of acceleration; and (ii) all other
defaults and Events of Default (other than nonpayments of
principal and interest that have become due solely by reason of
acceleration) shall have been remedied or cured or shall have
been waived pursuant to this paragraph; provided, however, that
no such rescission shall extend to or affect any subsequent
default or Event of Default or impair any right consequent
thereon.
WITHOUT LIMITING THE FOREGOING, THE CORPORATION AND THE
SUBSIDIARIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATED IN ANY WAY TO THIS NOTE OR THE NOTES AND
AGREES THAT ANY SUCH PROCEEDING MAY, IF THE HOLDER SO ELECTS, BE
BROUGHT AND ENFORCED IN THE SUPREME COURT OF THE STATE OF NEW
YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND THE CORPORATION AND THE SUBSIDIARIES
HEREBY WAIVE ANY OBJECTION TO JURISDICTION OR VENUE IN ANY SUCH
PROCEEDING COMMENCED IN SUCH COURT. THE CORPORATION AND THE
SUBSIDIARIES FURTHER AGREE THAT ANY PROCESS REQUIRED TO BE SERVED
ON THEM FOR PURPOSES OF ANY SUCH PROCEEDING MAY BE SERVED ON
THEM, WITH THE SAME EFFECT AS PERSONAL SERVICE ON THEM WITHIN THE
STATE OF DELAWARE, BY REGISTERED MAIL ADDRESSED TO THEM AT THE
OFFICE OR AGENCY SET FORTH IN SECTION 22 FOR PURPOSES OF NOTICES
HEREUNDER.
16. Suits for Enforcement. In case any one or more of
the Events of Default specified in Section 15 of this Note shall
happen and be continuing, the holder of this Note may proceed to
protect and enforce its rights by suit in equity, action at law
and/or by other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Note
or in aid of the exercise of any power granted in this Note, or
may proceed to enforce the payment of this Note or to enforce any
other legal or equitable right of the holder of this Note.
In case of any default under any Note, the Corporation
and the Subsidiaries, jointly and severally, will pay to the
holder thereof such amounts as shall be sufficient to cover the
costs and expenses of such holder due to said default, including,
without limitation, collection costs and reasonable attorneys'
fees, to the extent actually incurred.
17. Remedies Cumulative. No remedy herein conferred
upon the holder of this Note is intended to be exclusive of any
other remedy and each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or
otherwise.
18. Remedies Not Waived. No course of dealing between
the Corporation, the Subsidiaries and the holders of this Note or
any delay on the part of the holder hereof in exercising any
rights hereunder shall operate as a waiver of any right of any
holder of this Note.
19. Subordination. (a) The obligation of the
Corporation and the Subsidiaries to pay the principal of and
interest on this Note, shall be subordinate and junior in right
of payment to the extent set forth in the following paragraphs
(i), (ii) and (iii) to all Senior Debt. As used herein, "Senior
Debt" means the principal of, premium, if any, and interest
(including post-petition interest at the contract rate in any
bankruptcy, insolvency or similar proceeding with respect to the
Corporation) on, and other amounts payable on or in connection
with indebtedness for money borrowed by the Corporation or the
Subsidiaries, whether or not outstanding on the date of this
Note, from, of capital lease obligations payable to any bank or
other financial institution regularly engaged in the business of
making loans or extending credit; provided, that Senior Debt
shall not include any such indebtedness or capital lease
obligations which (a) is guaranteed by any other entity or person
(other than a subsidiary of the Corporation); (b) is convertible
into equity of the Corporation or any subsidiary or which was
purchased from the Corporation or any subsidiary by such bank or
financial institution along with capital stock, warrants or other
rights to receive an equity interest, profit participation or
similar rights in the Corporation or such subsidiary; or (c)
provides in any documentation evidencing such indebtedness or
capital lease obligation that such indebtedness or capital lease
obligation is not superior in right of payment to the Senior
Subordinated Notes.
(i) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or
any receivership proceedings in connection therewith,
relative to the Corporation or its creditors or its
property, and in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of the
Corporation, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Debt shall first be
paid in full, before any payment on account of principal or
interest is made upon this Note.
(ii) In any of the proceedings referred to in paragraph
(i) above, any payment or distribution of any kind or
character, whether in cash, property, stock or obligations
which may be payable or deliverable in respect of this Note
shall be paid or delivered directly to the holders of Senior
Debt for application in payment thereof, unless and until
all Senior Debt shall have been paid in full.
(iii) In the event (A) the Corporation shall default
under any Senior Debt obligation and the effect of such
default is to accelerate the maturity of such obligation,
(B) the Corporation shall default under any Senior Debt
obligation and as a result thereof the holder thereof shall
cause such obligation to become due prior to the stated
maturity thereof, (C) the Corporation shall not pay a Senior
Debt obligation at maturity or (D) the Corporation shall not
make any payment of principal or interest under any document
evidencing Senior Debt when due, then upon the occurrence of
(x) receipt by the holder of this Note of written notice
from the holder of such Senior Debt or (y) if such event of
default specified in clauses (A) through (D) above results
from the acceleration of the Senior Subordinated Notes, the
date of such acceleration, no such payment may be made by
the Corporation upon or in respect of the Notes for a period
(the "Payment Blockage Period") commencing on the earlier of
the date of receipt of such notice or the date of such
acceleration and ending 179 days thereafter (unless such
Payment Blockage Period shall be terminated earlier by
written notice to the holder hereof from the holder of such
Senior Debt commencing the Payment Blockage Period).
Notwithstanding anything herein to the contrary, in no event
shall a Payment Blockage Period extend beyond 179 days from
the date the payment on the Notes was due. Not more than
one Payment Blockage Period with respect to this Note may be
commenced during any period of 360 consecutive days. For
all purposes of this Section 19(a)(iii), no event of default
which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to
Senior Debt initiating such Payment Blockage Period shall
be, or be made, the basis for the commencement of a second
Payment Blockage Period by the holder of such Senior Debt
whether or not within a period of 360 consecutive days
unless such event of default shall have been cured or waived
for a period of not less than 30 consecutive days.
(b) Subject to the payment in full of all Senior Debt
as aforesaid, the holder of this Note shall be subrogated to the
rights of the holders of Senior Debt to receive payments or
distributions of any kind or character, whether in cash,
property, stock or obligations, which may be payable or
deliverable to the holders of Senior Debt, until the principal
of, and interest on, the Senior Subordinated Notes shall be paid
in full, and, as between the Corporation, its creditors other
than the holders of Senior Debt, and the holders of this Note, no
such payment or distribution made to the holders of Senior Debt
by virtue of this Section 19 which otherwise would have been made
to the holder of this Note shall be deemed a payment by the
Corporation on account of the Senior Debt, it being understood
that the provisions of this Section 19 are and are intended
solely for the purposes of defining the relative rights of the
holder of this Note, on the one hand, and the holders of the
Senior Debt, on the other hand. Subject to the rights, if any,
under this Section 19 of holders of Senior Debt to receive cash,
property, stock or obligations otherwise payable or deliverable
to the holder of this Note, nothing herein shall either impair,
as between the Corporation and the holder of this Note, the
obligation of the Corporation, which is unconditional and
absolute, to pay to the holder hereof the principal hereof and
interest hereon in accordance with its terms and the provisions
of this Note or prevent the holder of this Note from exercising
all remedies otherwise permitted by applicable law or hereunder
upon default hereunder. The failure to make a payment on account
of principal or interest on the Notes by reason of any provision
of this Section 19 shall not be construed as preventing the
occurrence of an Event of Default under Section 15.
(c) Notwithstanding any provision contained herein to
the contrary, the indebtedness evidenced by this Note shall not
(i) be subordinated to claims of any trade creditors of the
Corporation or (ii) be subordinated in right of payment to the
payment of any existing or future Debt of the Corporation which
is not Senior Debt; but rather shall rank equally with all
existing and future unsecured Debt of the Corporation except for
such Debt as may be subordinate thereto and as may be required by
bankruptcy or other laws affecting the rights of creditors
generally.
20. Covenants Bind Successors and Assigns. All the
covenants, stipulations, promises and agreements in this Note
contained by or on behalf of the Corporation and the Subsidiaries
shall bind their respective successors and assigns, whether so
expressed or not.
21. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
22. Headings. The headings of the Sections and
subsections of this Note are inserted for convenience only and do
not constitute a part of this Note.
23. Notices. All notices, requests, consents and
other communications hereunder shall be in writing and shall be
mailed by first class registered mail, postage prepaid,
(a) if to the Corporation or the Subsidiaries, at:
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to the holder of this Note, to its address set
forth in the register maintained by the Corporation for the
registration of transfer and exchange of Notes.
IN WITNESS WHEREOF, each of the undersigned has caused
this Note to be signed in its corporate name by one of its
officers thereunto duly authorized and to be dated as of the day
and year first above written.
TRANSCISCO INDUSTRIES, INC.
By__________________________
President
[Corporate Seal]
Attest:
_________________________________
Secretary
TRANSCISCO RAIL SERVICES COMPANY
By__________________________
President
[Corporate Seal]
Attest:
_________________________________
Secretary
TRANSCISCO LEASING COMPANY
By__________________________
President
[Corporate Seal]
Attest:
_________________________________
Secretary
TRANSCISCO TRADING COMPANY
By__________________________
President
[Corporate Seal]
Attest:
_________________________________
Secretary
____________________________________________________________________________
EXHIBIT B-2
SERIES B NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
IT HAS BEEN REGISTERED UNDER THAT ACT OR, IN THE OPINION OF
COUNSEL, AN EXEMPTION FROM REGISTRATION IS AVAILABLE
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED
HEREIN OR EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO
THE EXTENT SET FORTH IN A SUBORDINATION AGREEMENT (THE
"SUBORDINATION AGREEMENT"), DATED AS OF AUGUST ___, 1995, TO
CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS
CREDIT CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH
HOLDER OF THIS DOCUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND
BY THE SUBORDINATION AGREEMENT.
TRANSCISCO INDUSTRIES, INC.
Series B Senior Subordinated Note
Due July 31, 2000
Registered New York, New York
$[up to 1,000,000] August ___, 1995
TRANSCISCO INDUSTRIES, INC., a Delaware corporation
(the "Corporation"), TRANSCISCO RAIL SERVICES COMPANY, a
California corporation ("TRSC"), TRANSCISCO LEASING COMPANY, a
Delaware corporation ("TLC") and TRANSCISCO TRADING COMPANY, a
Delaware corporation ("TTC") (each of TRSC, TLC and TTC each a
"Subsidiary" and collectively, the "Subsidiaries"), for value
received, hereby jointly and severally promise to pay to the
order of [FURMAN SELZ SBIC, L.P., a Delaware limited partnership
or JAMES DOWLING] or registered assigns, the principal sum of [up
to One Million Dollars ($1,000,000)], on July 31, 2000 and to pay
interest as set forth below.
The payment of principal and interest on this Note
shall be in such currency of the United States of America as at
the time of payment shall be legal tender for payment of public
and private debts.
1. Notes. This Note is issued pursuant to a certain
Note and Warrant Purchase Agreement, dated as of August ___, 1995
(the "Purchase Agreement"), among the Corporation, the
Subsidiaries, Furman Selz SBIC, L.P. and James Dowling, providing
for, among other things, the issuance of (i) Series A Senior
Subordinated Notes Due 2000 in an aggregate principal amount of
$2,000,000, (ii) Series B Senior Subordinated Notes Due 2000 in
an aggregate principal amount of $1,000,000 (the "B Notes" and,
together with this Note, the "Senior Subordinated Notes"), and
(iii) warrants (the "Warrants") to subscribe to up to 1,000,000
shares of the Common Stock, par value $.01 per share, of the
Corporation. This Series B Senior Subordinated Note Due 2000 and
any such Note subsequently issued upon exchange or transfer
thereof are hereinafter collectively called the "Notes".
2. Interest. Interest shall accrue on the unpaid
principal balance of this Note at an annual rate of 14%. Accrued
but unpaid interest shall be due and payable on the unpaid
principal balance of this Note on each of July 31, 1996, July 31,
1997, and each January 31 and July 31 of each year thereafter,
beginning on January 31, 1998. One-half of the interest due and
payable on July 31, 1996 shall be deferred and shall be payable
on July 31, 1998 and one-half of the interest due and payable on
July 31, 1997 shall be deferred and shall be payable on July 31,
1999. Any interest deferred pursuant to the preceding sentence
shall compound and accrue interest at the applicable rate until
paid. All interest hereunder shall be computed on the basis of a
360-day year consisting of twelve 30-day months.
3. Payments of Interest and Principal. All payments
of principal and interest hereunder shall be paid to the holder
hereof by wire transfer in immediately available funds. Wire
transfer payments of interest and principal on this Note is
conditioned upon the holder providing to the Corporation duly
authorized instructions for the wire transfer of such amounts to
the holder's designated account. If principal or interest on
this Note becomes due and payable on a day that is not a Business
Day, the due date thereof shall be extended to the next
succeeding Business Day. For purposes of this Note, "Business
Day" means any day other than a Saturday, a Sunday or a legal
holiday under the laws of the State of New York.
4. Transfer or Exchange of Notes. The Corporation
shall keep at its office or agency maintained as provided in
subsection (a) of Section 12 a register in which the Corporation
shall provide for the registration of Notes and for the
registration of transfer and exchange of Notes. The holder of
this Note may, at its option, and either in person or by duly
authorized attorney, surrender the same for registration of
transfer or exchange, as a whole or in part, in multiples of
$100,000, at the office or agency of the Corporation maintained
as provided in subsection (a) of Section 12, and, without expense
to such holder (except for taxes or governmental charges imposed
in connection therewith), receive from the Corporation and the
Subsidiaries in exchange therefor a Note or Notes in such
denomination or denominations as such holder may request, dated
as of the date to which interest has been paid on the Note or
Notes so surrendered for transfer or exchange, for the same
aggregate principal amount as the then unpaid principal amount of
the Note or Notes so surrendered for transfer or exchange, and
registered in the name of such person or persons as may be
designated by such holder; provided, however, that this Note
shall not by transferred to any person whose primary line of
business is the manufacture of railroad car components or the
leasing of railroad cars or to any person that is not
incorporated or organized under the laws of the United States or
a State thereof. Every Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or
shall be accompanied by a written instrument of transfer,
satisfactory in form to the Corporation, duly executed by the
holder of such Note or his attorney, duly authorized in writing.
Every Note so made and delivered in exchange for this Note shall
in all other respects be in the same form and have the same terms
as this Note. No transfer or exchange of any Note shall be valid
unless made in the foregoing manner at such office or agency.
5. Loss, Theft, Destruction or Mutilation of Note.
Upon receipt of evidence satisfactory to the Corporation of the
loss, theft, destruction or mutilation of this Note, and, in the
case of any such loss, theft or destruction, upon receipt of an
affidavit of loss from the holder hereof reasonably satisfactory
to the Corporation, or, in the case of any such mutilation, upon
surrender and cancellation of this Note, the Corporation and the
Subsidiaries will make and deliver, in lieu of this Note, a new
Note of like tenor and unpaid principal amount and dated as of
the date to which interest has been paid on this Note.
6. Persons Deemed Owners; Holders. The Corporation
and the Subsidiaries may deem and treat the person in whose name
any Note is registered as the owner and holder of such Note for
the purpose of receiving payment of principal of and premium, if
any, and interest on such Note and for all other purposes
whatsoever, whether or not such Note shall be overdue. With
respect to any Note at any time outstanding, the term "holder,"
as used herein, shall be deemed to mean the person in whose name
such Note is registered as aforesaid at such time.
7. Prepayments. Prepayments on this Note may be made
only in accordance with the provisions of the Purchase Agreement
and Sections 8 through 11 hereof.
8. Notice of Prepayment and Other Notices. The
Corporation shall give written notice of prepayment of this Note
or any portion hereof pursuant to Section 7 not less than 30 nor
not more than 60 days prior to the date fixed for such
prepayment. Such notice and all other notices to be given to any
holder of this Note shall be given by registered or certified
mail to the person in whose name this Note is registered at its
address designated on the register maintained by the Corporation
on the date of mailing such notice of prepayment or other notice.
9. Interest After Date Fixed for Prepayment. If this
Note or a portion hereof is called for prepayment as provided
pursuant to Section 7, this Note or such portion shall cease to
bear interest on and after the date fixed for such prepayment
unless, upon presentation for the purpose of prepayment, the
Corporation and the Subsidiaries shall fail to pay this Note or
such portion, as the case may be, on such date, in which event
this Note or such portion, as the case may be, and, so far as may
be lawful, any overdue installment of interest thereon, shall
bear interest on and after the date fixed for such prepayment and
until paid at the rate of 14% per annum.
10. Surrender of Notes; Notation Thereon. Upon any
prepayment of a portion of the principal amount of this Note
pursuant to Section 7, the holder hereof, at its option, may
require the Corporation and the Subsidiaries to execute and
deliver at the expense of the Corporation and the Subsidiaries
(other than for transfer taxes, if any), upon surrender of this
Note, a new Note registered in the name of such person or persons
as may be designated by such holder for the principal amount of
this Note then remaining unpaid, dated as of the date to which
interest has been paid on the principal amount of this Note then
remaining unpaid, or may present this Note to the Corporation for
notation hereon of the payment of the portion of the principal
amount of this Note so prepaid.
11. Allocation of Payments. In the case of a
prepayment pursuant to Section 7 of less than all the Notes at
the time outstanding, the aggregate principal amount to be
prepaid shall be allocated (in units of $1,000 or integral
multiples thereof) among the holders of all the Notes at the time
outstanding in proportion, as nearly as practicable, to the
respective aggregate unpaid principal amounts of the Notes (not
theretofore called for prepayment) then held by them,
respectively, with adjustment, to the extent practicable, to
equalize for any prior unequal prepayments.
12. Affirmative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so
long as any Note shall be outstanding:
(a) Maintenance of Office. The Corporation will
maintain an office or agency in San Francisco, California (or
such other place in the United States of America as the
Corporation may designate in writing to the registered holder
hereof), where the Notes may be presented for registration of
transfer and for exchange as herein provided, where notices and
demands to or upon the Corporation in respect of the Notes may be
served and where, at the option of the holders thereof, the Notes
may be presented for payment. Until the Corporation otherwise
notifies the holders of the Notes, said office shall be the
principal office of the Corporation in San Francisco, California.
(b) Payment of Taxes. The Corporation will promptly
pay and discharge or cause to be paid and discharged, before the
same shall become in default, all lawful taxes and assessments
imposed upon the Corporation or any subsidiary or upon the income
and profits of the Corporation or any subsidiary, or upon any
property, real, personal or mixed, belonging to the Corporation
or any subsidiary, or upon any part thereof by the United States
or any State thereof, as well as all lawful claims for labor,
materials and supplies which, if unpaid, would become a lien or
charge upon such property or any part thereof; provided, however,
that the Corporation shall not be required to pay and discharge
or to cause to be paid and discharged any such tax, assessment,
charge, levy or claim so long as both (x) the Corporation has set
aside adequate reserves for such tax, assessment, charge, levy or
claim and (y)(i) the Corporation shall be contesting the validity
thereof in good faith by appropriate proceedings or (ii) the
Corporation shall, in its good faith judgment, deem the validity
thereof to be questionable and the party to whom such tax,
assessment, charge, levy or claim is allegedly owed shall not
have made written demand for the payment thereof.
(c) Corporate Existence. The Corporation will do or
cause to be done all things necessary and lawful to preserve and
keep in full force and effect its corporate existence, rights and
franchises and the corporate existence, rights and franchises of
its subsidiaries under the laws of the United States or any State
thereof or the District of Columbia; provided, however, that
nothing in this subsection (c) shall prevent (i) a consolidation
or merger of, or a sale, transfer or disposition of all or any
substantial part of the property and assets of, the Corporation
not prohibited by the provisions of Section 13, or (ii) the
abandonment or termination of any rights or franchises of the
Corporation, if such consolidation, merger, sale, transfer,
disposition, abandonment or termination is, in the good faith
business judgment of the Corporation, in the best interests of
the Corporation and not disadvantageous to the holder of this
Note.
(d) Maintenance of Property. The Corporation will,
and the Corporation will cause its subsidiaries to, at all times
maintain and keep, or cause to be maintained and kept, in good
repair, working order and condition all significant properties of
the Corporation and its subsidiaries used in the conduct of the
business of the Corporation and its subsidiaries, and will, and
will cause its subsidiaries to, from time to time make or cause
to be made all needful and proper repairs, renewals,
replacements, betterments and improvements thereto, so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that
nothing in this subsection (d) shall require (i) the making of
any repair or renewal or (ii) the continuance of the operation
and maintenance of any property or (iii) the retention of any
assets (the sale or other disposition of which would not be
prohibited by Section 13), if such action (or inaction) is, in
the good faith business judgment of the Corporation, in the best
interests of the Corporation.
(e) Insurance. The Corporation will, and the
Corporation will cause its subsidiaries to (i) keep adequately
insured, by financially sound and reputable insurers, all
property of a character usually insured by corporations engaged
in the same or a similar business similarly situated against loss
or damage of the kinds customarily insured against by such
corporations and (ii) carry, with financially sound and reputable
insurers, such other insurance (including, without limitation,
liability insurance) in such amounts as are available at
reasonable expense and to the extent believed necessary in the
good faith business judgment of the Corporation.
(f) Keeping of Books. The Corporation will at all
times keep proper books of record and account in which proper
entries will be made of its transactions in accordance with
generally accepted accounting principles consistently applied.
(g) Transactions with Affiliates. Neither the
Corporation nor any of its subsidiaries will enter into any
transaction or series of transactions with any director, officer,
stockholder, employee or affiliate of the Corporation or its
subsidiaries (other than (i) a transaction or series of
transactions that involves, individually, less than $25,000,
provided that the aggregate of all such transactions or series of
transactions involves less than $500,000 and (ii) transactions by
and among any of the Company and/or any Subsidiary), except on
terms and conditions that, in the reasonable judgment of the
Board of Directors of the Corporation (as evidenced by the
approval of not less than 66 2/3% of the then-existing
Directors), are no less favorable to the Corporation or its
direct or indirect subsidiaries, as the case may be, than the
terms and conditions which the Corporation or such subsidiary, as
the case may be, could obtain in a transaction with an
unaffiliated person on an arm's length basis.
(h) Notice of Default. If any one or more events
which constitute, or which with notice or lapse of time or both
would constitute, an Event of Default under Section 15 shall
occur, or if the holder of any Note shall demand payment or take
any other action permitted upon the occurrence of any such Event
of Default, the Corporation shall immediately after it becomes
aware that any such event would with or without notice or lapse
of time or both constitute such an Event or that such demand has
been made or that any such action has been taken, give notice to
the holder of this Note, specifying the nature of such event or
of such demand or action, as the case may be.
13. Negative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so
long as any Note shall be outstanding:
(a) Consolidation, Merger and Sale. The Corporation
will not consolidate or merge with or into, or sell or otherwise
dispose of all or substantially all of its property to, any other
corporation, unless
(i) the Corporation shall have obtained the written
consent of the holders of more than 66 2/3% in principal
amount of the Notes then outstanding;
(ii) the Corporation or such other corporation shall
not otherwise be in default in the performance or observance
of any covenant, agreement or condition of the Notes; and
(iii) the holder of this Note shall have received, in
connection therewith, an opinion of counsel for the
Corporation (or other counsel reasonably satisfactory to the
holder) in form and substance satisfactory to the holder, to
the effect that any such consolidation, merger, sale or
conveyance and any such assumption complies with the
provisions of this paragraph (a).
Following the consummation of such merger, sale,
conveyance or other disposition, the Corporation will, upon the
written request of the holder of any Note, provide such holder
with a copy of the agreement or agreements pursuant to which such
consolidation, merger, sale, conveyance or other disposition was
effected as promptly as possible.
(b) Restricted Payments. The Corporation shall not
and shall cause each of its subsidiaries not to (i) declare or
pay any dividend on, or authorize or make any distribution in
respect of, shares of any class of its or their stock (except
dividends or distributions payable in shares of its stock and
except for dividends paid by direct or indirect wholly-owned
subsidiaries), or (ii) authorize or make any purchase, redemption
or acquisition for value of, any shares of any class of its their
stock.
(c) Restrictions on Senior Subordinated Debt. The
Corporation shall not incur, and shall cause its subsidiaries not
to incur, directly or indirectly, any Debt (as defined below)
which is senior in right of payment to the Senior Subordinated
Notes and is subordinate or junior in any respect in right of
payment to any other Debt. As used herein, "Debt" of a person
means at any date, without duplication, whether or not
contingent, (i) all obligations for borrowed money of such
person, (ii) all obligations of such person evidenced by bonds,
debentures, notes, letters of credit or similar instruments,
(iii) all obligations of such person to pay the deferred purchase
price of property or services, except accounts payable and other
liabilities arising in the ordinary course of business, (iv) all
reimbursement obligations of such person, (v) all obligations of
such person as lessee under capital leases, (vi) all debt of
others secured by a lien on any asset of such person and (vii)
any Debt of others guaranteed by such person.
(d) Disposition of Assets Not in the Ordinary Course.
In the event the Corporation or any subsidiary sells, transfers,
assigns or otherwise disposes of any asset not in the ordinary
course of business, the Corporation shall, or cause such
subsidiary to, (i) use the proceeds of such disposition to repay
any Debt which is senior in right of payment to the Notes, (ii)
reinvest such proceeds in the Corporation or any wholly-owned
subsidiary of the Corporation, or (iii) prepay the Senior
Subordinated Notes.
(e) Limitation on Payment Restrictions Affecting
Subsidiaries. The Corporation shall not, and shall not permit
any subsidiary of the Corporation to, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance
or restriction which by its terms expressly restricts the ability
of any such subsidiary to (i) pay dividends or make any other
distributions on such subsidiary's capital stock or pay any Debt
owed to the corporation or any subsidiary of the Corporation,
(ii) make any loans or advances to the Corporation or any
subsidiary of the Corporation or (iii) transfer any of its
property or assets to the Corporation or any subsidiary of the
Corporation, except for any restrictions existing under
agreements in effect at the time of, or entered into concurrently
with, the issuance of this Note, including the restrictions
contained in the Credit Agreement (as defined below), to the
extent that such restrictions are set forth in such agreement as
in effect on the date of the issuance of this Note. As used
herein, "Credit Agreement" means that certain Credit Agreement
between Transamerica Business Credit Corporation (the "Bank"),
the Corporation and the Subsidiaries dated August ___, 1995.
14. Modification by Holders; Waiver. The Corporation
and the Subsidiaries may, with the written consent of the holders
of not less than 66 2/3% in principal amount of the Notes then
outstanding, modify the terms and provisions of the Notes or the
rights of the holders of the Notes or the obligations of the
Corporation and the Subsidiaries thereunder, and the observance
by the Corporation and the Subsidiaries of any term or provision
of the Notes may be waived with the written consent of the
holders of not less than 66 2/3% in principal amount of the Notes
then outstanding; provided, however, that no such modification or
waiver shall:
(a) change the maturity of any Note or reduce the
principal amount thereof or reduce the rate or extend the
time of payment of interest thereon or reduce the amount or
change the time of payment of premium payable on any
prepayment thereof without the consent of the holder of each
Note so affected; or
(b) give any Note any preference over any other Note;
or
(c) reduce the applicable aforesaid percentages of
Notes, the consent of the holders of which is required for
any such modification.
Any such modification or waiver shall apply equally to
all the holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Corporation and the
Subsidiaries, whether or not such Note shall have been marked to
indicate such modification or waiver, but any Note issued
thereafter shall bear a notation referring to any such
modification or waiver. Promptly after obtaining the written
consent of the holders as herein provided, the Corporation shall
transmit a copy of such modification or waiver to all the holders
of the Notes at the time outstanding.
15. Events of Default; Acceleration. If any one or
more of the following events, herein called Events of Default,
shall occur, for any reason whatsoever, and whether such
occurrence shall, on the part of the Corporation or any
Subsidiary, be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of a court of competent
jurisdiction or any order, rule or regulation of any
administrative or other governmental authority and such Event of
Default shall be continuing:
(a) default shall be made in the payment of the
principal of any Note or the premium thereon, if any, when
and as the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by
acceleration or otherwise and such default shall continue
for a period of five days; or
(b) default shall be made in the payment of any
installment of interest on any Note according to its terms
when and as the same shall become due and payable and such
default shall continue for a period of ten days; or
(c) default or breach shall be or shall have been made
in the due observance or performance of any representation,
covenant, condition or agreement on the part of the
Corporation or the Subsidiaries to be observed or performed
pursuant to the Purchase Agreement or the terms hereof and
such default shall continue for 15 days after written notice
thereof, specifying such default and requesting that the
same be remedied, shall have been given to the Corporation
by the holder or holders of at least 25% of the principal
amount of the Notes then outstanding (the Corporation to
give forthwith to all other holders of Notes at the time
outstanding written notice of the receipt of such notice
specifying the default referred to therein); or
(d) the entry of a decree or order for relief by a
court having jurisdiction in the premises in respect of the
Corporation or any subsidiary in an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Corporation or any
subsidiary or for any substantial part of any of their
respective property, or ordering the winding-up or
liquidation of any of their affairs and the continuance of
any such decree or order unstayed and in effect for a period
of 30 consecutive days; or
(e) the commencement by the Corporation or any
subsidiary of a voluntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other
similar laws, or the consent by the Corporation or any
subsidiary to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Corporation
or any subsidiary or for any substantial part of any of
their respective property, or the making by the Corporation
or any subsidiary of any assignment for the benefit of
creditors, or the failure of the Corporation or any
subsidiary generally to pay its debts as such debts become
due, or the taking of corporate action by the Corporation or
any subsidiary in furtherance of or which might reasonably
be expected to result in any of the foregoing; or
(f) (i) failure to make any payment in respect of any
Debt of the Corporation or its subsidiaries having an
aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all
creditors under any combined or syndicated credit
arrangement) of more than $50,000 when due (whether by
scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the
document relating thereto; or (ii) failure by the
Corporation or its subsidiaries to perform or observe any
other condition or covenant, or any other event shall occur
or condition exist, under any agreement or instrument
relating to any such Debt referred to in clause (i) above,
and such failure continues after the applicable grace or
notice period, if any, specified in the document relating
thereto if the effect of such failure, event or condition is
to cause, or to permit the holder or holders of such Debt or
beneficiary or beneficiaries of such Debt (or a trustee or
agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Debt to be declared to be due
and payable prior to its stated maturity; or
(g) final judgment for the payment of money in excess
$50,000 shall be rendered against the Corporation or any
subsidiary and the same shall remain undischarged for a
period of 30 days during which execution shall not be
effectively stayed;
(h) a Change of Control (as defined below) shall have
occurred;
then, the holder or holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding may, at its
or their option, by written notice to the Corporation and the
Subsidiaries, declare all the Notes to be, and all the Notes
shall thereupon be and become, forthwith due and payable together
with interest accrued thereon without presentment, demand,
protest or further notice of any kind, all of which are expressly
waived to the extent permitted by law; provided, however, that
upon the occurrence of any of the events specified in subsections
(d) or (e) of this Section 15, all the Notes shall thereupon be
and become, forthwith due and payable together with interest
accrued thereon without any action required by the holders
thereof whatsoever. As used herein, "Change of Control" means
(i) the Corporation merges or consolidates with another
corporation (other than the consolidation or merger of a wholly-
owned subsidiary with or into the Corporation or with or into any
other wholly-owned subsidiary, and other than a merger involving
the Corporation in which the holders of at least 51% of the
outstanding Common Stock, on a fully-diluted basis, immediately
prior to such merger hold at least 51% of the outstanding capital
stock of the surviving corporation in any such merger or
consolidation, on a fully-diluted basis, immediately after the
merger); (ii) any "person" or "group" (as such terms are used in
Section 13(d) of the Exchange Act and the regulations promulgated
hereunder) is or becomes a beneficial owner, directly or
indirectly, of securities of the Corporation having a majority of
the total number of votes that may be cast for the election of
directors of the Corporation; (iii) the Corporation and its
subsidiaries on a consolidated basis sells all or substantially
all of their consolidated assets; (iv) as the result of, or in
connection with, any cash tender or exchange offer, merger or
other business combination, sale of assets or contested election,
or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Corporation
before the Transaction cease to constitute a majority of the
Board of Directors of the Corporation or any successor to the
Corporation; or (v) any director is elected to the Corporation's
Board of Directors without being nominated thereto by a majority
of the Corporation's Independent Directors (as such term is
defined in the Corporation's By-Laws as in effect on the date
hereof).
At any time after any declaration of acceleration has
been made as provided in this Section 15 (except as provided
under subsections (d) or (e) thereunder), the holders of at least
66 2/3% in principal amount of the Notes then outstanding may, by
notice to the Corporation, rescind such declaration and its
consequences, if (i) the Corporation and the Subsidiaries have
paid all overdue installments of interest on the Notes and all
principal (and premium, if any) that has become due otherwise
than by such declaration of acceleration; and (ii) all other
defaults and Events of Default (other than nonpayments of
principal and interest that have become due solely by reason of
acceleration) shall have been remedied or cured or shall have
been waived pursuant to this paragraph; provided, however, that
no such rescission shall extend to or affect any subsequent
default or Event of Default or impair any right consequent
thereon.
WITHOUT LIMITING THE FOREGOING, THE CORPORATION AND THE
SUBSIDIARIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATED IN ANY WAY TO THIS NOTE OR THE NOTES AND
AGREES THAT ANY SUCH PROCEEDING MAY, IF THE HOLDER SO ELECTS, BE
BROUGHT AND ENFORCED IN THE SUPREME COURT OF THE STATE OF NEW
YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND THE CORPORATION AND THE SUBSIDIARIES
HEREBY WAIVE ANY OBJECTION TO JURISDICTION OR VENUE IN ANY SUCH
PROCEEDING COMMENCED IN SUCH COURT. THE CORPORATION AND THE
SUBSIDIARIES FURTHER AGREE THAT ANY PROCESS REQUIRED TO BE SERVED
ON THEM FOR PURPOSES OF ANY SUCH PROCEEDING MAY BE SERVED ON
THEM, WITH THE SAME EFFECT AS PERSONAL SERVICE ON THEM WITHIN THE
STATE OF DELAWARE, BY REGISTERED MAIL ADDRESSED TO THEM AT THE
OFFICE OR AGENCY SET FORTH IN SECTION 22 FOR PURPOSES OF NOTICES
HEREUNDER.
16. Suits for Enforcement. In case any one or more of
the Events of Default specified in Section 15 of this Note shall
happen and be continuing, the holder of this Note may proceed to
protect and enforce its rights by suit in equity, action at law
and/or by other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Note
or in aid of the exercise of any power granted in this Note, or
may proceed to enforce the payment of this Note or to enforce any
other legal or equitable right of the holder of this Note.
In case of any default under any Note, the Corporation
and the Subsidiaries, jointly and severally, will pay to the
holder thereof such amounts as shall be sufficient to cover the
costs and expenses of such holder due to said default, including,
without limitation, collection costs and reasonable attorneys'
fees, to the extent actually incurred.
17. Remedies Cumulative. No remedy herein conferred
upon the holder of this Note is intended to be exclusive of any
other remedy and each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or
otherwise.
18. Remedies Not Waived. No course of dealing between
the Corporation, the Subsidiaries and the holders of this Note or
any delay on the part of the holder hereof in exercising any
rights hereunder shall operate as a waiver of any right of any
holder of this Note.
19. Subordination. (a) The obligation of the
Corporation and the Subsidiaries to pay the principal of and
interest on this Note, shall be subordinate and junior in right
of payment to the extent set forth in the following paragraphs
(i), (ii) and (iii) to all Senior Debt. As used herein, "Senior
Debt" means the principal of, premium, if any, and interest
(including post-petition interest at the contract rate in any
bankruptcy, insolvency or similar proceeding with respect to the
Corporation) on, and other amounts payable on or in connection
with indebtedness for money borrowed by the Corporation or the
Subsidiaries, whether or not outstanding on the date of this
Note, from, of capital lease obligations payable to any bank or
other financial institution regularly engaged in the business of
making loans or extending credit; provided, that Senior Debt
shall not include any such indebtedness or capital lease
obligations which (a) is guaranteed by any other entity or person
(other than a subsidiary of the Corporation); (b) is convertible
into equity of the Corporation or any subsidiary or which was
purchased from the Corporation or any subsidiary by such bank or
financial institution along with capital stock, warrants or other
rights to receive an equity interest, profit participation or
similar rights in the Corporation or such subsidiary; or (c)
provides in any documentation evidencing such indebtedness or
capital lease obligation that such indebtedness or capital lease
obligation is not superior in right of payment to the Senior
Subordinated Notes.
(i) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or
any receivership proceedings in connection therewith,
relative to the Corporation or its creditors or its
property, and in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of the
Corporation, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Debt shall first be
paid in full, before any payment on account of principal or
interest is made upon this Note.
(ii) In any of the proceedings referred to in paragraph
(i) above, any payment or distribution of any kind or
character, whether in cash, property, stock or obligations
which may be payable or deliverable in respect of this Note
shall be paid or delivered directly to the holders of Senior
Debt for application in payment thereof, unless and until
all Senior Debt shall have been paid in full.
(iii) In the event (A) the Corporation shall default
under any Senior Debt obligation and the effect of such
default is to accelerate the maturity of such obligation,
(B) the Corporation shall default under any Senior Debt
obligation and as a result thereof the holder thereof shall
cause such obligation to become due prior to the stated
maturity thereof, (C) the Corporation shall not pay a Senior
Debt obligation at maturity or (D) the Corporation shall not
make any payment of principal or interest under any document
evidencing Senior Debt when due, then upon the occurrence of
(x) receipt by the holder of this Note of written notice
from the holder of such Senior Debt or (y) if such event of
default specified in clauses (A) through (D) above results
from the acceleration of the Senior Subordinated Notes, the
date of such acceleration, no such payment may be made by
the Corporation upon or in respect of the Notes for a period
(the "Payment Blockage Period") commencing on the earlier of
the date of receipt of such notice or the date of such
acceleration and ending 179 days thereafter (unless such
Payment Blockage Period shall be terminated earlier by
written notice to the holder hereof from the holder of such
Senior Debt commencing the Payment Blockage Period).
Notwithstanding anything herein to the contrary, in no event
shall a Payment Blockage Period extend beyond 179 days from
the date the payment on the Notes was due. Not more than
one Payment Blockage Period with respect to this Note may be
commenced during any period of 360 consecutive days. For
all purposes of this Section 19(a)(iii), no event of default
which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to
Senior Debt initiating such Payment Blockage Period shall
be, or be made, the basis for the commencement of a second
Payment Blockage Period by the holder of such Senior Debt
whether or not within a period of 360 consecutive days
unless such event of default shall have been cured or waived
for a period of not less than 30 consecutive days.
(b) Subject to the payment in full of all Senior Debt
as aforesaid, the holder of this Note shall be subrogated to the
rights of the holders of Senior Debt to receive payments or
distributions of any kind or character, whether in cash,
property, stock or obligations, which may be payable or
deliverable to the holders of Senior Debt, until the principal
of, and interest on, the Senior Subordinated Notes shall be paid
in full, and, as between the Corporation, its creditors other
than the holders of Senior Debt, and the holders of this Note, no
such payment or distribution made to the holders of Senior Debt
by virtue of this Section 19 which otherwise would have been made
to the holder of this Note shall be deemed a payment by the
Corporation on account of the Senior Debt, it being understood
that the provisions of this Section 19 are and are intended
solely for the purposes of defining the relative rights of the
holder of this Note, on the one hand, and the holders of the
Senior Debt, on the other hand. Subject to the rights, if any,
under this Section 19 of holders of Senior Debt to receive cash,
property, stock or obligations otherwise payable or deliverable
to the holder of this Note, nothing herein shall either impair,
as between the Corporation and the holder of this Note, the
obligation of the Corporation, which is unconditional and
absolute, to pay to the holder hereof the principal hereof and
interest hereon in accordance with its terms and the provisions
of this Note or prevent the holder of this Note from exercising
all remedies otherwise permitted by applicable law or hereunder
upon default hereunder. The failure to make a payment on account
of principal or interest on the Notes by reason of any provision
of this Section 19 shall not be construed as preventing the
occurrence of an Event of Default under Section 15.
(c) Notwithstanding any provision contained herein to
the contrary, the indebtedness evidenced by this Note shall not
(i) be subordinated to claims of any trade creditors of the
Corporation or (ii) be subordinated in right of payment to the
payment of any existing or future Debt of the Corporation which
is not Senior Debt; but rather shall rank equally with all
existing and future unsecured Debt of the Corporation except for
such Debt as may be subordinate thereto and as may be required by
bankruptcy or other laws affecting the rights of creditors
generally.
20. Covenants Bind Successors and Assigns. All the
covenants, stipulations, promises and agreements in this Note
contained by or on behalf of the Corporation and the Subsidiaries
shall bind their respective successors and assigns, whether so
expressed or not.
21. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
22. Headings. The headings of the Sections and
subsections of this Note are inserted for convenience only and do
not constitute a part of this Note.
23. Notices. All notices, requests, consents and
other communications hereunder shall be in writing and shall be
mailed by first class registered mail, postage prepaid,
(a) if to the Corporation or the Subsidiaries, at:
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to the holder of this Note, to its address set
forth in the register maintained by the Corporation for the
registration of transfer and exchange of Notes.
IN WITNESS WHEREOF, each of the undersigned has caused
this Note to be signed in its corporate name by one of its
officers thereunto duly authorized and to be dated as of the day
and year first above written.
TRANSCISCO INDUSTRIES, INC.
By__________________________
President
[Corporate Seal]
Attest:
_________________________________
Secretary
TRANSCISCO RAIL SERVICES COMPANY
By__________________________
President
[Corporate Seal]
Attest:
_________________________________
Secretary
TRANSCISCO LEASING COMPANY
By__________________________
President
[Corporate Seal]
Attest:
_________________________________
Secretary
TRANSCISCO TRADING COMPANY
By__________________________
President
[Corporate Seal]
Attest:
_________________________________
Secretary
___________________________________________________________________________
EXHIBIT C
THIS WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION
OF THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED
HEREIN OR EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO
THE EXTENT SET FORTH IN A SUBORDINATION AGREEMENT (THE
"SUBORDINATION AGREEMENT"), DATED AS OF AUGUST ___, 1995, TO
CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS
CREDIT CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH
HOLDER OF THIS DOCUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND
BY THE SUBORDINATION AGREEMENT.
WARRANT
TRANSCISCO INDUSTRIES, INC.
Stock Subscription Warrant
Warrant to Subscribe August ___, 1995
for [up to 1,000,000 shares]
Void After July 31, 2005
THIS CERTIFIES that, for value received, [FURMAN SELZ
SBIC, L.P., a Delaware limited partnership or James Dowling
("Dowling")], or its registered assigns, is entitled to subscribe
for and purchase from TRANSCISCO INDUSTRIES, INC., a Delaware
corporation (hereinafter called the "Corporation"), at the price
of $1.50 per share (such price as from time to time adjusted as
hereinafter provided being hereinafter called the "Warrant
Price"), at any time prior to July 31, 2005, up to [1,000,000]
(subject to adjustment as hereinafter provided) fully paid and
nonassessable shares of Common Stock, par value $.01 per share,
of the Corporation (hereinafter called the "Common Stock"),
subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. This Warrant was issued
pursuant to a certain Note and Warrant Purchase Agreement, dated
as of August ___, 1995 (the "Purchase Agreement"), among the
Corporation, certain subsidiaries of the Corporation, Furman Selz
SBIC, L.P. ("FS") and James Dowling ("Dowling"), and the rights
and benefits contained therein shall inure to the benefit of all
subsequent holders of this Warrant. The Warrants issued pursuant
to the Purchase Agreement and any warrant or warrants
subsequently issued upon exchange or transfer thereof are
hereinafter collectively called the "Warrants".
Section 1. Exercise of Warrant.
(a) Method of Exercise. The rights represented by
this Warrant may be exercised by the holder hereof, in whole at
any time or from time to time in part, but not as to a fractional
share of Common Stock, by the surrender of this Warrant (properly
endorsed) at the office of the Corporation as it may designate by
notice in writing to the holder hereof at the address of such
holder appearing on the books of the Corporation, and as further
provided below in this Section l:
(i) Cash Exercise. By payment to the Corporation of
the Warrant Price in cash or by certified or official bank
check, for each share being purchased;
(ii) Surrender of Notes. By surrender to the
Corporation for cancellation of A Notes or B Notes (as each
such term is defined in the Purchase Agreement), or of any
portion of an A Note or a B Note, for which credit shall be
given toward the Warrant Price for each share being acquired
on a dollar-for-dollar basis with reference to the principal
amount cancelled;
(iii) Net Issue Exercise. By an election to receive
shares the aggregate fair market value of which as of the
date of exercise is equal to the fair market value of this
Warrant (or the portion thereof being cancelled) on such
date, in which event the Corporation, upon receipt of notice
of such election, shall issue to the holder hereof a number
of shares of the Corporation's Common Stock equal to (A) the
number of shares of Common Stock acquirable upon exercise of
all or any portion of this Warrant being cancelled, as at
such date, multiplied by (B) the balance remaining after
deducting (x) the Warrant Price, as in effect on such date,
from (y) the fair market value of one share of the
Corporation's Common Stock as at such date and dividing the
result by (C) the fair market value of one share of the
Corporation's Common Stock as at such date; or
(iv) Combined Payment Method. By satisfaction of the
Warrant Price for each share being acquired in any
combination of two or more of the methods described in
clauses (i), (ii) and (iii) above.
(b) Definition of Fair Market Value. For the purposes
of this Section 1, "fair market value" shall mean, as to any
security, as follows: if that security is listed or admitted to
trading on one or more national securities exchanges, the average
of the last reported sales prices per share regular way or, in
case no such reported sales takes place on any such day, the
average of the last reported bid and asked prices per share
regular way, in either case on the principal national securities
exchange on which that security is listed or admitted to trading,
for the 30 trading days immediately preceding the date upon which
the fair market value is determined (the "Determination Date");
if that security is not listed or admitted to trading on a
national securities exchange but is quoted by the NASDAQ Stock
Market ("NASDAQ"), the average of the last reported sales prices
per share regular way or, in case no reported sale takes place on
any such day or the last reported sales prices are not then
quoted by NASDAQ, the average for each such day of the last
reported bid and asked prices per share, for the 30 trading days
immediately preceding the Determination Date as furnished by the
National Quotation Bureau Incorporated or any similar successor
organization; and if that security is not listed or admitted to
trading on a national securities exchange or quoted by NASDAQ or
any other nationally recognized quotation service, the "fair
market value" shall be the fair value thereof determined jointly
by the Corporation and the registered holders of Warrants
outstanding representing a majority of the shares of Common Stock
issuable upon exercise of the Warrants; provided, however, that
if such parties are unable to reach agreement within 60 days
after such determination becomes necessary, the "fair market
value" shall equal the fair market value of all outstanding
shares of Common Stock of the Corporation divided by the number
of shares of Common Stock outstanding, such fair market value to
be determined in good faith by an independent investment banking
firm selected jointly by the Corporation and the registered
holders of Warrants outstanding representing a majority of the
shares of Common Stock issuable upon exercise of the Warrants or,
if that selection cannot be made within 15 days, by an
independent investment banking firm selected by the American
Arbitration Association in accordance with its rules. The fees
and expenses of any such investment banking firm shall be shared
and paid equally by the Corporation and the holder(s) of such
Warrants who have required valuation. Anything in this paragraph
(b) to the contrary notwithstanding, the fair market value of
this Warrant or any portion thereof as of any Determination Date
shall be equal to (i) the fair market value of the shares of
Common Stock issuable upon exercise of this Warrant (or such
portion thereof), (determined in accordance with the foregoing
provisions of this paragraph (b)); minus (ii) the aggregate
Warrant Exercise Price of the Warrant (or such portion thereof).
(c) Delivery of Certificates, Etc. In the event of
any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Common Stock so
purchased, registered in the name of the holder, shall be
delivered to the holder hereof within a reasonable time, not
exceeding ten days, after the rights represented by this Warrant
shall have been so exercised; and, unless this Warrant has
expired, a new Warrant representing the number of shares (except
a remaining fractional share), if any, with respect to which this
Warrant shall not then have been exercised shall also be issued
to the holder hereof within such time. The person in whose name
any certificate for shares of Common Stock is issued upon
exercise of this Warrant shall for all purposes be deemed to have
become the holder of record of such shares on the date on which
the Warrant was surrendered and payment of the Warrant Price and
any applicable taxes was made, except that, if the date of such
surrender and payment is a date on which the stock transfer books
of the Corporation are closed, such person shall be deemed to
have become the holder of such shares at the close of business on
the next succeeding date on which the stock transfer books are
open.
Section 2. Adjustment of Number of Shares. Upon each
adjustment of the Warrant Price as provided in Section 3, the
holder of this Warrant shall thereafter be entitled to purchase,
at the Warrant Price resulting from such adjustment, the number
of shares (calculated to the nearest tenth of a share) obtained
by multiplying the Warrant Price in effect immediately prior to
such adjustment by the number of shares purchasable pursuant
hereto immediately prior to such adjustment and dividing the
product thereof by the Warrant Price resulting from such
adjustment.
Section 3. Adjustment of Price Upon Issuance of Common
Stock. If and whenever the Corporation shall issue or sell any
shares of its Common Stock for a consideration per share less
than the fair market value for such shares at the time of such
issue or sale, then, forthwith upon such issue or sale the
Warrant Price shall be adjusted (calculated to the nearest $.01)
determined by multiplying the Warrant Price by a fraction, the
numerator of which is the amount equal to the sum of (a) the
number of shares of Common Stock outstanding immediately prior to
such issue or sale multiplied by the fair market value for one
share of Common Stock, and (b) the consideration, if any,
received by the Corporation upon such issue or sale, and the
denominator of which is the amount equal to the total number of
shares of Common Stock outstanding immediately after such issue
or sale multiplied by the fair market value of one share of
Common Stock. No adjustments of the Warrant Price, however,
shall be made in an amount less than $.01 per share, but any such
lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to
$.01 per share or more.
For purposes of this Section 3, the following
paragraphs (a) to (o), inclusive, shall also be applicable:
(a) Issuance of Rights or Options. In case at any
time the Corporation shall in any manner grant (whether
directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any options for
the purchase of, Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such
rights or options being herein called "Options", and such
convertible or exchangeable stock or securities being herein
called "Convertible Securities") whether or not such Options
or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise
of such Options or upon conversion or exchange of such
Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable
to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion
or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such
Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such
Options) shall be less than the fair market value of a share
of Common Stock at the time of the granting of such Options,
then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such
Options shall be deemed to have been issued for such price
per share as of the date of granting of such Options and
thereafter shall be deemed to be outstanding. Except as
otherwise provided in paragraph (c), no adjustment of the
Warrant Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise
of such Options or upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible
Securities.
(b) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or
by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable,
and the price per share for which Common Stock is issuable
upon such conversion or exchange (determined by dividing (i)
the total amount received or receivable by the Corporation
as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the
conversion or exchange of all such Convertible Securities)
shall be less than the fair market value of a share of
Common Stock at the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities
shall be deemed to have been issued for such price per share
as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding,
provided that (i) except as otherwise provided in paragraph
(c) below, no adjustment of the Warrant Price shall be made
upon the actual issue of such Common Stock upon conversion
or exchange of such Convertible Securities, and (ii) if any
such issue or sale of such Convertible Securities is made
upon exercise of any Option to purchase any such Convertible
Securities for which adjustments of the Warrant Price have
been or are to be made pursuant to other provisions of this
Section 3, no further adjustment of the Warrant Price shall
be made by reason of such issue or sale.
(c) Change in Option Price or Conversion Rate. Upon
the happening of any of the following events, namely, if the
purchase price provided for in any Option referred to in
paragraph (a), the additional consideration, if any, payable
upon the conversion or exchange of any Convertible
Securities referred to in paragraph (a) or (b), or the rate
at which any Convertible Securities referred to in paragraph
(a) or (b) are convertible into or exchangeable for Common
Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution),
the Warrant Price in effect at the time of such event shall
forthwith be readjusted to the Warrant Price which would
have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially
granted, issued or sold; and on the expiration of any such
Option or the termination of any such right to convert or
exchange such Convertible Securities, the Warrant Price then
in effect hereunder shall forthwith be increased to the
Warrant Price which would have been in effect at the time of
such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately
prior to such expiration or termination, never been issued,
and the Common Stock issuable thereunder shall no longer be
deemed to be outstanding.
If the purchase price provided for in any such Option
referred to in paragraph (a) or the rate at which any
Convertible Securities referred to in paragraph (a) or (b)
are convertible into or exchangeable for Common Stock, shall
be reduced at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then
in case of the delivery of Common Stock upon the exercise of
any such Option or upon conversion or exchange of any such
Convertible Security, the Warrant Price then in effect
hereunder shall forthwith be adjusted to such respective
amount as would have been obtained had such Option or
Convertible Security never been issued as to such Common
Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid, but only if
as a result of such adjustment the Warrant Price then in
effect hereunder is thereby reduced.
(d) Stock Dividends. In case the Corporation shall
declare a dividend or make any other distribution upon any
stock of the Corporation payable in Common Stock, Options or
Convertible Securities, any Common Stock, Options or
Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
(e) Consideration for Stock. In case any shares of
Common Stock, Options or Convertible Securities shall be
issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Corporation
therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid
or allowed by the Corporation in connection therewith. In
case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash
received by the Corporation shall be deemed to be the fair
value of such consideration as determined by the Board of
Directors of the Corporation, without deduction of any
expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. The amount of consideration deemed to be
received by the Corporation pursuant to the foregoing
provisions of this paragraph (e) upon any issuance and/or
sale, pursuant to an established compensation plan of the
Corporation, to directors, officers or employees of the
Corporation in connection with their employment of shares of
Common Stock, Options or Convertible Securities, shall be
increased by the amount of any tax benefit realized by the
Corporation as a result of such issuance and/or sale, the
amount of such tax benefit being the amount by which the
Federal and/or State income or other tax liability of the
Corporation shall be reduced by reason of any deduction or
credit in respect of such issuance and/or sale. In case any
Options shall be issued in connection with the issue and
sale of other securities of the Corporation, together
comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued
without consideration. In case any shares of Common Stock,
Options or Convertible Securities shall be issued in
connection with any merger or consolidation in which the
Corporation is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value
as determined by the Board of Directors of the Corporation
of such portion of the assets and business of the non-
surviving corporation as such Board shall determine to be
attributable to such Common Stock, Options or Convertible
Securities, as the case may be. In the event of any
consolidation or merger of the Corporation in which the
Corporation is not the surviving corporation or in the event
of any sale of all or substantially all of the assets of the
Corporation for stock or other securities of any
corporation, the Corporation shall be deemed to have issued
a number of shares of its Common Stock for stock or
securities of the other corporation computed on the basis of
the actual exchange ratio on which the transaction was
predicated and for a consideration equal to the fair market
value on the date of such transaction of such stock or
securities of the other corporation, and if any such
calculation results in adjustment of the Warrant Price, the
determination of the number of shares of Common Stock
receivable under this Warrant immediately prior to such
merger, consolidation or sale, for purposes of paragraph
(i), shall be made after giving effect to such adjustment of
the Warrant Price.
(f) Record Date. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of
entitling them (i) to receive a dividend or other
distribution payable in Common Stock, Options or Convertible
Securities, or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record
date shall be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(g) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Corporation, and
the disposition of any such shares shall be considered an
issue or sale of Common Stock for the purposes of this
Section 3.
(h) Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding
shares of Common Stock into a greater number of shares, the
Warrant Price in effect immediately prior to such
subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock
of the Corporation shall be combined into a smaller number
of shares, the Warrant Price in effect immediately prior to
such combination shall be proportionately increased.
(i) Reorganization, Reclassification, Consolidation,
Merger or Sale. If any capital reorganization or
reclassification of the capital stock of the Corporation or
any consolidation or merger of the Corporation with another
corporation, or the sale of all or substantially all of its
assets to another corporation shall be effected in such a
way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provisions shall be made whereby
each holder of the Warrants shall thereafter have the right
to receive upon the basis and upon the terms and conditions
specified herein and in lieu of the shares of Common Stock
of the Corporation immediately theretofore receivable upon
the exercise of such Warrant or Warrants, such shares of
stock, securities or assets (including cash) as may be
issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to
the number of shares of such stock immediately theretofore
so receivable had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any
such case appropriate provision shall be made with respect
to the rights and interests of such holder to the end that
the provisions hereof (including without limitation
provisions for adjustments of the Warrant Price) shall
thereafter be applicable, as nearly as may be, in relation
to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such exercise rights
(including an immediate adjustment, by reason of such
reorganization or reclassification, of the Warrant Price to
the value for the Common stock reflected by the terms of
such reorganization or reclassification if the value so
reflected is less than the Warrant Price in effect
immediately prior to such reorganization or
reclassification). In the event of a merger or
consolidation of the Corporation as a result of which a
greater or lesser number of shares of common stock of the
surviving corporation are issuable to holders of Common
Stock of the Corporation outstanding immediately prior to
such merger or consolidation, the Warrant Price in effect
immediately prior to such merger or consolidation shall be
adjusted in the same manner as though there were a
subdivision or combination of the outstanding shares of
Common Stock of the Corporation. The Corporation will not
effect any such consolidation, merger or any sale of all or
substantially all of its assets of properties, unless prior
to the consummation thereof the successor corporation (if
other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and
mailed or delivered to each holder of the Warrants at the
last address of such holder appearing on the books of the
Corporation, the obligation to deliver to such holder such
shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to
receive.
(j) Notice of Adjustment. Upon any adjustment of the
Warrant Price, then and in each such case, the Corporation
shall give written notice thereof, by first class mail,
postage prepaid, addressed to each holder of the Warrants at
the address of such holder as shown on the books of the
Corporation, which notice shall state the Warrant Price
resulting from such adjustment, setting forth in reasonable
detail the method of calculation and the facts upon which
such calculation is based.
(k) Certain Events. If any event occurs as to which
in the opinion of the Board of Directors of the Corporation
the other provisions of this Section 3 are not strictly
applicable or if strictly applicable would not fairly
protect the exercise rights of this Warrant, in accordance
with the essential intent and principles of such provisions
to protect against dilution, then such Board of Directors
shall in good faith make an adjustment in the application of
such provisions, in accordance with such essential intent
and principles, so as to protect such exercise rights as
aforesaid.
(l) Stock to Be Reserved. The Corporation will at all
times reserve and keep available out of its authorized
Common Stock or its treasury shares, solely for the purpose
of issue upon the exercise of this Warrant as herein
provided, such number of shares of Common Stock as shall
then be issuable upon the exercise of this Warrant. The
Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and
fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Corporation
covenants that it will from time to time take all such
action as may be requisite to assure that the par value per
share of the Common Stock is at all times equal to or less
than the effective Warrant Price. The Corporation will take
all such action as may be necessary to assure that all such
shares of Common Stock may be so issued without violation of
any applicable law or regulation, or of any requirements of
any national securities exchange upon which the Common Stock
of the Corporation may be listed. The Corporation will not
take any action which results in any adjustment of the
Warrant Price if the total number of shares of Common Stock
issued and issuable after such action upon exercise of this
Warrant would exceed the total number of shares of Common
Stock then authorized by the Corporation's Articles of
Incorporation. The Corporation has not granted and will not
grant any right of first refusal with respect to shares
issuable upon exercise of this Warrant, and there are no
preemptive rights associated with such shares.
(m) Issue Tax. The issuance of certificates for
shares of Common Stock upon exercise of the Warrants shall
be made without charge to the holders of such Warrants for
any issuance tax in respect thereof provided that the
Corporation shall not be required to pay any tax which may
be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other
than that of any holder of the Warrants.
(n) Closing of Books. The Corporation will at no time
close its transfer books against the transfer of the shares
of Common Stock issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely
exercise of this Warrant.
(o) Definition of Common Stock. As used herein the
term "Common Stock" shall mean and include the Common Stock,
par value $.01 per share, of the Corporation as authorized
on the date hereof and also any capital stock of any class
of the Corporation hereinafter authorized which shall not be
limited to a fixed sum or percentage in respect of the
rights of the holders thereof to participate in dividends or
in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation; provided, however, that the shares purchasable
pursuant to this Warrant shall include only shares
designated as Common Stock, par value $.01 per share, of the
Corporation on the date hereof or shares of any class or
classes resulting from any reclassification or
reclassifications thereof which are not limited to any such
fixed sum or percentage and are not subject to redemption by
the Corporation and, in case at any time there shall be more
than one such resulting class, the shares of each class then
so issuable shall be substantially in the proportion which
the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares
of all such classes resulting from all such
reclassifications.
Section 4. Notices of Record Dates. In the event of
(i) any taking by the Corporation of a record of the
holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive
any dividend or other distribution (other than cash
dividends out of earned surplus), or any right to subscribe
for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive
any other right, or
(ii) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of
the Corporation or any transfer of all or substantially all
the assets of the Corporation to or consolidation or merger
of the Corporation with or into any other corporation, or
(iii) any voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation,
then and in each such event the Corporation will give notice to
the holder of this Warrant specifying (i) the date on which any
such record is to be taken for the purpose of such dividend,
distribution or right and stating the amount and character of
such dividend, distribution or right, and (ii) the date on which
any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock will be
entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such notice
shall be given at least 20 days and not more than 90 days prior
to the date therein specified, and such notice shall state that
the action in question or the record date is subject to the
effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") or to a favorable
vote of stockholders, if either is required.
Section 5. Registration Rights. The rights of the
holder hereof with respect to the registration under the
Securities Act of 1933, as amended, of the shares of Common Stock
issuable upon the exercise of this Warrant are set forth in the
Registration Rights Agreement, dated as of August ___, 1995,
between the Corporation, FS and Dowling.
Section 6. No Stockholder Rights or Liabilities. This
Warrant shall not entitle the holder hereof to any voting rights
or other rights as a stockholder of the Corporation. No
provision hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the
Warrant Price or as a stockholder of the Corporation, whether
such liability is asserted by the Corporation or by creditors of
the Corporation.
Section 7. Investment Representation and Legend. The
holder, by acceptance of the Warrant, represents and warrants to
the Corporation that it is acquiring the Warrant and the shares
of Common Stock (or other securities) issuable upon the exercise
hereof for investment purposes only and not with a view towards
the resale or other distribution thereof and agrees that the
Corporation may affix upon this Warrant the following legend:
"This Warrant has been issued in reliance upon the
representation of the holder that it has been acquired for
investment purposes and not with a view towards the resale
or other distribution thereof. Neither this Warrant nor the
shares issuable upon the exercise of this Warrant have been
registered under the Securities Act of 1933, as amended."
The holder, by acceptance of this Warrant, further agrees that
the Corporation may affix the following legend to certificates
for shares of Common Stock issued upon exercise of this Warrant:
"The securities represented by this certificate have
been issued in reliance upon the representation of the
holder that they have been acquired for investment and not
with a view toward the resale or other distribution thereof,
and have not been registered under the Securities Act of
1933, as amended. Neither the securities evidenced hereby,
nor any interest therein, may be offered, sold, transferred,
encumbered or otherwise disposed of unless either (i) there
is an effective registration statement under said Act
relating thereto or (ii) the Corporation has received an
opinion of counsel, reasonably satisfactory in form and
substance to the Corporation, stating that such registration
is not required."
Section 8. Lost, Stolen, Mutilated or Destroyed
Warrant. If this Warrant is lost, stolen, mutilated or
destroyed, the Corporation may, on such terms as to indemnity or
otherwise as it may in its discretion reasonably impose (which
shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as
the Warrant so lost, stolen, mutilated or destroyed. Any such
new Warrant shall constitute an original contractual obligation
of the Corporation, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable
by anyone.
Section 9. Notices. All notices, requests and other
communications required or permitted to be given or delivered
hereunder shall be in writing, and shall be delivered, or shall
be sent by certified or registered mail, postage prepaid and
addressed, if to the holder to such holder at the address shown
on such holder's Warrant or Warrant Shares or at such other
address as shall have been furnished to the Corporation by notice
from such holder. All notices, requests and other communications
required or permitted to be given or delivered hereunder shall be
in writing, and shall be delivered, or shall be sent by certified
or registered mail, postage prepaid and addressed to the
Corporation at such address as shall have been furnished to the
holder by notice from the Corporation.
IN WITNESS WHEREOF, Transcisco Industries, Inc. has
executed this Warrant on and as of the day and year first above
written.
TRANSCISCO INDUSTRIES, INC.
By____________________________
____________________________________________________________________________
SUBSCRIPTION AGREEMENT
To:
Dated:
The undersigned, pursuant to the provisions set forth
in the within Warrant, hereby agrees to subscribe for and
purchase __________ shares of Common Stock covered by such
Warrant, and makes payment herewith in full therefor (at the
price per share provided by such Warrant [in cash] [by surrender
of A Notes or B Notes (as each such term is defined in the Note
and Warrant Purchase Agreement, dated as of August ___, 1995
between the Corporation, Furman Selz SBIC, L.P. and James
Dowling] [as provided in Section 1(a)(iii) of such Warrant].
Signature ________________________
__________________________________
Address __________________________
__________________________________
____________________________________________________________________________
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, (the "Agreement") dated
as of August ___, 1995, by and between TRANSCISCO INDUSTRIES,
INC., a Delaware corporation (the "Company") and FURMAN SELZ
SBIC, L.P., a Delaware limited partnership ("Furman Selz"), and
JAMES DOWLING ("Dowling" and collectively with Furman Selz, the
"Purchasers").
WHEREAS, the parties hereto have entered into a Note
and Warrant Purchase Agreement dated as of even date herewith;
and
WHEREAS, pursuant to such agreement, Purchasers have
agreed to acquire Warrants (as defined below) from the Company;
and
WHEREAS, it is a condition precedent to the Purchasers'
obligations under such agreement that the parties hereto enter
into this Agreement; and
WHEREAS the Company wishes to grant registration rights
for shares of the Company's stock acquirable by the Purchasers
pursuant to the exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, the parties hereby agree as
follows:
1. Definitions
As used herein, the following terms have the following
respective meanings:
"Common Stock" means the Common Stock, par value $.01
per share, of the Company.
"Covered Shares" means the Registrable Securities of
the Selling Holders included in a registration statement pursuant
to the terms hereof.
"Demand Registration" has the meaning given to that
term in Section 2 hereof.
"Exchange Act" means the Securities and Exchange Act of
1934, as amended.
"Holders" means, collectively, the holders of Registra-
ble Securities granted registration rights pursuant to this
Agreement. A person shall be deemed to be a Holder whenever
person owns Registrable Securities or has the right to acquire
Registrable Securities, whether or not such acquisition has
actually been effected and disregarding any legal restrictions
upon the exercise of such right.
"Indemnified Party" has the meaning given to that term
in Section 6 hereof.
"Indemnifying Party" has the meaning given to that term
in Section 6 hereof.
"Majority Selling Holders" means the Selling Holders
holding a majority of the Covered Shares.
"Purchase Agreement" means the Note and Warrant Pur-
chase Agreement, dated as of August ___, 1995 among the Company,
the Purchasers, Transcisco Rail Services Company, Transcisco
Leasing Company and Transcisco Trading Company.
"Registrable Securities" means the Warrant Shares and
any Common Stock issued or issuable with respect to the Warrant
Shares by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consoli-
dation or other reorganization. Any Registrable Security will
cease to be a Registrable Security when (i) a registration
statement covering such Registrable Security has been declared
effective by the SEC and it has been disposed of pursuant to such
effective registration statement, (ii) it is sold under circum-
stances in which all of the applicable conditions of Rule 144 are
met, or (iii) it has been otherwise transferred, the Company has
delivered a new certificate or other evidence of ownership for it
not bearing any restrictive legend citing the absence of regis-
tration thereof and it may be resold without subsequent registra-
tion under the Securities Act.
"Registration Expenses" has the meaning given to that
term in Section 12 hereof.
"Requesting Holder" has the meaning given to that term
in Section 2 hereof.
"SEC" means the U.S Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Selling Holder" means a Holder who is selling Regis-
trable Securities pursuant to a registration statement in accor-
dance with the terms hereof.
"Warrants" mean those Warrants issued by the Company
pursuant to the Purchase Agreement.
"Warrant Shares" mean shares of Common Stock issued or
issuable upon exercise of the Warrants.
All capitalized terms used herein that are not other-
wise defined herein shall have the meanings ascribed thereto in
the Purchase Agreement.
2. Demand Registration.
(a) Subject to the provisions hereof, at any time on
or after the date hereof, the Holder or Holders of a majority (by
number of shares of Warrant Shares) of the Registrable Securities
(the "Requesting Holders") may make a written request to the
Company for registration with the SEC under and in accordance
with the provisions of the Securities Act of all or part of such
Requesting Holders' Registrable Securities (a "Demand Registra-
tion"); provided, that (x) the Company need not effect the Demand
Registration unless the sale of Registrable Securities held by
the Requesting Holders pursuant to the Demand Registration will
result in receipt by such Requesting Holders of at least
$1,000,000 in aggregate net proceeds, and (y) the Company may
defer the Demand Registration for a single period not to exceed
180 days, if the Board of Directors of the Company determines in
the exercise of its reasonable judgment that due to a pending or
contemplated acquisition, disposition or public offering it would
be inadvisable to effect the Demand Registration at such time.
Within 10 days after receipt of the request for a Demand Regis-
tration, the Company will serve written notice (the "Notice") of
such registration request to all Holders of Registrable Securi-
ties. Subject to Section 2(d) below, the Company will include in
any Demand Registration all Registrable Securities of the Holders
for which the Company has received written requests for inclusion
therein from such Holder within 15 business days after the
receipt by the applicable Holder of the Notice. All requests for
the sale of Registrable Securities in any Demand Registration
made pursuant to this Section 2(a) will specify the aggregate
number of the Registrable Securities to be registered.
(b) Unless the Demand Registration is effected by an
offering on a continuous or delayed basis under Rule 415 or any
successor rule under the Securities Act, a Demand Registration
shall be effected pursuant to a firm commitment underwritten
registration and offering, the managing underwriter of which
shall be a nationally-recognized investment banking firm named by
the Majority Selling Holders and reasonably acceptable to the
Company. The Company agrees that the firm of Furman Selz Inc. is
acceptable to the Company.
(c) The Holders shall be entitled to no more than one
Demand Registration, and the expenses (including the reasonable
fees and expenses of one counsel for the Holders in accordance
with Section 12) thereof shall be borne by the Company and
Holders as set forth in Section 12. A Demand Registration will
not be counted as a Demand Registration hereunder until such
Demand Registration has been declared effective (and Section
(a)(3) of Rule 430A under the Securities Act shall have been
complied with, if applicable) and maintained continuously effec-
tive for a period (i) in the case of an underwritten offering, of
at least six months or such shorter period until all Registrable
Securities included therein have been sold in accordance with
such Demand Registration or (ii) in the case of an offering on a
continuous or delayed basis, such period until all Registrable
Securities included therein have been sold in accordance with
such Demand Registration; provided, however, if a Demand Regis-
tration is withdrawn prior to effectiveness thereof at the
request of the holders of a majority of the Registrable Securi-
ties included therein due to reasons other than material adverse
changes in the Company's condition, financial or otherwise, since
the written request for the Demand Registration was delivered to
the Company, the Demand Registration will be counted hereunder
unless such Holders agree to pay the expenses incurred by the
Company in connection therewith.
(d) If the managing underwriter of a Demand Registra-
tion advises the Company in writing (with a copy to the Request-
ing Holders and each other Holder requesting inclusion of Regis-
trable Securities therein) that, in its opinion, the number of
Registrable Securities requested to be included in the Demand
Registration exceeds the number which can be sold in such offer-
ing, then the Company will include in such registration only the
number of Registrable Securities recommended by the managing
underwriter, selected in the following order of priority: (i)
first, the Registrable Securities that the Requesting Holders
have requested to be included in such registration (pro rata
according to the Registrable Securities proposed to be included
in the registration by such Requesting Holders); (ii) second,
Registrable Securities that other Holders have requested to be
included in such registration (pro rata according to the Regis-
trable Securities proposed to be included in the registration by
such other Holders); and (iii) third, securities held by all
other parties.
3. PiggyBack Registration
(a) Subject to the provisions of this Section 3, if
the Company at any time proposes to register any of its equity
securities (as defined in the Exchange Act) under the Securities
Act, whether or not for sale for its own account (other than
pursuant to Section 2 hereof), and the registration form to be
used may be used for the registration of Registrable Securities,
the Company each such time will give written notice of such
proposed filing to the Holders as soon as practicable (but in no
event less than ten days before the anticipated filing date), and
such notice shall offer the Holder the opportunity to include
such number of Registrable Securities in the registration as the
Holder may request.
(b) The Company shall use its best efforts to cause
the managing underwriter or underwriters of a proposed underwrit-
ten offering to permit the Registrable Securities requested to be
included in the registration statement for such offering on the
same terms and conditions as any similar securities of the
Company included therein. Notwithstanding the foregoing, if the
managing underwriter of such registration advises the Company in
writing (with a copy to the Requesting Holders and each other
Holder requesting inclusion of Registrable Securities therein)
that, in its opinion, the number of Registrable Securities
requested to be included in the registration exceeds the number
which can be sold in such offering, then the Company will include
in such registration only the number of Registrable Securities
recommended by the managing underwriter, selected in the follow-
ing order of priority: (i) first, the securities that the
Company intends to be included in such registration; (ii) second,
Registrable Securities that Holders have requested to be included
in such registration (pro rata according to the Registrable
Securities proposed to be included in the registration by such
Holders); and (iii) third, securities held by all other parties.
4. Holdback Agreements
(a) Restrictions on Public Sale by Holder of Registra-
ble Securities. Each Holder agrees not to effect any public sale
or distribution of Common Stock, including a sale pursuant to
Rule 144, during the 10 days prior to, and during the 90-day
period beginning on, the effective date of any registration
statement filed pursuant hereto (except as part of such registra-
tion), if and to the extent requested by the Company in the case
of a non-underwritten public offering or if and to the extent
requested by the managing underwriter or underwriters in the case
of an underwritten public offering.
(b) Restrictions on Public Sale by the Company and
Others. The Company agrees (i) not to effect any public sale or
distribution of any Common Stock (other than pursuant to a
registration statement on Form S-8 or any successor form), during
the 14 days before, and during the 90-day period beginning on,
the effective date of any registration statement filed hereunder
(except as part of such registration statement); and (ii) that
any agreement entered into after the date of this Agreement
pursuant to which the Company issues or agrees to issue any
privately placed securities shall contain a provision under which
the holders of such securities agree not to effect any public
sale or distribution of any such securities during the periods
described in (i) above, in each case including a sale pursuant to
Rule 144; provided, however, that the provisions of this para-
graph (b) shall not prevent the conversion or exchange of any
securities pursuant to their terms into or for other securities.
5. Registration Procedures.
Whenever the Holders have requested that any Registra-
ble Securities be registered pursuant to Section 2 or Section 3
hereof, the Company will use its best efforts to effect the
registration of such Registrable Securities in accordance with
the intended method of disposition thereof as promptly as practi-
cable, and in connection with any such request, the Company will
as expeditiously as possible (provided that nothing contained
herein prohibits the Company from abandoning a registration in
which Holders have requested to participate pursuant to Section 3
hereof):
(a) prepare and file with the SEC a registration
statement (but in any event within 90 days after the end of the
period within which requests may be given to the Company) on any
form for which the Company then qualifies or which counsel for
the Company deems appropriate and which form is available for the
sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and
use its best efforts to cause such filed registration statement
to become effective; provided that (i) before filing a registra-
tion statement or prospectus or any amendments or supplements
thereto, the Company will furnish to one counsel selected by the
Majority Selling Holders copies of all such documents proposed to
be filed, which documents will be subject to the review of such
counsel, and (ii) that after the filing of the registration
statement, the Company will promptly notify each Selling Holder
of any stop order issued or, to the knowledge of the Company,
threatened by the SEC and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered;
(b) prepare and file with the SEC such amendments and
supplements to the registration statement and the prospectus used
in connection therewith as may be necessary to keep the registra-
tion statement effective for a period which will terminate when
all Covered Shares have been sold (but not before the expiration
of the 90-day period referred to in Section 4(3) of the Securi-
ties Act and Rule 174 thereunder, if applicable, and not longer
than nine months after the effective date of such registration
statement) and comply with the provisions of the Securities Act
with respect to the disposition of all Covered Shares during such
period in accordance with the intended methods of disposition by
the Selling Holders thereof set forth in the registration state-
ment;
(c) furnish to each Selling Holder, before filing the
registration statement, if requested, copies of the registration
statement as proposed to be filed, and thereafter furnish to such
Selling Holder such number of copies of the registration state-
ment, each amendment and supplement thereto (in each case includ-
ing all exhibits thereto), the prospectus included in the regis-
tration statement (including each preliminary prospectus) and
such other document as such Selling Holder may reasonably request
in order to facilitate the disposition of the Covered Shares
owned by such Selling Holder;
(d) use its best efforts to register or qualify the
Covered Shares under such other securities or blue sky laws of
such jurisdictions in the United States as any Selling Holder
reasonably (in light of such Selling Holder's intended plan of
distribution) requests and do any and all other acts and things
which may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition in such jurisdic-
tions of its Covered Shares; provided that the Company will not
be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify
but for this paragraph (d), (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction;
(e) use its best efforts to cause the Covered Shares
to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable Selling Holders
to consummate the disposition of the Covered Shares owned by such
Selling Holders;
(f) notify each Selling Holder, at any time when a
prospectus relating to Covered Shares is required to be delivered
under the Securities Act, of the occurrence of an event requiring
the preparation of a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such
Covered Shares, such prospectus will not contain an 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 and promptly make available to each
Selling Holder any such supplement or amendment;
(g) enter into customary agreements (including an
underwriting agreement in customary form if the distribution of
the Covered Shares is otherwise to be made in an underwritten
offering) and take such other actions as are reasonably required
in order to expedite or facilitate the disposition of such
Covered Shares;
(h) make available for inspection by any Selling
Holder, any underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or
other professional retained by any Selling Holder or underwriter
(collectively, the "Inspectors"), all financial and other re-
cords, pertinent corporate documents and properties of the
Company (collectively, the "Records") as are reasonably necessary
to enable them to exercise due diligence, and cause the Company's
officers, directors and employees to supply all information
reasonably requested by any such Inspectors in connection with
the registration statement. Each Selling Holder further agrees
that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the
Company and allow the Company at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed
confidential;
(i) in the event an offering of Registrable Securities
is pursuant to an underwritten offering, use its best efforts to
obtain a comfort letter or comfort letters from the Company's
independent public accountants in customary form and covering
such matters of the type customarily covered by comfort letters
as the managing underwriter reasonably requests;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders, as soon as reasonably practi-
cable, an earnings statement satisfying the provisions of Section
11(a) of the Securities Act and covering a period of twelve
months, beginning within three months after the effective date of
the registration statement;
(k) use its best efforts to cause all Covered Shares
to be listed on each securities exchange on which similar securi-
ties issued by the Company are then listed; and
(l) provide a transfer agent and registrar for all of
the Covered Shares not later than the effective date of such
registration statement.
In any underwritten public offering contemplated by Section 2 or
Section 3, the Holders shall be entitled to sell their Warrants
to the underwriters for exercise and sale of the Warrant Shares
issued upon the exercise thereof.
6. Indemnification.
(a) Indemnification by the Company. The Company
agrees to indemnify and hold harmless each Selling Holder, its
officers, directors, employees and agents, and each Person, if
any, who controls any Selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any registration
statement or prospectus relating to the Covered Shares, in any
amendment or supplement thereto, in any preliminary prospectus,
or arising out of or based upon any omission or any alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not mislead-
ing, except insofar as such losses, claims, damages, liabilities
or expenses arise out of, or are based upon, any such untrue
statement or omission or allegation thereof based upon informa-
tion furnished in writing to the Company by such Selling Holder
or on such Selling Holder's behalf expressly for use therein.
(b) Indemnification by the Selling Holders. Each
Selling Holder agrees to indemnify and hold harmless the Company,
its directors and officers and each party, if any, who controls
the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each
Selling Holder, but only with respect to information furnished in
writing by such Selling Holder or on such Selling Holder's behalf
expressly for use in any registration statement or prospectus
relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus.
(c) Conduct of Indemnification Proceedings. If any
action or proceeding (including any governmental investigation)
is brought or asserted against any party entitled to indemnifica-
tion under clauses (a) or (b) above (an "Indemnified Party") in
respect of which indemnity may be sought from any party who has
agreed to provide such indemnification (an "Indemnifying Party"),
the Indemnifying Party will assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indem-
nified Party, and will assume the payment of all expenses. Such
Indemnified Party will have the right to employ separate counsel
in any such action and to participate in the defense thereof, but
the fees and expenses of such counsel will be at the expense of
such Indemnified Party unless (i) the Indemnifying Party has
agreed to pay such fees and expenses or (ii) the named parties to
any such action or proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party has been advised by counsel that there
is a conflict of interest on the part of counsel employed by the
Indemnifying Party to represent such Indemnified Party (in which
case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party will
not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party; it being under-
stood, however, that the Indemnifying Party will not, in connec-
tion with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local
counsel) at any time for all such Indemnified Parties). The
Indemnifying Party will not be liable for any settlement of any
such action or proceeding effected without its written consent,
but if settled with its written consent, or if there is a final
judgment for the plaintiff in any such action or proceeding, the
Indemnifying Party will indemnify and hold harmless such Indemni-
fied Parties from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment.
7. Contribution
If for any reason the indemnification provided for in
the preceding Sections 6(a) and 6(b) is unavailable to an Indem-
nified Party as contemplated by those sections, then the Indemni-
fying Party will contribute to the amount paid or payable by the
Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not
only the relative benefits received by the Indemnified Party and
the Indemnifying Party, but also the relative fault of the
Indemnified Party and the Indemnifying Party, as well as any
other relevant equitable considerations, provided that no Selling
Holder will be required to contribute in an amount greater than
the difference between the net proceeds received by such Selling
Holder with respect to the sale of any Registrable Securities and
all amounts already contributed by such Selling Holder with
respect to such claims.
8. Participation in Underwritten Registrations
No Holder may participate in any underwritten registra-
tion hereunder unless such Holder (a) agrees to sell it's securi-
ties on the basis provided in any underwriting arrangements
approved by the parties entitled hereunder to approve such
arrangements; and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such
underwriting arrangements and this Agreement. Notwithstanding
the previous sentence, no Holder shall be required to make any
representations or warranties to, or make any agreements with the
Company or any underwriter other than representations, warranties
or agreements regarding such Holder or such Holder's intended
method of distribution.
9. Rule 144
The Company covenants that it will file any reports
required to be filed by it under the Securities Act and the
Exchange Act so as to enable Holders to sell Warrant Shares
without registration under the Securities Act within the limita-
tion of the exemptions provided by Rule 144. Upon the request of
any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
10. Information
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the
distribution of the Registrable Securities as it may from time to
time reasonably request and such other information as may be
legally required or reasonably requested in connection with such
registration.
11. Amended or Supplemented Prospectus
Each Selling Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 5(f) hereof, such Selling Holder will
forthwith discontinue disposition of any Covered Shares pursuant
to the registration statement covering such Covered Shares until
such Selling Holder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 5(f) hereof, and,
if so directed by the Company, each Selling Holder will deliver
to the Company all copies, other than permanent file copies then
in such Selling Holder's possession, all prospectuses covering
such Covered Shares at the time of receipt of such notice, and
shall not effect any transaction with respect to any Covered
Shares except pursuant to the supplemented or amended prospectus.
In the event the Company gives such notice, the Company will
extend the period during which such registration statement will
be maintained effective (including the period referred to in
Section 5(f) hereof) by the number of days during the period from
and including the date of the giving of notice pursuant to
Section 5(f) hereof to the date when the Company makes available
to each Selling Holder a prospectus supplemented or amended to
conform with the requirements of Section 5(f) hereof.
12. Registration Expenses
In connection with any registration statement filed
pursuant to Section 2 or Section 3 hereof, the Company will pay
all registration expenses (the "Registration Expenses"), includ-
ing but not limited to: (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky
laws, subject to the provisions of Section 5(d), (including
reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Covered Shares), (iii) printing
expenses, (iv) internal expenses of the Company (including,
without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees
and expenses incurred in connection with the listing of the
Covered Shares, (vi) fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified
public accountants retained by the Company (including the expens-
es of any comfort letters or costs associated with the delivery
by independent certified public accountants of a comfort letter
or comfort letters requested pursuant to Section 5(i) hereof),
(vii) the fees and expenses of any special experts retained by
the Company in connection with such registration, and (viii)
reasonable fees and expenses of one law firm (designated by the
Majority Selling Holders and reasonably acceptable to the Compa-
ny) acting as counsel for the Selling Holders in connection with
the registration hereunder; provided, however, the Company will
not have any obligation to pay any underwriting fees, discounts
or commissions attributable to the sale of Covered Shares (which
will be the obligation of the Selling Holders) or, except as
otherwise provided in clause (viii) above, any out-of-pocket
expenses of the Selling Holders (or any agents who manage their
accounts) or fees and disbursements of any counsel for any
underwriter in any underwritten offering.
13. Registration Rights.
The Company agrees that it will not enter into any
agreement or arrangements which would grant any party a right to
participate in any registration that is superior to or in contra-
vention of the rights to participate set forth in this Agreement.
14. Parties in Interest.
(a) This Agreement is for the benefit of any Holder
irrespective of whether such Holder is a signatory to this
Agreement.
(b) All covenants and agreements contained in this
Agreement by or on behalf of either party hereto shall bind and
inure to the benefit of the respective successors and assigns of
such party hereto, whether so expressed or not, including subse-
quent Holders of Registrable Securities.
15. Notices.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by first-class
registered mail, postage prepaid, or sent by recognized courier
service addressed as follows:
(a) if to the Company, at
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Park Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to Furman Selz at:
230 Park Avenue
New York, NY 10169
Attention: Brian P. Friedman
if to Dowling at:
620 Fir Court
Norwood, NJ 07648
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esq.
(c) if to any Holder, to such Holder at its address
appearing on the records of the Company;
or, in any such case, at such other address or addresses as shall
have been furnished in writing by such party to the others.
16. LAW GOVERNING.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCOR-
DANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17. Entire Agreement.
This Agreement constitutes the entire Agreement of the
parties with respect to the subject mater hereof and may not be
modified or amended except in writing.
18. Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
TRANSCISCO INDUSTRIES, INC.
____________________________
By:
FURMAN SELZ SBIC, L.P.
By: FURMAN SELZ INVESTMENTS INC.,
its General Partner
____________________________
By:
_________________________________
James Dowling
___________________________________________________________________________
TRANSCISCO
601 California Street, Suite 1301
San Francisco, CA 94108
415 477-9700
Telefax: 415 788-0583
TRANSCISCO ADOPTS SHAREHOLDER RIGHTS PLAN
Contact: Greg Saunders
Vice President, Controller
(415) 477-9703
FOR IMMEDIATE RELEASE
San Francisco, California, September 7, 1995,
Transcisco Industries, Inc. (AMEX: TNI) today announced
that its Board of Directors had adopted a Shareholder
Rights Plan in which rights will be distributed as a
dividend at the rate of one right for each share of
common stock, par value $0.01 per share, of the Company
held by shareholders of record as of the close of busi-
ness on September 20, 1995. The Rights Plan is intended
to aid the Company in preserving the benefits of its net
operating loss carryforward by discouraging accumula-
tions of the Company's outstanding common stock in
excess of 5%. The Rights will expire on September 20,
2005. In addition, the Rights Plan may be used to deter
coercive takeover tactics, including the accumulation of
shares in the open market or through private transac-
tions, and to prevent an acquiror from gaining control
of the Company without offering a fair price to all of
the Company's shareholders.
Each right initially will entitle shareholders to
buy one unit of a share of preferred stock for $12.00.
The rights will be exercisable only if a person or group
(other than shareholders currently owning 5% of the
Company's common stock) acquires beneficial ownership of
5% or more of the Company's common stock or commences a
tender or exchange offer upon consummation of which such
person or group would beneficially own 5% or more of the
Company's common stock.
Subject to certain exceptions as specified in the
Rights Plan, if any person becomes the beneficial owner
of 5% or more of the Company's common stock, other than
pursuant to a tender or exchange offer for all outstand-
ing shares of the Company approved by a majority of the
independent directors not affiliated with a 5% or more
shareholder, then each right not owned by a 5% or more
shareholder or related parties will entitle its holder
to purchase, at the right's then current exercise price,
shares of the Company's common stock (or, in certain
circumstances as determined by the Board, cash, other
property, or other securities) having a value of ten
times the right's then current exercise price. In
addition, if after any person has become a 5% or more
shareholder, the Company is involved in a merger or
other business combination transaction with another
person in which the Company does not survive or in which
its common stock is changed or exchanged, or if the
Company sells 50% or more of its assets or earning power
to another person, each right will entitle its holder to
purchase, at the right's then current exercise price,
shares of common stock of such other person having a
value of ten times the right's then current exercise
price.
The Company will generally be entitled to redeem
the Rights at $0.001 per Right at any time until 20 days
(subject to extension) following a public announcement
that a 5% position has been acquired.
Details of the Shareholder Rights Plan are
outlined in a letter to be mailed to all shareholders of
the Company.
TRANSCISCO INDUSTRIES, INC., based in San
Francisco, is a holding company whose primary lines of
business include: (1) NATIONWIDE RAILCAR MAINTENANCE
through Transcisco Rail Services Company, operating 11
railcar repair and maintenance facilities from Georgia
to Montana; (2) SPECIALTY RAILCAR LEASING AND MANAGEMENT
SERVICES through Transcisco Leasing Company, providing
innovative railcar leasing and management services for
large utilities and Class I railroads; and, (3) RUSSIAN
RAIL TRANSPORTATION SERVICES through Transcisco Trading
Company, a 23.5% shareholder of SovFinAmTrans (SFAT),
Russia's leading privately held rail transportation
firm. SFAT's 5,400 tankcar fleet is used to transport
petroleum and petrochemicals for export.
TRANSCISCO
601 California Street, Suite 1301
San Francisco, CA 94108
415 477-9700
Telefax: 415 788-0583
September 29, 1995
Dear Transcisco Industries, Inc. Shareholder:
Transcisco's Board of Directors recently an-
nounced the adoption of a Shareholder Rights Plan. This
letter describes our reasons for adopting it. We are
enclosing a separate "Detailed Summary of Rights to
Purchase Series A Junior Participating Preferred Stock"
which provides important information about the operation
of the Plan. Please read it carefully.
As you may know, on August 2, 1995 Transcisco
announced a major step forward -- the successful comple-
tion of a new long-term financing. The proceeds from
that financing were used to repurchase approximately $14
million of the Company's Class F debt for about $8 mil-
lion. As a result, Transcisco will recognize an extraor-
dinary gain of approximately $6 million in the quarter
ending September 30, 1995. Our resulting balance sheet
will show approximately $13 million in long-term debt and
$10 million of shareholders' equity -- compared with pre-
refinancing balances of approximately $20 million in
long-term debt and $4 million in shareholders' equity.
Other recent developments of particular interest to
shareholders are set forth in our annual and quarterly
reports and in recent press releases included with this
mailing.
Transcisco continues to have a tax loss
carryforward of approximately $23 million (after the
refinancing gain) and possibly substantially more.
However, under the relevant provisions of the tax code,
the benefits of this loss carryforward could be dramati-
cally reduced if Transcisco's common stock is transferred
to persons who buy 5% or more of our outstanding shares
before the carryforward has been used up. Although
Transcisco's certificate of incorporation contains provi-
sions designed to ensure that our Board of Directors can
prevent such transfers, those provisions may have become
ineffective as a result of the refinancing. Accordingly,
the Board has adopted a Rights Plan to discourage any
accumulation of 5% or more of the outstanding Transcisco
common stock which might impair the value of the tax loss
carryforward.
Rights to be issued under the Plan (the
"Rights") will be issued to shareholders of record as of
September 20, 1995. Each Right will initially entitle a
shareholder to buy one unit of a share of preferred stock
for $12.00. Rights will be exercisable only if a person
or group (other than shareholders currently owning 5% of
the Company's common stock) acquires beneficial ownership
of 5% or more of the Company's common stock or commences
a tender or exchange offer which, upon consummation,
would result in that person or group beneficially owning
5% or more of the Company's common stock.
As more fully specified in the Rights Plan, if
a hostile person acquires 5% or more of the Company's
Common Stock, then each right not owned by that person
will entitle its holder to purchase shares of
Transcisco's Common Stock at 10% of the current market.
A similar result will apply if, after a hostile person
acquires 5% or more of Transcisco's common stock,
Transcisco is involved in a merger or other business
combination in which Transcisco is not the surviving
corporation, except that the rights will then become
rights to purchase stock of the surviving corporation at
10% of market.
Please see the enclosed Summary for a detailed
description of the Rights.
In addition to guarding the benefits of the
loss carry-forward, the Rights Plan protects your inter-
ests if the Company is confronted with coercive or unfair
takeover tactics. The Rights Plan contains provisions to
safeguard you in the event of an unsolicited offer to
acquire the Company, whether through: (1) a gradual
accumulation of shares in the open market; (2) a partial
or two-tiered tender offer that does not treat all share-
holders equally; (3) acquisition in the open market or
otherwise of shares constituting control without offering
fair value to all shareholders, or, (4) other abusive
takeover tactics that the Board believes are not in the
best interests of the Company s shareholders. Such
tactics often unfairly squeeze shareholders out of their
investment without giving them any real choice, thereby
depriving them of the full value of their shares.
More than 1,650 other companies (including most
companies in the railroad industry) have Rights Plans
similar to the one we have adopted. We consider the
Rights Plan to be the best available means to protect
your right to retain your equity investment in Transcisco
and the full value of that investment, without foreclos-
ing a fair acquisition bid for the Company.
The Rights Plan is not intended to prevent a
takeover of Transcisco and will not do so. The mere
declaration of the rights dividend should not affect any
prospective offeror willing to make an all cash offer at
a full and fair price or to negotiate with the Board of
Directors; certainly, it will not interfere with a merger
or other business combination transaction approved by
your Board.
The Rights may be redeemed by Transcisco (under
certain circumstances, as defined in the Rights Agreement
with the concurrence of a majority of the Continuing
Directors, and the consent of its primary lenders) at
$0.001 per Right up to 20 days (subject to extension)
after the time any person or group (an "Acquiring Per-
son") has acquired 5% or more of Transcisco's Common
Stock. Accordingly, the rights should not interfere with
any merger or other business combination approved by the
current Board (in certain circumstances, with the concur-
rence of the independent directors).
Issuance of Rights does not weaken the finan-
cial strength of the Company in any way or interfere with
its business plans. Issuance of Rights has no dilutive
effect, will not affect reported earnings per share. It
is not taxable to the Company or to you, and will not
change the way you trade the Company s shares. As ex-
plained in detail in the enclosed Summary, the Rights
will only be exercisable if and when an event triggers
their effectiveness. They will then operate to protect
you against being deprived of your right to participate
in the full measure of the Company s long-term potential.
As noted above, while the distribution of the
Rights will not be taxable to you or the Company, depend-
ing upon the circumstances, shareholders may recognize
taxable income if and when the Rights become exercisable.
The purpose of the Rights Plan is to protect
the Company's loss carryforward. Although the Rights
Plan also could prevent certain acquisitions of
Transcisco, we want to assure you that your board is not
opposed to the sale of Transcisco at a fair price and in
a manner fair to all shareholders.
We are working hard to continue the progress
which Transcisco has demonstrated in the last few months.
With a substantially stronger balance sheet, we think
Transcisco is much better positioned to pursue its oppor-
tunities in repair, leasing and international railcar
operations. Capitalizing on these opportunities and
maximizing long-term shareholder value are the principal
goals of the Company's management and Board of Directors.
Sincerely,
/s/ Steven L. Pease
Steven L. Pease
____________________________________________________________________________
DETAILED SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On August 31, 1995, the Board of Directors of
Transcisco Industries, Inc. (the "Company") adopted a
Shareholder Rights Plan, providing that one right (a
"Right") shall be attached to each share of common stock,
par value $0.01 per share, of the Company (the "Common
Stock"). Each Right entitles the registered holder to
purchase from the Company a unit (a "Unit") consisting of
one one-thousandth of a share of Series A Junior Partici-
pating Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), at a Purchase Price of $12.00 per
Unit (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in the
Rights Agreement (the "Rights Agreement"), dated as of
September 5, 1995, between the Company and First Inter-
state Bank of California, a national banking association,
as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all
Common Stock certificates representing shares then out-
standing, and no separate Rights Certificate will be
distributed. The Rights will separate from the Common
Stock and a Distribution Date will occur upon the earlier
of (i) ten (10) days following a public announcement that
a person or group of affiliated or associated persons,
other than an Exempted Person (as defined below), (an
"Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 5% or more of the
outstanding shares of Common Stock (the "Stock Acquisi-
tion Date") or (ii) ten (10) business days following the
commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 5%
or more of such outstanding shares of Common Stock.
Until the Distribution Date, (i) the Rights will evi-
denced by the Common Stock certificates and will be
transferred with and only with such Common Stock certifi-
cates, (ii) new Common Stock certificates will contain a
notation incorporating the Rights Agreement by reference
and (iii) the surrender for transfer of any certificates
for Common Stock outstanding will also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificate.
Any person who, together with all affiliates
and associates of such person, is (a) the beneficial
owner of Common Stock, options and/or warrants exercis-
able for shares of Common Stock representing 5% or more
of the shares of Common Stock outstanding on the date the
Board of Directors authorizes the rights dividend (the
"Rights Dividend Declaration Date") or (b) is subject to
a standstill agreement approved by a majority of the
independent directors not affiliated or associated with
an Acquiring Person (an "Approved Standstill Agreement")
and acquires such securities without violating such
Approved Standstill Agreement, will be an "Exempted
Person." However, any such person will no longer be
deemed to be an Exempted Person and will be deemed to be
an Acquiring Person if such person, together with all
affiliates and associates of such person, becomes the
beneficial owner, at any time after the Rights Dividend
Declaration Date, of additional securities representing
1,000 or more shares of Common Stock, except if such
additional securities are acquired (x) in accordance with
an Approved Standstill Agreement, (y) pursuant to the
exercise of options or warrants to purchase Common Stock
outstanding and beneficially owned by such person as of
the Rights Dividend Declaration Date or as a result of an
adjustment to the number of shares of Common Stock for
which such options or warrants are exercisable pursuant
to the terms thereof, or (z) as a result of a stock
split, stock dividend or the like. A purchaser, assignee
or transferee of the shares of Common Stock (or options
or warrants exercisable for Common Stock) of an Exempted
Person will not thereby become an Exempted Person.
The Rights are not exercisable until the Dis-
tribution Date and will expire at the close of business
on September 20, 2005 unless earlier redeemed by the
Company as described below.
As soon as practicable after the Distribution
Date, Rights Certificates will be mailed to holders of
record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
Except as otherwise determined by the Board of Directors,
only shares of Common Stock prior to the Distribution
Date will be issued with Rights.
In the event that an Acquiring Person, other
than an Exempted Person, becomes the beneficial owner of
5% or more of the then outstanding shares of Common Stock
(unless such acquisition is made pursuant to a tender or
exchange offer for all outstanding shares of the Company,
at a price determined by a majority of the independent
directors of the Company who are not representatives,
nominees, Affiliates or Associates of an Acquiring Person
to be fair and otherwise in the best interest of the
Company and its stockholders), each holder of a Right
will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, proper-
ty or other securities of the Company), having a value
equal to ten times the Exercise Price of the Right. The
Exercise Price is the Purchase Price times the number of
shares of Common Stock associated with each Right (ini-
tially, one). Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth
in this paragraph (the "Flip-In Events"), all Rights that
are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquir-
ing Person will be null and void. However, Rights are
not exercisable following the occurrence of any of the
Flip-In Events set forth above until such time as the
Rights are no longer redeemable by the Company as set
forth below.
In the event that following the Stock Acquisi-
tion Date, (i) the Company engages in a merger or busi-
ness combination transaction in which the Company is not
the surviving corporation (other than a merger that
follows a tender offer determined to be fair to the
stockholders of the Company, as described in the preced-
ing paragraph); (ii) the Company engages in a merger or
business combination transaction in which the Company is
the surviving corporation and the Common Stock is changed
or exchanged; or (iii) 50% or more of the Company's
assets or earning power is sold or transferred, each
holder of a Right (except Rights which have previously
been voided as set forth above) shall thereafter have the
right to receive, upon exercise of the Right, common
stock of the acquiring company having a value equal to
ten times the Exercise Price of the Right.
The Purchase Price and the number of Units of
Preferred Stock or other securities or property issuable
upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders
of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to hold-
ers of the Preferred Stock of evidences of indebtedness
or assets (excluding regular quarterly cash dividends) or
of subscription rights or warrants (other than those
referred to above).
With certain exceptions, no adjustments in the
Purchase Price will be required until cumulative adjust-
ments amount to at least 1% of the Purchase Price. No
fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price
of the Preferred Stock on the last trading date prior to
the date of exercise.
At any time until twenty (20) days following
the Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $0.001
per Right. Under certain circumstances, the decision to
redeem shall require the concurrence of a majority of the
Continuing Directors (as defined below). Immediately
upon the action of the Board of Directors ordering re-
demption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive
the $0.001 redemption price.
The term "Continuing Director" means any member
of the Board of Directors of the Company who was a member
of the Board prior to the adoption of the Rights Plan and
any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of
the Continuing Directors, but shall not include an Ac-
quiring Person, or an affiliate or associate of an Ac-
quiring Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of the
Company, including, without limitation, the right to vote
or to receive dividends. While the distribution of the
Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the circum-
stances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other
consideration) of the Company as set forth above.
Other than those provisions relating to the
principal economic terms of the Rights, any of the provi-
sions of the Rights Agreement may be amended by the Board
of Directors of the Company prior to the Distribution
Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board (in certain
circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make chang-
es which do not adversely affect the interests of holders
of Rights (excluding the interest of any Acquiring Per-
son), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment
to adjust the time period governing redemption shall be
made at such time as the Rights are not redeemable.
A copy of the Rights Agreement is being filed
with the Securities and Exchange Commission as an Exhibit
to a Registration Statement on Form 8-A. A copy of the
Rights Agreement is available free of charge from the
Company. This Detailed Summary of Rights does not pur-
port to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated
herein by reference.
