<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
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OPTEK TECHNOLOGY, INC.
(Name of Subject Company)
DKM ACQUISITION CORP.
THE DYSON-KISSNER-MORAN CORPORATION
(Bidders)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
683815 10 4
(CUSIP Number of Class of Securities)
----------------
John FitzSimons, Esq.
The Dyson-Kissner-Moran Corporation
565 Fifth Avenue, 4th Floor
New York, NY 10017
Telephone: (212) 885-1600
Facsimile: (212) 599-5105
(Name, Address and Telephone Number of Person authorized to
Receive Notices and Communications on Behalf of Bidders)
Copy to:
Stephen M Banker, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
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CALCULATION OF FILING FEE
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Transaction Valuation* $218,606,579 Amount of Filing Fee $43,722
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* Estimated for purposes of calculating the amount of the filing fee only.
The filing fee calculation assumes the purchase of 8,572,807 shares of
common stock, $0.01 par value per share (the "Shares"), of Optek
Technology, Inc. at a price of $25.50 per Share in cash, without interest.
The filing fee calculation is based on the 7,642,773 Shares outstanding as
of May 12, 1999 and assumes the issuance prior to the consummation of the
Offer (as defined herein) of 930,034 Shares upon the exercise of
outstanding options. The amount of the filing fee calculated in accordance
with Regulation 240.0-11 of the Securities Exchange Act of 1934, as
amended, equals 1/50th of one percent of the value of the transaction.
[_]Checkbox if any part of the fee is offset as provided by Rule 0-11 (a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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CUSIP NO. 683815 10 4
Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons
1.
DKM Acquisition Corp.
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2.
Check the Appropriate Box if a Member of a Group (a) [_]
(b) [_]
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3.
SEC Use Only
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4.
Sources of Funds AF
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5.
Check Box if Disclosure of Legal Proceedings is Required Pursuant to [_]
Items 2(e) or 2(f)
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6.
Citizenship or Place of Organization
Delaware
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7.
Aggregate Amount Beneficially Owned by Each Reporting
Person
none
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8.
Check Box if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
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9.
Percent of Class Represented by Amount in Row (7)
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10.
Type of Reporting Person
CO
2
<PAGE>
CUSIP NO. 683815 10 4
Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons
1.
The Dyson-Kissner-Moran Corporation
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2.
Check the Appropriate Box if a Member of a Group (a) [_]
(b) [_]
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3.
SEC Use Only
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4.
Sources of Funds BK
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5.
Check Box if Disclosure of Legal Proceedings is Required Pursuant to [_]
Items 2(e) or 2(f)
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6.
Citizenship or Place of Organization
Delaware
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7.
Aggregate Amount Beneficially Owned by Each Reporting
Person
none
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8.
Check Box if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
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9.
Percent of Class Represented by Amount in Row (7)
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10.
Type of Reporting Person
CO
3
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by DKM Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly owned subsidiary of The Dyson-Kissner-Moran Corporation, a Delaware
corporation ("Parent"), to purchase all of the outstanding shares of common
stock, par value $0.01 per share (the "Shares"), of Optek Technology, Inc., a
Delaware corporation (the "Company"), at $25.50 per Share, net to the seller
in cash, without interest, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated May 18, 1999 (the "Offer to Purchase"), a
copy of which is attached hereto as Exhibit (a)(1), and in the related Letter
of Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (which,
as amended or supplemented from time to time, together constitute the
"Offer").
Item 1. Security and Subject Company.
(a) The name of the subject company is Optek Technology, Inc. and the
address of its principal executive offices is 1215 West Crosby Road,
Carrollton, Texas 75006. The telephone number of the Company at such location
is (972) 323-2200.
(b) The information set forth in the "INTRODUCTION" of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in "Price Range of the Shares; Dividends on
the Shares" of the Offer to Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d), (g) This Statement is being filed by Purchaser and Parent. The
information set forth in the "INTRODUCTION" and "Certain Information
Concerning Parent and Purchaser" of the Offer to Purchase is incorporated
herein by reference. The name, business address, present principal occupation
or employment, the material occupations, positions, offices or employments for
the past five years and citizenship of Robert R. Dyson (the controlling
stockholder of Parent) and of each director and executive officer of Parent
and Purchaser and the name, principal business and address of any corporation
or other organization in which such occupations, positions, offices and
employments are or were carried on are set forth in Schedule I to the Offer to
Purchase and incorporated herein by reference.
(e)-(f) During the last five years none of Purchaser, Parent or Mr. Dyson
and, to the best knowledge of Purchaser and Parent, none of the persons listed
in Schedule I to the Offer to Purchase (i) have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was
a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a) The information set forth in "Certain Information Concerning Parent and
Purchaser" and "Background of the Offer; Purpose of the Offer and the Merger;
the Merger Agreement and Certain Other Agreements" of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in the "INTRODUCTION," "Certain Information
Concerning Parent and Purchaser," "Background of the Offer; Purpose of the
Offer and the Merger; The Merger Agreement and Certain Other Agreements" and
"Plans for the Company; Other Matters" of the Offer to Purchase is
incorporated herein by reference.
4
<PAGE>
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(b) The information set forth in the "INTRODUCTION" and "Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidders.
(a)-(e) The information set forth in the "INTRODUCTION," "Background of the
Offer; Purpose of the Offer and the Merger; The Merger Agreement and Certain
Other Agreements" and "Plans for the Company; Other Matters" of the Offer to
Purchase is incorporated herein by reference.
(f)-(g) The information set forth in the "INTRODUCTION" and "Effect of the
Offer on the Market for the Shares; Stock Listing; Exchange Act Registration;
Margin Regulations" of the Offer to Purchase is incorporated herein by
reference.
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in the "INTRODUCTION," "Certain
Information Concerning Parent and Purchaser" and "Background of the Offer;
Purpose of the Offer and the Merger; The Merger Agreement and Certain Other
Agreements" of the Offer to Purchase is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information set forth in the "INTRODUCTION," "Source and Amount of
Funds," "Background of the Offer; Purpose of the Offer and the Merger; The
Merger Agreement and Certain Other Agreements," "Plans for the Company; Other
Matters" and "Fees and Expenses" of the Offer to Purchase is incorporated
herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in "Fees and Expenses" of the Offer to Purchase is
incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
Not applicable.
Item 10. Additional Information.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser or Parent, or to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I of the Offer to Purchase, and the
Company, or any of its executive officers, directors, controlling persons or
subsidiaries.
(b)-(c) The information set forth in the "INTRODUCTION," "Conditions to the
Offer" and "Certain Legal Matters" of the Offer to Purchase is incorporated
herein by reference.
(d) The information set forth in "Effect of the Offer on the Market for the
Shares; Stock Listing; Exchange Act Registration; Margin Regulations" and
"Certain Legal Matters" of the Offer to Purchase is incorporated herein by
reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, to the extent not otherwise incorporated herein by
reference, is incorporated herein by reference.
5
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Item 11. Materials to be Filed as Exhibits.
(a)(1) Offer to Purchase dated May 18, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Joint Press Release of Parent and the Company dated May 12, 1999.
(a)(8) Press Release of Parent dated May 18, 1999.
(a)(9) Summary Advertisement.
(b)(1) Credit Agreement, dated as of June 26, 1996, by and among Parent,
NationsBank, N.A. and The Bank of Nova Scotia, as amended.
(c)(1) Agreement and Plan of Merger, dated as of May 12, 1999, by and among
Parent, Purchaser and the Company.
(c)(2) Stock Option Agreement, dated as of May 12, 1999, by and between
Parent and the Company.
(c)(3) Confidentiality Agreement, dated as of November 6, 1998, by and
between Parent and the Company (as supplemented on December 15,
1998).
(d) None.
(e) Not applicable.
(f) None.
6
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: May 18, 1999
DKM Acquisition Corp.
BY: /s/ Robert D. Farley
----------------------------------
Name: Robert D. Farley
Title: Vice President
The Dyson-Kissner-Moran Corporation
BY: /s/ Robert D. Farley
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Name: Robert D. Farley
Title: Vice President
7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequential
Exhibit Page No.
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<C> <S> <C>
(a)(1) Offer to Purchase, dated May 18, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Joint Press Release of Parent and the Company dated May
12, 1999.
(a)(8) Press Release of Parent dated May 18, 1999.
(a)(9) Summary Advertisement.
(b)(1) Credit Agreement, dated as of June 26, 1996, by and among
Parent, NationsBank, N.A. and The Bank of Nova Scotia,
as amended.
(c)(1) Agreement and Plan of Merger, dated as of May 12, 1999,
by and among Parent, Purchaser and the Company.
(c)(2) Stock Option Agreement, dated as of May 12, 1999, by and
between Parent and the Company.
(c)(3) Confidentiality Agreement, dated as of November 6, 1998,
by and between Parent and the Company (as supplemented
on December 15, 1998).
(d) None.
(e) Not Applicable.
(f) None
</TABLE>
8
<PAGE>
EXHIBIT 99(A)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Optek Technology, Inc.
at
$25.50 Net Per Share
by
DKM Acquisition Corp.
a wholly owned subsidiary of
The Dyson-Kissner-Moran Corporation
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF MAY 12, 1999, BY AND AMONG THE DYSON-KISSNER-MORAN CORPORATION
("PARENT"), DKM ACQUISITION CORP. ("PURCHASER") AND OPTEK TECHNOLOGY, INC.
(THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN), AND HAS
UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN)
THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY
PARENT OR PURCHASER (IF ANY), REPRESENTS AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR
PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS
OFFER TO PURCHASE. SEE SECTION 14.
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IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (i) complete and sign the enclosed
Letter of Transmittal (or a facsimile thereof) in accordance with the
Instructions in the Letter of Transmittal, have such stockholder's signature
thereon guaranteed (if required by Instruction 1 to the Letter of
Transmittal), mail or deliver the Letter of Transmittal (or a facsimile
thereof) and any other required documents to the Depositary (as defined
herein) and either deliver the certificates for such Shares to the Depositary
or tender such Shares pursuant to the procedure for book-entry transfer set
forth in Section 3 of this Offer to Purchase or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. Any stockholder whose Shares
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact such broker, dealer, commercial bank, trust
company or other nominee to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of
the Offer, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
other related materials may be directed to the Information Agent or to the
Dealer Manager at their respective addresses and telephone numbers set forth
on the back cover of this Offer to Purchase. Additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may also be obtained from brokers, dealers,
commercial banks or trust companies.
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The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
May 18, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
INTRODUCTION............................................................. 1
THE OFFER................................................................ 4
1. Terms of the Offer.................................................. 4
2. Acceptance for Payment and Payment.................................. 5
3. Procedures for Tendering Shares..................................... 6
4. Withdrawal Rights................................................... 9
5. Certain U.S. Federal Income Tax Consequences........................ 9
6. Price Range of the Shares; Dividends................................ 10
7. Effect of the Offer on the Market for the Shares; Stock Listing;
Exchange Act Registration; Margin Regulations...................... 10
8. Certain Information Concerning the Company.......................... 11
9. Certain Information Concerning Parent and Purchaser................. 13
10. Sources and Amount of Funds......................................... 14
11. Background of the Offer; Purpose of the Offer and the Merger; the
Merger Agreement and Certain Other Agreements...................... 15
12. Plans for the Company; Other Matters................................ 27
13. Dividends and Distributions......................................... 29
14. Conditions to the Offer............................................. 29
15. Certain Legal Matters............................................... 30
16. Fees and Expenses................................................... 33
17. Miscellaneous....................................................... 33
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND
PURCHASER............................................................ I-1
</TABLE>
<PAGE>
To the Holders of Common Stock of
Optek Technology, Inc.:
INTRODUCTION
DKM Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly
owned subsidiary of The Dyson-Kissner-Moran Corporation, a Delaware
corporation ("Parent"), hereby offers to purchase all outstanding shares of
common stock, par value $0.01 per share (the "Shares"), of Optek Technology,
Inc., a Delaware corporation (the "Company"), at a price of $25.50 per Share,
net to the seller in cash, without interest (the "Offer Price"), upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, as amended or supplemented from time
to time, collectively constitute the "Offer").
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold
their Shares through a bank or broker should check with such institution as to
whether they charge any service fees. Purchaser will pay all fees and expenses
of Bear, Stearns & Co. Inc. ("Bear Stearns"), which is acting as the Dealer
Manager (in such capacity, the "Dealer Manager"), The Bank of New York, which
is acting as the Depositary (in such capacity, the "Depositary") and MacKenzie
Partners, Inc., which is acting as Information Agent (in such capacity, the
"Information Agent"), incurred in connection with the Offer and in accordance
with the terms of the agreements entered into between Purchaser and/or Parent
and each such person. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
ABN AMRO Incorporated ("ABN AMRO"), financial advisor to the Company, has
delivered to the Company Board its opinion, dated as of May 11, 1999 (the
"Financial Advisor Opinion"), to the effect that, as of such date and based
upon and subject to certain assumptions and matters stated therein, the
consideration to be received by the holders of Shares (other than Parent and
its affiliates) in the Offer and the Merger is fair, from a financial point of
view, to such holders. A copy of the Financial Advisor Opinion is attached as
an exhibit to the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which has been filed by the Company with the
Securities and Exchange Commission (the "Commission") in connection with the
Offer and which is being mailed to holders of Shares herewith. Holders of
Shares are urged to, and should, read the Financial Advisor Opinion carefully.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR PURCHASER (IF
ANY), REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT (THE "MINIMUM
CONDITION"). THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN
THIS OFFER TO PURCHASE. SEE SECTION 14. As used in this Offer to Purchase,
"fully diluted basis" takes into account the exercise of all outstanding
options and other rights and securities exercisable into Shares. The Company
has represented and warranted to Parent and Purchaser that, as of May 12,
1999, there were 7,642,773 Shares issued and outstanding and 930,034 Shares
were issuable pursuant to the exercise of outstanding options (the "Options"),
with an average exercise price of $16.11. The Merger
<PAGE>
Agreement provides, among other things, that the Company will not, without the
prior written consent of Parent, issue any additional Shares (except upon the
exercise of outstanding Options). See Section 11. Based on the foregoing,
Purchaser believes that the Minimum Condition will be satisfied if 4,286,404
Shares are validly tendered and not withdrawn prior to the Expiration Date.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 12, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. Pursuant to the Merger Agreement and the Delaware General
Corporation Law, as amended (the "DGCL"), as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions, including the purchase of Shares pursuant to the Offer (sometimes
referred to herein as the "consummation" of the Offer) and the approval and
adoption of the Merger Agreement by the stockholders of the Company (if
required by applicable law), Purchaser shall be merged with and into the
Company (the "Merger") and the Company will be the surviving corporation in
the Merger (the "Surviving Corporation"). At the effective time of the Merger
(the "Effective Time"), each Share then outstanding, other than Shares held by
(i) the Company or any of its subsidiaries, (ii) Parent or any of its
subsidiaries including Purchaser and (iii) stockholders who properly perfect
their dissenters' rights under the DGCL, will be converted into the right to
receive $25.50 in cash or any higher price per Share paid in the Offer (the
"Merger Consideration"), without interest. The Merger Agreement is more fully
described in Section 11.
The Company has entered into a Stock Option Agreement, dated as of May 12,
1999 (the "Company Option Agreement"), with Parent pursuant to which the
Company has granted to Parent an irrevocable option (the "Stock Option") to
purchase up to the number of fully paid and nonassessable Shares as equals
19.9% of the Shares issued and outstanding immediately prior to the grant of
the Stock Option, at a purchase price of $25.50 per Share, exercisable upon
the occurrence of certain events. The Company Option Agreement is described
more fully in Section 11 below.
The Merger Agreement provides that, upon the purchase by Purchaser of at
least a majority of the Shares pursuant to the Offer and from time to time
thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board so that the
percentage of Parent's nominees on the Company Board equals the percentage of
outstanding Shares beneficially owned by Parent and its affiliates. The
Company shall, at such time, upon the request of Purchaser promptly use its
best efforts to take all action necessary to cause such persons designated by
Parent to be elected to the Company Board, if necessary, by increasing the
size of the Company Board or securing resignations of incumbent directors or
both.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement and the Merger, if required by applicable law and the
Company's Certificate of Incorporation (the "Certificate of Incorporation").
See Section 11. Under the DGCL and pursuant to the Certificate of
Incorporation, the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of any class or series of the Company's
capital stock that would be necessary to approve the Merger Agreement and the
Merger at a meeting of the Company's stockholders. If the Minimum Condition is
satisfied and Purchaser purchases at least a majority of the outstanding
Shares in the Offer, Purchaser will be able to effect the Merger without the
affirmative vote of any other stockholder. Pursuant to the Merger Agreement,
Parent and Purchaser have agreed to vote the Shares acquired by them pursuant
to the Offer in favor of the Merger. See Section 12. The Merger Agreement is
more fully described in Section 11.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors
or the stockholders of such other corporation (a "short-form merger"). In the
event that Purchaser acquires in the aggregate at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, then, at the election of Parent, a
short-form merger could be effected without any further approval of the
Company Board or the stockholders of the Company. In
2
<PAGE>
the Merger Agreement, Parent, Purchaser and the Company have agreed that,
notwithstanding that all conditions to the Offer are satisfied or waived as of
the scheduled Expiration Date, Purchaser may extend the Offer for a period not
to exceed 20 business days, subject to certain conditions, if the Shares
tendered pursuant to the Offer are less than 90% of the outstanding Shares.
Even if Purchaser does not own 90% of the outstanding Shares following
consummation of the Offer, Parent or Purchaser could seek to purchase
additional shares in the open market or otherwise in order to reach the 90%
threshold and employ a short-form merger. The per share consideration paid for
any Shares so acquired in open market purchases may be greater or less than
the Offer Price. Parent presently intends to effect a short-form merger, if
permitted to do so under the DGCL, pursuant to which Purchaser will be merged
with and into the Company. See Section 12.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
3
<PAGE>
THE OFFER
1. Terms of the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date, and not withdrawn in accordance with
Section 4. The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Tuesday, June 15, 1999, unless and until Purchaser, in accordance
with the terms of the Merger Agreement, shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Purchaser, shall expire. In the Merger Agreement, the Company, Parent and
Purchaser have agreed that if all conditions to Purchaser's obligation to
accept for payment and pay for Shares pursuant to the Offer are not satisfied
on the scheduled Expiration Date, Purchaser may, in its sole discretion,
extend the Offer for additional periods.
The Offer is conditioned upon the satisfaction of the Minimum Condition, the
expiration or termination of all waiting periods imposed by the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
other conditions set forth in Section 14. If such conditions are not satisfied
prior to the Expiration Date, Purchaser reserves the right, subject to the
terms of the Merger Agreement and subject to complying with applicable rules
and regulations of the Commission, to (i) decline to purchase any Shares
tendered in the Offer and terminate the Offer and return all tendered Shares
to the tendering stockholders, (ii) waive any or all conditions to the Offer
and, to the extent permitted by applicable law, purchase all Shares validly
tendered, (iii) extend the Offer and, subject to the right of stockholders to
withdraw Shares until the Expiration Date, retain all Shares which have been
tendered during the period or periods for which the Offer is extended or (iv)
subject to the next sentence, amend the Offer. The Merger Agreement provides
that Purchaser will not decrease the Offer Price, change the form of
consideration to be paid in the Offer, decrease the number of Shares sought in
the Offer, amend any other condition to the Offer in any manner materially
adverse to the holders of the Shares or impose additional conditions to the
Offer without the written consent of the Company.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied on the Expiration Date. However, if,
immediately prior to the scheduled Expiration Date, all conditions to the
Offer are satisfied but the number of Shares tendered and not withdrawn
pursuant to the Offer constitutes less than 90% of the Shares outstanding,
Purchaser may extend the Offer for a period not to exceed 20 business days. As
used in this Offer to Purchase, "business day" has the meaning set forth in
Rule 14d-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date
in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange
Act. Without limiting the obligation of Purchaser under such Rules or the
manner in which Purchaser may choose to make any public announcement,
Purchaser currently intends to make announcements by issuing a press release
to the Dow Jones News Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of Purchaser, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled
to withdrawal rights as described in Section 4. However, the ability of
Purchaser to delay the payment for Shares which Purchaser has accepted for
payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by, or on behalf of, holders of securities promptly after the termination or
withdrawal of the Offer.
4
<PAGE>
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the Commission has stated its view that an offer must remain
open for a minimum period of time following a material change in the terms of
the Offer and that waiver of a material condition, such as the Minimum
Condition, is a material change in the terms of the Offer. The release states
that an offer should remain open for a minimum of five business days from the
date a material change is first published, sent or given to security holders
and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares
being sought, a minimum of 10 business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such
increased consideration will be paid to all holders whose Shares are purchased
in the Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, dealers, banks and similar persons whose names, or the names of
whose nominees, appear on the stockholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
2. Acceptance for Payment and Payment.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for, as soon as
practicable after the Expiration Date, all Shares validly tendered prior to
the Expiration Date and not properly withdrawn in accordance with Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates for such Shares (or a
timely Book Entry Confirmation (as defined below) with respect thereto), (ii)
a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message (as defined below) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, payment may be
made to tendering stockholders at different times if delivery of the Shares
and other required documents occur at different times. The per share
consideration paid to any holder of Shares pursuant to the Offer will be the
highest per share consideration paid to any other holder of such Shares
pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID
BY PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
5
<PAGE>
The Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole
or in part with any applicable law. If Purchaser is delayed in its acceptance
for payment of, or payment for, Shares or is unable to accept for payment or
pay for Shares pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer (including such rights as are set forth
in Sections 1 and 14) (but subject to compliance with Rule 14e-1(c) under the
Exchange Act), the Depositary may, nevertheless, on behalf of Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person
as the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, such Shares will be credited to such
account maintained at the Book-Entry Transfer Facility as the tendering
stockholder shall specify in the Letter of Transmittal, as promptly as
practicable following the expiration, termination or withdrawal of the Offer.
If no such instructions are given with respect to Shares delivered by book-
entry transfer, any such Shares not tendered or not purchased will be returned
by crediting the account at the Book-Entry Transfer Facility designated in the
Letter of Transmittal as the account from which such Shares were delivered.
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
3. Procedures for Tendering Shares.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date
and either certificates evidencing tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered to the
Depositary pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary, in each case
prior to the Expiration Date, or (ii) the tendering stockholder must comply
with the guaranteed delivery procedures described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of
Shares by causing the Book-Entry Transfer Facility to transfer such Shares
into the Depositary's account in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at
the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message, and any other required documents must, in
any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation."
6
<PAGE>
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (ii) if such Shares are tendered for the account
of a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all
other cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed as aforesaid. See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect to)
such Shares, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, are received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the Nasdaq National Market (the "Nasdaq
National Market"), operated by the National Association of Securities
Dealers, Inc. (the "NASD"), is open for business.
7
<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mailed to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder
will irrevocably appoint designees of Parent as such stockholder's attorneys-
in-fact and proxies in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted
for payment by Purchaser and with respect to any and all non-cash dividends,
distributions, rights, other Shares or other securities issued or issuable in
respect of such Shares on or after May 12, 1999 (collectively,
"Distributions"). All such proxies will be considered coupled with an interest
in the tendered Shares. Such appointment will be effective if, as and when,
and only to the extent that, Purchaser accepts for payment Shares tendered by
such stockholder as provided herein. All such powers of attorney and proxies
will be irrevocable and will be deemed granted in consideration of the
acceptance for payment by Purchaser of Shares tendered in accordance with the
terms of the Offer. Upon such appointment, all prior powers of attorney,
proxies and consents given by such stockholder with respect to such Shares
(and any and all Distributions) will, without further action, be revoked and
no subsequent powers of attorney, proxies, consents or revocations may be
given by such stockholder (and, if given, will not be deemed effective). The
designees of Parent will thereby be empowered to exercise all voting and other
rights with respect to such Shares (and any and all Distributions), including,
without limitation, in respect of any annual or special meeting of the
Company's stockholders (and any adjournment or postponement thereof), actions
by written consent in lieu of any such meeting or otherwise, as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's acceptance for
payment of such Shares, Purchaser must be able to exercise full voting,
consent and other rights with respect to such Shares (and any and all
Distributions), including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. Purchaser reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be in
proper form or the acceptance for payment of which, or payment for which, may,
in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves
the absolute right, in its sole discretion, subject to the provisions of the
Merger Agreement, to waive any defect or irregularity in any tender of Shares
of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares will be deemed to have been validly made until all defects or
irregularities relating thereto have been cured or waived. None of Purchaser,
Parent, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Subject to the terms of the Merger Agreement, Purchaser's
interpretation of the terms and conditions of the Offer in this regard
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Withholding. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in
either case, the "Payee"), satisfies the conditions described in Instruction
10 of the Letter of Transmittal or is otherwise exempt, the cash payable as a
result of the Offer may be subject to backup withholding tax at a rate of 31%
of the gross proceeds. To prevent backup withholding, each Payee should
complete and sign the Substitute Form W-9 provided in the Letter of
Transmittal. See Instruction 10 to the Letter of Transmittal.
8
<PAGE>
4. Withdrawal Rights.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior
to the Expiration Date and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the Offer, may also be withdrawn at any time
after July 16, 1999.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility and otherwise comply with the
Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
5. Certain U.S. Federal Income Tax Consequences.
The following is a general summary of certain U.S. federal income tax
consequences of the Offer and the Merger relevant to a beneficial holder of
Shares whose Shares are tendered and accepted for payment pursuant to the
Offer or whose Shares are converted to cash in the Merger (a "Holder"). The
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), regulations issued thereunder, judicial decisions and administrative
rulings, all of which are subject to change, possibly with retroactive effect.
The following does not address the U.S. federal income tax consequences to all
categories of Holders that may be subject to special rules (e.g., holders who
acquired their Shares pursuant to the exercise of employee stock options or
other compensation arrangements with the Company, holders who perfect their
appraisal rights under the DGCL, foreign holders, insurance companies, tax-
exempt organizations, dealers in securities and persons who have acquired the
Shares as part of a straddle, hedge, conversion transaction or other
integrated investment), nor does it address the federal income tax
consequences to persons who do not hold the Shares as "capital assets" within
the meaning of Section 1221 of the Code (generally, property held for
investment). Holders should consult their own tax advisors regarding the U.S.
federal, state, local and foreign income and other tax consequences of the
Offer and the Merger.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. In general, a Holder who sells Shares pursuant to the Offer or
receives cash in exchange for Shares pursuant to the Merger will recognize
gain or loss for federal income tax purposes equal to the difference, if any,
between the amount of cash received and the Holder's adjusted tax basis in the
Shares sold pursuant to the Offer or surrendered for cash pursuant to the
Merger. Gain or loss will be determined separately for each block of Shares
(i.e., Shares acquired at the same cost in a single transaction) tendered
9
<PAGE>
pursuant to the Offer or surrendered for cash pursuant to the Merger. Such
gain or loss will be long-term capital gain or loss if the Holder has held the
Shares for more than one year at the time of the consummation of the Offer or
the Merger. Capital gains recognized by an individual investor (or an estate
or certain trusts) upon a disposition of a Share that has been held for more
than one year generally will be subject to a maximum tax rate of 20% or, in
the case of a Share that has been held for one year or less, will be subject
to tax at ordinary income rates. Certain limitations apply to the use of
capital losses.
6. Price Range of the Shares; Dividends.
The Shares are traded through the Nasdaq National Market under the symbol
"OPTT". The following table sets forth, for each of the fiscal quarters
indicated, the high and low reported sales price per Share on the Nasdaq
National Market.
<TABLE>
<CAPTION>
High Low
------ -------
<S> <C> <C>
Fiscal Year Ended October 31, 1997
First Quarter ended January 31, 1997.......................... $13.88 $ 9.00
Second Quarter ended May 2, 1997.............................. 14.13 10.50
Third Quarter ended August 1, 1997............................ 16.00 11.00
Fourth Quarter ended October 31, 1997......................... 19.75 15.75
Fiscal Year Ended October 30, 1998
First Quarter ended January 30, 1998.......................... $23.25 $ 18.00
Second Quarter ended May 1, 1998.............................. 27.75 20.75
Third Quarter ended July 31, 1998............................. 23.00 17.75
Fourth Quarter ended October 30, 1998......................... 23.13 10.94
Fiscal Year Ending October 29, 1999
First Quarter ended January 29, 1999.......................... $19.00 $ 16.75
Second Quarter ended April 30, 1999........................... 17.00 12.19
Third Quarter through May 17, 1999............................ 24.84 16.88
</TABLE>
On May 11, 1999, the last full trading day prior to the public announcement
of the execution of the Merger Agreement, the last reported closing sales
price of the Shares on the Nasdaq National Market was $19.63 per Share. On May
17, 1999, the last full trading day prior to the commencement of the Offer,
the last reported sales price of the Shares on the Nasdaq National Market was
$24.75 per Share. Stockholders are urged to obtain a current market quotation
for the Shares.
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. In addition, under the terms of the
Merger Agreement, the Company is not permitted to declare or pay dividends
with respect to the Shares without the prior written consent of Parent; Parent
does not intend to consent to any such declaration or payment.
7. Effect of the Offer on the Market for the Shares; Stock Listing; Exchange
Act Registration; Margin Regulations.
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which, depending upon the number
of Shares so purchased, could adversely affect the liquidity and market value
of the remaining Shares held by stockholders. Purchaser cannot predict whether
the reduction in the number of Shares that might otherwise trade publicly
would have an adverse or beneficial effect on the market price for, or
marketability of, the Shares or whether it would cause future market prices to
be greater or less than the Offer Price.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion on the Nasdaq National Market, which requires that an
issuer either (i) have at least 750,000 publicly held shares, held by at least
400 round lot
10
<PAGE>
stockholders, with a market value of at least $5,000,000, have at least two
market makers, have net tangible assets of at least $4 million, and have a
minimum bid price of $1 or (ii) have at least 1,100,000 publicly held shares,
held by at least 400 round lot stockholders, with a market value of at least
$15,000,000, have a minimum bid price of $5, have at least four market makers
and have either (A) a market capitalization of at least $50,000,000 or (B)
total assets and revenues each of at least $50,000,000. If the Nasdaq National
Market was to cease to publish quotations for the Shares, it is possible that
the Shares would continue to trade in the over-the-counter market and that
price or other quotations would be reported by other sources. The extent of
the public market for such Shares and the availability of such quotations
would depend, however, upon such factors as the number of stockholders and/or
the aggregate market value of such securities remaining at such time, the
interest in maintaining a market in the Shares on the part of securities
firms, the possible termination of registration under the Exchange Act as
described below, and other factors. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market place for, or marketability
of, the Shares or whether it would cause future market prices to be greater or
lesser than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b),
the requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with stockholders' meetings and the related requirement of
furnishing an annual report to stockholders and the requirements of Rule 13e-3
under the Exchange Act with respect to "going private" transactions.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant
to Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), may be impaired or eliminated.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
Parent currently intends to seek delisting of the Shares from the Nasdaq
National Market and the termination of the registration of the Shares under
the Exchange Act as soon after the completion of the Offer as the requirements
for such delisting and termination are met. If the Nasdaq National Market
listing and the Exchange Act registration of the Shares are not terminated
prior to the Merger, then the Shares will be delisted from the Nasdaq National
Market and the registration of the Shares under the Exchange Act will be
terminated following the consummation of the Merger.
8. Certain Information Concerning the Company.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by the Company or has been taken from or
based upon publicly available documents and records on file with the
Commission and other public sources. None of Parent, Purchaser or the Dealer
Manager assumes responsibility for the accuracy or completeness of the
information concerning the Company contained in such documents and records or
for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Parent, Purchaser or the Dealer Manager.
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The Company is a leading designer and manufacturer of electronic sensor
components and assemblies that detect motion and position for a broad range of
applications. The Company utilizes optoelectronic and magnetic field sensing
technologies to target customized, non-standard applications that require
specialized engineering and manufacturing expertise. The Company sells its
products for end use by original equipment manufacturers in the office
equipment, automotive, industrial, aerospace/defense, medical and
communications markets.
Selected Financial Information. Set forth below is certain consolidated
financial information with respect to the Company, excerpted or derived from
the Company's Annual Reports on Form 10-K for the fiscal years ended October
30, 1998 and October 31, 1997 and its Quarterly Report on Form 10-Q for the
quarter ended January 29, 1999, each as filed with the Commission pursuant to
the Exchange Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports, documents and financial information may be
inspected and copies may be obtained from the Commission in the manner set
forth below.
OPTEK TECHNOLOGY, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
(Unaudited) Fiscal Years Ended
----------------------- -----------------------------------
January 29, January 30, October 30, October 31, October 25,
1999 1998 1998 1997 1996
----------- ----------- ----------- ----------- -----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales............. $ 21,208 $ 20,419 $87,229 $75,572 $67,395
Operating income...... 4,313 4,428 19,284 17,758 15,186
Net income............ 2,943 2,940 13,004 11,502 12,895
Earnings per share:
Basic............... 0.38 0.69 2.15 2.74 3.41
Diluted............. 0.37 0.37 1.63 1.50 1.71
Balance Sheet Data:
Total assets.......... $ 53,941 $ 41,622 $52,672 $38,936 $25,886
Total liabilities..... 9,385 12,429 10,257 12,773 11,819
Total stockholders'
equity............... 44,556 29,193 42,415 26,163 14,067
</TABLE>
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent with certain information about the Company and its
financial performance which is not publicly available. The information
provided included financial projections for the Company as an independent
company (i.e., without regard to the impact to the Company of a transaction
with Parent), which included the following: projections of net sales and net
income of approximately $90 million and $11.5 million, respectively, for
fiscal 1999 and approximately $102 million and $13.2 million, respectively,
for fiscal 2000. The foregoing information was prepared by the Company solely
for internal use and not for publication or with a view to complying with the
published guidelines of the Commission regarding projections or with the
guidelines established by the American Institute of Certified Public
Accountants and are included in this Offer to Purchase only because they were
furnished to Parent. The foregoing information is "forward-looking" and
inherently subject to significant uncertainties and contingencies, many of
which are beyond the control of the Company, including industry performance,
general business and economic conditions, changing competition, adverse
changes in applicable laws, regulations or rules governing environmental, tax
or accounting matters and other matters. Although the Company has informed
Parent and Purchaser that it believes the assumptions used in preparing this
information were reasonable when made, such assumptions are inherently subject
to significant uncertainties and contingencies which are impossible to predict
and beyond the Company's
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control. One cannot predict whether the assumptions made in preparing the
foregoing information will be accurate, and accordingly, there can be no
assurance, and no representation or warranty is made, that actual results will
not vary materially from those described above. The inclusion of this
information should not be regarded as an indication that Parent, Purchaser,
the Company or anyone who received this information considered it a reliable
prediction of future events, and this information should not be relied on as
such. None of Parent, Purchaser, the Dealer Manager, the Company or ABN AMRO
assumes any responsibility for the validity, reasonableness, accuracy or
completeness of the projections, and the Company has made no representation to
Parent or Purchaser regarding the financial information described above. The
projections have not been adjusted to reflect the effects of the Merger.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
website on the internet at http://www.sec.gov that contains reports, proxy
statements and other information relating to the Company which have been filed
via the Commission's EDGAR System.
9. Certain Information Concerning Parent and Purchaser.
Parent and Purchaser. Parent is a Delaware corporation and is a privately
owned, international multi-industry holding company with annual revenues
approaching $700 million. Parent's core holdings, each of which is a wholly
owned subsidiary of Parent, are: Kearney-National Inc. (including its Wabash
Technologies operation ("Wabash")), a manufacturer of sensors, actuators,
potentiometers, relays and related products for the global automotive,
industrial and electronics markets; Thetford Corporation and its subsidiary,
Norcold, Inc., manufacturers of sanitation and refrigeration systems primarily
for the recreational vehicle, marine and camping markets; Plaid Enterprises,
Inc., a manufacturer of innovative customer-oriented, do-it-yourself craft
products; J.A. Sexauer, Inc., a value-added distributor of plumbing, heating,
electrical and general maintenance products for institutional, commercial and
industrial aftermarkets; and Burner Systems International, Inc., a
manufacturer of components for gas-fired appliances and grills. Parent is
controlled by Robert R. Dyson, who is also the Chairman and Chief Executive
Officer of Parent. See Schedule I.
Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. All of the outstanding
capital stock of Purchaser is owned directly by Parent. Until immediately
prior to the time Purchaser purchases Shares pursuant to the Offer, it is not
anticipated that Purchaser will have any significant assets or liabilities or
engage in any significant activities other than those incident to its
formation and capitalization and the transactions contemplated by the Offer
and the Merger.
The principal offices of Parent and Purchaser are located at 565 Fifth
Avenue, 4th Floor, New York, New York 10017. The telephone number of Parent
and Purchaser at such location is (212) 885-1600.
For certain information concerning the executive officers and directors of
Parent and Purchaser, see Schedule I.
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<PAGE>
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
Mr. Dyson or, to the best knowledge of Purchaser or Parent, any of the persons
listed on Schedule I, or any associate or majority owned subsidiary of any of
the foregoing, beneficially owns or has a right to acquire any Shares, except
for Bruce A. Cauley, who owns 300 Shares in joint tenancy with his wife, which
Shares were purchased on September 30, 1997, and none of Purchaser, Parent,
Mr. Dyson or, to the best of knowledge of Purchaser or Parent, any of the
persons or entities referred to above, or any of the respective executive
officers, directors or subsidiaries of any of the foregoing, has effected any
transaction in the Shares during the past sixty (60) days.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent or
Mr. Dyson has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including, but
not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
Mr. Dyson, any of their respective affiliates, or, to the best knowledge of
Purchaser or Parent, any of the persons listed on Schedule I, has had, since
October 30, 1995, any business relationships or transactions with the Company
or any of its executive officers, directors or affiliates that would be
required to be reported under the rules of the Commission. Except as set forth
in this Offer to Purchase, since October 30, 1995 there have been no contacts,
negotiations or transactions between Purchaser, Parent, Mr. Dyson, any of
their respective affiliates or, to the best knowledge of Purchaser or Parent,
any of the persons listed on Schedule I, and the Company or its affiliates
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer
of a material amount of assets.
Available Information. Parent and Purchaser are privately-held companies and
are generally not subject to the informational filing requirements of the
Exchange Act, and are generally not required to file reports, proxy statements
and other information with the Commission relating to their businesses,
financial condition and other matters. However, pursuant to Rule 14d-3 under
the Exchange Act, Parent and Purchaser have filed with the Commission the
Schedule 14D-1, together with exhibits, including this Offer to Purchase and
the Merger Agreement, which provides certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, should be available for inspection and copies should be obtainable
at the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of such information should also be
obtainable (i) by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661 and (ii) by
accessing the Commission's website on the internet at http://www.sec.gov.
10. Sources and Amount of Funds.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Purchaser to consummate the Offer and the Merger,
including the fees and expenses of the Offer and the Merger, is estimated to
be approximately $203 million. Purchaser will obtain all such funds from
Parent in the form of capital contributions and/or loans. Parent will obtain
such funds pursuant to the Credit Agreement, dated as of June 26, 1996 (as
amended, the "Credit Agreement"), among Parent, as borrower, the subsidiaries
of Parent from time to time party thereto, as guarantors (the "Guarantors"),
The Bank of Nova Scotia, as syndication agent, NationsBank, N.A., as
administrative agent and the lenders from time to time parties thereto (the
"Lenders"). This summary is not a complete description of the terms and
conditions of the Credit Agreement and is qualified in its entirety by
reference to the full text of the Credit Agreement, which is incorporated
herein by reference and a copy of which has been filed with the Commission as
an exhibit to the Schedule 14D-1. The Credit Agreement may be examined, and
copies obtained, in the manner set forth in Sections 8 and 9 of this Offer to
Purchase.
14
<PAGE>
Pursuant to the Credit Agreement, the Lenders have made available to Parent
a revolving credit facility of up to $270 million at any one time outstanding,
which expires on February 18, 2003. Loans under the Credit Agreement (the
"Loans") may be utilized to finance acquisitions and certain other permitted
investments. The transactions contemplated by the Merger Agreement are
permitted under the Credit Agreement. Parent has no present plans or
arrangements with respect to the repayment or refinancing of the Loans made in
connection with such transactions.
Loans bear interest at either (i) LIBOR plus the applicable margin ranging
from 0.625% to 1.125%(depending on Parent's consolidated debt coverage ratio)
per annum for periods of up to six months or (ii) the rate publicly announced
from time to time by NationsBank, N.A. as its prime rate in effect at its
principal office in Charlotte, North Carolina. As of April 30, 1999, the
Company had approximately $50 million of outstanding borrowings under the
Credit Agreement. Parent is obligated to pay a commitment fee at a rate of
0.20% to 0.375% (depending on Parent's consolidated debt coverage ratio) per
annum on the undrawn portion of the credit facility under the Credit
Agreement.
The Loans are subject to mandatory prepayment in certain limited
circumstances. Voluntary prepayments of the Loans and voluntary reductions of
the credit facility are permitted, in whole or in part, at the option of
Parent in minimum principal amounts, without premium or penalty, subject to
reimbursement of certain of the Lenders' costs under certain conditions.
Parent's obligations under the Credit Agreement have been unconditionally
guaranteed by the Guarantors and such guaranty is secured by a first priority
pledge of and security interest in the capital stock or other equity held by
Parent or any of its subsidiaries in each of the Guarantors. The Credit
Agreement contains representations and warranties, conditions precedent,
covenants, events of default and other provisions customarily found in similar
agreements.
11. Background of the Offer; Purpose of the Offer and the Merger; the Merger
Agreement and Certain Other Agreements.
Contacts with the Company; Background of the Offer.
In August 1996, Parent initiated discussions with Thomas R. Filesi, Chairman
and Chief Executive Officer of the Company, regarding the possibility of
Parent making a significant investment in the Company. Discussions continued
sporadically through February 1997, when Parent indicated that it had no
interest in proceeding.
In October 1998, Parent and Wabash requested a meeting with Mr. Filesi to
determine whether a combination of Wabash and the Company would be attractive
to the parties. At that meeting, the representatives of Parent and Mr. Filesi
determined to pursue the matter and to commence a due diligence investigation
of each other. Accordingly, the parties entered into the Confidentiality
Agreement to protect the information which would be exchanged. See
"Confidentiality Agreement" below in this Section 11. In November 1998, Parent
retained Bear Stearns for certain advisory services, including advice with
respect to the Company.
At several subsequent meetings in December 1998 and January 1999,
representatives of Parent and Wabash met with Mr. Filesi, Jerry L. Curtis,
President and Chief Operating Officer of the Company, and William J.
Collinsworth, Chief Financial Officer of the Company. At these meetings, the
Company suggested that it might be willing to acquire Wabash in exchange for
Shares.
On January 20, 1999, representatives of the Company, including Mr. Filesi
and Mr. Curtis, visited facilities of Wabash to explore the merits of a
possible business combination.
On January 21, 1999, Mr. Filesi met with Robert R. Dyson, Chairman and Chief
Executive Officer of Parent, Joseph L. Aurichio, President and Chief Operating
Officer of Parent, and Bruce A. Cauley, Vice President--Corporate Development
of Parent. At that meeting, Mr. Dyson suggested that Parent might be
interested in acquiring all of the equity interest in the Company. On January
25, 1999, Mr. Dyson advised Mr. Filesi that Parent would like to put together
a friendly purchase of the Company for cash. He emphasized that Parent would
15
<PAGE>
be prepared to move quickly, and its proposal would not be subject to a
financing contingency.
On January 27, 1999, Mr. Filesi advised Mr. Cauley that the Company Board
had established a committee consisting of two of the Company's non-employee
directors to consider the discussions between Parent and the Company, and that
those directors, Grant A. Dove and Michael E. Cahr, would like an opportunity
to meet with Parent. On February 8, 1999, Parent engaged Bear Stearns
specifically in connection with a potential acquisition of the Company.
On February 10, 1999, Messrs. Dyson, Aurichio and Robert D. Farley, Vice
President-Corporate Transactions of Parent, met with Messrs. Dove and Cahr,
who stated their preference for a transaction in which the Company would
acquire Wabash for Shares. They expressed their belief that such a transaction
might qualify as a pooling of interests for accounting purposes. Parent's
representatives reiterated their interest in a purchase of the Company for
cash, but agreed to reconsider the issue and speak with the Company the
following week.
On February 18, 1999, Mr. Farley advised Mr. Filesi that Wabash did not
qualify under the accounting rules for pooling transactions. As a result, and
in light of the adverse impact which would result from amortization of
goodwill under the purchase accounting rules, the acquisition of Wabash by the
Company was not an attractive alternative. Mr. Filesi indicated that the
Company Board had independently reached the same conclusions. Parent then
again suggested an acquisition of the Company for cash, and Mr. Filesi said
that the Company would consider such an offer.
Following additional due diligence, on March 25, 1999 Parent advised the
Company that it was prepared to enter discussions relating to the price at
which it might acquire the Company and suggested that the Company engage
financial and legal advisors to facilitate the process. On April 1, 1999,
Parent orally indicated to Mr. Filesi that Parent would be interested in
discussing an acquisition of the Company at $22.50 per Share, subject to
further due diligence and negotiation of a definitive agreement. On April 7,
Mr. Filesi advised Mr. Cauley that the Company would continue discussions with
Parent and was considering retaining an investment banker.
On April 27, 1999, at a meeting attended by Messrs. Cauley, Farley and a
representative of Bear Stearns, and Messrs. Filesi, Curtis, Collinsworth and a
representative of ABN AMRO, the Company advised Parent that it expected to
issue a press release on May 18 to announce the Company's second quarter
earnings, and expected that any announcement with respect to an acquisition of
the Company should be made on or before May 18. The next day, ABN AMRO advised
Bear Stearns that other parties had also expressed an interest in acquiring
the Company and that, as part of the Company's review of strategic and
financial alternatives, Parent and other parties who had expressed an interest
in acquiring the Company should submit their proposals to the Company,
together with a form of acquisition agreement, no later than May 7.
On May 7, 1999, after additional due diligence, Parent delivered to the
Company its proposal to acquire the Company at $21.50 per Share, together with
a draft of the Merger Agreement and Company Option Agreement. On the morning
of May 9, the Company advised Parent that its proposal was not viewed
favorably by the Company Board, and further discussions ensued; later that day
Parent increased its proposal to $25.50 per Share. On May 10, the Company
advised Parent that, on the basis of its increased proposal, the Company would
seek to negotiate the terms of an acquisition agreement with Parent. Over the
course of the next two days, counsel for Parent and the Company negotiated the
final terms of the Merger Agreement and the Company Option Agreement. On May
12, upon completion of such negotiations, the Merger Agreement and Company
Option Agreement were executed and the Merger was publicly announced. On May
18, 1999, pursuant to the terms of the Merger Agreement, the Offer was
commenced.
Purpose of the Offer and the Merger. The purpose of the Offer and the Merger
is to enable Parent to acquire control of, and the entire equity interest in,
the Company. The Offer is being made pursuant to the Merger Agreement and is
intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not
purchased pursuant to the Offer.
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<PAGE>
Stockholders of the Company who sell their Shares in the Offer will cease to
have any equity interest in the Company and any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under Section 262 of the
DGCL. See Section 12. Similarly, after selling their Shares in the Offer or
the subsequent Merger, stockholders of the Company will not bear the risk of
any decrease in the value of the Company.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell
all of their Shares for cash at a price which represents a premium of
approximately 29.9% over the closing sales price of the Shares on May 11,
1999, the last full trading day prior to the initial public announcement that
the Company, Purchaser and Parent had executed the Merger Agreement.
Merger Agreement
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full
text of the Merger Agreement, which is incorporated herein by reference and a
copy of which has been filed with the Commission as an exhibit to the Schedule
14D-1. The Merger Agreement may be examined, and copies obtained, in the
manner set forth in Sections 8 and 9 of this Offer to Purchase.
The Offer. The Merger Agreement provides for the making of the Offer as
provided in this Offer to Purchase.
The Company Board. The Merger Agreement provides that promptly after the
purchase of and payment for any Shares by Purchaser or any of its affiliates
as a result of which Purchaser and its affiliates own beneficially at least a
majority of the then outstanding Shares, Parent shall be entitled to designate
such number of directors, rounded up to the next whole number, on the Company
Board as is equal to the product of the total number of directors on such
Board (giving effect to the increase in the size of such Board) multiplied by
the percentage that the number of Shares beneficially owned by Purchaser
(including Shares so accepted for payment) bears to the total number of Shares
then outstanding. In furtherance thereof, the Company shall, upon request of
Parent, use its best efforts promptly either to increase the size of the
Company Board or to secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable such designees of Parent to be
so elected or appointed to the Company Board, and the Company shall take all
actions available to the Company to cause such designees of Parent to be so
elected or appointed. At such time, the Company shall, if requested by Parent,
also take all action necessary to cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number)
as is on the Company Board of (i) each committee of the Company Board, (ii)
each board of directors (or similar body) of each subsidiary of the Company
and (iii) each committee (or similar body) of each such board.
The Merger Agreement provides that, notwithstanding the foregoing, the
parties thereto shall use their respective reasonable best efforts to ensure
that at least two of the members of the Board shall, at all times prior to the
Effective Time, be Continuing Directors (as defined below). From and after the
time, if any, that Parent's designees constitute a majority of the Company
Board, any amendment or modification of the Merger Agreement, any amendment to
the Certificate of Incorporation or By-Laws inconsistent with the Merger
Agreement, any termination of the Merger Agreement by the Company, any
extension of time for performance of any of the obligations of Parent or
Purchaser under the Merger Agreement, any waiver of any condition to the
Company's obligations under the Merger Agreement or any of the Company's
rights under the Merger Agreement or other action by the Company under the
Merger Agreement may be effected only by the action of a
17
<PAGE>
majority of the Continuing Directors of the Company, which action shall be
deemed to constitute the action of any committee specifically designated by
the Company Board to approve the actions contemplated by the Merger Agreement
and the Company Option Agreement and the full Company Board; provided, that,
if there shall be no Continuing Directors, such actions may be effected by
majority vote of the entire Company Board; provided, further, that, if there
be no such Continuing Directors, Purchaser shall not decrease the Offer Price
or change the form of consideration to be paid in the Merger. The term
"Continuing Directors" means (i) any member of the Company Board as of the
date of the Merger Agreement or (ii) any successor of a Continuing Director
who is (A) unaffiliated with, and not a designee or nominee of, Parent or
Purchaser and (B) recommended to succeed a Continuing Director by a majority
of the Continuing Directors then on the Company Board, and in each case under
clauses (i) and (ii), who is not an employee of the Company.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof and in accordance with the DGCL, Purchaser shall be
merged with and into the Company and the separate corporate existence of
Purchaser will thereupon cease, and the Company will be the surviving
corporation in the Merger. At the effective time of the Merger, each Share
then outstanding, other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Parent or any of its subsidiaries including Purchaser and
(iii) stockholders who properly perfect their dissenters' rights under the
DGCL, will be converted into the right to receive $25.50 in cash or any higher
price per Share paid in the Offer, without interest.
Options. The Merger Agreement provides that at or immediately prior to the
Effective Time, each then outstanding Option, whether or not then vested or
exercisable, shall be cancelled by the Company. In consideration of such
cancellation of Options with an exercise price of less than the Offer Price,
the Company (or, at Parent's option, the Purchaser) shall pay to the holders
of such Options an amount in respect thereof equal to the product of (A) the
excess, if any, of the Offer Price over the exercise price of each such Option
and (B) the number of Shares previously subject to the Option immediately
prior to its cancellation (such payment to be net of withholding taxes and
without interest).
The Merger Agreement provides that the Company shall take all actions
necessary and appropriate so that all stock option or other equity based plans
maintained with respect to the Shares ("Option Plans"), shall terminate as of
the Effective Time and the provisions in any other benefit plan providing for
the issuance, transfer or grant of any capital stock of the Company or any
interest in respect of any capital stock of the Company shall be deleted as of
the Effective Time, and the Company shall use its best efforts to ensure that
following the Effective Time no holder of an Option or any participant in any
Option Plan shall have any right thereunder to acquire any capital stock of
the Company, Parent, Purchaser or the Surviving Corporation. In addition, the
Company has agreed to obtain all necessary consents from, and mail any
required notices to, holders of Options and amend the terms of the applicable
Option Plans, in each case as is necessary to give effect to the foregoing.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, subsidiaries, capital
stock, options to acquire Shares, authority to enter into the Merger Agreement
and the Company Option Agreement, required consents, no conflicts between the
Merger Agreement and applicable laws and certain agreements to which the
Company or its assets may be subject, financial statements, filings with the
Commission, disclosures in proxy statement and tender offer documents, absence
of certain changes or events, litigation, absence of changes in benefit plans,
employee benefit plans, tax matters, no non-deductible payments, compliance
with applicable laws, environmental matters, intellectual property, owned and
leased real property, material contracts, labor and employment matters,
product liability, applicability of state takeover statutes, votes required to
approve the Merger Agreement, brokers' and finders' fees, receipt of the
Financial Advisor Opinion, Year 2000, absence of questionable payments and
full disclosure to Parent.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement
and the Company Option Agreement, required consents, no conflicts between the
Merger Agreement or the Company Option Agreement and the certificate of
incorporation and by-laws of Parent and Purchaser or
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<PAGE>
laws applicable to Parent or Purchaser, disclosures in proxy statement and
tender offer documents, prior activities by Purchaser, brokers' and finders'
fees and financing.
Interim Operations. The Merger Agreement provides that after the date of the
Merger Agreement and prior to the time the designees of Parent have been
elected to or appointed to, and shall constitute a majority of, the Company
Board pursuant to the applicable provisions of the Merger Agreement, and
except (i) as expressly contemplated by the Merger Agreement, (ii) as set
forth in the applicable section of the disclosure schedule thereto or (iii) as
agreed in writing by Parent:
(a) the Company shall and shall cause its subsidiaries to carry on their
respective businesses in the ordinary course;
(b) the Company shall and shall cause its subsidiaries to use all
reasonable best efforts consistent with good business judgment to preserve
intact their current business organizations, keep available the services of
their current officers and key employees and preserve their relationships
consistent with past practice with desirable customers, suppliers,
licensors, licensees, distributors and others having business dealings with
them to the end that their goodwill and ongoing businesses shall be
unimpaired in all material respects at the Effective Time;
(c) neither the Company nor any of its subsidiaries shall, directly or
indirectly, amend its Certificate of Incorporation or By-laws or similar
organizational documents;
(d) representatives of the Company and its subsidiaries shall confer at
such times as Parent may reasonably request with one or more
representatives of Parent to report material operational matters and the
general status of ongoing operations;
(e) neither the Company nor any of its subsidiaries shall: (i)(A)
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that
of its subsidiaries, except that a wholly-owned Subsidiary of the Company
may declare and pay a dividend or make advances to its parent or the
Company or (B) redeem, purchase or otherwise acquire directly or indirectly
any of the Company's capital stock or that of its subsidiaries; (ii) issue,
sell, pledge, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class of the Company or its subsidiaries, other than Shares
issued upon the exercise of Options outstanding on the date of the Merger
Agreement in accordance with the Option Plans as in effect on the date of
the Merger Agreement; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of any of its subsidiaries;
(f) except as permitted by the Merger Agreement, neither the Company nor
any of its subsidiaries shall acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof (including entities which are subsidiaries of the Company or any of
its subsidiaries) or (ii) any assets, including real estate, except
purchases in the ordinary course of business consistent with past practice;
(g) neither the Company nor any of its subsidiaries shall make any new
capital expenditure or expenditures, other than the specific capital
expenditures disclosed and set forth in the applicable section of the
disclosure schedule to the Merger Agreement;
(h) neither the Company nor any of its subsidiaries shall, except in the
ordinary course of business and except as otherwise permitted by the Merger
Agreement, amend or terminate any material contract where such amendment or
termination would have a material adverse effect on the business,
properties, assets, prospects, financial condition or results of operations
of the Company and its subsidiaries taken as a whole (a "Material Adverse
Effect"), or waive, release or assign any material rights or claims;
(i) neither the Company nor any of its subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any
property or assets other than in the ordinary course of business and
consistent with past practice;
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(j) neither the Company nor any of its subsidiaries shall: (i) enter into
any employment or severance agreement with or grant any severance or
termination pay to any officer, director or key employee of the Company or
any its subsidiaries; or (ii) hire or agree to hire any new or additional
key employees or officers;
(k) neither the Company nor any of its subsidiaries shall, except as
required to comply with applicable law or expressly provided in the Merger
Agreement, (i) adopt, enter into, terminate, amend or increase the amount
or accelerate the payment or vesting of any benefit or award or amount
payable under any benefit plan or other arrangement for the current or
future benefit or welfare of any director, officer or current or former
employee, except to the extent necessary to coordinate any such benefit
plans with the terms of the Merger Agreement, (ii) increase in any manner
the compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee, (iii) pay any benefit not provided for under any
benefit plan, (iv) grant any awards under any bonus, incentive, performance
or other compensation plan or arrangement or benefit plan (including the
grant of stock options, stock appreciation rights, stock-based or stock-
related awards, performance units or restricted stock, or the removal of
existing restrictions in any benefit plans or agreements or awards made
thereunder) or (v) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or benefit plan;
(l) neither the Company nor any of its subsidiaries shall: (i) incur or
assume any long-term debt or, except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with
past practice; (ii) incur or modify any material indebtedness or other
liability except as set forth on the applicable section of the disclosure
schedule to the Merger Agreement; (iii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the ordinary
course of business and consistent with past practice; (iv) make any loans,
advances or capital contributions to, or investments in, any other person
(other than to wholly owned subsidiaries of the Company or customary loans
or advances to employees in the ordinary course of business in accordance
with past practice); (v) settle any material claims other than in the
ordinary course of business, in accordance with past practice and without
admission of liability; or (vi) enter into any material commitment or
transaction except in the ordinary course of business consistent with past
practice;
(m) neither the Company nor any of its subsidiaries shall change any of
the accounting principles used by it unless required by generally accepted
accounting principles;
(n) neither the Company nor any of its subsidiaries shall make or change
any tax election, amend any tax return, change an annual tax accounting
period, adopt or change any method of tax accounting, enter into any
closing agreement, settle or compromise any tax claim or assessment,
surrender any right to claim a tax refund, consent to any extension or
waiver of the limitations period applicable to any tax claim or assessment
or take or omit to take any other action relating to taxes except in the
ordinary course of business consistent with past practice;
(o) neither the Company nor any of its subsidiaries shall pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of any such claims, liabilities or obligations in
the ordinary course of business and consistent with past practice, of any
such claims, liabilities or obligations which are reflected or reserved
against in, or contemplated by, the consolidated financial statements (or
the notes thereto) of the Company and its consolidated subsidiaries; or
except in the ordinary course of business consistent with past practice,
waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or
any of its subsidiaries is a party;
(p) neither the Company nor any of its subsidiaries shall (by action or
inaction) amend, renew, terminate or cause to be extended any lease,
agreement or arrangement relating to any of the leased properties or enter
into any lease, agreement or arrangement with respect to real property;
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(q) neither the Company nor any of its subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing,
or to authorize, recommend, propose or announce an intention to do any of
the foregoing; and
(r) neither the Company nor any of its subsidiaries shall take any action
that would result in (i) any of its representations and warranties that are
qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not qualified as to materiality
becoming untrue in any material respect or (iii) any of the conditions to
the Offer, as set forth in the Merger Agreement, not being satisfied
(subject to the Company's right to take action specifically permitted by
the Merger Agreement).
Stockholders' Meeting. If required by applicable law in order to consummate
the Merger, the Company, acting through the Company Board, shall, in
accordance with applicable law, its Certificate of Incorporation and By-laws:
(i) as promptly as practicable following the acceptance for payment and
purchase of Shares by Purchaser pursuant to the Offer, duly call, give notice
of, convene and hold a special meeting of its stockholders (the "Special
Meeting") for the purposes of considering and taking action upon the approval
of the Merger and the approval and adoption of the Merger Agreement; (ii)
prepare and file with the Commission a preliminary proxy or information
statement relating to the Merger and the Merger Agreement; (iii) obtain and
furnish the information required to be included in the Proxy Statement (as
defined below) and, after consultation with Parent, respond promptly to any
comments made by the Commission with respect to the preliminary proxy or
information statement and cause a definitive proxy or information statement,
including any amendment or supplement thereto (the "Proxy Statement") to be
mailed to its stockholders at the earliest practicable date; provided that no
amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its counsel; (iv) use its reasonable best
efforts to obtain the necessary approvals of the Merger and the Merger
Agreement by its stockholders; and (v) unless the Merger Agreement has been
terminated in accordance with the provisions of the section summarized under
"Termination" below, subject to its rights pursuant to the section summarized
under "No Solicitation" below, include in the Proxy Statement the
recommendation of the Company Board that stockholders of the Company vote in
favor of the approval of the Merger and the approval and adoption of the
Merger Agreement. Parent has agreed to vote, or cause to be voted, all of the
Shares then owned by it, Purchaser or any of its other subsidiaries in favor
of the approval of the Merger and the approval and adoption of the Merger
Agreement.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it shall not, nor shall it permit any of its subsidiaries to, nor shall
it authorize (and shall use its best efforts not to permit) any officer,
director or employee of, or any investment banker, attorney or other advisor
or representative of, the Company or any of its subsidiaries to (i) solicit or
initiate, or encourage, directly or indirectly, any inquires or the submission
of, any Takeover Proposal (as defined below), (ii) participate in any
discussions or negotiations regarding, or furnish to any Person (as defined
below) any information or data with respect to or access to the properties of,
or take any other action to knowingly facilitate the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Takeover
Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal or approve or resolve to approve any Takeover Proposal; provided,
that, nothing contained in the applicable provisions of the Merger Agreement
shall prohibit the Company or the Company Board from (A) taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act or (B) making such disclosure to the Company's stockholders as,
in the good faith judgment of the Company Board, after receiving written
advice from outside counsel, is required under applicable law, provided that
the Company may not, except as permitted by the following paragraph, withdraw
or modify, or propose to withdraw or modify, its position with respect to the
Offer or the Merger or approve or recommend, or propose to approve or
recommend any Takeover Proposal, or enter into any agreement with respect to
any Takeover Proposal. Upon execution of the Merger Agreement, the Company
agreed to immediately cease any existing activities, discussions or
negotiations with any parties conducted prior to the date of the Merger
Agreement with respect to any of the foregoing. Notwithstanding the foregoing,
prior to the time of acceptance of Shares for payment pursuant to the Offer,
the Company may furnish information concerning its business, properties or
assets to any Person or group and may negotiate and participate in discussions
and negotiations with such Person or group concerning a Takeover Proposal if:
(x) such Person or group has submitted a Superior Proposal (as defined below);
and (y)
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the Company Board determines in good faith after consultation with outside
legal counsel that such action is necessary for the Company Board to comply
with its fiduciary duty under applicable law. The Company will promptly (but
in no case later than 24 hours) notify Parent of the existence of any
proposal, discussion, negotiation or inquiry received by the Company regarding
any Takeover Proposal, and the Company will immediately communicate to Parent
the terms of any proposal, discussion, negotiation or inquiry which it may
receive regarding any Takeover Proposal and the identity of the party making
such proposal or inquiry or engaging in such discussion or negotiation. The
Company will promptly provide to Parent any non-public information concerning
the Company provided to any other Person in connection with any Takeover
Proposal which was not previously provided to Parent. The Company will keep
Parent informed of the status and details of any such Takeover Proposal and of
any amendments or proposed amendments to any Takeover Proposal and will
promptly notify Parent (but in no case later than 24 hours) of any
determination by the Company Board that a Superior Proposal has been made.
Pursuant to the Merger Agreement, except as set forth in this paragraph,
neither the Company Board nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Company Board or any such
committee of the Offer, the Merger Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal or (iii)
enter into any agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing, subject to compliance with this paragraph prior
to the time of acceptance for payment of Shares pursuant to the Offer, the
Company Board may withdraw or modify its approval or recommendation of the
Offer, the Merger Agreement or the Merger, approve or recommend a Superior
Proposal, or enter into an agreement with respect to a Superior Proposal, in
each case at any time after the fifth business day following Parent's receipt
of written notice from the Company advising Parent that the Company Board has
received a Superior Proposal which it intends to accept, specifying the
material terms and conditions of such Superior Proposal and, identifying the
person making such Superior Proposal, but only if the Company shall have
caused its financial and legal advisors to negotiate with Parent to make such
adjustments to the terms and conditions of the Merger Agreement as would
enable the Company to proceed with the Offer and the Merger on such adjusted
terms. The term "Takeover Proposal" means any bona fide proposal or offer,
whether in writing or otherwise, from any Person other than Parent, Purchaser
or any affiliates thereof (a "Third Party") to acquire beneficial ownership
(as determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
all or a material portion of the assets of the Company or any of its
subsidiaries or 20% or more of any class of equity securities of the Company
or any of its subsidiaries pursuant to a merger, consolidation or other
business combination, sale of shares of capital stock, sale of assets, tender
offer, exchange offer or similar transaction with respect to either the
Company or any of its subsidiaries, including any single or multi-step
transaction or series of related transactions, which is structured to permit
such Third Party to acquire beneficial ownership of any material portion of
the assets of or 20% or more of the equity interest in either the Company or
any of its subsidiaries. The term "Superior Proposal" means an unsolicited
bona fide proposal by a Third Party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than a majority of
the Shares then outstanding or all or substantially all of the assets of the
Company or to acquire, directly or indirectly, the Company by merger or
consolidation, and otherwise on terms which the Company Board determines in
good faith to be more favorable to the Company's stockholders (taking into
account the time period reasonably believed necessary to consummate such
transaction) than the Offer and the Merger (based on advice from the Company's
independent financial advisor that the value of the consideration provided for
in such proposal is superior to the value of the consideration provided for in
the Offer and the Merger), for which financing, to the extent required, is
then committed and which, in the good faith reasonable judgment of the Company
Board, is reasonably likely to be consummated. The term "Person" means an
individual, corporation, partnership, joint venture, association, joint stock
company, limited liability company, labor union, estate, trust, unincorporated
organization or other entity, including any Governmental Entity (as defined
herein).
Indemnification and Insurance. The Merger Agreement provides that the
Company shall, to the fullest extent permitted under applicable Delaware law,
the terms of the Company's Certificate of Incorporation or By-Laws and
regardless of whether the Merger becomes effective, indemnify and hold
harmless each present and former director, officer or employee of the Company
or any of its subsidiaries (collectively, the "Indemnified
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Parties") against any costs or expenses (including reasonable attorneys'
fees), judgments, losses, claims, damages and liabilities incurred in
connection with, and amounts paid in settlement of, any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative and wherever asserted, brought or filed, (x) arising out of or
pertaining to the Offer or the Merger or (y) otherwise with respect to any
acts or omissions or alleged acts or omissions occurring at or prior to the
Effective Time, in each case for a period of six years after the date hereof.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) any counsel retained
by the Indemnified Parties for any period after the Effective Time must be
reasonably satisfactory to the Surviving Corporation, (ii) after the Effective
Time, the Surviving Corporation shall pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received, and (iii) the
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that the Surviving Corporation shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed); and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made within such
six year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to any single action unless there is, under applicable standards
of professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties. The indemnity agreements of
the Surviving Corporation in this paragraph shall extend to each Person or
entity who controls, or in the past controlled, any present or former
director, officer or employee of the Company or any of its subsidiaries.
The Merger Agreement provides that for a period of 36 months after the
Effective Time, Parent shall cause the Surviving Corporation to maintain in
effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy on terms (including the amounts of
coverage and the amounts of deductibles, if any) that are no less favorable to
such persons than the terms now applicable to them under the Company's current
policies; provided, however, that in no event shall Parent or the Surviving
Corporation be required to expend in excess of 150% of the annual premium
currently paid by the Company for such coverage; and provided further, that if
the premium for such coverage exceeds such amount, Parent or the Surviving
Corporation shall purchase a policy with the greatest coverage available for
such 150% of the annual premium.
Conditions to the Merger. The respective obligations of Parent and
Purchaser, on the one hand, and the Company, on the other hand, to effect the
Merger are subject to the satisfaction of each of the following conditions,
any and all of which may be waived in whole or in part by the Company, Parent
or Purchaser, as the case may be, to the extent permitted by applicable law:
(i) the Merger Agreement shall have been approved and adopted by the requisite
vote of the holders of Shares, if required by applicable law and the
Certificate of Incorporation, in order to consummate the Merger; (ii) no
statute, rule, regulation, order, decree or injunction shall have been
enacted, promulgated or issued by any Governmental Entity (as defined below)
precluding, restraining, enjoining or prohibiting consummation of the Merger;
and (iii) Parent, Purchaser or their affiliates shall have purchased Shares
pursuant to the Offer. The term "Governmental Entity" means any (i) nation,
state, county, city, town, village, district or other jurisdiction of any
nature; (ii) federal, state, local, municipal, foreign or other government;
(iii) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official or entity and any court
or other tribunal); or (iv) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
Termination. The Merger Agreement may be terminated and the Merger
contemplated therein may be abandoned at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Merger by the stockholders of the Company:
(a) By the mutual written consent of Parent and the Company; provided,
however, that if Parent shall have a majority of the directors pursuant to
the applicable provisions of the Merger Agreement, such consent of the
Company may only be given if approved by the Continuing Directors.
(b) By either of Parent or the Company if (i) a statute, rule or
executive order shall have been enacted, entered or promulgated prohibiting
the Offer or the Merger on the terms contemplated by the Merger
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Agreement or (ii) any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or
other action the parties to the Merger Agreement shall use their reasonable
efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the Offer or the Merger and such order, decree,
ruling or other action shall have become final and non-appealable.
(c) By either of Parent or the Company if the Effective Time shall not
have occurred on or before December 31, 1999, provided, that the party
seeking to terminate the Merger Agreement pursuant to this paragraph (c)
shall not have breached in any material respect its obligations under the
Merger Agreement in any manner that shall have proximately contributed to
the failure to consummate the Merger on or before such date.
(d) By the Company: (i) if the Company has entered into an agreement with
respect to a Superior Proposal or has approved or recommended a Superior
Proposal in accordance with the applicable provisions of the Merger
Agreement, provided the Company has complied with all provisions thereof,
including the notice provisions therein, and that it simultaneously
terminates the Merger Agreement; (ii) if Parent or Purchaser shall have
terminated the Offer or the Offer expires without Parent or Purchaser, as
the case may be, purchasing any Shares pursuant thereto; provided, that the
Company may not terminate the Merger Agreement pursuant to this clause
(d)(ii) if the Company is in material breach of the Merger Agreement or the
Company Option Agreement; (iii) if Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of the
Offer, provided, that the Company may not terminate the Merger Agreement
pursuant to this clause (d) (iii) if the Company is in material breach of
the Merger Agreement or the Company Option Agreement; or (iv) if there
shall be a material breach by either Parent or Purchaser of any of its
representations, warranties, covenants or agreements contained in the
Merger Agreement or the Company Option Agreement.
(e) By Parent or Purchaser: (i) (A) if prior to the purchase of the
Shares pursuant to the Offer, the Company Board shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser, its
approval or recommendation of the Offer, the Merger Agreement or the Merger
or shall have recommended or approved a Takeover Proposal or (B) there
shall have been a material breach of any provision of the section of the
Merger Agreement summarized under "No Solicitation" above; (ii) if Parent
or Purchaser shall have terminated the Offer without Parent or Purchaser
purchasing any Shares thereunder, provided that Parent or Purchaser may not
terminate the Merger Agreement pursuant to this clause (e) (ii) if Parent
or Purchaser is in material breach of the Merger Agreement; (iii) if, due
to an occurrence that if occurring after the commencement of the Offer
would result in a failure to satisfy any of the conditions set forth in the
Section 14 below, Parent, Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; (iv) if any
Person or "group" (within the meaning of Section 13(d)(3) of the Exchange
Act), other than Parent, Purchaser or their affiliates or any group of
which any of them is a member, shall have acquired or announced its
intention to acquire beneficial ownership (as determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of 20% or more of the Shares; (v)
if the Company receives a Takeover Proposal from any Person (other than
Parent or Purchaser), and the Company Board takes a neutral position or
makes no recommendation with respect to such Takeover Proposal after a
reasonable amount of time (and in no event more than five business days
following such receipt) has elapsed for the Company Board to review and
make a recommendation with respect to such Takeover Proposal; or (vi) if
there shall be a material breach by the Company of any of its
representations, warranties, covenants or agreements contained in the
Merger Agreement or the Company Option Agreement.
Termination Fee; Expenses. Pursuant to the Merger Agreement, if (x) Parent
or Purchaser terminates the Merger Agreement pursuant to clauses (e)(i) or
(e)(v) under the heading "Termination" above or (y) the Company terminates
this Agreement pursuant to clause (d)(i) under the heading "Termination"
above, then in each case, the Company shall pay, or cause to be paid to
Parent, at the time of termination, an amount equal to $7,000,000 (the
"Termination Fee") and an amount equal to Parent's and Purchaser's actual and
reasonably documented out-of-pocket expenses incurred in connection with the
Offer, the Merger, the Merger Agreement
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and the Company Option Agreement, including, without limitation, the fees and
expenses payable to all banks, investment banking firms, and other financial
institutions and Persons and their respective agents and counsel incurred in
connection with acting as Parent's or Purchaser's financial advisor with
respect to, or arranging or committing to provide or providing any financing
for, the Offer or the Merger up to $1,500,000 (the "Expenses").
In addition, if this Agreement is terminated (i) by either Parent or the
Company pursuant to clause (c) under the heading "Termination" above at any
time when there is pending a Superior Proposal, (ii) by Parent pursuant to
clauses (e)(ii), (iii) or (vi) under the heading "Termination" above (other
than by reason of a breach of any provision of the section of the Merger
Agreement summarized under "No Solicitation" above) or (iii) by the Company
pursuant to clause (d)(ii) under the heading "Termination" above (except, in
the case of clauses (e)(ii), (e)(iii) and (d)(ii), by reason of a failure of
the conditions in paragraphs (c) or (i) set forth in Section 14 below) and at
the time of any such termination, Parent is not in material breach of this
Agreement, then the Company shall pay to Parent, at the time of termination,
the Expenses. If, within 9 months after any termination referred to in this
paragraph, the Company shall enter into an agreement with respect to a
Takeover Proposal or any Person shall acquire 40% of the outstanding Shares,
then the Company shall pay the Termination Fee concurrently with entering into
any such agreement or, if sooner, within one day after such acquisition. Any
payments required to be made pursuant to this paragraph shall be made by wire
transfer of same day funds to an account designated by Parent.
Company Option Agreement
The following is a summary of certain provisions of the Company Option
Agreement. This summary is not a complete description of the terms and
conditions of the Company Option Agreement and is qualified in its entirety by
reference to the full text of the Company Option Agreement, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Company Option Agreement
may be examined, and copies obtained, in the manner set forth in Sections 8
and 9 of this Offer to Purchase.
Grant of Option. The Company Option Agreement provides for the grant by the
Company to Parent of an irrevocable option (the "Stock Option") to purchase up
to 19.9% of the number of Shares (the "Option Shares") issued at the time of
the grant of the Stock Option, at a price of $25.50 per Share (the "Exercise
Price"), payable in cash in accordance with the terms of the Company Option
Agreement.
Exercise of Option. The Company Option Agreement provides that the Stock
Option may be exercised by Parent, in whole or in part, at any time or from
time to time after the Merger Agreement becomes terminable pursuant to a
Triggering Event (as defined below). For the purposes of the Company Option
Agreement, "Triggering Event" means any termination of the Merger Agreement
which could entitle Parent to the Termination Fee under the Merger Agreement.
Cash Payment. If, at any time during the period commencing on the occurrence
of a Triggering Event and ending on the termination of the Stock Option in
accordance with the provisions of the Company Option Agreement, Parent sends
to the Company a notice indicating Parent's election to exercise its right
(the "Cash-Out Right") described in this paragraph, then the Company shall pay
to Parent, in exchange for the cancellation of the Stock Option with respect
to such number of Option Shares as Parent specifies an amount in cash equal to
the amount by which (A) the highest of (i) the price per share of the Shares
at which a tender offer or exchange offer therefor has been made, (ii) the
highest price per share of the Shares to be paid by any third-party pursuant
to an agreement with the Company, (iii) the highest closing price per Share
within the six month period immediately preceding the Notice Date and (iv) in
the event of a sale of all or a substantial portion of the Company's assets,
the sum of the price paid in such sale for such assets and the current market
value of the remaining assets of the Company divided by the number of Shares
outstanding at the time of such sale, exceeds (B) the Exercise Price,
multiplied by the number of shares for which the Stock Option is then
exercised.
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If Parent receives in aggregate (i) the Termination Fee and Expenses
pursuant to the applicable provisions of Merger Agreement, (ii) amounts from
the sale or other disposition of the Option Shares, and (iii) amounts paid
pursuant to the Company Option Agreement as described in the above paragraph,
and the aggregate of such amounts is in excess of the sum of (A) $8,500,000
plus (B) the amounts paid by Parent to purchase any Option Shares, then
Parent, at its sole election, shall either (1) reduce the number of Option
Shares, (2) deliver to the Issuer for cancellation Option Shares previously
purchased by Parent, (3) pay cash to the Issuer or (4) any combination
thereof, so that the amount received by Parent pursuant to clauses (i), (ii)
and (iii) above shall not exceed the sum of the amounts in clauses (A) and (B)
above after taking into account the foregoing actions.
Termination of Option. The Company Option Agreement provides that the Stock
Option will terminate upon the earlier of: (i) the purchase of Shares pursuant
to the Offer; (ii) six months after the date on which a Triggering Event
occurs; or (iii) the termination of the Merger Agreement in accordance with
its terms prior to the occurrence of a Triggering Event, unless, in the case
of clauses (ii) and (iii), Parent could be entitled to receive the Termination
Fee following such time or termination upon the occurrence of certain events,
in which case the Stock Option will not terminate until the later of (x) six
months following the time such fees become payable and (y) the expiration of
the period in which Parent has such right to receive the Termination Fee.
Registration Rights. The Company Option Agreement provides that Parent,
within three years, may, by written notice to the Company, request that the
Company register under the Securities Act all or any part of the Shares
beneficially owned by Parent in order to permit the sale or other disposition
of such securities pursuant to (a) a shelf registration or (b) a bona fide,
firm commitment underwritten public offering.
Adjustment upon Changes in Capitalization. The Company Option Agreement
provides that in the event of any change in the Shares by reason of stock
dividends, stock splits, reverse stock splits, mergers (other than the
Merger), recapitalizations, combinations, exchange of shares or similar
transaction, the type and number of shares or securities subject to the Stock
Option, and the Exercise Price per share, will be adjusted appropriately and
proper provision will be made so that Parent will receive upon exercise of the
option the number and class of shares or other securities or property that
Parent would have received with respect to the Shares if the Stock Option has
been exercised immediately prior to such event or the record date therefor, as
applicable.
Confidentiality Agreement
The following is a summary of certain provisions of the Confidentiality
Agreement entered into on November 6, 1998 by Parent and the Company, as
supplemented on December 15, 1998 (the "Confidentiality Agreement"). This
summary is not a complete description of the terms and conditions of the
Confidentiality Agreement and is qualified in its entirety by reference to the
full text of the Confidentiality Agreement, which is incorporated herein by
reference and a copy of which has been filed with the Commission as an exhibit
to the Schedule 14D-1. The Confidentiality Agreement may be examined, and
copies obtained, in the manner set forth in Sections 8 and 9 of this Offer to
Purchase.
Pursuant to the terms of the Confidentiality Agreement, the Company and
Parent agreed to provide, among other things, for the confidential treatment
of their discussions regarding a possible business combination and the
exchange of certain confidential information concerning the Company and
Wabash. Parent further agreed that, without the prior written consent of the
Company, none of Parent or any of its subsidiaries would hire any employee of
the Company for a period of two years from the termination of discussions
concerning a possible business combination between the Company and a
subsidiary of Parent. The Company also agreed not to hire any employee of
Parent or its subsidiaries, without the prior written consent of Parent, for
the same period of time. Parent further agreed that, for a period of one year
from the termination of discussions concerning a possible business combination
between the Company and a subsidiary of Parent, unless specifically requested
by the Company in writing, neither Parent nor any of its affiliates will, in
any manner, directly or indirectly, (a) acquire any securities or property of
the Company, (b) propose to enter into any merger or business combination or
purchase a material portion of the assets of the Company other than a
confidential proposal made to the Company Board without any public disclosure
by Parent, (c) participate in any solicitations of proxies, (d) participate in
a "group" (within the meaning of the Exchange Act) with respect to any
securities of the
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Company, (e) seek to control or influence the management or policies of the
Company or the Company Board, (f) disclose any intention, plan or arrangement
inconsistent with any of the foregoing or (g) advise, assist or encourage any
other persons in connection with any of the foregoing.
12. Plans for the Company; Other Matters.
Plans for the Company
If, as and to the extent that Purchaser acquires control of the Company,
Parent and Purchaser intend to conduct a review of the Company and its assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel and to consider and determine what, if any, changes
would be desirable in light of the circumstances which then exist.
The Merger Agreement provides that, upon the purchase of and payment for any
Shares by Parent or any of its subsidiaries pursuant to the Offer, Parent
shall be entitled to designate such number of directors, rounded up to the
next whole number, on the Company Board such that the percentage of its
designees on the Company Board shall equal the percentage of the outstanding
Shares beneficially owned by Parent and its affiliates. See Section 11.
Assuming the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Parent intends to promptly exercise such rights by
causing the Company to elect to the Company Board Messrs. Robert R. Dyson,
Joseph L. Aurichio, John F. Tierney, Jr., Bruce A. Cauley and Robert D.
Farley. Information with respect to such directors is contained in Schedule I
hereto and in the Information Statement required by Rule 14f-1 under the
Exchange Act included as Schedule I to the Schedule 14D-9. The Merger
Agreement provides that the directors of Purchaser and the officers of the
Company at the Effective Time of the Merger will, from and after the Effective
Time, be the initial directors and officers, respectively, of the Surviving
Corporation.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open
market purchases, privately negotiated transactions, a tender offer or
exchange offer or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less than the price to be paid pursuant to the
Offer. Purchaser and its affiliates also reserve the right to dispose of any
or all Shares acquired by them, subject to the terms of the Merger Agreement.
Except as disclosed in this Offer to Purchase neither Parent nor Purchaser
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation,
relocation of operations, or sale or transfer of a material amount of assets,
involving the Company or any of its subsidiaries, or any material changes in
the Company's capitalization, corporate structure, business or composition of
its management or the Company Board.
Stockholder Approval. Under the DGCL, the approval of the Company Board and
the affirmative vote of the holders of a majority of the outstanding Shares
are required to adopt and approve the Merger Agreement and the transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger by the Company's
stockholders in accordance with the DGCL. In addition, the Company has
represented that the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of the holders of any class or series of
the Company's capital stock which is necessary to approve the Merger Agreement
and the transactions contemplated thereby, including the Merger. Therefore,
unless the Merger is consummated pursuant to the short-form merger provisions
under the DGCL described below (in which case no further corporate action by
the stockholders of the Company will be required to complete the Merger), the
only remaining required corporate action of the Company will be the approval
of the Merger Agreement and the transactions contemplated thereby by the
affirmative vote of the holders of a majority of the Shares. The Merger
Agreement provides that Parent will vote, or cause to be voted,
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all of the Shares then owned by Parent, Purchaser or any of Parent's other
subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of the Merger Agreement. In the event that Parent, Purchaser and
Parent's other subsidiaries acquire in the aggregate at least a majority of
the Shares entitled to vote on the approval of the Merger and the Merger
Agreement, they would have the ability to effect the Merger without the
affirmative votes of any other stockholders.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors
or the stockholders of such other corporation (a "short-form merger"). In the
event that Parent, Purchaser and any other subsidiaries of Parent acquire in
the aggregate at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, then, at the election of Parent, a short-form merger could be
effected without any approval of the Company Board or the stockholders of the
Company, subject to compliance with the provisions of Section 253 of the DGCL.
In the Merger Agreement, Parent, Purchaser and the Company have agreed that,
notwithstanding that all conditions to the Offer are satisfied or waived as of
the scheduled Expiration Date, Purchaser may extend the Offer for a period not
to exceed 20 business days, subject to certain conditions, if the Shares
tendered pursuant to the Offer are less than 90% of the outstanding Shares.
Even if Parent and Purchaser do not own 90% of the outstanding Shares
following consummation of the Offer, Parent and Purchaser could seek to
purchase additional shares in the open market or otherwise in order to reach
the 90% threshold and employ a short-form merger. The per share consideration
paid for any Shares so acquired may be greater or less than that paid in the
Offer. Parent presently intends to effect a short-form merger if permitted to
do so under the DGCL.
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of
the Shares at the Effective Time will have certain rights pursuant to the
provisions of Section 262 of the DGCL including the right to dissent and
demand appraisal of, and to receive payment in cash of the fair value of,
their Shares. Under Section 262 of the DGCL, dissenting stockholders of the
Company who comply with the applicable statutory procedures will be entitled
to receive a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest thereon, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors
other than, or in addition to, the price per Share to be paid in the Merger or
the market value of the Shares. The value so determined could be more or less
than the price per Share to be paid in the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE
STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger
because it is anticipated that the Merger would be effected within one year
following consummation of the Offer and in the Merger stockholders would
receive the same price per Share as paid in the Offer. If Rule 13e-3 were
applicable to the Merger, it would require, among other things, that certain
financial information concerning the Company, and certain information relating
to the fairness of the proposed transaction and the consideration offered to
minority stockholders in such a transaction, be filed with the Commission and
disclosed to minority stockholders prior to consummation of the transaction.
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13. Dividends and Distributions.
As described above, the Merger Agreement provides that from May 12, 1999
until such time as the designees of Parent have been elected to, and shall
constitute a majority of, the Company Board, without the prior written consent
of Parent, neither the Company nor any of its subsidiaries shall: (i)(A)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to the Company's capital stock or that of its
subsidiaries, except that a wholly owned subsidiary of the Company may declare
and pay a dividend or make advances to its parent or the Company or (B)
redeem, purchase or otherwise acquire directly or indirectly any of the
Company's capital stock or that of its subsidiaries; (ii) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights
of any kind to acquire, any shares of capital stock of any class of the
Company or its subsidiaries, other than Shares issued upon the exercise of
Options outstanding on May 12, 1999 in accordance with the Option Plans as in
effect on May 12, 1999; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of any of the subsidiaries of the Company.
14. Conditions to the Offer.
The Offer is subject to the Minimum Condition being satisfied by the
Expiration Date or such later date as the Offer may be extended in accordance
with the terms of the Merger Agreement. Notwithstanding any other provision of
the Offer, subject to the terms of the Merger Agreement, Purchaser shall not
be required to accept for payment or pay for any Shares if (i) any applicable
waiting period under the HSR Act has not expired or been terminated or any
material consent required from a foreign Governmental Entity has not been
obtained or (ii) at any time on or after the date of the Merger Agreement and
prior to the expiration of the Offer, any of the following events shall occur:
(a) there shall be threatened by a Governmental Entity or pending any
suit, action or proceeding (i) seeking to prohibit or impose any material
limitations on Parent's or Purchaser's ownership or operation (or that of
any of their respective subsidiaries or affiliates) of all or a material
portion of their or the Company's businesses or assets, (ii) seeking to
compel Parent or Purchaser or their respective subsidiaries and affiliates
to dispose of or hold separate any material portion of the business or
assets of the Company or Parent and their respective subsidiaries, in each
case taken as a whole, (iii) challenging the acquisition by Parent or
Purchaser of any Shares pursuant to the Offer or the Company Option
Agreement, (iv) seeking to restrain or prohibit the making or consummation
of the Offer or the Merger or the performance of any of the other
transactions contemplated by the Merger Agreement and the Company Option
Agreement, (v) seeking to obtain from the Company any damages that would be
reasonably likely to have a Material Adverse Effect on the Company, (vi)
seeking to impose material limitations on the ability of Purchaser, or
rendering Purchaser unable, to accept for payment, pay for or purchase some
or all of the Shares pursuant to the Offer and the Merger, (vii) seeking to
impose material limitations on the ability of Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all
matters properly presented to the Company's stockholders or (viii) which
otherwise is reasonably likely to have a Material Adverse Effect on the
Company or, as a result of the Offer or the Merger, Parent and its
subsidiaries;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger
of applicable waiting periods under the HSR Act, that is reasonably likely
to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (viii) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the Nasdaq National Market, for
a period in excess of three hours (excluding suspensions or limitations
resulting solely from physical damage or interference with such exchange
not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) the commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any limitation or
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proposed limitation (whether or not mandatory) by any United States
governmental authority or agency that has a material adverse effect
generally on the extension of credit by banks or other financial
institutions, (v) any change in general financial bank or capital market
conditions which has a material adverse effect on the ability of financial
institutions in the United States to extend credit or syndicate loans, (vi)
any decline in either the Dow Jones Industrial Average or the Standard &
Poor's Index of 500 Industrial Companies by an amount in excess of 20%
measured from the close of business on the date of the Merger Agreement or
(vii) in the case of any of the situations in clauses (i) through (vi)
inclusive, existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof;
(d) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate as of any date up to and
including the date of consummation of the Offer as though made on or as of
such date (except for those representations and warranties that address
matters only as of a particular date or only with respect to a specific
period of time which need only be true and accurate as of such date or with
respect to such period) or the Company shall have breached or failed to
perform or comply with any obligation, agreement or covenant required by
the Merger Agreement to be performed or complied with by it except, in each
case where the failure of such representations and warranties to be true
and accurate (without giving effect to any limitation as to "knowledge"
"materiality" or "material adverse effect" set forth therein), or the
failure to perform or comply with such obligations, agreements or
covenants, do not, individually or in the aggregate, have a Material
Adverse Effect on the Company or a materially adverse effect on the ability
to consummate the Offer or the Merger;
(e) there shall have occurred any events or changes which have had or
which are reasonably likely to have or constitute, individually or in the
aggregate, a Material Adverse Effect on the Company;
(f) the Company Board (i) shall have withdrawn, or modified or changed in
a manner adverse to Parent or Purchaser (including by amendment of the
Schedule 14D-9) its recommendation of the Offer, the Merger Agreement or
the Merger, (ii) shall have recommended a Takeover Proposal, (iii) shall
have adopted any resolution to effect any of the foregoing or (iv) upon
request of Purchaser, shall fail to reaffirm its approval or recommendation
of the Offer, the Merger Agreement or the Merger;
(g) any Person or "group" (within the meaning of Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any
group of which any of them is a member, shall have acquired or announced
its intention to acquire beneficial ownership (as determined pursuant to
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the
Shares;
(h) the Company shall have breached or failed to perform any of its
agreements under the Company Option Agreement or breached any of its
representations and warranties in such agreement or such agreement shall
not be valid, binding and enforceable, except for such breaches or failures
or failures to be valid, binding and enforceable that do not materially and
adversely affect the benefits expected to be received by Parent and
Purchaser under the Merger Agreement or the Company Option Agreement; or
(i) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the sole good faith judgment of Parent or Purchaser, in any such
case, and regardless of the circumstances (including any action or inaction by
Parent or Purchaser) giving rise to such condition makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment
for Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be waived by Parent or Purchaser, in whole or in part, at any time and
from time to time, in the sole discretion of Parent or Purchaser. The failure
by Parent or Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any right and each such right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
15. Certain Legal Matters.
General. Except as described in this Section 15, based on information
provided by the Company, neither Purchaser nor Parent is aware of any license
or regulatory permit that appears to be material to the business of
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the Company and its subsidiaries, taken as a whole, that might be adversely
affected by the acquisition of Shares by Parent or Purchaser pursuant to the
Offer, the Merger or otherwise or any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by
Purchaser pursuant to the Offer, the Merger or otherwise. Should any such
approval or other action be required, Purchaser and Parent presently
contemplate that such approval or other action will be sought, except as
described below under "State Antitakeover Statutes." While, except as
otherwise described in this Offer to Purchase, Purchaser does not presently
intend to delay the acceptance for payment of, or payment for, Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that failure to obtain
any such approval or other action might not result in consequences adverse to
the Company's business or that certain parts of the Company's business might
not have to be disposed of, or other substantial conditions complied with, in
the event that such approvals were not obtained or such other actions were not
taken or in order to obtain any such approval or other action. If certain
types of adverse action are taken with respect to the matters discussed below,
Purchaser could decline to accept for payment, or pay for, any Shares
tendered. See Section 14 for certain conditions to the Offer, including
conditions with respect to governmental actions.
State Antitakeover Statutes. Section 203 of the DGCL, in general, prohibits
a Delaware corporation, such as the Company, from engaging in a "Business
Combination" (defined as a variety of transactions, including mergers) with an
"Interested Stockholder" (defined generally as a person that is the beneficial
owner of 15% or more of the outstanding voting stock of the subject
corporation) for a period of three years following the date that such person
became an Interested Stockholder unless, prior to the date such person became
an Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. The provisions of Section 203
of the DGCL are not applicable to any of the transactions contemplated by the
Merger Agreement or the Company Option Agreement, since the Merger Agreement,
the Company Option Agreement and the transactions contemplated thereby were
approved by the Company Board prior to the execution thereof.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal
executive offices or principal places of business in such states. In Edgar v.
MITE Corp., the Supreme Court of the United States (the "Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made certain corporate
acquisitions more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court held that the State of Indiana may, as a matter
of corporate law and, in particular, with respect to those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and, except as set forth above with respect to Section 203
of the DGCL, neither Parent nor Purchaser has attempted to comply with any
state antitakeover statute or regulation. Purchaser reserves the right to
challenge the applicability or validity of any state law purportedly
applicable to the Offer and nothing in this Offer to Purchase or any action
taken in connection with the Offer is intended as a waiver of such right. If
it is asserted that any state antitakeover statute is applicable to the Offer
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the Offer, Purchaser might be required to file certain
information with, or to receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer or may be delayed in consummating the
Offer. In such case, Purchaser may not be obligated to accept for payment, or
pay for, any Shares tendered pursuant to the Offer. See Section 14.
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Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied.
Parent and the Company intend to promptly file their Notification and Report
Forms with respect to the Offer under the HSR Act. The waiting period under
the HSR Act with respect to the Offer will expire at 11:59 p.m., New York City
time, on the fifteenth day after the date Parent's form is filed unless early
termination of the waiting period is granted. However, the DOJ or the FTC may
extend the waiting period by requesting additional information or documentary
material from Parent or the Company. If such a request is made, such waiting
period will expire at 11:59 p.m., New York City time, on the tenth day after
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized
by the HSR Act. Thereafter, such waiting period may be extended only by court
order or with the consent of Parent. In practice, complying with a request for
additional information or material can take a significant amount of time. In
addition, if the DOJ or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue. The Purchaser will not accept for payment Shares
tendered pursuant to the Offer unless and until the waiting period
requirements imposed by the HSR Act with respect to the Offer have been
satisfied. See Section 14.
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws of transactions such as Purchaser's acquisition of Shares pursuant to the
Offer and the Merger. At any time before or after Purchaser's acquisition of
Shares, the DOJ or the FTC could take such action under the Antitrust Laws as
it deems necessary or desirable in the public interest, including seeking to
enjoin the acquisition of Shares pursuant to the Offer or otherwise seeking
divestiture of Shares acquired by Purchaser or divestiture of substantial
assets of Parent or its subsidiaries. Private parties, as well as state
governments, may also bring legal action under the Antitrust Laws under
certain circumstances. Based upon an examination of information provided by
the Company relating to the businesses in which Parent and the Company are
engaged, Parent and Purchaser believe that the acquisition of Shares by
Purchaser will not violate the Antitrust Laws. Nevertheless, there can be no
assurance that a challenge to the Offer or other acquisition of Shares by
Purchaser on antitrust grounds will not be made or, if such a challenge is
made, of the result. See Section 14 for certain conditions to the Offer,
including conditions with respect to litigation and certain government
actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or
restraint of trade.
Mexican Federal Law of Economic Competition. The Company conducts certain
operations in Mexico and as a result thereof, Parent is required, under the
Mexican Federal Law of Economic Competition (the "FLEC"), to notify the
Mexican Federal Competition Commission (the "Competition Commission") of the
transactions contemplated by the Merger Agreement. After receipt of such
notice, the Competition Commission has 45 calendar days to issue its decision
on whether such transactions violate the FLEC. If such time period lapses
without notice from the Competition Commission, it is deemed to have no
objections and such transactions may proceed. If a violation of the FLEC is
deemed to have occurred, the Competition Commission may, notwithstanding the
imposition of sanctions provided in the FLEC or elsewhere, (i) allow the
consummation of the proposed transaction on such conditions as it may impose
or (ii) order the total or partial divestiture of the improper acquisition,
the termination of control by the controlling person or the elimination of a
particular activity, whichever action it deems appropriate. Parent will
promptly make a pre-notification filing with the Competition Commission
pursuant to the FLEC. The expiration or termination of the waiting period
under the FLEC without objection from the Competition Commission is a
condition to the Purchaser's obligation to accept for payment and pay for
Shares tendered in the Offer. See Section 14.
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Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or
maintenance of credit for the purpose of buying or carrying margin stock,
including the Shares, if the credit is secured directly or indirectly by
margin stock. Such secured credit may not be extended or maintained in an
amount that exceeds the maximum loan value of all the direct and indirect
collateral securing the credit, including margin stock and other collateral.
All financing for the Offer will be in full compliance with the Margin
Regulations.
16. Fees and Expenses.
Bear Stearns is serving as Dealer Manager in connection with the Offer and
is providing certain financial advisory services to Purchaser and Parent in
connection with the Offer and the Merger. Parent has agreed to pay a fee of
approximately $2,000,000 for such services should a transaction between Parent
and the Company be consummated, $500,000 of which was payable upon the
execution of the Merger Agreement. Parent has also agreed to reimburse Bear
Stearns for its out-of-pocket expenses, including the reasonable fees and
expenses of its counsel and any other advisor retained by Bear Stearns in
connection with its engagement and to indemnify Bear Stearns and certain
related persons against certain losses, claims, damages, liabilities and
actions and certain expenses related thereto, including certain liabilities
and expenses under the Federal securities laws.
In the ordinary course of its business, Bear Stearns engages in securities
trading, market-making and brokerage activities and may, at any time, hold
long or short positions and may trade or otherwise effect transactions in
securities of the Company.
Purchaser and Parent have retained MacKenzie Partners, Inc. to serve as the
Information Agent and The Bank of New York to serve as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by personal interview, mail, telephone, telex, telegraph and other methods of
electronic communication and may request brokers, dealers, commercial banks,
trust companies and other nominees to forward the Offer materials to
beneficial holders. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities in connection with their services, including certain liabilities
and expenses under the federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees or
commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding the
Offer materials to their customers.
17. Miscellaneous.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto,
Purchaser shall make a good faith effort to comply with such statute or seek
to have such statute declared inapplicable to the Offer. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) holders of
Shares in such state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
33
<PAGE>
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, setting forth its
recommendation with respect to the Offer and the reasons for its
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the same manner set forth in
Sections 8 and 9 of this Offer to Purchase (except that such material will not
be available at the regional offices of the Commission).
DKM ACQUISITION CORP.
May 18, 1999
34
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. Directors and Executive Officers of Parent. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Parent. Unless otherwise indicated,
each such person is a citizen of the United States of America and the business
address of each such person is c/o The Dyson-Kissner-Moran Corporation, 565
Fifth Avenue, 4th Floor, New York, New York 10017. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to employment
with Parent. Unless otherwise indicated, each such person has held his or her
present occupation as set forth below, or has been an executive officer of
Parent for the past five years.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
- ---- --------------------------------------------------
<S> <C>
ROBERT R. DYSON......... Mr. Dyson has been Chairman of the Board and Chief Executive
Director since 1980 Officer of Parent since 1992.
ANNE E. DYSON, M.D...... Dr. Dyson has been President of The Dyson Foundation since 1978
Director since 1980 and a director since 1979.
JOSEPH L. AURICHIO...... Mr. Aurichio has been President and Chief Operating Officer of
Director since 1993 Parent since 1993.
JOSEPH V. MARINER JR.... Mr. Mariner has been retired since 1977. Mr. Mariner has served
Director since 1983 as a director of Rent A Center Corp. since 1995, Peerless Mfg.
Co. since 1980 and Temtex Industries, Inc. since 1979.
HENRY C. BEINSTEIN...... Mr. Beinstein has been Executive Director of Schulte Roth &
Director since 1995 Zabel since 1997. From 1995 to 1997, he was Executive Director
of Milbank, Tweed, Hadley & McCloy. From 1985 to 1995, he was
Executive Director of Proskauer Rose LLP.
GRAHAME N. CLARK, JR.... Mr. Clark has been President of BancTec, Inc. since 1985 and
Director since 1996 Chairman of the Board and Chief Executive Officer since 1987.
SCOTT L. BOK............ Mr. Bok has been a Managing Director of Greenhill & Co., LLC
Director since 1998 since 1997. From 1995 to 1997, he was a Managing Director of
Morgan Stanley & Co. Incorporated. From 1985 to 1995, he was a
Principal of Morgan Stanley & Co. Incorporated.
MATTHEW J. ZILINSKAS.... Mr. Zilinskas has been Chief Financial Officer and a Vice
President of Parent since 1993.
MARC FELDMAN............ Mr. Feldman has been Vice President--Corporate Finance and
Treasurer of Parent since 1993.
ROBERT D. FARLEY........ Mr. Farley has been Vice President--Corporate Transactions of
Parent since 1987.
BRUCE A. CAULEY......... Mr. Cauley has been Vice President--Corporate Development of
Parent since 1994. From 1988 to 1994, he was Deputy General
Manager of Banque Paribas Dallas.
SILVIO A. BERNI......... Mr. Berni has been Vice President--Controller of Parent since
1994. From 1988 to 1994, he was Corporate Controller of
Pechiney Corporation.
DOUGLAS I. SCHWARTZ..... Mr. Schwartz has been Vice President--Taxes of Parent since
1994.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
- ---- --------------------------------------------------
<S> <C>
MICHAEL L. FROST........ Mr. Frost has been Vice President--Operations of Parent since
1998. Mr. Frost has also been President of Burner Systems
International, Inc., a subsidiary of Parent, since 1991.
JOHN H. FITZSIMONS...... Mr. FitzSimons has been General Counsel of Parent since 1982
and Secretary since 1984.
2. Directors and Executive Officers of Purchaser. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Purchaser. Unless otherwise indicated,
each such person is a citizen of the United States of America and the business
address of each such person is c/o The Dyson-Kissner-Moran Corporation, 565
Fifth Avenue, 4th Floor, New York, New York 10017. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to employment
with Parent. Unless otherwise indicated, each such person has held his present
occupation as set forth below, or has been an executive officer of Parent, or
the organization indicated, for the past five years.
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
- ---- --------------------------------------------------
<S> <C>
ROBERT R. DYSON......... Director, Chairman of the Board and Chief Executive Officer of
Purchaser. See Part 1 of this Schedule I.
JOSEPH L. AURICHIO...... Director and President of Purchaser. See Part 1 of this
Schedule I.
ROBERT D. FARLEY........ Director and Vice President of Purchaser. See Part 1 of this
Schedule I.
MARC FELDMAN............ Vice President and Treasurer of Purchaser. See Part 1 of this
Schedule I.
MATTHEW J. ZILINSKAS.... Vice President of Purchaser. See Part 1 of this Schedule I.
JOHN F. TIERNEY, JR..... Vice President of Purchaser. Mr. Tierney has been Executive
Vice President and Chief Operating Officer of Kearney-National
Inc., a subsidiary of Parent, since April 1999. From 1993 to
April 1999, he was Vice President and Chief Financial Officer
of Kearney-National Inc.
JOHN H. FITZSIMONS...... Secretary of Purchaser. See Part 1 of this Schedule I.
DOUGLAS A. SCHWARTZ..... Assistant Treasurer of Purchaser. See Part 1 of this Schedule
I.
</TABLE>
I-2
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at the applicable address set
forth below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Courier:
Tender & Exchange
Department (212) 815-6213 Tender & Exchange
P.O. Box 11248 (for Eligible Department
Church Street Station Institutions Only) 101 Barclay Street
New York, New York Receive and Deliver
10286-1248 For Confirmation Window
Telephone: New York, New York 10286
(800) 507-9357
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent at
the address and telephone number set forth below. Stockholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC. APPEARS HERE]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll Free: (800) 322-2885
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Call Toll Free: (888) 511-5800
<PAGE>
EXHIBIT 99.(A)(2)
Letter of Transmittal
To Tender Shares of Common Stock
of
Optek Technology, Inc.
Pursuant to the Offer to Purchase
Dated May 18, 1999
of
DKM Acquisition Corp.
a wholly owned subsidiary of
The Dyson-Kissner-Moran Corporation
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Courier:
Tender & Exchange
Department (212) 815-6213 Tender & Exchange
P.O. Box 11248 (for Eligible Department
Church Street Station Institutions Only) 101 Barclay Street
New York, New York Receive and Deliver
10286-1248 Window
New York, New York 10286
For Confirmation Telephone:
(800) 507-9357
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Optek
Technology, Inc. if certificates for Shares (as such term is defined below)
are to be forwarded herewith or, unless an Agent's message (as defined in
Instruction 2 below) is utilized, if delivery of Shares is to be made by book-
entry transfer to an account maintained by the Depositary at the Book-Entry
Transfer Facility (as defined in and pursuant to the procedures set forth in
Section 3 of the Offer to Purchase). Stockholders who deliver Shares by book-
entry transfer are referred to herein as "Book-Entry Stockholders" and other
stockholders who deliver shares are referred to herein as "Certificate
Stockholders."
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS
TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
<PAGE>
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution _________________________________________________
Account Number ________________________________________________________________
Transaction Code Number _______________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) ________________________________________________
Window Ticket Number (if any) _________________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Name of Institution which Guaranteed Delivery _________________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number ________________________________________________________________
Transaction Code Number _______________________________________________________
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in, if blank,
exactly as name(s)
appear(s) on Share Shares Tendered
certificate(s)) (Attach additional signed list if necessary)
- ---------------------------------------------------------------------------------
Total Number
of Shares
Share Represented by Number
Certificate Share of Shares
Number(s)(1) Certificate(s)(1) Tendered(2)
--------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Total Shares
- ---------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by Share certificates delivered to the Depositary are being
tendered hereby. See Instruction 4.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to DKM Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of The Dyson-Kissner-
Moran Corporation, a Delaware corporation ("Parent"), the above-described
shares of common stock, par value $0.01 per share (the "Shares"), of Optek
Technology, Inc., a Delaware corporation (the "Company"), pursuant to
Purchaser's offer to purchase all of the outstanding Shares at a price of
$25.50 per Share, net to the seller in cash, without interest thereon (the
"Offer Price") upon the terms and subject to the conditions set forth in the
Offer to Purchase dated May 18, 1999, and in this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"). The undersigned understands that
Purchaser reserves the right to transfer or assign, in whole at any time, or
in part from time to time, to one or more of its affiliates, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve Purchaser of its obligations
under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer. Receipt of the Offer is hereby acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 12, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other
Shares or other securities issued or issuable in respect thereof on or after
May 12, 1999 (collectively, "Distributions")) and irrevocably constitutes and
appoints the Depositary the true and lawful Agent and attorney-in-fact of the
undersigned with respect to such Shares (and all Distributions), with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver certificates for
such Shares (and any and all Distributions), or transfer ownership of such
Shares (and any and all Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and any and all Distributions) for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Robert D. Farley, Marc Feldman and John H. FitzSimons in their
respective capacities as officers of Purchaser, and any individual who shall
thereafter succeed to any such office of Purchaser, and each of them, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof or otherwise in such
manner as each such attorney-in-fact and proxy or his substitute shall in his
sole discretion deem proper with respect to, to execute any written consent
concerning any matter as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, and to
otherwise act as each such attorney-in-fact and proxy or his substitute shall
in his sole discretion deem proper with respect to, all of the Shares (and any
and all Distributions) tendered hereby and accepted for payment by Purchaser.
This appointment will be effective if and when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the
Offer. Such acceptance for payment shall, without further action, revoke any
prior powers of attorney and proxies granted by the undersigned at any time
with respect to such Shares (and any and all Distributions), and no subsequent
powers of attorney, proxies, consents or revocations may be given by the
undersigned with respect thereto (and, if given, will not be deemed
effective). Purchaser reserves the right to require that, in order for Shares
or other securities to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Shares, Purchaser must be able to
exercise full voting, consent and other rights with respect to such Shares
(and any and all Distributions), including voting at any meeting of the
Company's stockholders.
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the
account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, Purchaser shall
be entitled to all rights and privileges as owner of each such Distribution
and may withhold the entire purchase price of the Shares tendered hereby or
deduct from such purchase price, the amount or value of such Distribution as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the terms of the Merger
Agreement, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Shares purchased and/or return any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return any such certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility. The undersigned recognizes that Purchaser has no obligation,
pursuant to the "Special Payment Instructions," to transfer any Shares from
the name of the registered holder thereof if Purchaser does not accept for
payment any of the Shares so tendered.
<PAGE>
[_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
Number of Shares represented by lost, destroyed or stolen certificates: ____
SPECIAL PAYMENT INSTRUCTIONS (See SPECIAL DELIVERY INSTRUCTIONS
Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if the To be completed ONLY if certifi-
check for the purchase price of cates for Shares not tendered or
Shares accepted for payment is to not accepted for payment and/or
be issued in name of someone the check for the purchase price
other than the undersigned, if of Shares accepted for payment is
certificates for Shares not ten- to be sent to someone other than
dered or not accepted for payment the undersigned or to the under-
are to be issued in the name of signed at an address other than
someone other than the under- that shown under "Description of
signed or if Shares tendered Shares Tendered."
hereby and delivered by book-en-
try transfer that are not ac- Mail check and/or Share certifi-
cepted for payment are to be re- cates to:
turned by credit to an account
maintained at the Book-Entry Name _____________________________
Transfer Facility other than the (Please Print)
account indicated above.
Address __________________________
Issue check and/or Share certifi-
cate(s) to: __________________________________
(Include Zip Code)
Name _____________________________
(Please Print) __________________________________
(Taxpayer Identification or
Address __________________________ Social Security Number)
(See Substitute Form W-9)
__________________________________
(Include Zip Code)
__________________________________
(Taxpayer Identification or
Social Security Number)
(See Substitute Form W-9)
Credit Shares delivered by book-
entry transfer and not purchased
to the Book-Entry Transfer
Facility account.
__________________________________
(Account Number)
<PAGE>
SIGN HERE
(Also Complete Substitute Form W-9 Below)
............................................................................
............................................................................
(Signature(s) of Stockholder(s))
Dated: ................ 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s).....................................................................
(Please Print)
Name of Firm................................................................
Capacity (full title).......................................................
(see Instruction 5)
Address.....................................................................
.....................................................................
(Include Zip Code)
Area Code and Telephone Number..............................................
Tax Identification or
Social Security Number......................................................
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S) (See Instructions 1 and 5)
Authorized Signature........................................................
Name(s).....................................................................
(Please Print)
Title.......................................................................
Name of Firm................................................................
Address.....................................................................
.....................................................................
(Include Zip Code)
Area Code and Telephone Number..............................................
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders of
the Company either if Share certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth herein and in Section
3 of the Offer to Purchase. For a stockholder validly to tender Shares
pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees or an Agent's Message (in connection with book-entry
transfer) and any other required documents, must be received by the Depositary
at one of its addresses set forth herein prior to the Expiration Date and
either (i) certificates for tendered Shares must be received by the Depositary
at one of such addresses prior to the Expiration Date or (ii) Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
and in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must
be received by the Depositary prior to the Expiration Date or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-
entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section
3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Shares), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other required documents
must be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the Nasdaq National Market is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
<PAGE>
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so
to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares
not tendered or not accepted for payment are to be issued in the name of a
person other than the registered holder(s). Signatures on any such Share
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such other
person) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
<PAGE>
7. Special Payment and Delivery Instructions; Wire Transfers. If a check for
the purchase price of any Shares accepted for payment is to be issued in the
name of, and/or Share certificates for Shares not accepted for payment or not
tendered are to be issued in the name of and/or returned to, a person other
than the signer of this Letter of Transmittal or if a check is to be sent,
and/or such certificates are to be returned, to a person other than the signer
of this Letter of Transmittal, or to an address other than that shown above,
the appropriate boxes on this Letter of Transmittal should be completed. Any
stockholder(s) delivering Shares by book-entry transfer may request that
Shares not purchased be credited to such account maintained at a Book-Entry
Transfer Facility as such stockholder(s) may designate in the box entitled
"Special Payment Instructions." If no such instructions are given, any such
Shares not purchased will be returned by crediting the account at the Book-
Entry Transfer Facility designated above as the account from which such Shares
were delivered.
8. Requests for Assistance or Additional Copies. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address and phone number set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. Waiver of Conditions. Subject to the Merger Agreement, Purchaser reserves
the absolute right in its sole discretion to waive, at any time or from time
to time, any of the specified conditions of the Offer, in whole or in part, in
the case of any Shares tendered.
10. Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify,
under penalties of perjury, that such TIN is correct and that such stockholder
is not subject to backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. Lost, Destroyed or Stolen Share Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is his social security number. If a
tendering stockholder is subject to backup withholding, such stockholder must
cross out item (2) of the Certification box on the Substitute Form W-9. If the
Depositary is not provided with the correct taxpayer identification number,
the stockholder may be subject to a $50 penalty imposed by the Internal
Revenue Service. In addition, payments that are made to such stockholder with
respect to Shares purchased pursuant to the Offer may be subject to backup
withholding.
Certain stockholders (including, among others, all corporations, and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9
to the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form contained herein certifying that the TIN provided on
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN.
What Number to Give the Depositary
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
such stockholder should write "Applied For" in the space provided for in the
TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price
until a TIN is provided to the Depositary.
<PAGE>
PAYER'S NAME: The Bank of New York
- -------------------------------------------------------------------------------
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR ----------------------
Form W-9 TIN IN THE BOX AT RIGHT AND Social Security Number
Department of CERTIFY BY SIGNING AND (If awaiting TIN write
the Treasury DATING BELOW "Applied For")
Internal
Revenue Service
OR
----------------------
Payer's Request for Taxpayer Identification Number ("TIN")
Part 2--Certificate--Under penalties of perjury, I
certify that:
Employer Identification
Number
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued for me), and
(If awaiting TIN write
"Applied For")
--------------------------------------------------------
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
--------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item
(2) above if you have been notified by the IRS that
you are currently subject to backup withholding be-
cause of under-reporting interest or dividends on
your tax returns. However, if after being notified by
the IRS that you are subject to backup withholding,
you receive another notification from the IRS that
you are no longer subject to backup withholding, do
not cross out such item (2). (Also see instructions
in the enclosed Guidelines).
SIGNATURE __________________________ DATE ______,1999
--------------------------------------------------------
Part 3--Awaiting TIN [_]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number to the
Depositary by the time of payment, 31% of all reportable payments made to
me thereafter will be withheld, but that such amounts will be refunded to
me if I provide a certified Taxpayer Identification Number to the
Depositary within sixty (60) days.
______________________________________ ____________________________, 1999
Signature Date
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below:
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll Free: (800) 322-2885
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Call Toll Free: (888) 511-5800
<PAGE>
EXHIBIT 99(A)(3)
NOTICE OF GUARANTEED DELIVERY
For
Tender of Shares of Common Stock
of
Optek Technology, Inc.
to
DKM Acquisition Corp.
a wholly owned subsidiary of
The Dyson-Kissner-Moran Corporation
(Not to Be Used for Signature Guarantees)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of Common Stock, par value $0.01 per share (the "Shares"),
of Optek Technology, Inc., a Delaware corporation, are not immediately
available, if the procedure for book-entry transfer cannot be completed prior
to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or
if time will not permit all required documents to reach the Depositary prior
to the Expiration Date. Such form may be delivered by hand, transmitted by
facsimile transmission or mailed to the Depositary. See Section 3 of the Offer
to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight
Courier:
Tender & Exchange (212) 815-6213
Department (for Eligible Institutions Only) Tender & Exchange
P.O. Box 11248 Department
Church Street Station 101 Barclay Street
New York, New York Receive and Deliver
10286-1248 Window
New York, New York 10286
For Confirmation Telephone:
(800) 507-9357
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via facsimile transmission
other than as set forth above will not constitute a valid delivery.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to DKM Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of The Dyson-Kissner-
Moran Corporation, a Delaware corporation, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase dated May 18, 1999 and
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer"), receipt of which is hereby
acknowledged, the number of shares set forth below of common stock, par value
$0.01 per share (the "Shares"), of Optek Technology, Inc., a Delaware
corporation, pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Number of Shares: ________________ Name(s) of Record Holder(s):
Certificate Nos. (if available): __________________________________
__________________________________
__________________________________ Please Print
__________________________________
Address(es): _____________________
Check box if Shares will be ten-
dered by book-entry transfer: __________________________________
__________________________________
Account Number: __________________ Zip Code
Dated: _____________________, 1999 Area Code and Tel. No.:
__________________________________
__________________________________
Signature(s): ____________________
__________________________________
GUARANTEE
(Not to Be Used for Signature Guarantees)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, guarantees to deliver to the Depositary
either certificates representing the Shares tendered hereby, in proper form
for transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts at The Depository Trust Company, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or an Agent's
Message, and any other documents required by the Letter of Transmittal,
within three trading days (as described in the Offer to Purchase) after the
date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown
herein. Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: ______________________ ____________________________________
Authorized Signature
Address: ___________________________ Name: ______________________________
Please Print
____________________________________ Title: _____________________________
Zip Code
Area Code and Tel. No.: ____________ Dated: _______________________, 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99(A)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Optek Technology, Inc.
at
$25.50 Net per Share
By
DKM Acquisition Corp.
a wholly owned subsidiary of
The Dyson-Kissner-Moran Corporation
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
May 18, 1999
To: Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been appointed by DKM Acquisition Corp., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of The Dyson-Kissner-Moran
Corporation, a Delaware corporation ("Parent"), to act as Dealer Manager in
connection with Purchaser's offer to purchase all outstanding shares of common
stock, par value $0.01 per share (the "Shares"), of Optek Technology, Inc., a
Delaware corporation (the "Company"), at $25.50 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated May 18, 1999 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, constitute the "Offer") enclosed herewith. Please furnish copies of
the enclosed materials to those of your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the
Offer to Purchase) that number of Shares which, when added to the Shares
beneficially owned by Parent or Purchaser (if any), represents at least a
majority of the Shares outstanding on a fully diluted basis on the date Shares
are accepted for payment. The Offer is also subject to the other conditions in
the Offer to Purchase. See Section 14 of the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase dated May 18, 1999;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry transfer
cannot be completed, by the Expiration Date (as defined in the Offer to
Purchase);
4. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
<PAGE>
5. A letter to stockholders of the Company from Thomas R. Filesi,
Chairman and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 dated May 18, 1999,
which has been filed by the Company with the Securities and Exchange
Commission;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to The Bank of New York (the
"Depositary").
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to
the Offer. Payment for Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (i) certificates
for such Shares, or timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company, pursuant
to the procedures described in Section 3 of the Offer to Purchase, (ii) a
properly completed and duly executed Letter of Transmittal (or a properly
completed and manually signed facsimile thereof) or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer and
(iii) all other documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Depositary and the
Information Agent as described in the Offer to Purchase) for soliciting
tenders of Shares pursuant to the Offer. Purchaser will, however, upon
request, reimburse brokers, dealers, commercial banks and trust companies for
customary mailing and handling costs incurred by them in forwarding the
enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of
the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
BEAR, STEARNS & CO. INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE
DEPOSITARY, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT 99(A)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Optek Technology, Inc.
at
$25.50 Net per Share
By
DKM Acquisition Corp.
a wholly owned subsidiary of
The Dyson-Kissner-Moran Corporation
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
To: Our Clients: May 18, 1999
Enclosed for your consideration are the Offer to Purchase dated May 18, 1999
and the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") in connection with
the offer by DKM Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly owned subsidiary of The Dyson-Kissner-Moran Corporation, a Delaware
corporation ("Parent"), to purchase for cash all outstanding shares of common
stock, par value $0.01 per share (the "Shares"), of Optek Technology, Inc., a
Delaware corporation (the "Company"). We are the holder of record of Shares
held for your account. A tender of such Shares can be made only by us as the
holder of record and pursuant to your instructions. The enclosed Letter of
Transmittal is furnished to you for your information only and cannot be used
by you to tender Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $25.50 per Share, net to you in cash without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby, including the Offer and the Merger (each as defined
in the Offer to Purchase), and has unanimously determined that the Offer
and the Merger are fair to, and in the best interest of, the Company's
stockholders and unanimously recommends that the stockholders accept the
Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on June 15, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the
Offer to Purchase) that number of Shares which, when added to the Shares
beneficially owned by Parent or Purchaser (if any), represents at least a
majority of the Shares outstanding on a fully diluted basis on the date
Shares are accepted for payment. The Offer is also subject to the other
conditions in the Offer to Purchase. See Section 14 of the Offer to
Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
<PAGE>
Except as disclosed in the Offer to Purchase, Purchaser is not aware of any
state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares
will be tendered unless otherwise specified on the reverse side of this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
OPTEK TECHNOLOGY, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated May 18, 1999 and the related Letter of Transmittal in
connection with the Offer by DKM Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of The Dyson-Kissner-Moran Corporation, a Delaware
corporation,, to purchase all outstanding shares of common stock, par value
$0.01 per share (the "Shares"), of Optek Technology, Inc., a Delaware
corporation.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares to be Tendered:*
___________________________________
Shares
Dated: , 1999 _____________________________________
_____________________________________
Signature(s)
_____________________________________
Print Name(s)
_____________________________________
_____________________________________
Address(es)
_____________________________________
Area Code and Telephone Number
_____________________________________
Tax ID or Social Security Number
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
EXHIBIT 99(A)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social Security numbers have nine digits separated by two hyphens: i.e., 000-
00-0000. Employer identification numbers have nine digits separated by only
one hyphen, i.e. 00-0000000. The table below will help determine the number to
give the payer.
- -------------------------------------- --------------------------------------
Give the
SOCIAL SECURITY
For this type of account number of--
- ----------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account or,
if combined funds,
any one of the
individuals (2)
3. Husband and wife (joint The actual owner
account) of the account or,
if joint funds,
either person (2)
4. Custodian account of a The minor (3)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor (1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person (4)
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee (1)
(grantor is also
trustee)
b. So-called trust The actual owner
account that is not a (1)
legal or valid trust
under State law
8. Sole proprietorship ac-
count The owner (5)
9. A valid trust, estate, The legal entity
or pension trust (do not furnish
the identifying
number of the
personal
representative or
trustee unless the
legal entity
itself is not
designated in the
account title) (1)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or The broker or
registered nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
- ---------------
(1) List first and circle the name of the legal trust, estate, or pension
trust.
(2) List first and circle the name of the person whose number you furnish.
(3) Circle the minor's name and furnish the minor's social security number.
(4) Circle the ward, minor's or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the owner.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Card, or Form SS-
4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
Except as described below, backup withholding is not required if the payee is:
1. An organization exempt from tax under section 501(a), any IRA, or a
custodial account under section 404(b)(7) if the account satisfies the
requirements of section 401(f)(2).
2. The United States or any of its agencies or instrumentalities.
3. A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
4. A foreign government or any of its political subdivisions, agencies or
instrumentalities.
5. An international organization or any of its agencies or instrumentalities.
Other payees that may be exempt from backup withholding include:
6. A corporation.
7. A foreign central bank of issue.
8. A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
9. A futures commission merchant registered with the Commodity Futures
Trading Commission.
10. A real estate investment trust.
11. An entity registered at all times during the tax year under the
Investment Company Act of 1940.
12. A common trust fund operated by a bank under section 584(a).
13. A financial institution.
14. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of
Corporate Secretaries, Inc., Nominee List.
15. A trust exempt from tax under section 664 or described in section 4947.
Interest and dividend payments. All listed payees are exempt except the payee
in item 9.
Broker transactions. All payees listed in items 1 through 13 are exempt. A
person registered under the Investment Advisors Act of 1940 who regularly acts
as a broker is also exempt.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, CHECK "EXEMPT" IN PART II OF THE FORM, SIGN AND DATE
THE FORM AND RETURN IT TO THE PAYER.
Payments of dividends and patronage dividends not generally subject to backup
withholding include:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 404(k) distributions made by an ESOP.
Payments of interest not generally subject to backup withholding include:
. Payments of interest on obligations issued by individuals. However if you
pay $600 or more of interest in the course of your trade or business to a
payee, you must report the payment. Backup withholding applies to the
reportable payment if the payee has not provided a TIN or has provided an
incorrect TIN.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid to you.
Certain payments other than interest, dividends and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A,
6042, 6044, 6045, 6049, 6050A and 6050N.
Privacy Act Notice.--Section 6109 of the Internal Revenue Code requires you to
give your correct TIN to persons who must file information returns with the
IRS to report interest, dividends, and certain other income paid to you,
mortgage interest you paid, the acquisition or abandonment of secured
property, cancellation of debt, or contributions you made to an IRA. The IRS
uses the numbers for identification purposes to help verify the accuracy of
your tax return. The IRS may also provide this information to the Department
of Justice for civil and criminal litigation and to cities, states, and the
District of Columbia to carry out their tax laws.
You must provide your TIN whether or not you are required to file a tax
return. Payers must generally withhold 31% of taxable interest, dividend, and
certain other payments to a payee who does not give a Tin to a payer. Certain
penalties may also apply.
Penalties
Failure to Furnish TIN.--If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding.--If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
[LOGO]
Contacts:
William J. Collinsworth
Vice President and Chief Financial Officer
Optek Technology, Inc.
(972) 323-2301
For Immediate Release
John H. FitzSimons
Secretary and General Counsel
The Dyson-Kissner-Moran Corporation
(212) 885-1626
The Dyson-Kissner-Moran Corporation to Acquire Optek Technology, Inc. for
$25.50 per Share in Cash
Carrollton, Texas and New York, New York (May 12, 1999)--Optek Technology,
Inc. (NASDAQ: OPTT) and The Dyson-Kissner-Moran Corporation ("DKM") jointly
announced that they have signed a definitive agreement for Optek to be
acquired by DKM for $25.50 per share in cash. The value of the transaction is
approximately $200 million on a fully-diluted basis.
In the transaction, Optek shareholders will receive $25.50 per share in cash
under a tender offer for all of Optek's outstanding shares. The tender offer
is expected to commence within a week and is scheduled to close after the
expiration of 20 business days. Optek shares not purchased in the tender offer
will be converted into $25.50 per share in cash in a subsequent merger.
The transaction has been unanimously approved by the Board of Directors of
Optek and is not subject to financing. Optek's Board has recommended that
stockholders tender their shares and approve the merger. The tender offer is
subject to a majority of Optek's shares being tendered and not withdrawn, as
well as other considerations.
Tom Filesi, Chairman and CEO of Optek, commented: "The combination of DKM's
Wabash Technologies and Optek brings together two leaders in their respective
markets and creates opportunities for the customers, suppliers and employees
of both companies. The combined entity will offer its customers access to a
broad array of technologies and present future growth opportunities."
"Optek is a tremendous addition to our core holdings and has all of the
features we look for in an acquisition" said Robert R. Dyson, Chairman and CEO
of DKM.
Separately, Optek announced its results for the second fiscal quarter ended
April 30, 1999. Second quarter revenues were $20.1 million, which represent a
decrease of approximately 13% from the same quarter of the prior fiscal year.
Optek earned $0.30 per share on a diluted basis in the second fiscal quarter
which compares to $0.46 per share on a diluted basis for the same quarter of
the prior fiscal year.
As Optek has previously reported, sales of commercial products have been
soft during the second quarter, particularly in higher margin assembly
products. Softness in the demand for these products is expected to continue
into at least the third quarter. In addition, sales of automotive products
were negatively affected by a customer's decision in the last month of the
quarter to implement a pull system to better control its inventory, resulting
in a reduction in sales. Optek's margins for the quarter were also impacted by
increased expenditures related to establishing capacity for production of
fiber optic products in anticipation of increases in sales of such products in
future periods.
<PAGE>
Optek Technology, Inc. is a leading manufacturer of custom optoelectronic,
magnetic and fiber optic sensor products. Optek provides components worldwide
for manufacturers of office and computer equipment, automobiles, industrial
equipment, aerospace and defense applications, medical equipment and
communications equipment. Additional information can be accessed on the
Internet at http://www.optekinc. com.
The Dyson-Kissner-Moran Corporation is a privately owned holding company
with 1998 revenues approaching $700 million. Wabash Technologies, owned by
DKM's Kearney-National Inc. subsidiary, is a producer of customized sensors
and actuators for the global automotive and off-road markets.
<PAGE>
EXHIBIT 99(A)(8)
FOR IMMEDIATE RELEASE
- ----------------------
Contact:
Mark Harnett
MacKenzie Partners, Inc.
(212) 929-5877
John FitzSimons
The Dyson-Kissner-Moran Corporation
(212) 885-1626
THE DYSON-KISSNER-MORAN CORPORATION ANNOUNCES
COMMENCEMENT OF TENDER OFFER FOR OPTEK TECHNOLOGY, INC.
NEW YORK, May 18, 1999 - The Dyson-Kissner-Moran Corporation announced
today that DKM Acquisition Corp., its wholly owned subsidiary, has commenced a
cash tender offer to purchase all of the outstanding shares of Optek Technology,
Inc. [NASDAQ: OPTT] at a price of $25.50 per share.
The offer is being made pursuant to the previously announced merger
agreement among The Dyson-Kissner-Moran Corporation, DKM Acquisition Corp. and
Optek Technology, Inc. The offer is conditioned upon, among other things, the
tender of a majority of the shares outstanding on a fully diluted basis and the
expiration or earlier termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. The offer and withdrawal
rights are scheduled to expire at 12:00 midnight, New York City time, on June
15, 1999, unless the offer is extended. Bear, Stearns & Co. Inc. is acting as
the Dealer Manager and MacKenzie Partners, Inc. is acting as the Information
Agent in connection with the offer.
The Dyson-Kissner-Moran Corporation is a privately owned holding company
with annual revenues approaching $700 million.
Optek Technology, Inc. is a leading manufacturer of custom optoelectronic,
magnetic and fiber optic sensor products. Optek provides components worldwide
for manufacturers of office and computer equipment, automobiles, industrial
equipment, aerospace and defense applications, medical equipment and
communications equipment. Additional information can be accessed on the internet
at http://www.optekinc.com.
This press release is neither an offer to purchase nor a solicitation of an
offer to sell securities. The tender offer is made only through the Offer to
Purchase and the related Letter of Transmittal which is being mailed to
stockholders today. Additional copies of such documents can be obtained by
contacting the Dealer Manager at (888) 511-5800 or the Information Agent at
(800) 322-2885.
# # #
<PAGE>
EXHIBIT 99(A)(9)
- --------------------------------------------------------------------------------
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated May 18,
1999, and the related Letter of Transmittal, and is being made to all holders of
Shares. The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction or any administrative or judicial action pursuant thereto. In
any jurisdiction where securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of DKM Acquisition Corp. by Bear, Stearns & Co. Inc. or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
of
Optek Technology Inc.
at
$25.50 Net Per Share
by
DKM Acquisition Corp.
a wholly owned subsidiary of
The Dyson-Kissner-Moran Corporation
DKM Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly
owned subsidiary of The Dyson-Kissner Moran Corporation, a Delaware corporation
("Parent"), is offering to purchase all of the outstanding shares of Common
Stock par value $.O1 per share (the "Shares"), of Optek Technology, Inc., a
Delaware corporation (the "Company"), at a price of $25.50 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated May 18, 1999 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the Offer
to Purchase) that number of Shares which, when added to the Shares beneficially
owned by Parent or Purchaser (if any), represents at least a majority of the
Shares outstanding (on a fully diluted basis) on the date Shares are accepted
for payment. The Offer is also subject to the other conditions set forth in the
Offer to Purchase. See Section 14 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 12, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company. The Merger Agreement provides that, as soon as practicable after
the completion of the Offer and satisfaction or waiver, if permissible of all
conditions contained in the Merger Agreement, and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Purchaser will be merged
with and into the Company (the "Merger"). Following the consummation of the
Merger, the Company will continue as the surviving corporation and will be a
direct wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each Share then outstanding (other than Shares held by
the Company or any of its subsidiaries. Parent or any of its subsidiaries
including Purchaser and stockholders who properly perfect their dissenters'
rights under the DGCL) will be convened into the right to receive $25.50 in cash
(or such higher price paid pursuant to the Offer) without interest thereon.
In connection with the execution of the Merger Agreement, Parent and the
Company have entered into a Stock Option Agreement, dated as of May 12, 1999
(the "Option Agreement"), pursuant to which the Company has granted to Parent an
irrevocable option to purchase up to the number of Shares as equals 19.9% of the
Company's Shares outstanding on the date thereof.
The Board of Directors of the Company has unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, and has unanimously determined that the Offer and the Merger are fair
to, and in the best interests of, the Company's stockholders and unanimously
recommends that its stockholders accept the Offer and tender their Shares
pursuant to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of its acceptance for payment
of such Shares. Upon the terms and subject to the conditions of the Offer,
payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from
Purchaser and transmitting payment to tendering stockholders. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares (or a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase)), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase), and (iii) any other documents required by the Letter of Transmittal.
The per Share consideration paid to any stockholder pursuant to the Offer will
be the highest per Share consideration paid to any other stockholder pursuant to
the Offer. Under no circumstances will interest be paid on the purchase price
to be paid by Purchaser for such Shares, regardless of any extension of the
Offer or any delay in making such payment.
The term "Expiration Date" shall mean 12:00 Midnight New York City time, on
Tuesday, June 15, 1999, unless and until Purchaser (in accordance with the terms
of the Merger Agreement), shall have extended the period of time during which
The Offer is open, in which event the term "Expiration Date" shall mean the
latest time and date at which the Offer, as so extended by Purchaser, shall
expire. Subject to the applicable rules and regulations of the Securities and
Exchange Commission and to applicable law, Purchaser expressly reserves the
right in its sole discretion (subject to the terms of the Merger Agreement), at
any time and from time to time, to extend for any reason the period of time
during which the Offer is open, including the occurrence of any of the events
specified in Section 14 of the Offer to Purchase, by giving oral or written
notice of such extension to the Depositary. Any such extension will be followed
by a public announcement thereof by no later than 9:00 am., New York City time,
on the next business day after the previously scheduled Expiration Date. During
any such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares. Without limiting the manner in which
Purchaser may choose to make any public announcement, Purchaser will have no
obligation to publish, advertise or otherwise communicate any such announcement
other than by issuing a press release to the Dow Jones News Service or otherwise
as may be required by applicable law.
Except as otherwise provided below, tenders of Shares made pursuant to the
Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at
any time prior to the Expiration Date and, unless theretofore accepted for
payment pursuant to the Offer, may also be withdrawn at any time after July 16,
1999, or such later time as may apply if the Offer is extended. For a withdrawal
to be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth in the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates evidencing such Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered for the
account of an Eligible Institution (as defined in the Offer to Purchase), the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase, any notice
of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals
of tenders of Shares may not be rescinded, and any Shares properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will he final and binding.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended, is contained in
the Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal and
other relevant documents will be mailed to record holders of Shares whose names
appear on the stockholder list and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the Company's stockholder lists, or, if applicable,
who are listed as participants in a clearing agency's security position listing,
for subsequent transmittal to beneficial owners of Shares.
<PAGE>
The Offer to Purchase and the related Letter of Transmittal contain
important information and should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be directed
to the Information Agent or the Dealer Manager (each as defined in the Offer to
Purchase), at their respective addresses and telephone numbers set forth below,
and copies will be furnished promptly at Purchaser's expense. Neither of Parent
or Purchaser will pay any fees or commissions to any broker or dealer or other
person other than the Dealer Manager and the Information Agent for soliciting
tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[LOGO] MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE: (800) 322-2885
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
CALL TOLL-FREE: (888) 511-5800
May 18, 1999
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99(B)(1)
CREDIT AGREEMENT
Dated as of June 26, 1996
among
THE DYSON-KISSNER-MORAN CORPORATION,
as Borrower,
THE SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO,
NATIONSBANK, N.A.,
as Administrative Agent
and
Documentation Agent
and
THE BANK OF NOVA SCOTIA,
as Syndication Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 DEFINITIONS.............................................. 1
1.1 Definitions.............................................. 1
1.2 Computation of Time Periods.............................. 31
1.3 Accounting Terms......................................... 31
SECTION 2 CREDIT FACILITIES........................................ 32
2.1 Revolving Loans.......................................... 32
2.2 Letter of Credit Subfacility............................. 34
2.3 Swingline Loan Subfacility............................... 41
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES........... 43
3.1 Default Rate............................................. 43
3.2 Extension and Conversion................................. 43
3.3 Prepayments.............................................. 44
3.4 Termination and Reduction of Revolving Committed Amount.. 45
3.5 Fees..................................................... 46
3.6 Capital Adequacy......................................... 47
3.7 Inability To Determine Interest Rate..................... 47
3.8 Illegality............................................... 48
3.9 Requirements of Law...................................... 48
3.10 Taxes.................................................... 50
3.11 Indemnity................................................ 52
3.12 Pro Rata Treatment....................................... 53
3.13 Sharing of Payments...................................... 53
3.14 Payments, Computations, Etc.............................. 54
3.15 Evidence of Debt......................................... 57
3.16 Change of Lending Office; Mandatory Assignment........... 57
SECTION 4 GUARANTY................................................. 58
4.1 The Guarantee............................................ 58
4.2 Obligations Unconditional................................ 58
4.3 Reinstatement............................................ 60
4.4 Certain Additional Waivers............................... 60
4.5 Remedies................................................. 60
4.6 Rights of Contribution................................... 61
4.7 Continuing Guarantee..................................... 61
SECTION 5 CONDITIONS............................................... 62
5.1 Closing Conditions....................................... 62
5.2 Conditions to all Extensions of Credit................... 64
</TABLE>
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<TABLE>
<S> <C>
SECTION 6 REPRESENTATIONS AND WARRANTIES................................................... 65
6.1 Financial Condition.............................................................. 65
6.2 No Change........................................................................ 67
6.3 Organization; Existence; Compliance with Law..................................... 67
6.4 Power; Authorization; Enforceable Obligations.................................... 67
6.5 No Legal Bar..................................................................... 68
6.6 No Material Litigation........................................................... 68
6.7 Ownership of Property; Liens..................................................... 68
6.8 Intellectual Property............................................................ 68
6.9 No Burdensome Restrictions....................................................... 69
6.10 Taxes............................................................................ 69
6.11 ERISA............................................................................ 69
6.12 Governmental Regulations, Etc.................................................... 70
6.13 Subsidiaries..................................................................... 72
6.14 Purpose of Loans and Letters of Credit........................................... 72
6.15 Environmental Matters............................................................ 72
SECTION 7 AFFIRMATIVE COVENANTS............................................................ 73
7.1 Information Covenants............................................................ 74
7.2 Preservation of Existence and Franchises......................................... 77
7.3 Books and Records................................................................ 78
7.4 Compliance with Law.............................................................. 78
7.5 Payment of Taxes................................................................. 78
7.6 Insurance........................................................................ 78
7.7 Maintenance of Property.......................................................... 78
7.8 Use of Proceeds.................................................................. 78
7.9 Audits/Inspections............................................................... 78
7.10 Financial Covenants.............................................................. 79
7.11 Additional Credit Parties........................................................ 79
SECTION 8 NEGATIVE COVENANTS............................................................... 82
8.1 Indebtedness..................................................................... 82
8.2 Liens............................................................................ 84
8.3 Consolidation, Merger, Sale or Purchase of Assets, etc........................... 85
8.4 Investments...................................................................... 89
8.5 Restricted Payments.............................................................. 90
8.6 Amendment of Charter Documents, Prepayments of Indebtedness, etc................. 91
8.7 Transactions with Affiliates..................................................... 91
8.8 Fiscal Year...................................................................... 92
8.9 Limitation on Restrictions on Subsidiary Dividends and Other Distributions, etc.. 92
8.10 Sale Leasebacks.................................................................. 92
8.11 No Further Negative Pledges...................................................... 92
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
8.12 Unconsolidated Subsidiaries...................................................... 93
8.13 Speculative Real Estate Investments and Hedging Arrangements..................... 93
SECTION 9 EVENTS OF DEFAULT................................................................ 93
9.1 Events of Default................................................................ 93
9.2 Acceleration; Remedies........................................................... 96
</TABLE>
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<TABLE>
<S> <C>
SECTION 10 AGENCY PROVISIONS................................. 97
10.1 Appointment....................................... 97
10.2 Delegation of Duties.............................. 98
10.3 Exculpatory Provisions............................ 98
10.4 Reliance on Communications........................ 98
10.5 Information and Notices........................... 99
10.6 Non-Reliance on Agent and Other Lenders........... 99
10.7 Indemnification................................... 100
10.8 Agent in its Individual Capacity.................. 101
10.9 Successor Agent................................... 101
10.10 Syndication Agent................................. 101
SECTION 11 MISCELLANEOUS..................................... 101
11.1 Notices........................................... 101
11.2 Right of Set-Off.................................. 102
11.3 Benefit of Agreement.............................. 102
11.4 No Waiver; Remedies Cumulative.................... 106
11.5 Payment of Expenses, etc.......................... 106
11.6 Amendments, Waivers and Consents.................. 107
11.7 Counterparts...................................... 108
11.8 Headings.......................................... 108
11.9 Survival.......................................... 108
11.10 Governing Law; Submission to Jurisdiction; Venue.. 108
11.11 Severability...................................... 109
11.12 Entirety.......................................... 109
11.13 Binding Effect; Termination....................... 109
11.14 Confidentiality................................... 109
11.15 Source of Funds................................... 110
11.16 Release of Guarantors and Pledged Stock........... 111
11.17 Conflict.......................................... 112
</TABLE>
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<PAGE>
SCHEDULES
Schedule 1.1A Existing Letters of Credit
Schedule 1.1B Liens
Schedule 1.1C Tender Offer for Stock Repurchase
Schedule 1.1D Form of Pledge Agreement
Schedule 2.1(a) Lenders
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Committed Revolving Note
Schedule 2.3(d) Form of Swingline Note
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 5.1(h) Form of Haythe & Curley Opinion
Schedule 5.1(i) Form of Opinion of John H. FitzSimons, Esq.
Schedule 5.1(j) Form of Haythe & Curley Opinion Regarding Substantive
Consolidation Issues
Schedule 6.8 Intellectual Property
Schedule 6.13 Subsidiaries
Schedule 7.1(c) Form of Officer's Compliance Certificate
Schedule 7.11 Form of Joinder Agreement
Schedule 8.1 Existing Guaranty Obligations in Respect of
Indebtedness of Unconsolidated Subsidiaries
Schedule 8.9 Existing Restrictions on Subsidiary Dividends
Schedule 11.3 Form of Assignment and Acceptance
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<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of June 26, 1996 (the "Credit Agreement"),
----------------
is by and among THE DYSON-KISSNER-MORAN CORPORATION, a Delaware corporation (the
"Borrower"), the subsidiaries of the Borrower identified on the signature pages
--------
hereto and such other subsidiaries as may from time to time become a party
hereto (the "Guarantors"), the several lenders identified on the signature pages
----------
hereto and such other lenders as may from time to time become a party hereto
(the "Lenders"), NATIONSBANK, N.A., as administrative agent (in such capacity,
-------
the "Agent") and documentation agent (in such capacity, the "Documentation
----- -------------
Agent") for the Lenders, and THE BANK OF NOVA SCOTIA, as syndication agent (in
such capacity, the "Syndication Agent").
-----------------
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a $220,000,000
credit facility for the purposes hereinafter set forth;
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
-----------
1.1 Definitions. As used in this Credit Agreement, the following terms
-----------
shall have the meanings specified below unless the context otherwise requires:
"Acceptable Accountant" means any of Coopers & Lybrand LLP, Deloitte &
---------------------
Touche LLP, Ernst & Young LLP, KPMG Peat Marwick LLP and Price Waterhouse
LLP, or any successor firm to a merger or other combination of any of the
foregoing Persons (i) with any other of the foregoing Persons, (ii) with
Arthur Andersen, LLP or (iii) provided that such foregoing Person is the
--------
surviving entity, with another accounting firm.
"Acquisition Conditions" means, in connection with any purchase, lease
----------------------
or other acquisition of the type referred to in Section 8.3(d), that (1) if
such purchase, lease or other acquisition involves a purchase, lease or
other acquisition of Property with respect to which the purchase price
exceeds $10,000,000, the Borrower shall have first delivered
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<PAGE>
to the Agent a Pro Forma Compliance Certificate demonstrating that, upon
giving effect to such purchase, lease or other acquisition on a Pro Forma
Basis, no Default or Event of Default would exist as a result of a
violation of Section 7.10(a) or Section 7.10(c) and (2) the aggregate
purchase price (including cash and noncash consideration) paid by the
Borrower and/or its Consolidated Subsidiaries for the capital stock,
securities or Properties purchased, leased or otherwise acquired in any
such purchase, lease or other acquisition individually shall not exceed
$100,000,000.
"Additional Credit Party" means each Person that becomes a Guarantor
-----------------------
after the Closing Date by execution of a Joinder Agreement.
"Affiliate" means, with respect to any Person, any other Person (i)
---------
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the equity interest in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agency Services Address" means NationsBank, N.A., NC1001-15-04, 101
-----------------------
South Tryon Street, Charlotte, North Carolina 28255, Attn: Agency Services,
or such other address as may be identified by written notice from the Agent
to the Borrower.
"Agent" shall have the meaning assigned to such term in the heading
-----
hereof, together with any successors or assigns.
"Agent's Fee Letter" means that certain letter agreement, dated as of
------------------
the Closing Date, between the Agent and the Borrower, as amended, modified,
supplemented or replaced from time to time.
"Agent's Fees" shall have the meaning assigned to such term in Section
------------
3.5(d).
"Applicable Percentage" means, for purposes of calculating the
---------------------
applicable interest rate for any day for any Eurodollar Loan or the
applicable rate of the Unused Fee for any day for purposes of Section
3.5(b) or the applicable rate of the Standby Letter of Credit Fee for any
day for purposes of Section 3.5(c)(i), the appropriate applicable
percentage corresponding to the Consolidated Debt Coverage Ratio in effect
as of the most recent Calculation Date:
<TABLE>
<CAPTION>
===========================================================================================================
Pricing Pricing Pricing Pricing
Level I Level II Level III Level IV
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
If the Consolidated If the Consolidated
If the Consolidated Debt Coverage Ratio Debt Coverage Ratio If the
Debt Coverage Ratio is greater than 1.50 is greater than 2.50 Consolidated
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
is equal to or less but equal to or less but equal to or less Debt Coverage
than 1.50 than 2.50 than 3.25 Ratio is greater
than 3.25
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Eurodollar
Loan 0.50% 0.75% 1.00% 1.25%
- -----------------------------------------------------------------------------------------------------------
Unused Fee 0.20% 0.25% 0.3125% 0.375%
- -----------------------------------------------------------------------------------------------------------
Standby
Letter of
Credit Fee 0.50% 0.75% 1.00% 1.25%
===========================================================================================================
</TABLE>
Determination of the Applicable Percentages based on the Consolidated Debt
Coverage Ratio shall be made as of each Calculation Date. The Consolidated
Debt Coverage Ratio in effect as of a Calculation Date shall establish the
Applicable Percentages that shall be effective as of the date designated by
the Agent as the Applicable Percentage Change Date. The Agent shall
determine the Applicable Percentages as of each Calculation Date based upon
the Required Financial Information for such Calculation Date and shall
promptly notify the Borrower and the Lenders of the Applicable Percentages
so determined and of the Applicable Percentage Change Date. Such
determinations by the Agent of the Applicable Percentages shall be
conclusive absent demonstrable error. The initial Applicable Percentages
shall be based on Pricing Level II until the first Applicable Percentage
Change Date occurring after the Closing Date.
"Applicable Percentage Change Date" means, with respect to any
---------------------------------
Calculation Date, a date designated by the Agent that is not more than five
(5) Business Days after the date that the Required Financial Information
for such Calculation Date is required to be delivered to the Agency
Services Address as required by Section 7.1(a) or (b)(i), as applicable,
and by Section 7.1(c).
"Application Period" shall have the meaning assigned to such term (i)
------------------
in connection with any Subsidiary Dissolution, in Section 8.3(a)(ii) and
(ii) in connection with any Asset Disposition, in Section 8.3(c)(vii).
"Asset Disposition" means any sale by the Borrower or any Consolidated
-----------------
Subsidiary of any asset (including stock in Subsidiaries) pursuant to the
terms of Section 8.3(c)(vii).
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
---------------
States Code, as amended, modified, succeeded or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence
----------------
of any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other
-3-
<PAGE>
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there shall
be commenced against such Person an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
any case, proceeding or other action for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or for
the winding up or liquidation of its affairs, and such involuntary case or
other case, proceeding or other action shall remain undismissed,
undischarged or unbonded for a period of sixty (60) consecutive days; or
(iii) such Person shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case under
any such law, or consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part of its
Property or make any general assignment for the benefit of creditors; or
(iv) such Person shall admit in writing its inability to pay its debts
generally as they become due.
"Base Rate" means, for any day, the rate per annum (rounded upwards,
---------
if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
greater of (a) the Federal Funds Rate in effect on such day plus 2 of 1% or
----
(b) the Prime Rate in effect on such day. If for any reason the Agent
shall have determined (which determination shall be conclusive absent
demonstrable error) that it is unable after due inquiry to ascertain the
Federal Funds Rate for any reason, including the inability or failure of
the Agent to obtain sufficient quotations in accordance with the terms
hereof, the Base Rate shall be determined without regard to clause (a) of
the first sentence of this definition until the circumstances giving rise
to such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective on
the effective date of such change in the Prime Rate or the Federal Funds
Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
--------------
determined by reference to the Base Rate.
"Book Value" means, in respect of any Property as of any date of
----------
determination thereof, (i) with respect to any Property (other than
Property consisting of the ownership interest of a Person in a Subsidiary
of such Person), the book value of such Property at such time and (ii) with
respect to any Property consisting of the ownership interest of a Person in
a Subsidiary of such Person, the equity and net intercompany debt interest
of the Borrower and its Consolidated Subsidiaries in such Property at such
time.
"Borrower" means the Person identified as such in the heading hereof,
--------
together with any permitted successors and assigns.
"Borrower's Obligations" means, without duplication, (i) all of the
----------------------
obligations of the Borrower to the Lenders (including the Issuing Lender)
and the Agent, whenever
-4-
<PAGE>
arising, under this Credit Agreement, the Notes or any of the other Credit
Documents and (ii) all liabilities and obligations, whenever arising, owing
from the Borrower to any Lender, or any Affiliate of a Lender, arising
under any Hedging Agreement or any Person that was a Lender or its
Affiliate at the time it entered into any Hedging Agreement.
"Business Day" means a day other than a Saturday, Sunday or other day
------------
on which commercial banks in Charlotte, North Carolina or New York, New
York are authorized or required by law to close, except that, when used in
------ ----
connection with a Eurodollar Loan, such day shall also be a day on which
dealings between banks are carried on in U.S. dollar deposits in London,
England, Charlotte, North Carolina, and New York, New York.
"Calculation Date" means the last day of each fiscal quarter of the
----------------
Borrower.
"Canadian Pledge Agreement" means that certain pledge agreement,
-------------------------
dated as of the Closing Date, executed in favor of the Senior Creditor
Agent by M.S. Chambers & Son, Inc., J.A. Sexauer, Inc. and Kearney-National
Inc.
"Capital Lease" means, as applied to any Person, any lease of any
-------------
Property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP is or should be accounted for as a capital lease on
the balance sheet of that Person.
"Cash Collateral Account" shall have the meaning assigned to such
-----------------------
term in Section 3.14(b)(ii).
"Cash Equivalents" means (1) with respect to the Borrower and each
----------------
Domestic Consolidated Subsidiary (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (b) U.S.
dollar denominated time deposits, demand deposits and certificates of
deposit of (i) any Lender, or (ii) any domestic commercial bank of
recognized standing (y) having capital and surplus in excess of
$500,000,000 and (z) whose short-term commercial paper rating from S&P is
at least A-1 or the equivalent thereof or from Moody's is at least P-1 or
the equivalent thereof (any such bank being an "Approved Lender"), in each
---------------
case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes issued
by any Approved Lender (or by the parent company thereof) and maturing
within six months of the date of acquisition, (d) repurchase agreements
entered into by such Person with a bank or trust company (including any of
the Lenders) or recognized securities dealer having capital and surplus in
excess of $500,000,000 for direct obligations issued by or fully guaranteed
by the United States of America in which such Person shall have a perfected
first priority security interest (subject to no other Liens) and having, on
the date of purchase thereof, a fair market value of at least 100% of the
amount of the repurchase obligations, (e) obligations of any State of the
United States or any political subdivision thereof, the interest with
respect to which is
-5-
<PAGE>
exempt from federal income taxation under Section 103 of the Code, having a
long term rating of at least Aa-3 or AA- by Moody's or S&P, respectively,
and maturing within three years from the date of acquisition thereof, (f)
Investments in municipal auction preferred stock (i) rated AAA (or the
equivalent thereof) or better by S&P or Aaa (or the equivalent thereof) or
better by Moody's and (ii) with dividends that reset at least once every
365 days and (g) Investments, classified in accordance with GAAP as current
assets, in money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $100,000,000 and the
portfolios of which are limited to Investments of the character described
in the foregoing subdivisions (a), (b), (c), (e) and (f), and (2) with
respect to any Foreign Consolidated Subsidiary (a) any of the items
referred to in clause (1) above, (b) obligations of the national government
of the country in which such Foreign Consolidated Subsidiary maintains its
chief executive office and principal place of business provided such
country is a member of the Organization for Economic Cooperation and
Development, in each case maturing within 360 days after the date of
investment therein, (c) certificates of deposit of, bankers acceptances of,
or time deposits with, any commercial bank which is organized and existing
under the laws of the country in which such Foreign Consolidated Subsidiary
maintains its chief executive office and principal place of business
provided such country is a member of the Organization for Economic
Cooperation and Development, and whose short-term commercial paper rating
from S&P is at least A-1 or the equivalent thereof or from Moody's is at
least P-1 or the equivalent thereof (any such Bank being an "Approved
--------
Foreign Lender"), and in each case with maturities of not more than 270
--------------
days from the date of acquisition and (d) the equivalent of demand deposit
accounts which are maintained with an Approved Foreign Lender.
"Change of Control" means, at any time, the Dyson Family shall cease
-----------------
(a) to own or control legally and beneficially at least 51% of the combined
voting power of all Voting Stock of the Borrower or (b) to have the ability
to elect, directly or indirectly, at least a majority of the members of the
board of directors of the Borrower.
"Closing Date" means the date hereof.
------------
"Code" means the Internal Revenue Code of 1986, as amended, and any
----
successor thereto, as interpreted by the rules and regulations issued
thereunder, in each case as in effect from time to time. References to
sections of the Code shall be construed also to refer to any successor
sections.
"Collateral" means a collective reference to the collateral which at
----------
any time will be covered by the Collateral Documents.
"Collateral Documents" means a collective reference to the Pledge
--------------------
Agreements, any other pledge agreement delivered pursuant to the terms of
Section 7.11, the Financing Statements and such other documents executed
and delivered in connection with the
-6-
<PAGE>
attachment and perfection of the Senior Creditor Agent's, or the Lender's
and Senior Noteholder's, as the case may be, security interests and liens
arising thereunder.
"Commitment" means (i) with respect to each Lender, the Revolving
----------
Commitment of such Lender, (ii) with respect to the Swingline Lender, the
Swingline Commitment, and (iii) with respect to the Issuing Lender, the LOC
Commitment.
"Commitment Percentage" means, for any Lender, the percentage
---------------------
identified as its Commitment Percentage on Schedule 2.1(a), as such
---------------
percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Consolidated Adjusted Net Worth" means, as of any date, (a)
-------------------------------
Consolidated Net Worth as of such date minus (b) the outstanding amount of
-----
Consolidated New Long Term Investments as of such date plus (c) proceeds
----
and other distributions received by the Borrower and/or any of the
Consolidated Subsidiaries subsequent to the Closing Date from the ownership
interest in or operations or sales of Unconsolidated Subsidiaries and from
any other asset or Investment of the Borrower or any Consolidated
Subsidiary which is not, in accordance with GAAP, shown as an asset or
Investment, as applicable, on a consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries, to the extent not otherwise included in
Consolidated Net Worth as of such date.
"Consolidated Capital Expenditures" means, for any period, all capital
---------------------------------
expenditures of the Borrower and its Consolidated Subsidiaries on a
consolidated basis for such period, as determined in accordance with GAAP.
"Consolidated Cash Restricted Payments" means, for any period, all
-------------------------------------
cash Restricted Payments made by the Borrower and any of its Consolidated
Subsidiaries on a consolidated basis (other than any such Restricted
Payments made to the Borrower or a Consolidated Subsidiary) for such
period.
"Consolidated Cash Taxes" means, for any period, all cash taxes of the
-----------------------
Borrower and its Consolidated Subsidiaries on a consolidated basis for such
period, as determined in accordance with GAAP.
"Consolidated Debt Coverage Ratio" means, as of any Calculation Date,
--------------------------------
the ratio of (a) the aggregate principal amount of all Funded Indebtedness
of the Borrower and its Consolidated Subsidiaries on a consolidated basis
as of such Calculation Date to (b) Consolidated EBITA for the four-quarter
period ended as of such Calculation Date.
"Consolidated EBITA" means, for any period, the sum of (a)
------------------
Consolidated Net Income for such period plus (b) an amount which, in the
determination of Consolidated Net Income for such period has been deducted
for (i) Consolidated Interest Expense for such period, (ii) total Federal,
state or other income taxes of the Borrower and its Consolidated
Subsidiaries for such period, and (iii) all amortization expense of the
-7-
<PAGE>
Borrower and its Consolidated Subsidiaries for such period, all as
determined in accordance with GAAP.
"Consolidated EBITDA" means, for any period, the sum of (a)
-------------------
Consolidated EBITA for such period plus (b) an amount which, in the
determination of Consolidated Net Income for such period has been deducted
for all depreciation expense of the Borrower and its Consolidated
Subsidiaries for such period, all as determined in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, as of any
----------------------------------------
Calculation Date, the ratio of (a) (i) Consolidated EBITDA for the four-
quarter period ended as of such Calculation Date minus (ii) Consolidated
-----
Capital Expenditures for the four-quarter period ended as of such
Calculation Date minus (iii) Consolidated Cash Taxes for the four-quarter
-----
period ended as of such Calculation Date minus (iv) Consolidated Cash
-----
Restricted Payments for the four-quarter period ended as of such
Calculation Date to (b) the sum of (i) Consolidated Interest Expense for
the four-quarter period ended as of such Calculation Date plus (ii)
Consolidated Scheduled Funded Indebtedness Payments for the four-quarter
period ended as of such Calculation Date.
"Consolidated Interest Coverage Ratio" means, as of any Calculation
------------------------------------
Date, the ratio of (a) Consolidated EBITA for the four-quarter period ended
as of such Calculation Date to (b) Consolidated Interest Expense for the
four-quarter period ended as of such Calculation Date.
"Consolidated Interest Expense" means, for any period, all interest
-----------------------------
expense (including the interest component under Capital Leases) of the
Borrower and its Consolidated Subsidiaries on a consolidated basis for such
period, as determined in accordance with GAAP; provided, however, that
-------- -------
Consolidated Interest Expense shall not include (i) the interest paid as
part of the Stock Repurchase or (ii) the costs and expenses of the Borrower
incurred in connection with the execution of the Credit Agreement and the
other Credit Documents and/or the Senior Note Agreements and the Senior
Notes.
"Consolidated Net Income" shall mean, for any period the net income
-----------------------
or net loss of the Borrower and its Subsidiaries determined in accordance
with GAAP, but excluding, without duplication, (i) earnings or losses of
any Person in which the Borrower or any of its Consolidated Subsidiaries
has an ownership or profit interest of less than 20% of all such interests
in such Person unless, in the case of any such earnings, such earnings have
been received in the form of cash distributions; (ii) extraordinary gains
or losses, (iii) net earnings or losses of any Consolidated Subsidiary
accrued before it became a direct or indirect Subsidiary of the Borrower;
(iv) to the extent not included in clause (i) above, earnings or losses of
any Person (other than a Consolidated Subsidiary) in which the Borrower or
any of its Consolidated Subsidiaries has an ownership or profit interest
unless such earnings shall have been received in the form of cash
distributions, and then, in the case of any such earnings, only to the
extent such earnings exceed any losses of such Person accumulated from and
after the Closing Date; (v) any portion of net
-8-
<PAGE>
earnings of any Consolidated Subsidiary which is unavailable for
distribution to the Borrower; (vi) earnings or charges resulting from any
write-up or write-down of assets other than in the ordinary course of
business; and (vii) gains or losses resulting from any disposition of
capital stock, securities or Property.
"Consolidated Net Worth" means, as of any date, shareholders' equity
----------------------
of the Borrower and its Subsidiaries on a consolidated basis, as determined
in accordance with GAAP.
"Consolidated New Long Term Investments" means any Investments of
--------------------------------------
the type described in clauses (iii), (v)(B), (vi) (but only to the extent
of any such Investments arising after the Closing Date and pursuant to
Section 8.1(f)(ii)(B)) and (ix) (but only to the extent of any such
Investments arising after the Closing Date and which do not result in a
Person becoming a Consolidated Subsidiary or which are not made by the
Borrower or any Consolidated Subsidiary) of the definition of "Permitted
Investments" set forth in this Section 1.1 (excluding, in any case,
Investments made in the Borrower or in any of its Consolidated
Subsidiaries, but including Investments consisting of a minority equity
interest (valued in accordance with GAAP) retained by the Borrower or a
Consolidated Subsidiary in connection with a sale after the Closing Date of
a majority equity interest in a Consolidated Subsidiary) made by the
Borrower or any of its Consolidated Subsidiaries subsequent to the Closing
Date.
"Consolidated Restricted Net Income" means, for any period, the net
----------------------------------
income or net loss of the Borrower and its Subsidiaries for such period, as
determined in accordance with GAAP, but excluding, without duplication, (i)
earnings or losses attributable to minority interests unless, in the case
of any such earnings, such earnings have been received in the form of cash
distributions; (ii) extraordinary gains or losses, (iii) net earnings or
losses of any Consolidated Subsidiary accrued before it became a direct or
indirect Subsidiary of the Borrower; (iv) earnings or losses of any
business entity (other than a Consolidated Subsidiary) in which the
Borrower or any of its Consolidated Subsidiaries has an ownership interest
unless such earnings shall have been received in the form of cash
distributions; and (v) any portion of net earnings of any Consolidated
Subsidiary which is unavailable for distribution to the Borrower.
"Consolidated Scheduled Funded Indebtedness Payments" means, as of
---------------------------------------------------
the date of determination, the sum of all scheduled payments of principal
on Funded Indebtedness for the Borrower and its Consolidated Subsidiaries
on a consolidated basis for the four-quarter period ended on the date of
determination (including the principal component of payments due on Capital
Leases during the four-quarter period ended on the date of determination);
it being understood that Consolidated Scheduled Funded Indebtedness
Payments shall not include (i) voluntary prepayments or the mandatory
prepayments required pursuant to Section 3.3 hereof, (ii) principal
payments due on the Termination Date, (iii) the repurchases of Senior Notes
contemplated by Section 7.3 or Section 7.4 of the Senior Note Agreements or
the prepayments of the Senior Notes contemplated by
-9-
<PAGE>
Section 7.2 of the Senior Note Agreements or (iv) any payments to the
extent financed through the incurrence of additional Indebtedness permitted
by Section 8.1.
"Consolidated Subsidiary" means any present or future, direct or
-----------------------
indirect Subsidiary of the Borrower which is not an Unconsolidated
Subsidiary; provided, however, that no Subsidiary of the Borrower shall be
-------- -------
a Consolidated Subsidiary for purposes of this Credit Agreement unless such
Subsidiary is also a Consolidated Subsidiary under the Senior Note
Agreements.
"Credit Documents" means a collective reference to this Credit
----------------
Agreement, the Notes, the LOC Documents, each Joinder Agreement, the
Agent's Fee Letter, the Syndication Agent's Fee Letter and the Collateral
Documents.
"Credit Party" means any of the Borrower and the Guarantors.
------------
"Default" means any event, act or condition which with notice or
-------
lapse of time, or both, would constitute an Event of Default.
"Documentation Agent" shall have the meaning assigned to such term
-------------------
in the heading hereof.
"Dollars" and "$" means dollars in lawful currency of the United
------- -
States of America.
"Domestic Consolidated Subsidiary" means any present or future
--------------------------------
Consolidated Subsidiary which is also a Domestic Subsidiary.
"Domestic Subsidiary" means, with respect to any Person, any
-------------------
Subsidiary of such Person which is incorporated or organized under the laws
of any State of the United States or the District of Columbia.
"Dutch Pledge Agreement" means that certain pledge of shares, dated
----------------------
as of the Closing Date, executed in favor of the Senior Creditor Agent by
Thetford Corporation.
"Dyson Family" means, collectively, Charles H. Dyson, his wife, his
------------
lineal descendants and their respective spouses, adopted children of such
descendants, trusts for their benefit, their estates, the estate of
Margaret M. Dyson, The Dyson Charitable Fund, a Delaware corporation, and
Dyson Foundation, a Delaware corporation.
"Eligible Assignee" shall have the meaning assigned to such term in
-----------------
Section 11.3(b).
"Environmental Laws" means any and all lawful and applicable Federal,
------------------
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or other governmental
-10-
<PAGE>
relating to the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment including,
without limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.
"Equity Transaction" means any issuance by the Borrower or any
------------------
Consolidated Subsidiary of (i) shares of its capital stock or other equity
interests or warrants or other rights to acquire such capital stock or
other equity interests, (ii) any shares of its capital stock or other
equity interests pursuant to the exercise of options, warrants or other
rights or (iii) any shares of its capital stock or other equity interests
pursuant to the conversion of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common control with
---------------
the Borrower or any Consolidated Subsidiary within the meaning of Section
4001(a)(14) of ERISA, or is a member of a group which includes the Borrower
or any Consolidated Subsidiary and which is treated as a single employer
under Sections 414(b), (c), (m), or (o) of the Code.
"Eurodollar Loan" means any Loan bearing interest at a rate determined
---------------
by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
---------------
Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate determined pursuant to
the following formula:
Eurodollar Rate = Interbank Offered Rate
--------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage
-----------------------------
(expressed as a decimal) which is in effect from time to time under
Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities as
that term is defined in Regulation D (or against any other category of
liabilities that includes deposits by reference to which the interest rate
of Eurodollar Loans is determined), whether or not
-11-
<PAGE>
Lender has any Eurocurrency liabilities subject to such reserve requirement
at that time. Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements
without benefits of credits for proration, exceptions or offsets that may
be available from time to time to a Lender. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section 9.1.
----------------
"Excess Net Proceeds" means, with respect to any Subsidiary
-------------------
Dissolution made pursuant to Section 8.3(a)(ii) or any Asset Disposition
made pursuant to Section 8.3(c)(vii), the Net Proceeds of such Subsidiary
Dissolution or Asset Disposition, as applicable, which, together with the
Net Proceeds of all other dissolutions, liquidations or windings up
pursuant to Section 8.3(a)(ii) for the period from the Closing Date through
and including the date of such Subsidiary Dissolution or Asset Disposition,
as applicable, and the Net Proceeds of all other sales, leases, transfers
or other dispositions pursuant to Section 8.3(c)(vii) for the period from
the Closing Date through and including the date of such proposed Subsidiary
Dissolution or Asset Disposition, as applicable, exceed 30% of the Book
Value of the Consolidated Subsidiaries as of the most recent Calculation
Date preceding such Subsidiary Dissolution or Asset Disposition, as
applicable, with respect to which the Agent shall have received the
Required Financial Information.
"Excess Net Proceeds Event" means, with respect to any Subsidiary
-------------------------
Dissolution made pursuant to Section 8.3(a)(ii) or any Asset Disposition
made pursuant to Section 8.3(c)(vii), the failure of the Borrower (i) to
make an Investment (or cause its applicable Consolidated Subsidiary to make
an Investment) in the Borrower or any of the Consolidated Subsidiaries
(including Investments and acquisitions which result in a Person becoming a
Consolidated Subsidiary) or (ii) to apply (or cause its applicable
Consolidated Subsidiary to apply) to the purchase, acquisition or
construction of other Property (including any purchases and acquisitions
which result in a Person becoming a Consolidated Subsidiary) during, in the
case of either of clause (i) or (ii) above, the Application Period for such
Subsidiary Dissolution or Asset Disposition, as applicable, as contemplated
by the terms of Section 8.3(a)(ii)(B)(2)(x) or Section
8.3(c)(vii)(B)(2)(x), as applicable, in an amount equal to the Excess Net
Proceeds of such Subsidiary Dissolution or Asset Disposition, as
applicable.
"Existing Credit Agreement" means that certain credit agreement dated
-------------------------
as of March 31, 1993 among the Borrower, the Subsidiary Guarantors party
thereto, the Banks party thereto and The Chase Manhattan Bank (National
Association), as Administrative Agent.
"Existing Letters of Credit" means the letters of credit described by
--------------------------
date of issuance, letter of credit number, undrawn amount, name of
beneficiary and date of expiry on Schedule 1.1A hereto.
-------------
-12-
<PAGE>
"Fees" means all fees payable pursuant to Section 3.5.
----
"Federal Funds Rate" means, for any day, the rate of interest per
------------------
annum (rounded upwards, if necessary, to the nearest whole multiple of
1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day,
provided that (A) if such day is not a Business Day, the Federal Funds Rate
--------
for such day shall be such rate on such transactions on the next preceding
Business Day and (B) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate quoted to the Agent on such day on such transactions as
determined by the Agent.
"Financing Statements" means the UCC financing statements and all
--------------------
renewals and amendments thereto, given by the Borrower and the Subsidiary
Pledgors to the Senior Creditor Agent in connection with the security
interests granted to the Senior Creditor Agent in the Collateral pursuant
to the Collateral Documents.
"Foreign Consolidated Subsidiary" means any present or future
-------------------------------
Consolidated Subsidiary which is not a Domestic Consolidated Subsidiary.
"Foreign Subsidiary" means, with respect to any Person, any
------------------
Subsidiary of such Person which is not a Domestic Subsidiary.
"French Pledge Agreement" means that certain "Acte de cautionnement
-----------------------
reel et de nantissement des parts de Thetford Sarl," dated as of the
Closing Date, executed in favor of the Senior Credit Agent by Thetford
Corporation.
"Funded Indebtedness" means, with respect to any Person, without
-------------------
duplication, (i) all Indebtedness of such Person for borrowed money, (ii)
all purchase money Indebtedness of such Person, including without
limitation the principal portion of all obligations of such Person under
Capital Leases, (iii) all Guaranty Obligations of such Person with respect
to Funded Indebtedness of another Person, (iv) the maximum available amount
of all standby letters of credit or acceptances issued or created for the
account of such Person, (v) all Funded Indebtedness of another Person
secured by a Lien on any Property of such Person, whether or not such
Funded Indebtedness has been assumed and (vi) the principal balance
outstanding under any synthetic lease, tax retention operating lease, off-
balance sheet loan or similar off-balance sheet financing product where
such transaction is considered borrowed money indebtedness for tax purposes
but is classified as an operating lease in accordance with GAAP. The
Funded Indebtedness of any Person (x) shall include the Funded Indebtedness
of any partnership or joint venture in which such Person is a general
partner or joint venturer and (y) shall not include any Intercompany
Indebtedness of such Person.
-13-
<PAGE>
"GAAP" means generally accepted accounting principles in the United
---
States applied on a consistent basis and subject to the terms of Section
1.3 hereof.
"Governmental Authority" means any nation or government, any state,
----------------------
province or other political subdivision thereof, and any government,
executive, legislative, judicial, administrative or regulatory agency,
department, authority, instrumentality, commission, board or similar body,
whether Federal, state, local or foreign.
"Guarantor" means each of those Persons identified as a "Guarantor" on
---------
the signature pages hereto, and each Additional Credit Party which may
hereafter execute a Joinder Agreement, together with their successors and
permitted assigns.
"Guaranty Obligations" means, with respect to any Person, without
--------------------
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor for the purpose of assuring the holder of such Indebtedness, (ii)
to advance or provide funds or other support for the payment or purchase of
any such Indebtedness or to maintain working capital, solvency or other
balance sheet condition of such other Person (including without limitation
keep well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of Indebtedness
of such other Person, (iii) to lease or purchase Property, securities or
services primarily for the purpose of assuring the holder of such
Indebtedness, or (iv) to otherwise assure or hold harmless the holder of
such Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal
amount (or maximum principal amount, if larger) of the Indebtedness in
respect of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection agreement or
------------------
foreign currency exchange agreement between the Borrower and any Lender, or
any Affiliate of a Lender.
"Indebtedness" of any Person means, without duplication, (i) all
------------
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered
into in the ordinary course of business), (iv) all obligations of such
Person issued or assumed as the deferred purchase price of Property or
services purchased by such Person (other than trade debt incurred in the
ordinary course of business and due within six months of the incurrence
thereof) which would appear as liabilities on a balance sheet of such
Person,
-14-
<PAGE>
(v) all obligations of such Person under take-or-pay or similar
arrangements or under commodities agreements other than any such
arrangements or agreements entered into in the ordinary course of business
(other than any commodities trading business), (vi) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, Property owned or acquired
by such Person, whether or not the obligations secured thereby have been
assumed, (vii) all Guaranty Obligations of such Person, (viii) the
principal portion of all obligations of such Person under Capital Leases,
(ix) all obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or
option agreements or other interest or exchange rate or commodity price
hedging agreements (including, but not limited to, the Hedging Agreements),
(x) the maximum available amount of all standby letters of credit issued or
bankers' acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent
unreimbursed) and (xi) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but is classified
as an operating lease in accordance with GAAP. The Indebtedness of any
Person shall include the Indebtedness of any partnership or joint venture
in which such Person is a general partner or a joint venturer.
"Interbank Offered Rate" means, for the Interest Period for each
----------------------
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal
to the rate of interest determined by the Agent on the basis of the offered
rates for deposits in dollars for a period of time corresponding to such
Interest Period (and commencing on the first day of such Interest Period),
which appear on the Reuters Screen LIBO Page as of 11:00 A.M. (London time)
two (2) Business Days before the first day of such Interest Period
(provided that if at least two such offered rates appear on the Reuters
--------
Screen LIBO Page, the rate in respect of such Interest Period will be the
arithmetic mean of such offered rates). As used herein, "Reuters Screen
LIBO Page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Intercompany Indebtedness" means any Indebtedness of the Borrower or
-------------------------
any Consolidated Subsidiary which is owing to the Borrower or any
Consolidated Subsidiary.
"Intercreditor Agreement" means that Intercreditor Agreement dated as
-----------------------
of the Closing Date by and among the Agent, the Senior Creditor Agent, the
Lenders and the Senior Noteholders.
"Interest Payment Date" means (i) as to any Base Rate Loan or any
---------------------
Swingline Loan, the last Business Day of each March, June, September and
December and the Termination Date and (ii) as to any Eurodollar Loan, the
last day of each Interest Period
-15-
<PAGE>
for such Loan, the date of repayment of principal of such Loan and on the
Termination Date, and in addition where the applicable Interest Period is
more than 3 months, then also on the date 3 months from the beginning of
the Interest Period, and each 3 months thereafter. If an Interest Payment
Date falls on a date which is not a Business Day, such Interest Payment
Date shall be deemed to be the next succeeding Business Day, except that in
------ ----
the case of Eurodollar Loans where the next succeeding Business Day falls
in the next succeeding calendar month, then on the next preceding Business
Day.
"Interest Period" means, as to any Eurodollar Loan, a period of one,
two, three or six month's duration, as the Borrower may elect, commencing
in each case, on the date of the borrowing (including conversions,
extensions and renewals); provided, however, (i) if any Interest Period
-------- -------
would end on a day which is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day (except that if the next
succeeding Business Day falls in the next succeeding calendar month, then
on the next preceding Business Day), (ii) no Interest Period shall extend
beyond the Termination Date, and (iii) where an Interest Period begins on a
day for which there is no numerically corresponding day in the calendar
month in which the Interest Period is to end, such Interest Period shall
end on the last day of such calendar month.
"Investment" in any Person, means any loan or advance to such Person,
----------
any purchase or other acquisition of any capital stock, warrants, rights,
options, obligations or other securities of, or equity interest in, such
Person, any capital contribution to such Person or any other investment in
such Person, including, without limitation, any Guaranty Obligation
incurred for the benefit of such Person.
"Issuing Lender" means NationsBank.
--------------
"Issuing Lender Fees" shall have the meaning assigned to such term in
-------------------
Section 3.5(c)(iii).
"Joinder Agreement" means a Joinder Agreement substantially in the
-----------------
form of Schedule 7.11 hereto, executed and delivered by an Additional
Credit Party in accordance with the provisions of Section 7.11.
-------------
"Lenders" means each of the Persons identified as a "Lender" on the
-------
signature pages hereto, and each Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
"Letter of Credit" means (i) any letter of credit issued by the
----------------
Issuing Lender for the account of the Borrower in accordance with the
terms of Section 2.2 and (ii) any Existing Letter of Credit.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give
any of the foregoing, any
-16-
<PAGE>
conditional sale or other title retention agreement, any financing or
similar statement or notice filed under the Uniform Commercial Code as
adopted and in effect in the relevant jurisdiction or other similar
recording or notice statute, and any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans (or a portion of any
---- -----
Revolving Loan bearing interest at the Base Rate or the Eurodollar Rate and
referred to as a Base Rate Loan or a Eurodollar Loan) and/or the Swingline
Loans, individually or collectively, as appropriate.
"LOC Commitment" means the commitment of the Issuing Lender to issue
--------------
Letters of Credit in an aggregate available amount at any time outstanding,
together with the aggregate amount of all unreimbursed drawings under
Letters of Credit honored by the Issuing Lender, of up to the LOC Committed
Amount.
"LOC Committed Amount" shall have the meaning assigned to such term in
--------------------
Section 2.2.
"LOC Documents" means, with respect to any Letter of Credit, such
-------------
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for (i)
the rights and obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum
---------------
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit plus
----
(ii) the aggregate amount of all drawings under Letters of Credit honored
by the Issuing Lender but not theretofore reimbursed.
"Material Adverse Effect" means a material adverse effect on (i) the
-----------------------
condition (financial or otherwise), operations, business, assets or
liabilities of the Borrower and its Consolidated Subsidiaries taken as a
whole, (ii) the ability of the Credit Parties to perform any material
obligation under the Credit Documents or (iii) other than as the result of
any action or inaction by the Agent or any of the Lenders, the material
rights and remedies of the Lenders under the Credit Documents.
"Material Domestic Subsidiary" means each present or future Domestic
----------------------------
Consolidated Subsidiary having assets (as determined in accordance with
GAAP) at any time on or after the Closing Date equal to or greater than
$1,000,000.
"Material Foreign Subsidiary" means each present or future Foreign
---------------------------
Consolidated Subsidiary having assets (as determined in accordance with
GAAP) at any time on or after the Closing Date equal to or greater than
$1,000,000.
-17-
<PAGE>
"Materials of Environmental Concern" means any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Moody's" means Moody's Investors Service, Inc., or any successor or
-------
assignee of the business of such company in the business of rating
securities.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
------------------
defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
----------------------
Consolidated Subsidiary or any ERISA Affiliate and at least one employer
other than the Borrower, any Consolidated Subsidiary or any ERISA Affiliate
are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its successors.
-----------
"Net Proceeds" means cash proceeds received by the Borrower or any
------------
Consolidated Subsidiary from time to time in connection with any Asset
Disposition, Equity Transaction or Subsidiary Dissolution, net of (i) the
actual costs and taxes incurred by such Person in connection with and
attributable to such Asset Disposition, Equity Transaction or Subsidiary
Dissolution, as applicable, and (ii) in the case of any Asset Disposition,
Indebtedness secured by a Lien on the Property, capital stock or other
securities which is/are the subject of such Asset Disposition and which is
repaid as required by the terms of such Asset Disposition.
"Non-Excluded Taxes" means such term as is defined in Section 3.10.
------------------
"Non-Voting Equity" shall have the meaning assigned to such term in
-----------------
Section 7.11.
"Note" or "Notes" means any Revolving Note or the Swingline Note, as
---- -----
the context may require.
"Notice of Borrowing" means a written notice of borrowing in
-------------------
substantially the form of Schedule 2.1(b)(i), as required by Section
------------------
2.1(b)(i).
"Notice of Extension/Conversion" means the written notice of extension
------------------------------
or conversion in substantially the form of Schedule 3.2 as required by
------------
Section 3.2.
"Operating Lease" means, as applied to any Person, any lease
---------------
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property
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<PAGE>
(whether real, personal or mixed) which is not a Capital Lease other than
any such lease in which that Person is the lessor.
"Participation Interest" means the extension of credit by a Lender by
----------------------
way of a purchase of a participation in any Letters of Credit or LOC
Obligations as provided in Section 2.2(c), in Swingline Loans as provided
in Section 2.3(b)(iii) or in any Loans as provided in Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Investments" means (i) cash and Cash Equivalents; (ii)
---------------------
accounts receivable created, acquired or made in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms; (iii) Investments consisting of (A) any debt security, obligation or
instrument received in settlement of accounts receivable (created in the
ordinary course of business) from obligors and (B) any stock, obligations,
securities or other property received in settlement of accounts receivable
(created in the ordinary course of business) from bankrupt obligors; (iv)
Investments in the Borrower or in any Domestic Consolidated Subsidiary or
in any Foreign Consolidated Subsidiary which is or becomes a Guarantor
(including Investments and acquisitions which result in a Person becoming a
Consolidated Subsidiary, and, in the case of a Person becoming a Foreign
Consolidated Subsidiary, which result in such Foreign Consolidated
Subsidiary also becoming a Guarantor) provided that the Acquisition
--------
Conditions, if applicable, are satisfied; (v) Investments of the Borrower,
any Domestic Consolidated Subsidiary or any Foreign Consolidated Subsidiary
which is a Guarantor in any Foreign Consolidated Subsidiary which is not a
Guarantor (including without limitation Guaranty Obligations in respect of
Indebtedness of any such Foreign Consolidated Subsidiary to the extent
permitted by Section 8.1(e)(ii)) (A) existing as of the Closing Date or (B)
made on or after the Closing Date, provided that the aggregate outstanding
--------
amount of all such Investments made on or after the Closing Date shall not
exceed, as of the date made, 20% of Consolidated Adjusted Net Worth as of
the then most recent Calculation Date with respect to which the Agent shall
have received the Required Financial Information; (vi) Guaranty Obligations
permitted by Section 8.1; (vii) Intercompany Indebtedness permitted by
Section 8.1(g); (viii) obligations of the Borrower in respect of Hedging
Agreements permitted by Section 8.1(i); (ix) acquisitions permitted by
Section 8.3(d); (x) transactions permitted by Section 8.7; (xi) advances or
loans to directors, officers, employees or agents that do not exceed
$1,000,000 in the aggregate at any one time outstanding for the Borrower
and its Consolidated Subsidiaries taken together; and (xii) Investments of
the Borrower or any Consolidated Subsidiary consisting of notes or other
securities of the other party under any sale, lease, transfer or other
disposition of Property transaction otherwise permitted by Section 8.3(c)
and constituting a portion of the purchase price for the Property sold,
leased, transferred or otherwise disposed of in such transaction, provided
--------
that the aggregate outstanding amount of all such Investments shall not
exceed at any time $15,000,000.
-19-
<PAGE>
"Permitted Liens" means:
---------------
(i) Liens in favor of the Senior Creditor Agent on behalf of
the Lenders and/or the Senior Noteholders;
(ii) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or
Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with
GAAP have been established (and as to which the Property subject to
any such Lien is not yet subject to foreclosure or sale on account
thereof);
(iii) statutory and contractual Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers and other
liens imposed by law or pursuant to customary reservations or
retentions of title arising in the ordinary course of business,
provided that such Liens secure only amounts not yet due and payable
--------
or, if due and payable, no other action has been taken to enforce the
same or are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have
been established (and as to which the Property subject to any such
Lien is not yet subject to foreclosure or sale on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by the Borrower and its Consolidated
Subsidiaries in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the judgments
--------
secured shall, within 60 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall have
been discharged within 30 days after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions and other similar
encumbrances and encumbrances consisting of zoning restrictions,
licenses, restrictions on the use of Property or minor imperfections
in title thereto which, in the aggregate, do not interfere with the
ordinary conduct of the business of the Borrower or any of its
Consolidated Subsidiaries;
(vii) Liens on Property securing Indebtedness (including Capital
Leases) to the extent permitted under Section 8.1(h)(ii), provided
--------
that, in the case of purchase money Indebtedness incurred after the
Closing Date, any such Lien
-20-
<PAGE>
attaches to such Property concurrently with or within 90 days after
the acquisition thereof;
(viii) any interest of title of a lessor under, and Liens arising
from UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases permitted by
this Credit Agreement;
(ix) normal and customary rights of setoff upon deposits of cash
in favor of banks or other depository institutions;
(x) Liens existing as of the Closing Date and set forth on
Schedule 1.1B; and
-------------
(xi) any Lien arising in connection with the extension, renewal,
refinancing or replacement of any Indebtedness secured by a Lien of
the type referred to in any of clauses (i) through (x) above, provided
--------
that such Lien shall not be extended to or cover any additional
Indebtedness or Property (other than a substitution of like Property).
"Person" means any individual, partnership, joint venture, firm,
------
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
----
ERISA) which is covered by ERISA and with respect to which the Borrower,
any Consolidated Subsidiary or any ERISA Affiliate is (or, if such plan
were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means a collective reference to the Canadian Pledge
----------------
Agreement, the Dutch Pledge Agreement, the French Pledge Agreement, the
U.K. Pledge Agreements and the U.S. Pledge Agreement.
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by NationsBank as its prime rate in effect at its
principal office in Charlotte, North Carolina, with each change in the
Prime Rate being effective on the date such change is publicly announced as
effective (it being understood and agreed that the Prime Rate is a
reference rate used by NationsBank in determining interest rates on certain
loans and is not intended to be the lowest rate of interest charged on any
extension of credit by NationsBank to any debtor).
"Pro Forma Basis" means, with respect to any transaction, that such
---------------
transaction shall be deemed to have occurred as of the first day of the
four fiscal-quarter period ending as of the most recent Calculation Date
preceding the date of such transaction with respect to which the Agent has
received the Required Financial Information. As used
-21-
<PAGE>
herein, "transaction" means (i) any dissolution, liquidation or winding up
of the affairs of a Consolidated Subsidiary as referred to in Section
8.3(a)(ii), (ii) any sale, lease, transfer or other disposition of Property
as referred to in Section 8.3(c)(vii), (iii) any acquisition of capital
stock or securities or any purchase, lease or other acquisition of Property
as referred to in Section 8.3(d) or (iv) any Investment as referred to in
Section 8.4(ii). In connection with any calculation of the Consolidated
Interest Coverage Ratio or the Consolidated Debt Coverage Ratio upon giving
effect to a transaction on a Pro Forma Basis for purposes of any such
Section 8.3(a)(ii), Section 8.3(c)(vii), Section 8.3(d) or Section 8.4(ii),
as applicable:
(A) for purposes of any such calculation in respect of any
dissolution, liquidation or winding up of the affairs of a
Consolidated Subsidiary as referred to in Section 8.3(a)(ii) or any
sale, lease, transfer or other disposition of Property as referred to
in Section 8.3(c)(vii), (1) income statement items (whether positive
or negative, including without limitation EBITA and interest expense)
attributable to the Consolidated Subsidiary dissolved, liquidated or
wound up in such dissolution, liquidation or winding up or to the
Property disposed of in such sale, lease, transfer or other
disposition, as applicable, shall be excluded to the extent relating
to any period occurring prior to the date of such transaction and (2)
Indebtedness which is retired in connection with such dissolution,
liquidation or winding up or in such sale, lease, transfer or other
disposition, as applicable, shall be excluded and deemed to have been
retired as of the first day of the four fiscal-quarter period ending
as of the most recent Calculation Date preceding the date of such
transaction with respect to which the Agent has received the Required
Financial Information;
(B) for purposes of any such calculation in respect of any
acquisition of capital stock or securities or any purchase, lease or
other acquisition of Property as referred to in Section 8.3(d) or any
Investment as referred to in Section 8.4(ii), (1) any Indebtedness
incurred by the Borrower or any of its Consolidated Subsidiaries in
connection with such transaction shall be deemed to have been incurred
as of the most recent Calculation Date preceding the date of such
transaction with respect to which the Agent has received the Required
Financial Information and (2) income statement items (whether positive
or negative, including without limitation EBITA and interest expense)
attributable to the Property acquired in such transaction or to the
Investment comprising such transaction, as applicable, shall be
excluded to the extent relating to any period occurring prior to the
date of such transaction; and
(C) for purposes of any such calculation, the principles set
forth in the second paragraph of Section 1.3 shall be applicable.
"Pro Forma Compliance Certificate" means a certificate of the chief
--------------------------------
financial officer of the Borrower delivered to the Agent in connection with
any dissolution, liquidation or winding up of the affairs of a Consolidated
Subsidiary as referred to in
-22-
<PAGE>
Section 8.3(a)(ii), any sale, lease, transfer or other disposition of
Property as referred to in Section 8.3(c)(vii), any acquisition of capital
stock or securities or any purchase, lease or other acquisition of Property
as referred to in Section 8.3(d) or any Investment as referred to in
Section 8.4(ii), as applicable, and containing reasonably detailed
calculations, upon giving effect to the applicable transaction on a Pro
Forma Basis, of the Consolidated Interest Coverage Ratio and the
Consolidated Debt Coverage Ratio as of the most recent Calculation Date
preceding the date of the applicable transaction with respect to which the
Agent shall have received the Required Financial Information.
"Property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
"Register" shall have the meaning given such term in Section 11.3(c).
--------
"Regulation D, G, U, or X" means Regulation D, G, U or X,
------------------------
respectively, of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor to all or a portion thereof.
"Release" means any spilling, leaking, pumping, pouring, emitting,
-------
emptying, discharging, injecting, escaping, leaching, dumping or disposing
into the environment (including the abandonment or discarding of barrels,
containers and other closed receptacles containing any Materials of
Environmental Concern).
"Reportable Event" means any of the events set forth in Section
----------------
4043(c) of ERISA, other than those events as to which the post-event notice
requirement is waived under subsections .13, .14, .18, .19, or .20 of PBGC
Reg. ' 2615.
"Required Financial Information" means, with respect to the applicable
------------------------------
Calculation Date, (i) the financial statements of the Borrower required to
be delivered pursuant to Section 7.1(a) or (b) for the fiscal period or
quarter ending as of such Calculation Date, and (ii) the certificate of the
chief financial officer of the Borrower required by Section 7.1(c) to be
delivered with the financial statements described in clause (i) above.
"Required Lenders" means, at any time, Lenders which are then in
----------------
compliance with their material obligations hereunder (as reasonably
determined by the Agent) and holding in the aggregate at least 51% of (i)
the Revolving Commitments (and Participation Interests therein) or (ii) if
the Commitments have been terminated, the outstanding Loans and
Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit).
"Requirement of Law" means, as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other
-23-
<PAGE>
Governmental Authority, in each case applicable to or binding upon such
Person or any of its material Property is subject.
"Restricted Payment" means (i) any dividend or other distribution,
------------------
direct or indirect, on account of any shares of any class of stock of the
Borrower or any Consolidated Subsidiary, now or hereafter outstanding, (ii)
any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class
of stock of the Borrower, now or hereafter outstanding, and (iii) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock
of the Borrower, now or hereafter outstanding.
"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Commitment Percentage of the Revolving
Committed Amount, (i) to make Revolving Loans in accordance with the
provisions of Section 2.1(a), (ii) to purchase participation interests in
Letters of Credit in accordance with the provisions of Section 2.2(c), and
(iii) to purchase participation interests in the Swingline Loans in
accordance with the provisions of Section 2.3(b)(iii).
"Revolving Committed Amount" shall have the meaning assigned to such
--------------------------
term in Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to such term in
---------------
Section 2.1(a).
"Revolving Note" means a promissory note of the Borrower in favor of a
--------------
Lender delivered pursuant to Section 2.1(e) and evidencing the Revolving
Loans of such Lender, as such promissory note may be amended, modified,
restated or replaced from time to time.
"S&P" means Standard & Poor's, a division of McGrawHill, Inc., or any
---
successor or assignee of the business of such division in the business of
rating securities.
"Senior Creditor Agent" means NationsBank, N.A., in its capacity as
---------------------
collateral agent under the Collateral Documents for the Lenders and the
Senior Noteholders pursuant to and in accordance with the Intercreditor
Agreement.
"Senior Financial Officer" means any of the chief financial officer,
------------------------
the principal accounting officer, the treasurer and the controller of the
Borrower.
"Senior Note" means any one of the 7.54% Senior Notes due May 31,
-----------
2006, in an aggregate original principal amount of $80,000,000, issued by
the Borrower in favor of the Senior Noteholders pursuant to the Senior Note
Agreements, as such Senior Notes
-24-
<PAGE>
may be restated, extended, renewed, amended or otherwise modified and in
effect from time to time.
"Senior Note Agreements" means those certain Note Purchase Agreements
----------------------
dated as of the date hereof by and between the Borrower and each of the
Senior Noteholders, as the same may be restated, extended, renewed, amended
or otherwise modified and in effect from time to time.
"Senior Noteholder" means any one of the holders from time to time of
-----------------
the Senior Notes.
"Single Employer Plan" means any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent" or "Solvency" means, with respect to any Person as of a
------- --------
particular date, that on such date (i) such Person is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations
and other commitments as they mature in the normal course of business, (ii)
such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature in their ordinary course, (iii) such Person is not
engaged in a business or a transaction, and is not about to engage in a
business or a transaction, for which such Person's Property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged or is
to engage, (iv) the fair value of the Property of such Person is greater
than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person and (v) the present fair saleable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
"Standby Letter of Credit Fee" shall have the meaning assigned to
----------------------------
such term in Section 3.5(c)(i).
"Stock Repurchase" means the repurchase, if any, by the Borrower on or
----------------
after the Closing Date but no later than June 30, 1996 of up to 480,000
shares of the Class A nonvoting common stock of the Borrower pursuant to
the tender offer dated March 6, 1996 in the form attached hereto as
Schedule 1.1C.
-------------
"Subsidiary" means, with respect to any Person at any time, any
----------
corporation, partnership, joint venture, limited liability company, trust
or estate of which (or in which) more than 50% of:
-25-
<PAGE>
(a) the issued and outstanding shares of capital stock having
ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at the time shares of
capital stock or any class or classes of such corporation shall or
might have voting power by reason of the happening of any
contingency);
(b) the interest in the capital or profits of such partnership,
joint venture or limited liability company; or
(c) the beneficial interest in such trust or estate,
is, at such time, directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one
or more of such Person's other Subsidiaries.
"Subsidiary Dissolution" means any dissolution, liquidation or
----------------------
winding up of the affairs of any Consolidated Subsidiary pursuant to the
terms of Section 8.3(a)(ii).
"Subsidiary Pledgors" means, at any time, each of the Subsidiaries of
-------------------
the Borrower which is a Pledgor under and as defined in any Pledge
Agreement or has executed any other pledge agreement in favor of the Senior
Creditor Agent in accordance with the terms of Section 7.11.
"Swingline Commitment" means the commitment of the Swingline Lender
--------------------
to make Swingline Loans in an aggregate principal amount at any time
outstanding of up to the Swingline Committed Amount.
"Swingline Committed Amount" shall have the meaning assigned to such
--------------------------
term in Section 2.3(a).
"Swingline Lender" means NationsBank.
----------------
"Swingline Loan" shall have the meaning assigned to such term in
--------------
Section 2.3(a).
"Swingline Note" means the promissory note of the Borrower in favor
--------------
of the Swingline Lender in the original principal amount of $15,000,000, as
such promissory note may be amended, modified, restated or replaced from
time to time.
"Syndication Agent" shall have the meaning assigned to such term in
-----------------
the heading hereof.
"Syndication Agent's Fee" shall have the meaning assigned to such
-----------------------
term in Section 3.5(e).
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<PAGE>
"Syndication Agent's Fee Letter" means that certain letter agreement,
------------------------------
dated as of April 3, 1996, between the Syndication Agent and the Borrower,
as amended, modified, supplemented or replaced from time to time.
"Termination Date" means June 26, 2001.
----------------
"Termination Event" means (i) with respect to any Plan, the
-----------------
occurrence of a Reportable Event or the substantial cessation of operations
(within the meaning of Section 4062(e) of ERISA); (ii) the withdrawal by
the Borrower, any Consolidated Subsidiary or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a substantial
employer (as such term is defined in Section 4001(a)(2) of ERISA), or the
termination of a Multiple Employer Plan; (iii) the distribution of a notice
of intent to terminate or the actual termination of a Plan pursuant to
Section 4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings
to terminate or the actual termination of a Plan by the PBGC under Section
4042 of ERISA; (v) any event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; or (vi) the complete or partial withdrawal
of the Borrower, any Consolidated Subsidiary or any ERISA Affiliate from a
Multiemployer Plan.
"Trade Letter of Credit Fee" shall have the meaning assigned to such
--------------------------
term in Section 3.5(c)(ii).
"U.K. Pledge Agreements" means those certain memorandums of deposit,
----------------------
dated as of the Closing Date, executed in favor of the Senior Creditor
Agent by Kearney-National Inc. and Thetford Corporation.
"Unconsolidated Subsidiary" means any of (i) DKM Properties Corp., a
-------------------------
New Jersey corporation, and its Subsidiaries, (ii) DKM Residential
Properties Corp., a New Jersey corporation, and its Subsidiaries, (iii)
Patterson Broadcasting, Inc., a Delaware corporation, and its Subsidiaries,
(iv) any newly created or acquired direct or indirect Subsidiary of a then
existing Unconsolidated Subsidiary and (v) any newly created or acquired
direct or indirect Subsidiary of the Borrower which would be consolidated
with the Borrower under GAAP, but which, subject to the terms of Section
8.4(ii) and Section 8.12, is designated by the Borrower as an
Unconsolidated Subsidiary by written notice of such designation to the
Agent within twenty (20) days after the creation or acquisition thereof;
provided, however, that (i) no Subsidiary of the Borrower shall be an
-------- -------
Unconsolidated Subsidiary for purposes of this Credit Agreement unless such
Subsidiary is also an Unconsolidated Subsidiary under and as defined in the
Senior Note Agreements, (ii) no present or future Consolidated Subsidiary
may be designated by the Borrower as an Unconsolidated Subsidiary and (iii)
no Person which is a Subsidiary of an Unconsolidated Subsidiary may be
designated by the Borrower as a Consolidated Subsidiary.
"Unused Fee" shall have the meaning assigned to such term in Section
----------
3.5(b).
-27-
<PAGE>
"Unused Fee Calculation Period" shall have the meaning assigned to
-----------------------------
such term in Section 3.5(b).
"Unused Revolving Committed Amount" means, for any period, the amount
---------------------------------
by which (a) the then applicable Revolving Committed Amount exceeds (b) the
daily average sum for such period of (i) the outstanding aggregate
principal amount of all Revolving Loans (but not including any Swingline
Loans) plus (ii) the outstanding aggregate principal amount of all LOC
----
Obligations.
"Upfront Fee" shall have the meaning assigned to such term in Section
-----------
3.5(a).
"U.S. Pledge Agreement" means the pledge agreement dated as of the
---------------------
Closing Date in the form of Schedule 1.1D to be executed in favor of the
-------------
Senior Creditor Agent by the Borrower and each of the Guarantors.
"Voting Equity" shall have the meaning assigned to such term in
-------------
Section 7.11.
1.2 Computation of Time Periods. For purposes of computation of periods
---------------------------
of time hereunder, the word "from" means "from and including" and the words "to"
and "until" each mean "to but excluding."
1.3 Accounting Terms. Except as otherwise expressly provided herein, all
----------------
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered to
the Lenders hereunder shall be prepared in accordance with, and all calculations
made for the purposes of determining compliance with this Credit Agreement shall
(except as otherwise expressly provided herein) be made by application of, GAAP
and applied on a consistent basis with GAAP as applied in the preparation of the
audited consolidated financial statements of the Borrower as at January 31, 1996
(except for the effects of not consolidating the Unconsolidated Subsidiaries
and, in the case of interim financial statements, except for the absence of
footnote disclosures and subject to changes resulting from audit and normal
yearend audit adjustments).
Notwithstanding the above, it is understood and agreed that, for purposes of all
calculations made in determining compliance with the financial covenants set
forth in Section 7.10 (including without limitation for purposes of the
definition of "Pro Forma Basis" set forth in Section 1.1), (i) (A) income
statement items (whether positive or negative, including without limitation
EBITA and interest expense) attributable to the Consolidated Subsidiary
dissolved, liquidated or wound up in any dissolution, liquidation or winding up
as contemplated by Section 8.3(a)(ii) or to the Property disposed of in any
sale, lease, transfer or other disposition of Property as contemplated by
Section 8.3(c)(vii), as applicable, shall be excluded to the extent relating to
any period occurring prior to the date of such transaction and (B) Indebtedness
which is retired in connection with any such dissolution, liquidation or winding
up or any such sale, lease, transfer or other disposition, as applicable, shall
be excluded and deemed to have been retired as of the first day of the four
fiscal-quarter period ending as of the most recent Calculation Date preceding
-28-
<PAGE>
the date of such transaction with respect to which the Agent has received the
Required Financial Information and (ii) income statement items (whether positive
or negative, including without limitation EBITA and interest expense)
attributable to any capital stock, securities and Property acquired or leased in
a transaction contemplated by Section 8.3(d) or attributable to any Investment
transaction contemplated by Section 8.4 shall be included to the extent relating
to any period applicable in such calculations occurring after the date of such
transaction (and, notwithstanding the foregoing, during the first four fiscal
quarters following the date of such transaction, shall be included on an
annualized basis).
SECTION 2
CREDIT FACILITIES
-----------------
2.1 Revolving Loans.
---------------
(a) Revolving Commitment. Subject to the terms and conditions
--------------------
hereof and in reliance upon the representations and warranties set forth
herein, each Lender severally agrees to make available to the Borrower such
Lender's Commitment Percentage of revolving credit loans requested by the
Borrower in Dollars ("Revolving Loans") from time to time from the Closing
---------------
Date until the Termination Date, or such earlier date as the Revolving
Commitments shall have been terminated as provided herein for the purposes
hereinafter set forth; provided, however, that the sum of the aggregate
-------- -------
principal amount of outstanding Revolving Loans shall not exceed TWO
HUNDRED TWENTY MILLION DOLLARS ($220,000,000.00) (as such aggregate maximum
amount may be reduced from time to time as provided in Section 3.4, the
"Revolving Committed Amount"); provided, further, (i) with regard to each
--------------------------- -------- -------
Lender individually, the aggregate principal amount of such Lender's
outstanding Revolving Loans plus such Lender's participation interests in
----
Letters of Credit plus such Lender's participation interests in the
----
Swingline Loans shall not exceed such Lender's Commitment Percentage of the
Revolving Committed Amount, and (ii) with regard to the Lenders
collectively, the aggregate principal amount of outstanding Revolving Loans
plus the aggregate principal amount of outstanding Swingline Loans plus LOC
---- ----
Obligations outstanding shall not exceed the Revolving Committed Amount.
Revolving Loans may consist of Base Rate Loans or Eurodollar Loans, or a
combination thereof, as the Borrower may request, and may be repaid and
reborrowed in accordance with the provisions hereof; provided, however,
-------- -------
that no more than 5 Eurodollar Loans shall be outstanding hereunder at any
time. For purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans, even if they
begin on the same date, although borrowings, extensions and conversions
may, in accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new Eurodollar Loan with a single
Interest Period. Revolving Loans hereunder may be repaid and reborrowed in
accordance with the provisions hereof.
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<PAGE>
(b) Revolving Loan Borrowings.
-------------------------
(i) Notice of Borrowing. The Borrower shall request a
-------------------
Revolving Loan borrowing by written notice (or telephone notice promptly
confirmed in writing) to the Agent not later than 1:00 P.M. (Charlotte,
North Carolina time) on the Business Day of the requested borrowing in the
case of Base Rate Loans, and not later than 1:00 P.M. (Charlotte, North
Carolina time) on the third Business Day prior to the date of the requested
borrowing in the case of Eurodollar Loans. Each such request for borrowing
shall be irrevocable and shall specify (A) that a Revolving Loan is
requested, (B) the date of the requested borrowing (which shall be a
Business Day), (C) the aggregate principal amount to be borrowed, and (D)
whether the borrowing shall be comprised of Base Rate Loans, Eurodollar
Loans or a combination thereof, and if Eurodollar Loans are requested, the
Interest Period(s) therefor. If the Borrower shall fail to specify in any
such Notice of Borrowing (I) an applicable Interest Period in the case of a
Eurodollar Loan, then such notice shall be deemed to be a request for an
Interest Period of one month, or (II) the type of Revolving Loan requested,
then such notice shall be deemed to be a request for a Base Rate Loan
hereunder. The Agent shall give notice to each affected Lender promptly
upon receipt of each Notice of Borrowing pursuant to this Section
2.1(b)(i), the contents thereof and each such Lender's share of any
borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Subject to the terms of Section 2.2(e)
---------------
each Eurodollar Loan or Base Rate Loan that is a Revolving Loan shall be in
a minimum aggregate principal amount of $5,000,000 and integral multiples
of $1,000,000 in excess thereof (or the remaining amount of the Revolving
Committed Amount, if less).
(iii) Advances. Each Lender will make its Commitment Percentage
--------
of each Revolving Loan borrowing available to the Agent for the account of
the Borrower as specified in Section 3.14(a), or in such other manner as
the Agent may specify in writing, by 3:00 P.M. (Charlotte, North Carolina
time) on the date specified in the applicable Notice of Borrowing in
Dollars and in funds immediately available to the Agent. Such borrowing
will then be made available to the Borrower by the Agent by crediting the
account of the Borrower in the Register maintained by the Agent pursuant to
Section 11.3(c) with the aggregate of the amounts made available to the
Agent by the Lenders and in like funds as received by the Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be due
---------
and payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 3.1,
--------
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<PAGE>
(i) Base Rate Loans. During such periods as Revolving
---------------
Loans shall be comprised in whole or in part of Base Rate Loans, such
Base Rate Loans shall bear interest at a per annum rate equal to the
Base Rate;
(ii) Eurodollar Loans. During such periods as Revolving
----------------
Loans shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to the
Eurodollar Rate plus the Applicable Percentage.
----
Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
(e) Revolving Notes. The Revolving Loans made by each Lender shall be
---------------
evidenced by a duly executed promissory note of the Borrower to such Lender
in an original principal amount equal to such Lender's Commitment
Percentage of the Revolving Committed Amount and in substantially the form
of Schedule 2.1(e).
---------------
2.2 Letter of Credit Subfacility.
----------------------------
(a) Issuance. Subject to the terms and conditions hereof and of the
--------
LOC Documents, if any, and any other terms and conditions which the Issuing
Lender may reasonably require, the Issuing Lender agrees to issue Letters
of Credit from time to time and the Lenders will participate in the
issuance by the Issuing Lender from time to time of such Letters of Credit
in Dollars from the Closing Date until the Termination Date, all as the
Borrower may request, in a form reasonably acceptable to the Issuing
Lender; provided, however, that (i) the LOC Obligations outstanding shall
-------- -------
not at any time exceed THIRTY MILLION DOLLARS ($30,000,000) (the "LOC
---
Committed Amount") and (ii) the sum of the aggregate principal amount of
----------------
outstanding Revolving Loans plus the aggregate principal amount of
----
outstanding Swingline Loans plus LOC Obligations outstanding shall not
----
exceed the Revolving Committed Amount. No Letter of Credit shall (x) have
an original expiry date more than one year from the date of issuance or (y)
as originally issued or as extended, have an expiry date extending beyond
the Termination Date. Each Letter of Credit shall comply with the related
LOC Documents. The issuance and expiry date of each Letter of Credit shall
be a Business Day.
(b) Notice and Reports. The request for the issuance of a Letter of
------------------
Credit shall be submitted by the Borrower to the Issuing Lender at least
three (3) Business Days prior to the requested date of issuance. The
Issuing Lender will, at least quarterly and more frequently upon request by
a Lender, disseminate to the Borrower and each of the Lenders a detailed
report specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may have occurred
since the date of the prior report, and including therein,
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<PAGE>
among other things, the beneficiary, the face amount, expiry date as well
as any payment or expirations which may have occurred.
(c) Participation. Each Lender, upon issuance of a Letter of Credit
-------------
(or, in the case of each Existing Letter of Credit, on the Closing Date),
shall be deemed to have purchased without recourse a risk participation
from the Issuing Lender in such Letter of Credit and the obligations
arising thereunder, in each case in an amount equal to its pro rata share
of the obligations under such Letter of Credit (based on the respective
Commitment Percentages of the Lenders) and shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as
surety, and be obligated to pay to the Issuing Lender therefor and
discharge when due, its pro rata share of the obligations arising under
such Letter of Credit. Without limiting the scope and nature of each
Lender's participation in any Letter of Credit, to the extent that the
Issuing Lender has not been reimbursed as required hereunder or under any
such Letter of Credit, each such Lender shall pay to the Issuing Lender its
pro rata share of such unreimbursed drawing pursuant to the provisions of
subsection (d) hereof. The obligation of each Lender to so reimburse the
Issuing Lender shall be absolute and unconditional and shall not be
affected by the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the Borrower to reimburse the Issuing Lender under
any Letter of Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
-------------
Credit, the Issuing Lender will promptly notify the Borrower. Thereafter,
unless the Borrower shall promptly notify the Issuing Lender that the
Borrower intends to otherwise reimburse the Issuing Lender for such
drawing, the Borrower shall be deemed to have requested that the Lenders
make a Revolving Loan in the amount of the drawing as provided in
subsection (e) hereof on the related Letter of Credit, the proceeds of
which will be used to satisfy the related reimbursement obligations. The
Borrower agrees to reimburse the Issuing Lender on the day of drawing under
any Letter of Credit (either with the proceeds of a Revolving Loan obtained
hereunder or otherwise) in same day funds. If the Borrower shall fail to
reimburse the Issuing Lender as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal to the
Base Rate plus the sum of (i) the Applicable Percentage and (ii) two
percent (2%). The Borrower's reimbursement obligations hereunder shall be
absolute and unconditional under all circumstances irrespective of any
rights of setoff, counterclaim or defense to payment the Borrower may claim
or have against the Issuing Lender, the Agent, the Lenders, the beneficiary
of the Letter of Credit drawn upon or any other Person, including without
limitation any defense based on any failure of the Borrower or any other
Credit Party to receive consideration or the legality, validity, regularity
or unenforceability of the Letter of Credit. The Issuing Lender will
promptly notify the other Lenders of the amount of any unreimbursed drawing
and each Lender shall promptly pay to the Agent for the
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<PAGE>
account of the Issuing Lender in Dollars and in immediately available
funds, the amount of such Lender's pro rata share of such unreimbursed
drawing. Such payment shall be made on the day such notice is received by
such Lender from the Issuing Lender if such notice is received at or before
2:00 P.M. (Charlotte, North Carolina time) otherwise such payment shall be
made at or before 12:00 Noon (Charlotte, North Carolina time) on the
Business Day next succeeding the day such notice is received. If such
Lender does not pay such amount to the Issuing Lender in full upon such
request, such Lender shall, on demand, pay to the Agent for the account of
the Issuing Lender interest on the unpaid amount during the period from the
date of such drawing until such Lender pays such amount to the Issuing
Lender in full at a rate per annum equal to, if paid within two (2)
Business Days of the date that such Lender is required to make payments of
such amount pursuant to the preceding sentence, the Federal Funds Rate and
thereafter at a rate equal to the Base Rate. Each Lender's obligation to
make such payment to the Issuing Lender, and the right of the Issuing
Lender to receive the same, shall be absolute and unconditional, shall not
be affected by any circumstance whatsoever and without regard to the
termination of this Credit Agreement or the Commitments hereunder, the
existence of a Default or Event of Default or the acceleration of the
obligations of the Borrower hereunder and shall be made without any offset,
abatement, withholding or reduction whatsoever. Simultaneously with the
making of each such payment by a Lender to the Issuing Lender, such Lender
shall, automatically and without any further action on the part of the
Issuing Lender or such Lender, acquire a participation in an amount equal
to such payment (excluding the portion of such payment constituting
interest owing to the Issuing Lender) in the related unreimbursed drawing
portion of the LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the Borrower in
accordance with the terms hereof with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the Borrower
------------------------------
shall have requested, or been deemed to have requested, a Revolving Loan
advance to reimburse a drawing under a Letter of Credit, the Agent shall
give notice to the Lenders that a Revolving Loan has been requested or
deemed requested by the Borrower to be made in connection with a drawing
under a Letter of Credit, in which case a Revolving Loan advance comprised
of Base Rate Loans (or Eurodollar Loans to the extent the Borrower has
complied with the procedures of Section 2.1(b)(i) with respect thereto)
shall be immediately made to the Borrower by all Lenders (notwithstanding
any termination of the Commitments pursuant to Section 9.2) pro rata based
--- ----
on the respective Commitment Percentages of the Lenders (determined before
giving effect to any termination of the Commitments pursuant to Section
9.2) and the proceeds thereof shall be paid directly to the Issuing Lender
for application to the respective LOC Obligations. Each such Lender hereby
irrevocably agrees to make its pro rata share of each such Revolving Loan
immediately upon any such request or deemed request in the amount, in the
manner and on the date specified in the preceding sentence
-33-
<PAGE>
notwithstanding (i) the amount of such borrowing may not comply with the
---------------
minimum amount for advances of Revolving Loans otherwise required
hereunder, (ii) whether any conditions specified in Section 5.2 are then
satisfied, (iii) whether a Default or an Event of Default then exists, (iv)
failure for any such request or deemed request for Revolving Loan to be
made by the time otherwise required hereunder, (v) whether the date of such
borrowing is a date on which Revolving Loans are otherwise permitted to be
made hereunder or (vi) any termination of the Commitments relating thereto
immediately prior to or contemporaneously with such borrowing. In the event
that any Revolving Loan cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower or any Credit Party), then each such Lender hereby agrees that it
shall forthwith purchase (as of the date such borrowing would otherwise
have occurred, but adjusted for any payments received from the Borrower on
or after such date and prior to such purchase) from the Issuing Lender such
participation in the outstanding LOC Obligations as shall be necessary to
cause each such Lender to share in such LOC Obligations ratably (based upon
the respective Commitment Percentages of the Lenders (determined before
giving effect to any termination of the Commitments pursuant to Section
9.2)), provided that at the time any purchase of participation pursuant to
--------
this sentence is actually made, the purchasing Lender shall be required to
pay to the Issuing Lender, to the extent not paid to the Issuer by the
Borrower in accordance with the terms of subsection (d) hereof, interest on
the principal amount of participation purchased for each day from and
including the day upon which such borrowing would otherwise have occurred
to but excluding the date of payment for such participation, at the rate
equal to, if paid within two (2) Business Days of the date of the Revolving
Loan advance, the Federal Funds Rate, and thereafter at a rate equal to the
Base Rate.
(f) Designation of Consolidated Subsidiaries as Account Parties.
-----------------------------------------------------------
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 2.2(a) hereof, a Letter of
Credit issued hereunder may contain a statement to the effect that such
Letter of Credit is issued for the account of a Consolidated Subsidiary,
provided that notwithstanding such statement, the Borrower shall be the
actual account party for all purposes of this Credit Agreement for such
Letter of Credit and such statement shall not affect the Borrower's
reimbursement obligations hereunder with respect to such Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter of
------------------
Credit shall, for purposes hereof, be treated in all respects the same as
the issuance of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Issuing Lender may have the
-----------------------------
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue by the
International
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<PAGE>
Chamber of Commerce (the "UCP"), in which case the UCP may be incorporated
---
therein and deemed in all respects to be a part thereof.
(i) Indemnification; Nature of Issuing Lender's Duties. (i) In
--------------------------------------------------
addition to its other obligations under this Section 2.2, the Borrower
hereby agrees to protect, indemnify, pay and save the Issuing Lender
harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or (B) the failure of the Issuing Lender to honor a drawing under a
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called
"Government Acts").
(ii) As between the Borrower and the Issuing Lender, the Borrower
shall assume all risks of the acts, omissions or misuse of any Letter of
Credit by the beneficiary thereof. The Issuing Lender shall not be
responsible: (A) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with
the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (D) for
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (E) for any consequences arising from causes beyond the
control of the Issuing Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent the
vesting of the Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
the Issuing Lender, under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put such
Issuing Lender under any resulting liability to the Borrower or any other
Credit Party. It is the intention of the parties that this Credit Agreement
shall be construed and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower (on behalf of
itself and each of the other Credit Parties), including, without
limitation, any and all Government Acts. The Issuing Lender shall not, in
any way, be liable for any failure by the Issuing Lender or anyone else to
pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Lender.
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<PAGE>
(iv) Nothing in this subsection (h) is intended to limit the
reimbursement obligations of the Borrower contained in subsection (d)
above. The obligations of the Borrower under this subsection (h) shall
survive the termination of this Credit Agreement. No act or omissions of
any current or prior beneficiary of a Letter of Credit shall in any way
affect or impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (h), the Borrower shall have no obligation to indemnify the
Issuing Lender in respect of any liability incurred by the Issuing Lender
(A) arising solely out of the gross negligence or willful misconduct of the
Issuing Lender, as determined by a court of competent jurisdiction, or (B)
caused by the Issuing Lender's failure to pay under any Letter of Credit
after presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit, as determined by a court of competent
jurisdiction, unless such payment is prohibited by any law, regulation,
court order or decree.
(j) Responsibility of Issuing Lender. It is expressly understood and
--------------------------------
agreed that the obligations of the Issuing Lender hereunder to the Lenders
are only those expressly set forth in this Credit Agreement and that the
Issuing Lender shall be entitled to assume that the conditions precedent
set forth in Section 5.2 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Section 2.2 shall be
-------- -------
deemed to prejudice the right of any Lender to recover from the Issuing
Lender any amounts made available by such Lender to the Issuing Lender
pursuant to this Section 2.2 in the event that it is determined by a court
of competent jurisdiction that the payment with respect to a Letter of
Credit constituted gross negligence or willful misconduct on the part of
the Issuing Lender.
(k) Conflict with LOC Documents. In the event of any conflict
---------------------------
between this Credit Agreement and any LOC Document (including any letter of
credit application), this Credit Agreement shall control.
2.3 Swingline Loan Subfacility.
--------------------------
(a) Swingline Commitment. Subject to the terms and conditions hereof and
--------------------
in reliance upon the representations and warranties herein set forth, the
Swingline Lender, in its individual capacity, agrees to make certain revolving
credit loans requested by the Borrower in Dollars to the Borrower (each a
"Swingline Loan" and, collectively, the "Swingline Loans") from time to time
-------------- ---------------
from the Closing Date until the Termination Date for the purposes hereinafter
set forth; provided, however, (i) the aggregate principal amount of Swingline
-------- -------
Loans outstanding at any time shall not exceed FIFTEEN MILLION DOLLARS
($15,000,000) (the "Swingline Committed Amount") and (ii) the sum of the
--------------------------
aggregate principal amount of outstanding
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<PAGE>
Revolving Loans plus the aggregate principal amount of outstanding Swingline
----
Loans plus LOC Obligations outstanding shall not exceed the Revolving Committed
----
Amount. Swingline Loans hereunder may be repaid and reborrowed in accordance
with the provisions hereof.
(b) Swingline Loan Advances.
-----------------------
(i) Notices; Disbursement. Whenever the Borrower desires a
---------------------
Swingline Loan advance hereunder it shall give written notice (or telephone
notice promptly confirmed in writing) to the Swingline Lender not later
than 1:00 P.M. (Charlotte, North Carolina time) on the Business Day of the
requested Swingline Loan advance. Each such notice shall be irrevocable and
shall specify (A) that a Swingline Loan advance is requested, (B) the date
of the requested Swingline Loan advance (which shall be a Business Day) and
(C) the principal amount of the Swingline Loan advance requested. The
Swingline Lender shall initiate the transfer of funds representing the
Swingline Loan advance to the Borrower by 3:00 P.M. (Charlotte, North
Carolina time) on the Business Day of the requested borrowing.
(ii) Minimum Amounts. Each Swingline Loan advance shall be in a
---------------
minimum principal amount of $100,000 and in integral multiples of $100,000
in excess thereof (or the remaining amount of the Swingline Committed
Amount, if less).
(iii) Repayment of Swingline Loans. The principal amount of all
----------------------------
Swingline Loans shall be due and payable on the Termination Date. The
Swingline Lender may, at any time, in its sole discretion, by written
notice to the Borrower and the Lenders, demand repayment of its Swingline
Loans by way of a Revolving Loan advance, in which case the Borrower shall
be deemed to have requested a Revolving Loan advance comprised solely of
Base Rate Loans in the amount of such Swingline Loans; provided, however,
-------- -------
that any such demand shall be deemed to have been given (i) one Business
Day prior to the Termination Date and (ii) on the date of the occurrence of
any Event of Default described in Section 9.1 and upon acceleration of the
indebtedness hereunder and the exercise of remedies in accordance with the
provisions of Section 9.2. Each Lender hereby irrevocably agrees to make
its pro rata share of each such Revolving Loan in the amount, in the manner
and on the date specified in the preceding sentence notwithstanding (I) the
---------------
amount of such borrowing may not comply with the minimum amount for
advances of Revolving Loans otherwise required hereunder, (II) whether any
conditions specified in Section 5.2 are then satisfied, (III) whether a
Default or an Event of Default then exists, (IV) failure of any such
request or deemed request for Revolving Loan to be made by the time
otherwise required hereunder, (V) whether the date of such borrowing is a
date on which Revolving Loans are otherwise permitted to be made hereunder
or (VI) any termination of the Commitments relating thereto immediately
prior to or contemporaneously with such borrowing. In the event that any
Revolving Loan cannot for any reason be made on the date otherwise required
above (including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the Borrower or any
other Credit Party), then each Lender hereby agrees that it shall forthwith
purchase (as of the date such borrowing would otherwise have
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<PAGE>
occurred, but adjusted for any payments received from the Borrower on or
after such date and prior to such purchase) from the Swingline Lender such
participations in the outstanding Swingline Loans as shall be necessary to
cause each such Lender to share in such Swingline Loans ratably based upon
its Commitment Percentage of the Revolving Committed Amount (determined
before giving effect to any termination of the Commitments pursuant to
Section 3.4), provided that (A) all interest payable on the Swingline Loans
--------
shall be for the account of the Swingline Lender until the date as of which
the respective participation is purchased and (B) at the time any purchase
of participations pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay to the Swingline Lender, to the
extent not paid to the Swingline Lender by the Borrower in accordance with
the terms of subsection (c)(ii) hereof, interest on the principal amount of
participation purchased for each day from and including the day upon which
such borrowing would otherwise have occurred to but excluding the date of
payment for such participation, at the rate equal to the Federal Funds
Rate.
(c) Interest on Swingline Loans. (i) Subject to the provisions of Section
---------------------------
3.1, each Swingline Loan shall bear interest at a per annum rate (computed on
the basis of the actual number of days elapsed over a year of 365 days) equal to
the Base Rate.
(ii) Payment of Interest. Interest on Swingline Loans shall be payable in
-------------------
arrears on each applicable Interest Payment Date (or at such other times as may
be specified herein).
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
--------------
executed promissory note of the Borrower to the Swingline Lender in an original
principal amount equal to the Swingline Committed Amount substantially in the
form of Schedule 2.3(d).
----------------
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
----------------------------------------------
3.1 Default Rate. Upon the occurrence, and during the continuance, of an
------------
Event of Default, the principal of and, to the extent permitted by law, interest
on the Loans and any other amounts owing hereunder or under the other Credit
Documents shall, if so determined by the Required Lenders, bear interest,
payable on demand, at a per annum rate 2% greater than the rate which would
otherwise be applicable (or if no rate is applicable, whether in respect of
interest, fees or other amounts, then 2% greater than the Base Rate).
3.2 Extension and Conversion. Subject to the terms of Section 5.2, the
------------------------
Borrower shall have the option, on any Business Day, to extend existing Loans
into a subsequent permissible Interest Period or to convert Loans into Loans of
another interest rate type; provided, however, that (i) except as provided in
-------- -------
Section 3.8, Eurodollar Loans may be converted into Base Rate Loans only on the
last day of the Interest Period applicable thereto, (ii) Eurodollar Loans may be
extended, and Base Rate Loans may be converted into Eurodollar Loans, only if no
Default or Event of Default is in existence on the date of extension or
conversion, (iii) Loans
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<PAGE>
extended as, or converted into, Eurodollar Loans shall be subject to the terms
of the definition of "Interest Period" set forth in Section 1.1 and shall be in
---------------
such minimum amounts as provided in Section 2.1(b)(ii), (iv) no more than 5
Eurodollar Loans shall be outstanding hereunder at any time (it being understood
that, for purposes hereof, Eurodollar Loans with different Interest Periods
shall be considered as separate Eurodollar Loans, even if they begin on the same
date, although borrowings, extensions and conversions may, in accordance with
the provisions hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period), (v) any request
for extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month and (vi) Swingline Loans may not be extended or converted pursuant to this
Section 3.2. Each such extension or conversion shall be effected by the Borrower
by giving a Notice of Extension/Conversion (or telephone notice promptly
confirmed in writing) to the Agent prior to 1:00 P.M. (Charlotte, North Carolina
time) on the Business Day of, in the case of the conversion of a Eurodollar Loan
into a Base Rate Loan, and prior to 1:00 P.M. (Charlotte, North Carolina time)
on the third Business Day prior to, in the case of the extension of a Eurodollar
Loan as, or conversion of a Base Rate Loan into, a Eurodollar Loan, the date of
the proposed extension or conversion, specifying the date of the proposed
extension or conversion, the Loans to be so extended or converted, the types of
Loans into which such Loans are to be converted and, if appropriate, the
applicable Interest Periods with respect thereto. Each request for extension or
conversion shall be irrevocable and shall constitute a representation and
warranty by the Borrower of the matters specified in subsections (ii), (iii),
(iv), (v) and (vi) of Section 5.2. In the event the Borrower fails to request
extension or conversion of any Eurodollar Loan in accordance with this Section,
or any such conversion or extension is not permitted or required by this
Section, then such Eurodollar Loan shall be automatically converted into a Base
Rate Loan at the end of the Interest Period applicable thereto. The Agent shall
give each Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Loan.
3.3 Prepayments.
-----------
(a) Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay Loans in whole or in part from time to time, subject to Section
3.11, but otherwise without premium or penalty; provided, however, that (i)
-------- -------
Eurodollar Loans may only be prepaid on three Business Days' prior written
notice to the Agent and specifying the applicable Loans to be prepaid; (ii)
any prepayment of Eurodollar Loans will be subject to Section 3.11; and
(iii) each such partial prepayment of Loans shall be (A) in the case of
Revolving Loans, in a minimum principal amount of $1,000,000 and (B) in the
case of Swingline Loans, in a minimum principal amount of $100,000.
Subject to the foregoing terms, amounts prepaid under this Section 3.3(a)
shall be applied as the Borrower may elect.
(b) Mandatory Prepayments. If at any time, the sum of the aggregate
---------------------
principal amount of outstanding Revolving Loans plus the aggregate
----
principal amount of outstanding Swingline Loans plus LOC Obligations
----
outstanding shall exceed the Revolving Committed Amount, the Borrower
agrees to prepay immediately the
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<PAGE>
outstanding principal balance on the Revolving Loans in an amount
sufficient to eliminate such excess.
(c) General. All prepayments made pursuant to this Section 3.3 shall
-------
(i) be subject to Section 3.11, (ii) be applied first to accrued but unpaid
interest on the principal amount prepaid and (iii) unless the Borrower
shall specify otherwise, be applied first to Base Rate Loans, if any, and
then to Eurodollar Loans in direct order of Interest Period maturities.
Amount prepaid on the Revolving Loans may be reborrowed in accordance with
the provisions hereof.
3.4 Termination and Reduction of Revolving Committed Amount.
-------------------------------------------------------
(a) Voluntary Reductions. The Borrower may from time to time permanently
--------------------
reduce or terminate the Revolving Committed Amount in whole or in part (in
minimum aggregate amounts of $1,000,000 or in integral multiples of $1,000,000
in excess thereof (or, if less, the full remaining amount of the then applicable
Revolving Committed Amount)) upon five Business Days' prior written notice to
the Agent; provided, however, no such termination or reduction shall be made
-------- -------
which would cause the aggregate principal amount of outstanding Revolving Loans
plus the aggregate principal amount of outstanding Swingline Loans plus LOC
- ---- ----
Obligations outstanding to exceed the Revolving Committed Amount unless,
concurrently with such termination or reduction, the Revolving Loans are repaid
to the extent necessary to eliminate such excess. The Commitments of the Lenders
and the Issuing Lender shall automatically terminate on the Termination Date.
The Agent shall promptly notify each affected Lender of receipt by the Agent of
any notice from the Borrower pursuant to this Section 3.4(a).
(b) Mandatory Reductions. The Borrower shall notify the Agent of the
--------------------
occurrence of any Excess Net Proceeds Event within five (5) days of the
occurrence thereof, and at the request to the Agent and the Borrower of the
Required Lenders given within 30 days from the date of receipt of such notice by
the Agent, the Revolving Committed Amount shall be reduced in an amount equal to
the amount by which (A) the amount of the Excess Net Proceeds of the related
Subsidiary Dissolution or Asset Disposition, as applicable, not utilized to make
Investments or to the purchase, acquisition or construction of other Property
during the related Application Period in the Borrower or in any of the
Consolidated Subsidiaries (including Investments, purchases and acquisitions
which result in a Person becoming a Consolidated Subsidiary) as contemplated by
the terms of Section 8.3(a)(ii)(B)(2)(x) or Section 8.3(c)(vii)(B)(2)(x), as
applicable, multiplied by the percentage determined by dividing (1) the then
-------------
current Revolving Committed Amount by (2) the sum of (I) the then current
Revolving Committed Amount plus (II) the aggregate then outstanding principal
----
amount of all Senior Notes, exceeds (B) the amount of all voluntary reductions
-------
of the Revolving Committed Amount made by the Borrower pursuant to Section
3.4(a) during such Application Period.
(c) Termination Date. The Revolving Commitments of the Lenders, the
----------------
Swingline Commitment of the Swingline Lender and the LOC Commitment of the
Issuing Lender shall automatically terminate on the Termination Date.
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<PAGE>
(d) General. The Borrower shall pay to the Agent for the account of the
-------
Lenders in accordance with the terms of Section 3.5(b), on the date of each
termination or reduction of the Revolving Committed Amount, the Unused Fee
accrued through the date of such termination or reduction on the amount of the
Revolving Committed Amount so terminated or reduced.
3.5 Fees.
----
(a) Upfront Fees. The Borrower agrees to pay to the Agent for the
------------
benefit of the Lenders in immediately available funds on or before the
Closing Date an upfront fee (the "Upfront Fee") in the amount provided in
-----------
the Agent's Fee Letter.
(b) Unused Fee. In consideration of the Revolving Commitments of the
----------
Lenders hereunder, the Borrower agrees to pay to the Agent for the account
of each Lender a fee (the "Unused Fee") on the Unused Revolving Committed
----------
Amount computed at a per annum rate for each day during the applicable
Unused Fee Calculation Period (hereinafter defined) at a rate equal to the
Applicable Percentage in effect from time to time. The Unused Fee shall
commence to accrue on the Closing Date and shall be due and payable in
arrears on the last business day of each March, June, September and
December (and any date that the Revolving Committed Amount is reduced as
provided in Section 3.4 and the Termination Date) for the immediately
preceding quarter (or portion thereof) (each such quarter or portion
thereof for which the Unused Fee is payable hereunder being herein referred
to as an "Unused Fee Calculation Period"), beginning with the first of such
-----------------------------
dates to occur after the Closing Date.
(c) Letter of Credit Fees.
---------------------
(i) Standby Letter of Credit Issuance Fee. In consideration of
-------------------------------------
the issuance of standby Letters of Credit hereunder, the Borrower
promises to pay to the Agent for the account of each Lender a fee (the
"Standby Letter of Credit Fee") on such Lender's Commitment Percentage
---------------------------
of the average daily maximum amount available to be drawn under each
such standby Letter of Credit computed at a per annum rate for each
day from the date of issuance to the date of expiration equal to the
Applicable Percentage. The Standby Letter of Credit Fee will be
payable quarterly in arrears on the last Business Day of each March,
June, September and December for the immediately preceding quarter (or
a portion thereof).
(ii) Trade Letter of Credit Drawing Fee. In consideration of the
----------------------------------
issuance of trade Letters of Credit hereunder, the Borrower promises
to pay to the Agent for the account of each Lender a fee (the "Trade
-----
Letter of Credit Fee") equal to 0.125% on such Lender's Commitment
--------------------
Percentage of the amount of each drawing under any such trade Letter
of Credit. The Trade Letter of Credit Fee will be payable on each
date of drawing under a trade Letter of Credit.
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(iii) Issuing Lender Fees. In addition to the Standby Letter of
-------------------
Credit Fee payable pursuant to clause (i) above and the Trade Letter
of Credit Fee payable pursuant to clause (ii) above, the Borrower
promises to pay to the Issuing Lender for its own account without
sharing by the other Lenders the letter of credit fronting and
negotiation fees referred to in the Agent's Fee Letter and the
customary charges from time to time of the Issuing Lender with respect
to the issuance, amendment, transfer, administration, cancellation and
conversion of, and drawings under, such Letters of Credit
(collectively, the "Issuing Lender Fees").
-------------------
(d) Agent's Fees. The Borrower agrees to pay to the Agent, for its
------------
own account and NationsBanc Capital Markets, Inc., as applicable, the fees
referred to in the Agent's Fee Letter (collectively, the "Agent's Fees").
------------
(e) Syndication Agent's Fees. The Borrower agrees to pay to the
------------------------
Syndication Agent, for its own account, the fees referred to in the
Syndication Agent's Fee Letter (the "Syndication Agent's Fees").
------------------------
3.6 Capital Adequacy. If any Lender has determined, after the date
----------------
hereof, that the adoption or the becoming effective of, or any change in, or any
change by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such Lender
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender's policies with respect to capital
adequacy), then, upon notice from such Lender to the Borrower, the Borrower
shall be obligated to pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction. Each determination by any such
Lender of amounts owing under this Section shall, absent manifest error, be
conclusive and binding on the parties hereto.
3.7 Inability To Determine Interest Rate. If prior to the first day of
------------------------------------
any Interest Period, the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Agent shall give
telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter. If such notice is given (x) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans and (y) any Loans that were to have been converted on the first
day of such Interest Period to or continued as Eurodollar Loans shall be
converted to or continued as Base Rate Loans. Until such notice has been
withdrawn by the Agent, no further Eurodollar Loans shall be made or continued
as such, nor shall the Borrower have the right to convert Base Rate Loans to
Eurodollar Loans.
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3.8 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law (other than any adoption of
or change in the certificate of incorporation, by-laws or other organizational
or governing documents of such Lender) or in the interpretation or application
thereof by a Governmental Authority occurring after the Closing Date shall make
it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated
by this Credit Agreement, (a) such Lender shall promptly give written notice of
such circumstances to the Borrower and the Agent (which notice shall be
withdrawn whenever such circumstances no longer exist), (b) the commitment of
such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as
such and convert a Base Rate Loan to Eurodollar Loans shall forthwith be
canceled and, until such time as it shall no longer be unlawful for such Lender
to make or maintain Eurodollar Loans, such Lender shall then have a commitment
only to make a Base Rate Loan when a Eurodollar Loan is requested and (c) such
Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days or the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 3.11.
3.9 Requirements of Law. If, after the date hereof, the adoption of or
-------------------
any change in any Requirement of Law (other than any adoption of or change in
the certificate of incorporation, by-laws or other organizational or governing
documents of such Lender) or in the interpretation or application thereof by any
Governmental Authority applicable to any Lender, or compliance by any Lender
with any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority, in each case made subsequent to
the Closing Date (or, if later, the date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind whatsoever with
respect to any Letter of Credit, any Eurodollar Loans made by it or its
obligation to make Eurodollar Loans, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
covered by Section 3.10 (including Non-Excluded Taxes imposed solely by
reason of any failure of such Lender to comply with its obligations under
Section 3.10(b)) and except for changes in taxes measured by or imposed
upon the overall net income, or franchise tax (imposed in lieu of such net
income tax), of such Lender or its applicable lending office, branch, or
any affiliate thereof);
(b) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(c) shall impose on such Lender any other condition (excluding any tax
of any kind whatsoever);
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and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Agent, in accordance herewith, the Borrower shall be obligated to
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable,
provided that, in any such case, the Borrower may elect to convert the
- --------
Eurodollar Loans made by such Lender hereunder to Base Rate Loans by giving the
Agent at least one Business Day's notice of such election, in which case the
Borrower shall promptly pay to such Lender, upon demand, without duplication,
such amounts, if any, as may be required pursuant to Section 3.11. If any
Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall provide prompt notice thereof to the Borrower, through the
Agent, certifying (x) that one of the events described in this paragraph (a) has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed explanation
of the calculation thereof. Such a certificate as to any additional amounts
payable pursuant to this subsection submitted by such Lender, through the Agent,
to the Borrower shall be conclusive and binding on the parties hereto in the
absence of manifest error. This covenant shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
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<PAGE>
3.10 Taxes.
-----
(a) Except as provided below in this subsection, all payments made by
the Borrower under this Credit Agreement and any Notes shall be made free
and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes, levies,
imposts, duties, charges, fees, deductions or withholdings measured by or
imposed upon the overall net income of any Lender or its applicable lending
office, or any branch or affiliate thereof, and all franchise taxes, branch
taxes, taxes on doing business or taxes on the overall capital or net worth
of any Lender or its applicable lending office, or any branch or affiliate
thereof, in each case imposed in lieu of net income taxes, imposed: (i) by
the jurisdiction under the laws of which such Lender, applicable lending
office, branch or affiliate is organized or is located, or in which its
principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by
reason of any connection between the jurisdiction imposing such tax and
such Lender, applicable lending office, branch or affiliate other than a
connection arising solely from such Lender having executed, delivered or
performed its obligations, or received payment under or enforced, this
Credit Agreement or any Notes. If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
------------
Taxes") are required to be withheld by the Borrower from any amounts
-----
payable to the Agent or any Lender hereunder or under any Notes, (A) the
amounts so payable to the Agent or such Lender shall be increased to the
extent necessary to yield to the Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Credit Agreement and any
Notes, provided, however, that the Borrower shall be entitled to deduct and
-------- -------
withhold any Non-Excluded Taxes and shall not be required to increase any
such amounts payable to any Lender that is not organized under the laws of
the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this subsection whenever
any Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as
possible thereafter the Borrower shall send to the Agent for its own
account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by the Borrower showing
payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when
due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Agent or any Lender as
a result of any such failure. The agreements in this subsection shall
survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
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(X)(i) on or before the date of any payment by the Borrower (or
the Agent) under this Credit Agreement or Notes to such Lender,
deliver to the Borrower and the Agent (A) two (2) duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, certifying that it is
entitled to receive payments under this Credit Agreement and any Notes
without deduction or withholding of any United States federal income
taxes and (B) an Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be, certifying that it is
entitled to an exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Agent two (2) further
copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent; or
(Y) in the case of any such Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (i) represent
to the Borrower (for the benefit of the Borrower and the Agent) that it is
not a bank within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (ii) agree to furnish to the Borrower on or before the date
of any payment by the Borrower, with a copy to the Agent two (2) accurate
and complete original signed copies of Internal Revenue Service Form W-8,
or successor applicable form certifying to such Lender's legal entitlement
at the date of such certificate to an exemption from U.S. withholding tax
under the provisions of Section 881(c) of the Internal Revenue Code with
respect to payments to be made under this Credit Agreement and any Notes
(and to deliver to the Borrower and the Agent two (2) further copies of
such form on or before the date it expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recently
provided form and, if necessary, obtain any extensions of time reasonably
requested by the Borrower or the Agent for filing and completing such
forms), and (iii) agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower or the Agent, to provide to the Borrower
(for the benefit of the Borrower and the Agent) such other forms as may be
reasonably required in order to establish the legal entitlement of such
Lender to an exemption from withholding with respect to payments under this
Credit Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Agent. Each Person that shall
become a Lender or a participant of a Lender pursuant to subsection 11.3
shall,
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<PAGE>
upon the effectiveness of the related transfer, be required to provide all
of the forms, certifications and statements required pursuant to this
subsection, provided that in the case of a participant of a Lender the
--------
obligations of such participant of a Lender pursuant to this subsection (b)
shall be determined as if the participant of a Lender were a Lender except
that such participant of a Lender shall furnish all such required forms,
certifications and statements to the Lender from which the related
participation shall have been purchased.
3.11 Indemnity. The Borrower promises to indemnify each Lender and to
---------
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur (other than through such Lender's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Credit Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan after the Borrower has given a notice thereof in
accordance with the provisions of this Credit Agreement or (c) the making of a
prepayment (including, without limitation, a mandatory assignment pursuant to
Section 3.16(b)) of Eurodollar Loans on a day which is not the last day of an
Interest Period with respect thereto. With respect to Eurodollar Loans, such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Loans provided for herein (excluding, however, the Applicable Percentage
included therein, if any and excluding any default rate of interest) over (ii)
the amount of interest (as reasonably determined by such Lender) which would
have accrued to such Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the interbank Eurodollar market. The
covenants of the Borrower set forth in this Section 3.11 shall survive the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
3.12 Pro Rata Treatment. Except to the extent otherwise provided herein:
------------------
(a) Loans. Each Revolving Loan, each payment or prepayment of
-----
principal of any Revolving Loan or reimbursement obligations arising from
drawings under Letters of Credit, each payment of interest on the Revolving
Loans or reimbursement obligations arising from drawings under Letters of
Credit, each payment of Unused Fees, each payment of the Standby Letter of
Credit Fee, each payment of the Trade Letter of Credit Fee, each reduction
of the Revolving Committed Amount and each conversion or extension of any
Revolving Loan, shall be allocated pro rata among the Lenders in accordance
with the respective principal amounts of their outstanding Loans and
Participation Interests.
(b) Advances. Unless the Agent shall have been notified in writing
--------
by any Lender prior to a borrowing that such Lender will not make the
amount that would
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<PAGE>
constitute its ratable share of such borrowing available to the Agent, the
Agent may assume that such Lender is making such amount available to the
Agent, and the Agent may, in reliance upon such assumption, make available
to the Borrower a corresponding amount. If such amount is not made
available to the Agent by such Lender within the time period specified
therefor hereunder, such Lender shall pay to the Agent, on demand, such
amount with interest thereon at a rate equal to the Federal Funds Rate for
the period until such Lender makes such amount available to the Agent. A
certificate of the Agent submitted to any Lender with respect to any
amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's ratable share of such borrowing is not
made available to the Agent by such Lender within two Business Days of the
date of the related borrowing, the Agent shall notify the Borrower of the
failure of such Lender to make such amount available to the Agent and the
Agent shall be entitled to recover such amount with interest thereon at the
rate per annum applicable to Base Rate Loans hereunder, on demand, from the
Borrower.
3.13 Sharing of Payments. The Lenders agree among themselves that, in the
-------------------
event that any Lender shall obtain payment in respect of any Loan, LOC
Obligations or any other obligation owing to such Lender under this Credit
Agreement through the exercise of a right of setoff, banker's lien or
counterclaim, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, in excess
of its pro rata share of such payment as provided for in this Credit Agreement,
such Lender shall promptly purchase from the other Lenders a participation in
such Loans, LOC Obligations and other obligations in such amounts, and make such
other adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
participation theretofore sold, return its share of that benefit (together with
its share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise restored. The Borrower
agrees that any Lender so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including setoff,
banker's lien or counterclaim, with respect to such participation as fully as if
such Lender were a holder of such Loan, LOC Obligations or other obligation in
the amount of such participation. Except as otherwise expressly provided in
this Credit Agreement, if any Lender or the Agent shall fail to remit to the
Agent or any other Lender an amount payable by such Lender or the Agent to the
Agent or such other Lender pursuant to this Credit Agreement on the date when
such amount is due, such payments shall be made together with interest thereon
for each date from the date such amount is due until the date such amount is
paid to the Agent or such other Lender at a rate per annum equal to the Federal
Funds Rate. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section 3.13 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in
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a manner consistent with the rights of the Lenders under this Section 3.13 to
share in the benefits of any recovery on such secured claim.
3.14 Payments, Computations, Etc.
----------------------------
(a) (i) Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Agent in Dollars in immediately
available funds, without offset, deduction, counterclaim or withholding of
any kind, at the Agent's office specified in Schedule 2.1(a) not later than
---------------
2:00 P.M. (Charlotte, North Carolina time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Borrower shall, at the time it makes any
payment under this Credit Agreement, specify to the Agent the Loans, LOC
Obligations, Fees, interest or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the event that it
fails so to specify, or if such application would be inconsistent with the
terms hereof, the Agent shall distribute such payment to the Lenders in
such manner as the Agent may determine to be appropriate in respect of
obligations owing by the Borrower hereunder, subject to the terms of
Section 3.12(a)). The Agent will distribute such payments to such Lenders,
if any such payment is received prior to 2:00 P.M. (Charlotte, North
Carolina time) on a Business Day, in like funds as received prior to the
end of such Business Day and otherwise the Agent will distribute such
payment to such Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day (subject to accrual of interest and Fees for the period of
such extension), except that in the case of Eurodollar Loans, if the
extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding
Business Day.
(ii) Except as expressly provided otherwise herein, all computations
of interest and fees shall be made on the basis of actual number of days
elapsed over a year of 360 days, except with respect to computation of
interest on Base Rate Loans which shall be calculated based on a year of
365 or 366 days, as appropriate. Interest shall accrue from and include the
date of borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default.
---------------------------------------------
(i) Notwithstanding any other provisions of this Credit Agreement to
the contrary and subject to the terms of the Intercreditor Agreement, after
the occurrence and during the continuance of an Event of Default and
following the exercise of any remedies by the Agent or the Lenders as set
forth in Section 9.2, all amounts collected or received by the Agent or any
Lender on account of the Borrower's Obligations or any other amounts
outstanding under any of the Credit Documents or in respect of the
Collateral shall be paid over or delivered as follows:
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FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Agent in connection with enforcing the rights of the Lenders under the
Credit Documents and any protective advances made by the Agent with respect
to the Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of each
of the Lenders in connection with enforcing its rights under the Credit
Documents or Hedging Agreements or otherwise with respect to the Borrower's
Obligations owing to such Lender;
FOURTH, to the payment of all of the Borrower's Obligations consisting
of accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Borrower's Obligations;
SIXTH, to all other Borrower's Obligations and other obligations which
shall have become due and payable under the Credit Documents or otherwise
and not repaid pursuant to clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (A) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (B) each Lender shall receive an amount equal to its
pro rata share (based on such Lender's share, if any, of the aggregate
outstanding amount of the applicable type of Borrower's Obligations) of
amounts available to be applied pursuant to clauses "THIRD", "FOURTH",
"FIFTH" and "SIXTH" above; and (C) subject to the terms of subsection
(b)(ii) below, the full amount of Borrower's Obligations on account of any
Letters of Credit outstanding but not drawn upon shall be deemed to be then
due and owing and shall be included in the amounts payable under clause
"FIFTH" above.
(ii) The full amount payable under subsection (b)(i) above with
respect to Borrower's Obligations on account of Letters of Credit
outstanding but not drawn upon shall be deposited in a separate account
under the exclusive dominion and control of the Senior Creditor Agent (the
"Cash Collateral Account") and held by the Senior Creditor Agent, as
----------------------
contemplated by Section 2(d) of the Intercreditor Agreement, as security
for the Borrower's Obligations and the obligations of the Borrower under or
in respect of the Senior Note Agreements and/or the Senior Notes. The
amount so deposited shall be applied in accordance with the terms of the
Intercreditor Agreement. The Borrower hereby grants to the Senior Creditor
Agent, for the ratable benefit of the Lenders and the
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holders of the Senior Notes, a lien on and security interest in all funds
deposited in the Cash Collateral Account, as security for all the
Borrower's Obligations and the Obligations of the Borrower under or in
respect of the Senior Note Agreements and/or the Senior Notes as set forth
above, and the Borrower acknowledges that the Senior Creditor Agent shall
have sole and exclusive control over the Cash Collateral Account.
3.15 Evidence of Debt. (a) Each Lender shall maintain an account or
----------------
accounts evidencing each Loan made by such Lender to the Borrower from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Credit Agreement. Each Lender will make
reasonable efforts to maintain the accuracy of its account or accounts and to
promptly update its account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section 11.3(c),
and a subaccount for each Lender, in which Register and subaccounts (taken
together) shall be recorded (i) the amount, type and Interest Period of each
such Loan hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder from or for the account of the
Borrower and each Lender's share thereof. The Agent will make reasonable efforts
to maintain the accuracy of the subaccounts referred to in the preceding
sentence and to promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Agent, subsection (a)) shall be prima facie evidence of
the existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Agent to maintain any
- -------- -------
such account, such Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of the Borrower to repay
the Loans made by such Lender in accordance with the terms hereof.
3.16 Change of Lending Office; Mandatory Assignment.
----------------------------------------------
(a) Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of Section 3.6, Section 3.8, Section 3.9 or Section 3.10,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Lender) to designate another lending
office for any Loans affected by an event contemplated by any such Section,
provided that such designa tion is made on such terms that such Lender and its
- --------
lending office suffer no economic, legal or regulatory disadvantage, with the
object of avoiding the consequence of the event giving rise to the operation of
any such Section. Nothing in this Section 3.16(a) shall affect or postpone any
of the obligations of the Borrower or the right of any Lender provided in
Section 3.6, Section 3.8, Section 3.9 or Section 3.10.
(b) In the event that (i) any Lender fails to fulfill its Commitment to
make any Revolving Loan, (ii) any Lender delivers to the Borrower any notice in
accordance with Section 3.6 or Section 3.8 or (iii) any Lender requests payment
by the Borrower of any additional
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amounts pursuant to Section 3.9 or Section 3.10, then, provided that no Default
or Event of Default has occurred and is continuing at such time, the Borrower
may, at its own expense (such expense to include any transfer fee payable to the
Agent under Section 11.3(b)), and in its sole discretion require such Lender,
and such Lender hereby agrees, to transfer and assign in whole or in part,
without recourse (in accordance with and subject to the terms and conditions of
Section 11.3(b)), all or part of its interests, rights and obligations under
this Credit Agreement to an Eligible Assignee which shall assume such assigned
obligations, provided that (i) such assignment shall not conflict with
--------
any law, rule or regulation or order of any court or other Governmental
Authority and (ii) the Borrower or such assignee shall have paid to the
assigning Lender in immediately available funds the principal of and interest
accrued to the date of such payment on the Loans made by it hereunder and all
other amounts owed to it hereunder.
SECTION 4
GUARANTY
--------
4.1 The Guarantee. Each of the Guarantors hereby jointly and severally
-------------
guarantees to each Lender, each Affiliate of a Lender that enters into a Hedging
Agreement and the Agent as hereinafter provided the prompt payment of the
Borrower's Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, a mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof. The Guarantors hereby
further agree that if any of the Borrower's Obligations are not paid in full
when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as mandatory cash collateralization or otherwise), the Guarantors
will, jointly and severally, promptly pay the same, without any demand or notice
whatsoever (except as expressly provided herein), and that in the case of any
extension of time of payment or renewal of any of the Borrower's Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration or otherwise) in accordance with the
terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law, including the Bankruptcy Code, relating to fraudulent
conveyances or transfers) then the obligations of each Guarantor hereunder
automatically shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
4.2 Obligations Unconditional. The obligations of the Guarantors under
-------------------------
Section 4.1 hereof are joint and several, absolute and unconditional (to the
fullest extent permitted by applicable law), irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Credit
Documents or Hedging Agreements, or any other agreement or instrument referred
to therein, or any substitution, release or exchange of any other guarantee of
or security for any of the Borrower's Obligations, and, to the fullest extent
permitted by applicable law,
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<PAGE>
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.2 that the obligations of the Guarantors
hereunder shall be absolute and unconditional under any and all circumstances.
Each Guarantor agrees that such Guarantor shall have no right of subrogation,
indemnity, reimbursement or contribution against the Borrower or any other
Guarantor of the Borrower's Obligations for amounts paid under this Guaranty
until such time as the Lenders (and any Affiliates of Lenders entering into
Hedging Agreements) have been paid in full, all Commitments under the Credit
Agreement have been terminated and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the Lenders
in connection with monies received under the Credit Documents or Hedging
Agreements. Without limiting the generality of the foregoing, it is agreed that,
to the fullest extent permitted by applicable law, the occurrence of any one or
more of the following shall not alter or impair the liability of any Guarantor
hereunder which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of the
Borrower's Obligations shall be extended, or such performance or compliance
shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be done or omitted;
(iii) the maturity of any of the Borrower's Obligations shall be
accelerated, or any of the Borrower's Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be waived or any other guarantee of any of the Borrower's Obligations or
any security therefor shall be released or exchanged in whole or in part or
otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders as security for any of the Borrower's Obligations shall fail to
attach or be perfected; or
(v) any of the Borrower's Obligations shall be determined to be void
or voidable (including, without limitation, for the benefit of any creditor
of any Guarantor) or shall be subordinated to the claims of any Person
(including, without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever (except notices expressly required hereunder), and any requirement
that the Agent or any Lender exhaust any right, power or remedy or proceed
against any Person under any of the Credit Documents, any Hedging Agreement or
any other agreement or instrument referred to in the Credit Documents or Hedging
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<PAGE>
Agreements, or against any other Person under any other guarantee of, or
security for, any of the Borrower's Obligations.
4.3 Reinstatement. The obligations of the Guarantors under this Section 4
-------------
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Borrower's Obligations
is rescinded or must be otherwise restored by any holder of any of the
Borrower's Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable out-of-pocket costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by the Agent or such Lender in connection with such rescission
or restoration, including any such reasonable costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
4.4 Certain Additional Waivers. Without limiting the generality of the
--------------------------
provisions of this Section 4, to the extent permitted by applicable law, each
Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. '' 26-7
through 26-9, inclusive. Each Guarantor further agrees that such Guarantor
shall have no right of recourse to security for the Borrower's Obligations,
except through the exercise of the rights of subrogation pursuant to Section
4.2.
4.5 Remedies. The Guarantors agree that, to the fullest extent permitted
--------
by applicable law, as between the Guarantors, on the one hand, and the Agent and
the Lenders, on the other hand, the Borrower's Obligations may be declared to be
forthwith due and payable as provided in Section 9.2 hereof (and shall be deemed
to have become automatically due and payable in the circumstances provided in
said Section 9.2) for purposes of Section 4.1 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing the
Borrower's Obligations from becoming automatically due and payable) as against
any other Person and that, in the event of such declaration (or the Borrower's
Obligations being deemed to have become automatically due and payable), the
Borrower's Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of said
Section 4.1.
4.6 Rights of Contribution. The Guarantors hereby agree, as among
----------------------
themselves, that if any Guarantor shall become an Excess Funding Guarantor (as
defined below), each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the succeeding provisions of this Section 4.6), pay to
such Excess Funding Guarantor an amount equal to such Guarantor's Pro Rata Share
(as defined below and determined, for this purpose, without reference to the
properties, assets, liabilities and debts of such Excess Funding Guarantor) of
such Excess Payment (as defined below). The payment obligation of any Guarantor
to any Excess Funding Guarantor under this Section 4.6 shall be subordinate and
subject in right of payment to the prior payment in full of the obligations of
such Guarantor under the other provisions of this Section 4, and such Excess
Funding Guarantor shall not exercise any right or remedy with respect to such
excess until payment and satisfaction in full of all of such obligations. For
purposes hereof, (i)
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"Excess Funding Guarantor" shall mean, in respect of any obligations arising
------------------------
under the other provisions of this Section 4 (hereafter, the "Guaranteed
Obligations"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of the Guaranteed Obligations; (ii) "Excess Payment" shall mean,
--------------
in respect of any Guaranteed Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations; and
(iii) "Pro Rata Share", for the purposes of this Section 4.6, shall mean, for
--------------
any Guarantor, the ratio (expressed as a percentage) of (a) the amount by which
the aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder) to (b) the amount by which the
aggregate present fair saleable value of all assets and other properties of the
Borrower and all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date
(if any Guarantor becomes a party hereto subsequent to the Closing Date, then
for the purposes of this Section 4.6 such subsequent Guarantor shall be deemed
to have been a Guarantor as of the Closing Date and the information pertaining
to, and only pertaining to, such Guarantor as of the date such Guarantor became
a Guarantor shall be deemed true as of the Closing Date).
4.7 Continuing Guarantee. The guarantee in this Section 4 is a continuing
--------------------
guarantee, and shall apply to all Borrower's Obligations whenever arising.
SECTION 5
CONDITIONS
----------
5.1 Closing Conditions. The obligation of the Lenders to enter into
------------------
this Credit Agreement and to make the initial Loans or the Issuing Lender to
issue the initial Letter of Credit, whichever shall occur first, shall be
subject to satisfaction of the following conditions (in form and substance
reasonably acceptable to the Lenders):
(a) The Agent shall have received original counterparts of this
Credit Agreement executed by each of the parties hereto;
(b) The Agent shall have received an appropriate original Revolving
Note for each Lender, executed by the Borrower;
(c) The Agent shall have received an appropriate original Swingline
Note for the Swingline Lender, executed by the Borrower;
(d) The Agent shall have received original counterparts of the
Intercreditor Agreement executed by each of the parties thereto;
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<PAGE>
(e) The Senior Creditor Agent shall have received original
counterparts of each Pledge Agreement executed by each of the parties
thereto, together with (i) all stock or other equity interest certificates,
if any, evidencing the stock or other equity interest pledged to the Senior
Creditor Agent, for the benefit of the Lenders and Senior Noteholders, or
to the Lenders and Senior Noteholders, as the case may be, pursuant to such
Pledge Agreement, (ii) duly executed in blank undated stock or other
appropriate powers attached thereto (unless, with respect to a Foreign
Consolidated Subsidiary, such stock powers are deemed unnecessary by the
Senior Creditor Agent in its reasonable discretion under the law of the
jurisdiction of incorporation of such Person), (iii) evidence of the
execution of such further pledge agreements as may be necessary to comply
with additional requirements under the laws of the jurisdiction of a
Material Foreign Subsidiary where stock or other equity interest is to be
pledged pursuant to a Pledge Agreement, (iv) searches of Uniform Commercial
Code filings in the jurisdiction of the chief executive office of each of
the Borrower and the Subsidiary Pledgors, and each jurisdiction where a
filing would need to be made in order to perfect the Senior Creditor
Agent's security interest in any Collateral, copies of the financing
statements on file in such jurisdictions and evidence that no Liens exist
other than Permitted Liens and (v) the Financing Statements;
(f) The Agent shall have received all documents it may reasonably
request relating to the existence and good standing of each of the Credit
Parties, the corporate or other necessary authority for and the validity of
the Credit Documents, and any other matters relevant thereto, all in form
and substance reasonably satisfactory to the Agent;
(g) The Agent shall have received a copy certified by a secretary
or assistant secretary of the Borrower of a resolution of the directors of
the Borrower approving the Senior Note Agreements;
(h) The Agent shall have received a legal opinion of Haythe &
Curley, counsel for the Credit Parties, dated as of the Closing Date and
substantially in the form of Schedule 5.1(h);
---------------
(i) The Agent shall have received a legal opinion of John H.
FitzSimons, Esq., General Counsel of the Borrower, dated as of the Closing
Date and substantially in the form of Schedule 5.1(i);
---------------
(j) The Agent shall have received a legal opinion of Haythe &
Curley, counsel for the Credit Parties, dated as of the Closing Date and
substantially in the form of Schedule 5.1(j);
---------------
(k) The Agent shall have received a legal opinion of special
foreign counsel for the Credit Parties for each country in which any
Material Foreign Subsidiary whose stock or other equity interest is to be
pledged pursuant to any Pledge Agreement is incorporated, all in form and
substance reasonably satisfactory to the Agent;
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<PAGE>
(l) No material adverse change shall have occurred since January
31, 1996 in the condition (financial or otherwise), business or management
of the Borrower and its Consolidated Subsidiaries taken as a whole;
(m) (i) The Borrower shall have entered into a Senior Note
Agreement with each holder of a Senior Note, (ii) the Borrower shall have
executed the Senior Notes and (iii) the Agent shall have received a copy,
certified by an officer of the Borrower as true and complete, of each of
the Senior Note Agreements and each of the Senior Notes as originally
executed and delivered, and no amendment or modification thereof shall have
been entered into on or prior to the Effective Date which shall not have
been approved by each of the Lenders;
(n) The Borrower shall have received proceeds from the sale of the
Senior Notes in an aggregate principal amount of $80,000,000;
(o) The Agent shall have received a certificate executed by the
chief financial officer of the Borrower as of the Closing Date stating
that, immediately after giving effect to this Credit Agreement and the
other Credit Documents, the Senior Note Agreements, the Senior Notes and
all other transactions contemplated by this Credit Agreement and the other
Credit Documents and the Senior Note Agreements to occur on such date, (x)
the Borrower and its Consolidated Subsidiaries taken as a whole are
Solvent, (y) no Default or Event of Default exists, and (z) the
representations and warranties set forth in Section 6 are, subject to the
limitations set forth therein, true and correct in all material respects;
(p) The Agent shall have received copies of insurance policies or
certificates of insurance of the Borrower and its Consolidated Subsidiaries
evidencing liability and casualty insurance meeting the requirements of
Section 7.6;
(q) The Agent shall have received, for its own account and for the
accounts of the Lenders, all fees and expenses required by this Credit
Agreement or any other Credit Document to be paid on or before the Closing
Date;
(r) Evidence satisfactory to the Agent that all obligations under
the Existing Credit Agreement have been paid in full and all commitments of
the lenders under the Existing Credit Agreement have been terminated; and
(s) The Agent shall have received such other documents, agreements
or information which may be reasonably requested by the Agent.
5.2 Conditions to all Extensions of Credit. The obligations of each
--------------------------------------
Lender to make, convert or extend any Loan and of the Issuing Lender to issue or
extend Letters of Credit (including the initial Loans and the initial Letter of
Credit) are subject to satisfaction of the following conditions in addition to
satisfaction on the Closing Date of the conditions set forth in Section 5.1:
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(i) The Borrower shall have delivered (A) in the case of any
Revolving Loan, an appropriate Notice of Borrowing or Notice of
Extension/Conversion or (B) in the case of any Letter of Credit, the
Issuing Lender shall have received an appropriate request for issuance in
accordance with the provisions of Section 2.2(b);
(ii) The representations and warranties set forth in Section 6 shall
be, subject to the limitations set forth therein, true and correct in all
material respects as of such date (except for those which expressly relate
to an earlier date);
(iii) There shall not have been commenced against the Borrower or any
Guarantor an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded;
(iv) No Default or Event of Default shall exist and be continuing
either prior to or after giving effect thereto; and
(v) Immediately after giving effect to the making of such Loan (and
the application of the proceeds thereof) or to the issuance of such Letter
of Credit, as the case may be, (A) the sum of the aggregate principal
amount of outstanding Revolving Loans plus the aggregate principal amount
----
of outstanding Swingline Loans plus LOC Obligations outstanding shall
----
not exceed the Revolving Committed Amount, and (B) the LOC Obligations
shall not exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing, each Notice of Extension/Conversion
and each request for a Letter of Credit pursuant to Section 2.2(b) shall
constitute a representation and warranty by the Borrower of the correctness of
the matters specified in subsections (ii), (iii), (iv) and (v) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 Financial Condition. (i) The audited consolidated balance sheets of
-------------------
the Borrower and its Subsidiaries as of January 31, 1994, January 31, 1995 and
January 31, 1996 and the audited consolidated statements of income and of cash
flows for the Borrower and its Subsidiaries for the years ended January 31,
1994, January 31, 1995 and January 31, 1996 have heretofore been furnished to
the Agent. Such audited consolidated financial statements (including the notes
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thereto) (A) have been audited by Arthur Andersen, LLP, (B) have been prepared
in accordance with GAAP (except for the effects of not consolidating the
Unconsolidated Subsidiaries), consistently applied throughout the periods
covered thereby and (C) present fairly (on the basis disclosed in the footnotes
to such financial statements) in all material respects the consolidated
financial condition, results of operations and cash flows of the Borrower and
its Subsidiaries as of such dates and for such periods.
(ii) The unaudited consolidating balance sheets of the Borrower and
its Consolidated Subsidiaries as of January 31, 1994, January 31, 1995 and
January 31, 1996 and the unaudited consolidating statements of income and of
cash flows for the Borrower and its Consolidated Subsidiaries for the years
ended January 31, 1994, January 31, 1995 and January 31, 1996 have heretofore
been furnished to the Agent.
(iii) (A) The audited consolidated balance sheets of DKM Properties
Corp. and its Subsidiaries (including without limitation DKM Residential
Properties Corp. and its Subsidiaries) as of January 31, 1994, January 31, 1995
and January 31, 1996 and the audited consolidated statements of income and of
cash flows for DKM Properties Corp. and its Subsidiaries (including without
limitation DKM Residential Properties Corp. and its Subsidiaries) for the years
ended January 31, 1994, January 31, 1995 and January 31, 1996 have heretofore
been furnished to the Agent. Such audited consolidated financial statements
(including the notes thereto) (1) have been audited by (x) in the case of the
financial statements for fiscal year 1994, KPMG Peat Marwick and (y) in the case
of the financial statements for fiscal years 1995 and 1996, Arthur Andersen,
LLP, (2) have been prepared in accordance with GAAP, consistently applied
throughout the periods covered thereby and (3) present fairly (on the basis
disclosed in the footnotes to such financial statements) in all material
respects the consolidated financial condition, results of operations and cash
flows of DKM Properties Corp. and its Subsidiaries (including without limitation
DKM Residential Properties Corp. and its Subsidiaries) as of such dates and for
such periods.
(B) The audited consolidated balance sheet of Patterson Broadcasting,
Inc. and its Subsidiaries as of December 31, 1995 and the audited consolidated
statements of income and of cash flows for Patterson Broadcasting, Inc. and its
Subsidiaries for the period ended December 31, 1995 have heretofore been
furnished to the Agent. Such audited consolidated financial statements
(including the notes thereto) (1) have been audited by Arthur Andersen, LLP, (2)
have been prepared in accordance with GAAP, consistently applied throughout the
period covered thereby and (3) present fairly (on the basis disclosed in the
footnotes to such financial statements) in all material respects the
consolidated financial condition, results of operations and cash flows of
Patterson Broadcasting, Inc. and its Subsidiaries as of such date and for such
period.
(iv) During the period from January 31, 1996 to and including
the Closing Date, there has been no sale, transfer or other disposition by the
Borrower or any of its Consolidated Subsidiaries of any material part of the
business or property of the Borrower and its Consolidated Subsidiaries, taken as
a whole, except for sales of inventory and other assets in the ordinary course
of business, and, except for the purchase by Needle Acquisition Corp. of
substantially all
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of the assets of Bucilla Corporation, no purchase or other acquisition by any of
them of any business or property (including any capital stock of any other
person) material in relation to the consolidated financial condition of the
Borrower and its Consolidated Subsidiaries, taken as a whole, except for
purchases of raw materials, inventory and other assets in the ordinary course of
business, in each case, which, is not reflected in the foregoing financial
statements or in the notes thereto and has not otherwise been disclosed in
writing to the Lenders on or prior to the Closing Date.
6.2 No Change. Since January 31, 1996 to and including the Closing
---------
Date, there has been no development or event relating to or affecting the
Borrower or any of its Consolidated Subsidiaries which has had or would be
reasonably expected to have a Material Adverse Effect.
6.3 Organization; Existence; Compliance with Law. Each of the
--------------------------------------------
Borrower and its Consolidated Subsidiaries (a) is a corporation duly organized,
validly existing and is in good standing under the laws of the jurisdiction of
its incorporation or organization, except where the failure to be in good
standing would not have a Material Adverse Effect, (b) has the corporate or
other necessary power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, except where the failure to have such
other power or authority would not have a Material Adverse Effect, (c) is duly
qualified as a foreign entity and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, other than in such jurisdictions
where the failure to be so qualified and in good standing would not have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law,
except where the failure to be in compliance with such Requirements of Law would
not have a Material Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations. Each of the Credit
---------------------------------------------
Parties has the corporate or other necessary power and authority, and the legal
right, to make, deliver and perform the Credit Documents to which it is a party,
and in the case of the Borrower, to borrow hereunder, and has taken all
necessary corporate action to authorize the borrowings on the terms and
conditions of this Credit Agreement (in the case of the Borrower) and to
authorize the execution, delivery and performance of the Credit Documents to
which it is a party. No consent or authorization of, filing with, notice to or
other similar act by or in respect of, any Governmental Authority or any other
Person is required to be obtained or made by or on behalf of any Credit Party in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability by or against any Credit Party of the
Credit Documents to which such Credit Party is a party, except for filings to
perfect the Liens created by the Collateral Documents. This Credit Agreement has
been, and each other Credit Document to which any Credit Party is a party will
be, duly executed and delivered by such Credit Party on behalf of the Credit
Parties. This Credit Agreement constitutes, and each other Credit Document to
which any Credit Party is a party when executed and delivered will constitute, a
legal, valid and binding obligation of such Credit Party enforceable against
such party in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
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6.5 No Legal Bar. The execution, delivery and performance of the
------------
Credit Documents by the Credit Parties, the borrowings hereunder and the use of
the proceeds thereof (a) will not violate any Requirement of Law or contractual
obligation of the Borrower or any of its Consolidated Subsidiaries in any
respect that would have a Material Adverse Effect and (b) will not result in, or
require, the creation or imposition of any Lien (other than the Liens created by
the Collateral Documents) on any of the properties or revenues of any of the
Borrower or any of its Consolidated Subsidiaries pursuant to any such
Requirement of Law or contractual obligation.
6.6 No Material Litigation. Except as disclosed by the Borrower
----------------------
pursuant to Section 7.1(h) hereof, no litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the best
knowledge of the Credit Parties, threatened by or against the Borrower or any of
its Consolidated Subsidiaries or against any of their respective properties or
revenues which (a) relates to any of the Credit Documents or any of the
transactions contemplated hereby or thereby or (b) would have a Material Adverse
Effect.
6.7 Ownership of Property; Liens. Each of the Borrower and its
----------------------------
Consolidated Subsidiaries has good record and marketable title in fee simple to,
or a valid leasehold interest in, all its material real property, and good title
to, or a valid leasehold interest in, all its other material property, and none
of such property is subject to any Lien, except for Permitted Liens.
6.8 Intellectual Property. Each of the Borrower and its Consolidated
---------------------
Subsidiaries owns, or has the legal right to use, all United States trademarks,
tradenames and copyrights, if any, used in the conduct of its business as
currently conducted (the "Intellectual Property") except for those the failure
---------------------
to own or have such legal right to use would not have a Material Adverse Effect.
Except as provided on Schedule 6.8, no claim has been asserted and is pending by
------------
any Person challenging or questioning the use of any such Intellectual Property
or the validity or effectiveness of any such Intellectual Property, nor does any
Credit Party know of any such claim, and the use of such Intellectual Property
by the Borrower or any of its Consolidated Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements that in the
aggregate, would not have a Material Adverse Effect.
6.9 No Burdensome Restrictions. Except as disclosed in writing to the
--------------------------
Agent, no Requirement of Law or contractual obligation of the Borrower or any of
its Consolidated Subsidiaries would have a Material Adverse Effect.
6.10 Taxes. Each of the Borrower and its Consolidated Subsidiaries
-----
has filed or caused to be filed all United States federal income tax returns and
all other material tax returns which, to the best knowledge of the Credit
Parties, are required to be filed and has paid (a) all taxes shown to be due and
payable on said returns or (b) all taxes shown to be due and payable on any
assessments of which it has received notice made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any (i) taxes, fees or other
charges with respect to which the failure to pay, in the aggregate, would not
have a Material Adverse Effect or (ii) taxes, fees or other charges the
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amount or validity of which are currently being contested and with respect to
which reserves in conformity with GAAP have been provided on the books of such
Person).
6.11 ERISA. Except as would not result in a Material Adverse Effect:
-----
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has occurred,
and, to the best knowledge of the Credit Parties, no event or condition has
occurred or exists as a result of which any Termination Event could reasonably
be expected to occur, with respect to any Plan; (ii) no "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, has occurred with respect to any Plan; (iii)
each Plan has been maintained, operated, and funded in compliance with its own
terms and in material compliance with the provisions of ERISA, the Code, and any
other applicable federal or state laws; and (iv) no lien in favor of the PBGC or
a Plan has arisen or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" under all
Single Employer Plans (determined within the meaning of Section 401(a)(2) of the
Code, utilizing the actuarial assumptions used to fund such Plans), whether or
not vested, did not, as of the last annual valuation date prior to the date on
which this representation is made or deemed made, exceed the current value of
the Property of all such Plans by more than $2,000,000.
(c) Neither the Borrower, any Consolidated Subsidiary nor any ERISA
Affiliate has incurred, or, to the best knowledge of the Credit Parties, could
be reasonably expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the Borrower, any
Consolidated Subsidiary nor any ERISA Affiliate would become subject to any
withdrawal liability under ERISA if the Borrower, any Consolidated Subsidiary or
any ERISA Affiliate were to withdraw completely from all Multiemployer Plans and
Multiple Employer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. Neither the Borrower, any
Consolidated Subsidiary nor any ERISA Affiliate has received any notification
that any Multiemployer Plan is in reorganization (within the meaning of Section
4241 of ERISA), is insolvent (within the meaning of Section 4245 of ERISA), or
has been terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of the Credit Parties, reasonably
expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Code) or breach of fiduciary responsibility has occurred
with respect to a Plan which has subjected or may subject the Borrower, any
Consolidated Subsidiary or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which the Borrower, any Consolidated
Subsidiary or any ERISA Affiliate has agreed or is required to indemnify any
person against any such liability.
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(e) Neither the execution and delivery of this Agreement nor the
consummation of the financing transactions contemplated thereunder will involve
any transaction which is subject to the prohibitions of Section 406 of ERISA or
in connection with which a tax could be imposed pursuant to Section 4975 of the
Code. The representation by the Credit Parties in the preceding sentence is made
in reliance upon and subject to the accuracy of the Lenders' representation in
Section 11.15 with respect to their source of funds and is subject, in the event
that the source of the funds used by the Lenders in connection with this
transaction is an insurance company's general asset account, to the continued
validity of Department of Labor Prohibited Transaction Class Exemption 95-60, 60
Fed. Reg. 35,925 (1995), or the issuance of any other similar relief or
prohibited transaction exemption, which provides relief from the restriction of
Section 406(a) and 406(b) of ERISA and the taxes imposed by Section 4975 of the
Code for certain transactions involving an insurance company general account.
6.12 Governmental Regulations, Etc.
-----------------------------
(a) No part of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation G or Regulation U, except for any
purchases or carryings which are effected in accordance with Regulations G
and U. If requested by the Agent, the Borrower will furnish to the Agent a
statement to the foregoing effect in conformity with the requirements of FR
Form U-1 referred to in said Regulation U. No indebtedness being reduced or
retired out of the proceeds of the Loans was or will be incurred for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation T.
"Margin stock" within the meanings of Regulation U does not constitute more
than 25% of the value of the consolidated assets of the Borrower and its
Consolidated Subsidiaries. None of the transactions contemplated by this
Credit Agreement (including, without limitation, the direct or indirect use
of the proceeds of the Loans) will violate or result in a violation of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, or regulations issued pursuant thereto, or Regulation G, T, U
or X.
(b) Neither the Borrower nor any of its Consolidated Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act or the Investment Company Act of 1940, each as
amended. In addition, neither the Borrower nor any of its Consolidated
Subsidiaries is (i) an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (ii) a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company"
or of a "subsidiary" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(c) As of the Closing Date, no director, executive officer or
principal shareholder of the Borrower or any of its Consolidated
Subsidiaries is a director, executive officer or principal shareholder of
any Lender. For the purposes hereof the terms "director", "executive
officer" and "principal shareholder" (when used with
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reference to any Lender) have the respective meanings assigned thereto in
Regulation O issued by the Board of Governors of the Federal Reserve
System.
(d) Each of the Borrower and its Consolidated Subsidiaries has
obtained all material licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its respective assets and to
the conduct of its business, except where the failure to obtain the same
would not have a Material Adverse Effect.
(e) Each of the Borrower and its Consolidated Subsidiaries is
current with all material reports and documents, if any, required to be
filed with any state or federal securities commission or similar agency and
is in compliance in all material respects with all applicable rules and
regulations of such commissions, except where the failure to be in
compliance would not have a Material Adverse Effect.
6.13 Subsidiaries. Schedule 6.13 sets forth all of the Consolidated
------------ -------------
Subsidiaries of the Borrower at the Closing Date, all of the Unconsolidated
Subsidiaries as of the Closing Date, the jurisdiction of incorporation of each
such Person and the direct or indirect ownership interest of the Borrower in
each such Person.
6.14 Purpose of Loans and Letters of Credit. The proceeds of the
--------------------------------------
Loans hereunder shall be used solely by the Borrower (i) to refinance existing
indebtedness of the Borrower under the Existing Credit Agreement, (ii) to
finance the Stock Repurchase, and (iii) for working capital and general
corporate purposes (including acquisitions permitted by Section 8.3(d) and
Investments permitted by Section 8.4) of the Borrower and its Consolidated
Subsidiaries. The Letters of Credit shall be used only for or in connection
with appeal bonds, reimbursement obligations arising in connection with surety
and reclamation bonds, reinsurance, domestic or international trade transactions
and obligations not otherwise aforementioned relating to transactions entered
into by the applicable account party in the ordinary course of business.
6.15 Environmental Matters. Except as disclosed in writing to the
---------------------
Agent or except as would not have a Material Adverse Effect,
(a) Each of the facilities and properties owned, leased or operated by the
Borrower or any of its Consolidated Subsidiaries (the "Properties") and all
----------
operations at the Properties are in compliance with all applicable Environmental
Laws, and there is no violation of any Environmental Law with respect to the
Properties or the businesses operated by the Borrower or any of its Consolidated
Subsidiaries (the "Businesses"), and there are no conditions relating to the
----------
Businesses or Properties that could give rise to liability under any applicable
Environmental Laws.
(b) None of the Properties contains, or has previously contained, any
Materials of Environmental Concern at, on or under the Properties in amounts or
concentrations that constitute or constituted a violation of, or could give rise
to liability under, Environmental Laws.
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<PAGE>
(c) Neither the Borrower nor any of its Consolidated Subsidiaries has
received any written notice of any Governmental Authority regarding any
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Businesses which has not been cured or
for which there is remaining liability, nor does the Borrower or any of its
Consolidated Subsidiaries have knowledge or reason to believe that any such
notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by or
on behalf of the Borrower or any of its Consolidated Subsidiaries in violation
of, or, to the knowledge of the Credit Parties, in a manner that would be
reasonably likely to give rise to liability under, any applicable Environmental
Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which the Borrower or any of its Consolidated Subsidiaries
is or will be named as a party, nor are there any outstanding consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
outstanding administrative or judicial requirements outstanding under any
Environmental Law with respect to the Borrower or any of its Consolidated
Subsidiaries, the Properties or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations (including, without limitation, disposal) of the Borrower or any
of its Consolidated Subsidiaries in connection with the Properties or otherwise
in connection with the Businesses, in violation of or, to the knowledge of the
Credit Parties, in amounts or in a manner that would give rise to liability
under Environmental Laws.
6.16 Perfected Security Interests. Except as the result of or in
----------------------------
connection with a dissolution, merger or disposition of a Consolidated
Subsidiary permitted by Section 8.3(a), Section 8.3(b) or Section 8.3(c), at all
times after execution and delivery of the Pledge Agreements (and any other
pledge agreement in favor of the Senior Creditor Agent in accordance with the
terms of Section 7.11) by the Borrower and the Subsidiary Pledgors and
satisfaction of the conditions specified therein, the security interests in the
Collateral created in favor of the Senior Creditor Agent, for the benefit of the
Lenders and/or Senior Noteholders, or in favor of the Lenders and Senior
Noteholders, as the case may be, will constitute valid, perfected security
interests in the securities delivered pursuant to the Pledge Agreements.
SECTION 7
AFFIRMATIVE COVENANTS
---------------------
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<PAGE>
The Borrower hereby covenants and agrees that so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
7.1 Information Covenants. The Borrower will furnish, or cause to be
---------------------
furnished, to the Agent:
(a) Annual Financial Statements. (i) As soon as available, and
---------------------------
in any event within 90 days after the close of each fiscal year of the
Borrower and its Subsidiaries, a consolidated balance sheet of the Borrower
and its Subsidiaries, as of the end of such fiscal year, together with
related consolidated statements of income and of cash flows for such fiscal
year, setting forth in comparative form consolidated figures for the
preceding fiscal year, all such financial statements described above to be
in substantially the form of the audited consolidated financial statements
for the fiscal year ended January 31, 1996 referred to in clause (i) of
Section 6.1 or otherwise in form and detail reasonably acceptable to the
Agent and audited by Arthur Andersen, LLP, and an Acceptable Accountant or
other independent certified public accountants of recognized national
standing reasonably acceptable to the Agent and whose opinion shall be to
the effect that such financial statements have been prepared in accordance
with GAAP (except for the effects of not consolidating the Unconsolidated
Subsidiaries and except for changes with which such accountants concur) and
shall not be limited as to the scope of the audit or qualified as to the
status of the Borrower and its Subsidiaries as a going concern.
(ii) As soon as available, and in any event within 90 days after
the close of each fiscal year of the Borrower and its Consolidated
Subsidiaries, a consolidating balance sheet of the Borrower and its
Consolidated Subsidiaries, as of the end of such fiscal year, together with
related consolidating statements of income and of cash flows for such
fiscal year, setting forth in comparative form consolidating figures for
the preceding fiscal year, all such financial statements described above to
be in substantially the form of the unaudited consolidating financial
statements for the Borrower and its Consolidated Subsidiaries for the
fiscal year ended January 31, 1996 referred to in clause (ii) of Section
6.1 or otherwise in form and detail reasonably acceptable to the Agent.
(iii) As soon as available, and in any event within 90 days after
the close of each fiscal year of the applicable Unconsolidated
Subsidiaries, a consolidated balance sheet of the applicable Unconsolidated
Subsidiaries, as of the end of such fiscal year, together with related
consolidated statements of income and of cash flows for such fiscal year,
setting forth in comparative form consolidated figures for the preceding
fiscal year, all such financial statements described above to be in
substantially the form of the audited consolidated financial statements for
the Unconsolidated Subsidiaries for the fiscal year ended January 31, 1996
or December 31, 1995, as applicable, referred to in clause (iii) of Section
6.1 or otherwise in form and detail reasonably acceptable to the Agent and
audited by Arthur Andersen, LLP, an Acceptable Accountant or other
independent certified public accountants of recognized national standing
reasonably acceptable to the Agent and whose opinion shall be to the effect
that such financial statements have been
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<PAGE>
prepared in accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope of the audit.
(b) Quarterly Financial Statements. (i) As soon as available, and
------------------------------
in any event within 45 days after the close of each fiscal quarter of the
Borrower and its Subsidiaries (other than the fourth fiscal quarter, in
which case 90 days after the end thereof) a consolidated balance sheet of
the Borrower and its Subsidiaries, as of the end of such fiscal quarter,
together with related consolidated statements of income and of cash flows
for such fiscal quarter in each case setting forth in comparative form
consolidated figures for the corresponding period of the preceding fiscal
year, all such financial statements described above to be in substantially
the form of the unaudited consolidated financial statements for the Borrower
and its Subsidiaries for the fiscal quarter ended October 31, 1995 or
otherwise in form and detail and reasonably acceptable to the Agent, and
accompanied by a certificate of the Senior Financial Officer of the Borrower
to the effect that such quarterly financial statements fairly present in all
material respects the financial condition of the Borrower and its
Subsidiaries and have been prepared in accordance with GAAP (except for the
effects of not consolidating the Unconsolidated Subsidiaries and except for
the absence of footnote disclosures, and subject to changes resulting from
audit and normal year-end audit adjustments).
(ii) As soon as available, and in any event within 45 days after
the close of each fiscal quarter of the Borrower and its Consolidated
Subsidiaries (other than the fourth fiscal quarter, in which case 90 days
after the end thereof) a consolidating balance sheet of the Borrower and
its Consolidated Subsidiaries, as of the end of such fiscal quarter,
together with related consolidating statements of income and of cash flows
for such fiscal quarter in each case setting forth in comparative form
consolidating figures for the corresponding period of the preceding fiscal
year, all such financial statements described above to be in substantially
the form of the unaudited consolidating financial statements for the
Borrower and its Consolidated Subsidiaries for the fiscal quarter ended
October 31, 1995 or otherwise in form and detail and reasonably acceptable
to the Agent.
(c) Officer's Certificate. At the time of delivery of the
---------------------
financial statements provided for in Sections 7.1(a)(i) and 7.1(b)(i)
above, a certificate of the Senior Financial Officer of the Borrower;
substantially in the form of Schedule 7.1(c), (i) demonstrating compliance
---------------
with the financial covenants contained in Section 7.10 by calculation
thereof as of the end of each such fiscal period and (ii) stating that no
Default or Event of Default exists, or if any Default or Event of Default
does exist, specifying the nature and extent thereof and what action the
Borrower proposes to take with respect thereto. The Borrower shall also
deliver a copy of each such certificate to the Agency Services Address.
(d) Annual Budgets. At least 90 days after the end of each fiscal
--------------
year of the Borrower and its Consolidated Subsidiaries, beginning with the
fiscal year ending January 31, 1998, an annual budget of the Borrower and
its Consolidated Subsidiaries consisting of pro forma financial statements
for the next fiscal year.
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(e) Accountant's Certificate. Within the period for delivery of the
------------------------
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have reviewed
Section 7.10 and Section 8 of this Credit Agreement and stating further
whether, in the course of their audit, they have not become aware of any
Default or Event of Default under Section 7.10 or those portions of Section
8 relating to accounting matters or, if any such Default or Event of
Default exists, specifying the nature and extent thereof.
(f) Auditor's Reports. Promptly upon receipt thereof, a copy of any
-----------------
other written report or "management letter" submitted by independent
accountants to the Borrower and its Subsidiaries in connection with any
annual, interim or special audit of the books of such Person.
(g) Reports. Promptly upon transmission or receipt thereof, (a)
-------
copies of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies of
all financial statements, proxy statements, notices and reports as the
Borrower or any of its Consolidated Subsidiaries shall send to a holder of
any Indebtedness owed by the Borrower or any of its Consolidated
Subsidiaries in its capacity as such a holder and (b) upon the reasonable
request of the Agent, all reports and written information to and from the
United States Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency responsible
for health and safety matters, or any successor agencies or authorities
concerning environmental, health or safety matters.
(h) Notices. Upon obtaining knowledge thereof, the Borrower will
-------
give written notice to the Agent promptly of (i) the occurrence of an event
or condition consisting of a Default or Event of Default, specifying the
nature and existence thereof and what action the Borrower or its
Consolidated Subsidiaries propose to take with respect thereto, and (ii)
with respect to the Borrower or any Consolidated Subsidiary, the
commencement of any litigation, arbitral or governmental proceeding against
such Person which if adversely determined would have a Material Adverse
Effect.
(i) ERISA. Upon obtaining knowledge thereof, the Borrower will give
-----
written notice to the Agent promptly (and in any event within five business
days) of: (i) of any event or condition, including, but not limited to, any
Reportable Event, that constitutes, or might reasonably lead to, a
Termination Event; (ii) with respect to any Multiemployer Plan, the receipt
of notice as prescribed in ERISA or otherwise of any withdrawal liability
assessed against the Borrower or any of its ERISA Affiliates, or of a
determination that any Multiemployer Plan is in reorganization or insolvent
(both within the meaning of Title IV of ERISA); (iii) the failure to make
full payment on or before the due date (including extensions) thereof of
all amounts which the Borrower, any Consolidated Subsidiary or any ERISA
Affiliate is required to contribute to each Plan pursuant to its terms and
as required to meet the minimum funding standard set forth in
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ERISA and the Code with respect thereto; or (iv) any change in the funding
status of any Plan that would have a Material Adverse Effect; together,
with a description of any such event or condition or a copy of any such
notice and a statement by the chief financial officer of the Borrower
briefly setting forth the details regarding such event, condition, or
notice, and the action, if any, which has been or is being taken or is
proposed to be taken by the Credit Parties with respect thereto. Promptly
upon reasonable request, the Borrower shall furnish the Agent with such
additional information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return (Form
5500 series), as well as all schedules and attachments thereto required to
be filed with the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan year" (within
the meaning of Section 3(39) of ERISA).
(j) Other Information. With reasonable promptness upon any such
-----------------
request, such other information regarding the business, properties or
financial condition of the Borrower or any of its Subsidiaries as the Agent
or the Required Lenders may reasonably request .
7.2 Preservation of Existence and Franchises. Except as a result of
----------------------------------------
or in connection with a dissolution, merger or disposition of a Consolidated
Subsidiary permitted by Section 8.3(a), Section 8.3(b) or Section 8.3(c), the
Borrower will, and will cause each of its Consolidated Subsidiaries to, do all
things necessary to preserve and keep in full force and effect its existence,
rights, franchises and authority, except where the failure to maintain any such
rights, franchises or authority would not have a Material Adverse Effect.
7.3 Books and Records. The Borrower will, and will cause each of its
-----------------
Consolidated Subsidiaries to, keep books and records of its transactions in
accordance with good accounting practices (including the establishment and
maintenance of appropriate reserves).
7.4 Compliance with Law. The Borrower will, and will cause each of
-------------------
its Consolidated Subsidiaries to, comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all Governmental Authorities,
applicable to it and its property if noncompliance with any such law, rule,
regulation, order or restriction would have a Material Adverse Effect.
7.5 Payment of Taxes. Except as otherwise provided pursuant to the
----------------
terms of the definition of "Permitted Liens" set forth in Section 1.1, the
Borrower will, and will cause each of its Consolidated Subsidiaries to, pay and
discharge all taxes, assessments and governmental charges or levies imposed upon
it, or upon its income or profits, or upon any of its properties, before they
shall become delinquent.
7.6 Insurance. The Borrower will, and will cause each of its
---------
Consolidated Subsidiaries to, at all times maintain in full force and effect
insurance (including worker's compensation insurance, liability insurance,
casualty insurance and business interruption insurance) in such amounts,
covering such risks and liabilities and with such deductibles or self
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insurance retentions as are currently in effect or otherwise in accordance with
normal industry practice.
7.7 Maintenance of Property. The Borrower will, and will cause each
-----------------------
of its Consolidated Subsidiaries to, maintain and preserve its equipment
material to the conduct of its business in good repair, working order and
condition, normal wear and tear and casualty and condemnation excepted.
7.8 Use of Proceeds. The Borrower will use the proceeds of the Loans
---------------
and will use the Letters of Credit solely for the purposes set forth in Section
6.14.
7.9 Audits/Inspections. Upon reasonable notice and during normal
------------------
business hours and without unreasonable disruption, the Borrower will, and will
cause each of its Consolidated Subsidiaries to, permit representatives appointed
by the Agent, including, without limitation, independent accountants, agents,
attorneys, and appraisers to visit and inspect its property, including its books
and records, its accounts receivable and inventory, its facilities and its other
business assets, and to make photocopies or photographs thereof and to write
down and record any information such representative obtains and shall permit the
Agent or its representatives to investigate and verify the accuracy of
information provided to the Lenders and to discuss all such matters with the
officers, employees and representatives of such Person, all (unless an Event of
Default shall have occurred and be continuing) at the Lenders' sole cost and
expense and provided that such representative first specifically agrees in a
writing furnished to and for the benefit of the Credit Parties to be bound by
the terms of Section 11.14.
7.10 Financial Covenants.
-------------------
(a) Consolidated Interest Coverage Ratio. The Consolidated
------------------------------------
Interest Coverage Ratio, as of each Calculation Date, shall be greater than
or equal to 3.0 to 1.0.
(b) Consolidated Fixed Charge Coverage Ratio. The Consolidated
----------------------------------------
Fixed Charge Coverage Ratio, as of each Calculation Date, shall be greater
than or equal to 1.25 to 1.0.
(c) Consolidated Debt Coverage Ratio. The Consolidated Debt
--------------------------------
Coverage Ratio, as of each Calculation Date, shall be no greater than 3.75
to 1.0.
(d) Consolidated Adjusted Net Worth. At all times, Consolidated
-------------------------------
Adjusted Net Worth shall be greater than or equal to 80% of Consolidated
Net Worth as of the last day of the calendar month immediately preceding
the Closing Date; provided, however, that, on and after the date of the
Stock Repurchase, the Stock Repurchase shall be deemed to have occurred
prior to the last day of the calendar month immediately preceding the
Closing Date.
7.11 Additional Credit Parties. The Borrower will (i) cause each of
-------------------------
its Material Domestic Subsidiaries to be a Guarantor hereunder and (ii) cause
100% (or, if less, the full amount owned by the Borrower and each Domestic
Consolidated Subsidiary) of the capital stock
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or other equity interest owned by the Borrower or any Domestic Consolidated
Subsidiary of each Material Domestic Subsidiary and 65% (or, if less, the full
amount owned by the Borrower and each Domestic Consolidated Subsidiary) of the
capital stock or the other equity interest entitled to vote (within the meaning
of Treas. Reg. Section 1.9562(c)(2)) ("Voting Equity") and 100% (or, if less,
--------------
the full amount owned by the Borrower and each Domestic Consolidated Subsidiary)
of the capital stock or the other equity interest not entitled to vote (within
the meaning of Treas. Reg. Section 1.9562(c)(2)) ("Non-Voting Equity") of each
-----------------
Material Foreign Subsidiary owned by the Borrower or any Domestic Consolidated
Subsidiary to be pledged to the Senior Creditor Agent (for the ratable benefit
of the Lenders and Senior Noteholders) or to the Lenders and Senior Noteholders,
as the case may be, pursuant to the terms and conditions of the appropriate
Pledge Agreement or a pledge agreement in form reasonably acceptable to the
Senior Creditor Agent;provided, however, that, in the event that, as a result of
-------- -------
any changes in the United States tax laws after the date hereof, the pledge to
the Senior Creditor Agent (for the ratable benefit of the Lenders and the Senior
Noteholders) or to the Lenders and Senior Noteholders, as the case may be, of
any additional shares of capital stock of any Material Foreign Subsidiaries
would not result in an increase in the aggregate net consolidated tax
liabilities of the Borrower and its Subsidiaries, then all such additional
shares of capital stock shall be pledged to the Senior Creditor Agent (for the
ratable benefit of the Lenders and the Senior Noteholders) or to the Lenders and
Senior Noteholders, as the case may be, pursuant to the terms and conditions of
the appropriate Pledge Agreement or a pledge agreement in form reasonably
acceptable to the Senior Creditor Agent; provided further, however, that,
-------- ------- -------
notwithstanding the above, the Borrower shall not be required by this Section
7.11 to cause any of the capital stock or other equity interest of Kearney
(Thailand) Co., Ltd. ("Kearney Thailand") to be pledged to the Senior Creditor
----------------
Agent (for the ratable benefit of the Lenders and the Senior Noteholders) or to
the Lenders and Senior Noteholders, as the case may be, until such time, if
ever, as Kearney Thailand shall have assets equal to or greater than $5,000,000.
In furtherance of the foregoing terms of this Section 7.11, the Borrower agrees
that
(a) at the time that any Person becomes a Material Domestic Subsidiary or
that the Borrower elects to cause a Foreign Consolidated Subsidiary to
become an Additional Credit Party, the Borrower shall so notify the Agent
and shall (1) cause such Person to execute a Joinder Agreement in
substantially the same form as Schedule 7.11 attached hereto, (2) if any
-------------
capital stock or other equity interest is not evidenced by certificates,
take all actions (including, without limitation, the filing of financing
statements (or the equivalent thereof) under the Uniform Commercial Code
(or similar statute) of all applicable jurisdictions) that may be necessary
or that the Senior Creditor Agent may deem desirable to create, perfect and
protect first priority liens on and security interests under the applicable
jurisdictions in 100% (or, if less, the full amount directly owned by the
Borrower and the full amount directly owned by each Domestic Consolidated
Subsidiary) (if such Person is a Material Domestic Subsidiary) or 65% (or,
if less, the full amount owned by the Borrower and each Domestic
Consolidated Subsidiary) (if such Person is a Material Foreign Subsidiary)
of the Voting Equity and 100% (or, if less, the full amount owned by the
Borrower and each Domestic Consolidated Subsidiary) of the Non-Voting
Equity of such Person to be pledged to the Senior Creditor Agent (for the
ratable benefit of the Lenders and the Senior Noteholders)
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or to the Lenders and Senior Noteholders, as the case may be, pursuant to
pledge agreement(s) in form reasonably acceptable to the Senior Creditor
Agent, (3) if any capital stock or other equity interest of such Person is
evidenced by certificates, cause 100% (or, if less, the full amount
directly owned by the Borrower and the full amount directly owned by each
Domestic Consolidated Subsidiary) (if such Person is a Material Domestic
Subsidiary) or 65% (or, if less, the full amount owned by the Borrower and
each Domestic Consolidated Subsidiary) (if such Person is a Material
Foreign Subsidiary) of the Voting Equity and 100% (or, if less, the full
amount owned by the Borrower and each Domestic Consolidated Subsidiary) of
the Non-Voting Equity of such Person to be delivered to the Senior Creditor
Agent (together with undated stock or other appropriate powers signed in
blank (unless, with respect to a Foreign Subsidiary, such stock or other
powers are deemed unnecessary by the Senior Creditor Agent in its
reasonable discretion under the law of the jurisdiction of incorporation of
such Person)) and pledged to the Senior Creditor Agent (for the ratable
benefit of the Lenders and the Senior Noteholders) or to the Lenders and
Senior Noteholders, as the case may be, pursuant to pledge agreement(s) in
form reasonably acceptable to the Senior Creditor Agent and (4) cause such
Person to (A) if such Person has a Subsidiary which is a Material Foreign
Subsidiary, (I) if any capital stock or other equity interest is not
evidenced by certificates, to take all actions (including, without
limitation, the filing of financing statements (or the equivalent thereof)
under the Uniform Commercial Code (or similar statute) of all applicable
jurisdictions) that may be necessary or that the Senior Creditor Agent may
deem desirable to create, perfect and protect first priority liens on and
security interests under the applicable jurisdictions in 65% (or, if less,
the full amount owned by the Borrower and each Domestic Consolidated
Subsidiary) of the Voting Equity and 100% (or, if less, the full amount
owned by the Borrower and each Domestic Consolidated Subsidiary) of the
Non-Voting Equity of such Subsidiary, (II) if any capital stock or other
equity interest is evidenced by certificates, deliver 65% (or, if less, the
full amount owned by the Borrower and each Domestic Consolidated
Subsidiary) of the Voting Equity and 100% (or, if less, the full amount
owned by the Borrower and each Domestic Consolidated Subsidiary) of the
Non-Voting Equity of such Subsidiary (together with undated stock or other
appropriate powers signed in blank (unless such stock or other powers are
deemed unnecessary by the Senior Creditor Agent in its reasonable
discretion under the law of the jurisdiction of incorporation of such
Person)) to the Senior Creditor Agent and (III) execute a pledge agreement
in form reasonably acceptable to the Senior Creditor Agent with respect to
the stock or other equity interest of each such Material Foreign Subsidiary
and (B) deliver such other documentation as the Senior Creditor Agent may
reasonably request in connection with the foregoing, including, without
limitation, certified resolutions and other organizational and authorizing
documents of such Person and favorable opinions of counsel to such Person
(which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above in this
clause (a)), all in form, content and scope reasonably satisfactory to the
Senior Creditor Agent, and
(b) at such time, if ever, as Kearney Thailand shall have assets equal
to or greater than $5,000,000, the Borrower shall so notify the Agent and
shall (1) cause 65%
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(or, if less, the full amount owned by the Borrower and each Domestic
Consolidated Subsidiary) of the Voting Equity and 100% (or, if less, the
full amount owned by the Borrower and each Domestic Consolidated
Subsidiary) of the Non-Voting Equity of Kearney Thailand to be delivered to
the Senior Creditor Agent (together with undated stock or other appropriate
powers signed in blank (unless such stock or other powers are deemed
unnecessary by the Senior Creditor Agent in its reasonable discretion under
the law of Thailand)) and pledged to the Senior Creditor Agent (for the
ratable benefit of the Lenders and the Senior Noteholders) or to the
Lenders and Senior Noteholders, as the case may be, pursuant to the U.S.
Pledge Agreement or a pledge agreement in substantially the form of the
U.S. Pledge Agreement and otherwise in form reasonably acceptable to the
Senior Creditor Agent and (2) deliver such other documentation as the
Senior Creditor Agent may reasonably request in connection with the
foregoing, including, without limitation, certified resolutions and
favorable opinions of counsel (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation
referred to above in this clause (b)), all in form, content and scope
reasonably satisfactory to the Senior Creditor Agent.
Absent a change in United States tax laws as described in this Section 7.11,
nothing herein shall require the pledge by any Foreign Subsidiary of Voting
Equity or Non-Voting Equity of any Subsidiary thereof.
SECTION 8
NEGATIVE COVENANTS
------------------
The Borrower hereby covenants and agrees that, so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
8.1 Indebtedness. The Borrower will not, nor will it permit any its
------------
Consolidated Subsidiaries to, contract, create, incur, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness arising under the Senior Note Agreements and the
Senior Notes ;
(c) Indebtedness of the Borrower or any Guarantor (other than a
Foreign Consolidated Subsidiary) which is owing to the Borrower or any
Guarantor (other than a Foreign Consolidated Subsidiary);
(d) Indebtedness of any Domestic Consolidated Subsidiary which is not
a Guarantor which is owing to the Borrower;
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(e) (i) Indebtedness of any Foreign Consolidated Subsidiary which is
not a Guarantor, provided that (i) the aggregate outstanding principal
--------
amount of all such Indebtedness for all such Persons taken together shall
not exceed, as of the date incurred, 15% of Consolidated Adjusted Net
Worth, determined as of the then most recent Calculation Date with respect
to which the Agent shall have received the Required Financial Information
and (ii) the aggregate outstanding principal amount of all Indebtedness
permitted by this clause (e)(i), together with the aggregate outstanding
principal amount of all Indebtedness permitted pursuant to subsection
(h)(ii) below and the aggregate outstanding principal amount of all
Indebtedness permitted pursuant to subsection (j) below, shall not exceed
$50,000,000;
(ii) subject to the terms of clause (v) of the definition of
"Permitted Investments" set forth in Section 1.1, Guaranty Obligations of
the Borrower, any Domestic Consolidated Subsidiary or any Foreign
Consolidated Subsidiary which is a Guarantor in respect of any Indebtedness
of any Foreign Consolidated Subsidiary which is not a Guarantor permitted
pursuant to the terms of clause (e)(i) above;
(f) Guaranty Obligations of the Borrower or any Consolidated
Subsidiary in respect of (i) Indebtedness of the Borrower or any
Consolidated Subsidiary otherwise permitted under this Section 8.1 and (ii)
Indebtedness of any Unconsolidated Subsidiary (A) existing as of the
Closing Date and set forth in Schedule 8.1 or (B) to the extent otherwise
------------
permitted to be incurred under the terms of Section 8.4(ii);
(g) Intercompany Indebtedness;
(h) purchase money and other Indebtedness (including Capital
Leases) of the Borrower or any of its Consolidated Subsidiaries:
(i) secured by Liens described on Schedule 1.1B; or
-------------
(ii) hereafter incurred by the Borrower or any of its
Consolidated Subsidiaries to finance the acquisition or construction
of Property (including without limitation (1) any purchase money and
other Indebtedness of a Person which was incurred by such person to
finance the acquisition or construction of Property and which is
assumed by the Borrower or any Consolidated Subsidiary in connection
with an acquisition of all or substantially all of the assets of such
Person in accordance with Section 8.3(d) and (2) any such Indebtedness
of a Person which becomes a Consolidated Subsidiary after the Closing
Date, provided that such Indebtedness is in existence at the time such
--------
Person becomes a Consolidated Subsidiary and is not created in
anticipation thereof), provided that (A) the total of all such
--------
Indebtedness for all such Persons taken together shall not exceed an
aggregate principal amount of $25,000,000 at any one time outstanding,
(B) the total of all such Indebtedness for all such Persons taken
together, together with the aggregate outstanding principal amount of
all Indebtedness permitted
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<PAGE>
pursuant to subsection (e)(i) above and the aggregate outstanding
principal amount of all Indebtedness permitted pursuant to subsection
(j) below, shall not exceed an aggregate principal amount of
$50,000,000 at any one time outstanding; and (C) such Indebtedness
(other than any such Indebtedness referred to in the first
parenthetical clause contained in this clause (ii)) when incurred
shall not exceed the financed cost of such acquisition or construction
of the Property financed;
provided, however, that no such Indebtedness permitted under this clause
-------- -------
(h) shall be refinanced for a principal amount in excess of the principal
balance outstanding thereon at the time of such refinancing;
(i) obligations of the Borrower in respect of Hedging Agreements
entered into in order to manage existing or anticipated interest rate or
exchange rate risk and not for speculative purposes; and
(j) subject to the terms of subsections (e)(i) and (f) above, other
unsecured Indebtedness hereafter incurred by the Borrower or any
Consolidated Subsidiary in an aggregate principal amount, together with the
aggregate outstanding principal amount of all Indebtedness permitted
pursuant to subsection (e)(i) above and the aggregate outstanding principal
amount of all Indebtedness permitted pursuant to subsection (h)(ii) above,
not to exceed $50,000,000 for all such Indebtedness for all such Persons
taken together.
8.2 Liens. The Borrower will not, nor will it permit any of its
-----
Consolidated Subsidiaries to, contract, create, incur, assume or permit to exist
any Lien with respect to any of their Property, whether now owned or after
acquired, except for Permitted Liens.
8.3 Consolidation, Merger, Sale or Purchase of Assets, etc. The Borrower
------------------------------------------------------
will not, nor will it permit any of its Consolidated Subsidiaries to:
(a) dissolve, liquidate or wind up their affairs, other than (i) the
dissolution, liquidation or winding up of the affairs of a Consolidated
Subsidiary in connection with a disposition of Property permitted by the
terms of Section 8.3(c) and (ii) any other dissolution, liquidation or
winding up of the affairs of a Consolidated Subsidiary determined to be in
the best interests of the Borrower and its Subsidiaries by the Borrower's
Board of Directors, provided that (A) if such dissolution, liquidation or
--------
winding up involves a Consolidated Subsidiary in which the Book Value
exceeds $10,000,000, the Borrower shall have first delivered to the Agent a
Pro Forma Compliance Certificate demonstrating that, upon giving effect to
such dissolution, liquidation or winding up on a Pro Forma Basis, no
Default or Event of Default would exist as a result of a violation of
Section 7.10(a) or Section 7.10(c), and (B) either (1) the Book Value of
all Consolidated Subsidiaries dissolved, liquidated or wound up pursuant to
this clause (ii), together with the Book Value of all Property disposed of
in all sales, leases, transfers or other dispositions pursuant to Section
8.3(c)(vii) for the period from
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the Closing Date through and including the date of such proposed
dissolution, liquidation or winding up, does not exceed 30% of the Book
Value of the Consolidated Subsidiaries as of the most recent Calculation
Date preceding such sale, lease, transfer or other disposition with respect
to which the Agent shall have received the Required Financial Information
or (2) the Borrower shall give notice to the Agent specifying the
anticipated or actual date of such dissolution, liquidation or winding up,
briefly describing the Consolidated Subsidiary dissolved, liquidated or
wound up, or to be dissolved, liquidated or wound up, and setting forth the
Book Value of such Consolidated Subsidiary and the aggregate proceeds to be
generated by such dissolution, liquidation or winding up and the Net
Proceeds to be received by the Borrower and/or any of the Consolidated
Subsidiaries in connection with such dissolution, liquidation or winding up
and thereafter the Borrower shall (x) within the period of twelve months
following the receipt by the Borrower or any Consolidated Subsidiary of any
Net Proceeds of such dissolution, liquidation or winding up (with respect
to any such dissolution, liquidation or winding up, the "Application
-----------
Period"), (I) make an Investment (or cause its applicable Consolidated
------
Subsidiary to make an Investment) in the Borrower or any of the
Consolidated Subsidiaries (including Investments and acquisitions which
result in a Person becoming a Consolidated Subsidiary) or (II) apply (or
cause its applicable Consolidated Subsidiary to apply) to the purchase,
acquisition or construction of other Property (including purchases and
acquisitions which result in a Person becoming a Consolidated Subsidiary)
in an amount, in the case of either of clause (I) or (II) above, equal to
the Net Proceeds of such dissolution, liquidation or winding up which,
together with the Net Proceeds of all other dissolutions, liquidations or
windings up pursuant to this clause (ii) for the period from the Closing
Date through and including the date of such proposed dissolution,
liquidation or winding up and the Net Proceeds of all sales, leases,
transfers or other dispositions pursuant to Section 8.3(c)(vii) for the
period from the Closing Date through and including the date of such
proposed dissolution, liquidation or winding up, exceed 30% of the Book
Value of the Consolidated Subsidiaries as of the most recent Calculation
Date preceding such dissolution, liquidation or winding up with respect to
which the Agent shall have received the Required Financial Information or
(y) prepay the Loans in connection with such dissolution, liquidation or
winding up to the extent required by Section 3.3(b) (upon giving effect to
the terms of Section 3.4(b) in respect of such dissolution, liquidation or
winding up); or
(b) enter into any transaction of merger or consolidation; provided,
--------
however, that, so long as no Default or Event of Default would be directly
-------
or indirectly caused as a result thereof, (i) the Borrower may merge or
consolidate with any of its Consolidated Subsidiaries provided that the
Borrower is the surviving corporation; (ii) any Material Domestic
Subsidiary may merge or consolidate with any other Consolidated Subsidiary
provided that such Material Domestic Subsidiary is the surviving
corporation; (iii) any Domestic Consolidated Subsidiary may merge or
consolidate with any Person that is not a Domestic Consolidated Subsidiary
provided that such Domestic Consolidated Subsidiary is the surviving
corporation; (iv) any Foreign Consolidated Subsidiary which is a Guarantor
may merge or consolidate with any other Foreign Consolidated Subsidiary
provided that the Foreign Consolidated Subsidiary which is a Guarantor is
the surviving
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corporation; (v) any Foreign Consolidated Subsidiary which is a Material
Foreign Subsidiary which is not a Guarantor may merge with or consolidate
with any other Foreign Consolidated Subsidiary which is not a Guarantor
provided that the Material Foreign Subsidiary is the surviving corporation;
(vi) any Foreign Consolidated Subsidiary which is not a Guarantor or a
Material Foreign Subsidiary may merge with any other Foreign Consolidated
Subsidiary which is not a Guarantor or a Material Foreign Subsidiary; (vii)
the Borrower or any Consolidated Subsidiary may merge or consolidate with
any other Person (other than the Borrower or a Consolidated Subsidiary) in
a transaction otherwise permitted under the terms of Section 8.3(d)
provided that the Borrower or such Consolidated Subsidiary, as the case may
be, is the surviving corporation; and (viii) any Consolidated Subsidiary
may merge or consolidate with any other Person (other than the Borrower or
a Consolidated Subsidiary) in a transaction otherwise permitted under the
terms of Section 8.3(d) and in which such other Person is the surviving
corporation provided that, if the Consolidated Subsidiary merging into or
--------
consolidated with such surviving corporation is a Guarantor, the Borrower
shall, concurrently with the consummation of such merger or consolidation,
cause such surviving corporation to become a Guarantor and otherwise comply
with the requirements of Section 7.11 with respect to such surviving
corporation;
(c) sell, lease (as lessor), transfer or otherwise dispose of any
Property (including without limitation pursuant to any sale and leaseback
transaction other than as permitted by Section 8.10) other than from time
to time (i) the sale of inventory in the ordinary course of business (ii)
the sale or disposition of machinery and equipment, or other Property
having a Book Value not in excess of $5,000,000 in the aggregate for all
such sales and dispositions of such other Property in a single transaction
or series of related transactions, no longer used or useful in the conduct
of such Person's business, (iii) the sale, lease, transfer or other
disposition of all or any part of any Unconsolidated Subsidiary or any
other asset or Investment of the Borrower or any Consolidated Subsidiary
which is not, in accordance with GAAP, shown as an asset or Investment, as
applicable, on a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries, (iv) the sale on or before the first anniversary
of the Closing Date of all of the stock or all or substantially all of the
assets of M.S. Chambers & Son, Inc. and/or Consolidated Group, Inc. (and of
Subsidiaries thereof), (v) Equity Transactions, (vi) to the Borrower, to
any Domestic Consolidated Subsidiary or to any Foreign Consolidated
Subsidiary which is a Guarantor and (vii) subject to the terms of Section
8.7 and Section 8.10, other sales, leases (as lessor), transfers or other
dispositions of Property (including stock or other ownership interest of
any of the Consolidated Subsidiaries held by the Borrower or another
Consolidated Subsidiary), provided that (A) if such sale, lease, transfer
--------
or other disposition involves a disposition of Property with respect to
which the Book Value of such Property exceeds $10,000,000, the Borrower
shall have first delivered to the Agent a Pro Forma Compliance Certificate
demonstrating that, upon giving effect to such sale, lease, transfer or
other disposition on a Pro Forma Basis, no Default or Event of Default
would exist as a result of a violation of Section 7.10(a) or Section
7.10(c), and (B) either (1) the Book Value of all Property disposed of in
all sales, leases, transfers or other dispositions pursuant to this clause
(vii) for the period from the
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Closing Date through and including the date of such proposed sale, lease,
transfer or other disposition, together with the Book Value of all
Consolidated Subsidiaries dissolved, liquidated or wound up pursuant to
Section 8.3(a)(ii), does not exceed 30% of the Book Value of the
Consolidated Subsidiaries as of the most recent Calculation Date preceding
such sale, lease, transfer or other disposition with respect to which the
Agent shall have received the Required Financial Information or (2) the
Borrower shall give notice to the Agent specifying the anticipated or
actual date of such sale, lease, transfer or other disposition, briefly
describing the Property sold, leased, transferred or other disposed, or to
be sold, leased, transferred or other disposed, and setting forth the
amount of the Book Value of such Property and the aggregate consideration
and the Net Proceeds to be received by the Borrower and/or any of the
Consolidated Subsidiaries in connection with such sale, lease, transfer or
other disposition and thereafter the Borrower shall (x) within the period
of twelve months following the receipt by the Borrower or any Consolidated
Subsidiary of any Net Proceeds of such sale, lease, transfer or other
disposition (with respect to any such sale, lease, transfer or other
disposition, the "Application Period"), either (I) make an Investment (or
------------------
cause its applicable Consolidated Subsidiary to make an Investment) in the
Borrower or any of the Consolidated Subsidiaries (including Investments and
acquisitions which result in a Person becoming a Consolidated Subsidiary)
or (II) apply (or cause its applicable Consolidated Subsidiary to apply) to
the purchase, acquisition or construction of other Property (including
purchases and acquisitions which result in a Person becoming a Consolidated
Subsidiary) in an amount, in the case of either of clause (I) or (II)
above, equal to the Net Proceeds of such sale, lease, transfer or other
disposition which, together with the Net Proceeds of all other sales,
leases, transfers or other dispositions pursuant to this clause (vii) for
the period from the Closing Date through and including the date of such
proposed sale, lease, transfer or other disposition and the Net Proceeds
received by the Borrower and/or any of the Consolidated Subsidiaries in
connection with a dissolution, liquidation or winding up of the affairs of
a Consolidated Subsidiary pursuant to Section 8.3(a)(ii), exceed 30% of the
Book Value of the Consolidated Subsidiaries as of the most recent
Calculation Date preceding such sale, lease, transfer or other disposition
with respect to which the Agent shall have received the Required Financial
Information or (y) prepay the Loans in connection with such sale, lease,
transfer or other disposition to the extent required by Section 3.3(b)
(upon giving effect to the terms of Section 3.4(b) in respect of such sale,
lease, transfer or other disposition); or
(d) except as otherwise permitted by Section 8.3(a) or Section 8.3(b)
and Section 8.4, and subject to Section 8.7 and Section 8.13, acquire all
or any portion of the capital stock or securities of any other Person or
purchase, lease (as lessee) or otherwise acquire (in a single transaction
or a series of related transactions) all or any substantial part of the
Property of any other Person; provided that, subject to the terms of
--------
Section 8.4, the Borrower or any Consolidated Subsidiary shall be permitted
to make purchases, leases (as lessee), and other acquisitions of the type
referred to in this Section 8.3(d) so long as the Acquisition Conditions,
if applicable, are satisfied.
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8.4 Investments. The Borrower will not, nor will it permit any of its
-----------
Consolidated Subsidiaries to, make Investments in or to any Persons, except for
(i) Permitted Investments and (ii) other Investments (including Investments
consisting of a minority equity interest retained by the Borrower or a
Consolidated Subsidiary in connection with a sale of a majority equity interest
in a Subsidiary valued in accordance with GAAP), provided that (A) the aggregate
--------
amount of all Investments made pursuant to this clause (ii) on or after the
Closing Date (but excluding for purposes of calculating such aggregate amount
utilized the lesser of the Book Value or purchase price of any previously
included Investments in a Person which subsequently has become a Guarantor),
together with the aggregate amount of all Restricted Payments made pursuant to
Section 8.5(iv) on or after the Closing Date, shall not exceed an amount equal
to the sum of $35,000,000, plus 50% of aggregate Consolidated Restricted Net
----
Income for the period from February 1, 1996 through the most recent Calculation
Date preceding the date of such Investment with respect to which the Agent shall
have received the Required Financial Information, minus 100% of Consolidated
-----
Restricted Net Income for any full fiscal year period for which Consolidated
Restricted Net Income is a negative amount and occurring during the period from
February 1, 1996 through the most recent fiscal year end preceding the date of
such Investment with respect to which the Agent shall have received the Required
Financial Information, plus the aggregate Net Proceeds received by the Borrower
----
and/or any of the Consolidated Subsidiaries from all Equity Transactions
consummated during the period from the Closing Date through the most recent
Calculation Date preceding the date of such Investment with respect to which the
Agent shall have received the Required Financial Information, plus (without
----
duplication) the sum of all proceeds and other distributions received by the
Borrower and/or any of the Consolidated Subsidiaries subsequent to the Closing
Date from the operations or sales of Unconsolidated Subsidiaries and any other
asset or Investment of the Borrower or any Consolidated Subsidiary which is not,
in accordance with GAAP, shown as an asset or Investment, as applicable, on a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries,
for the period from the Closing Date through the most recent Calculation Date
preceding the date of such Investment with respect to which the Agent shall have
received the Required Financial Information, and (B) if such Investment pursuant
to this clause (ii) involves an amount in excess of $10,000,000, the Borrower
shall have first delivered to the Agent and each of the Lenders a Pro Forma
Compliance Certificate demonstrating that, upon giving effect to such Investment
on a Pro Forma Basis, no Default or Event of Default would exist as a result of
a violation of Section 7.10(a) or Section 7.10(c).
8.5 Restricted Payments. The Borrower will not, nor will it permit any of
-------------------
its Consolidated Subsidiaries to, directly or indirectly, declare, order, make
or set apart any sum for or pay any Restricted Payment, except for (i) the Stock
Repurchase, (ii) Restricted Payments to the Borrower or any Domestic
Consolidated Subsidiary, (iii) Restricted Payments by a Foreign Subsidiary to a
Foreign Consolidated Subsidiary and (iv) other Restricted Payments, provided
--------
that (A) the aggregate amount of all Restricted Payments made pursuant to this
clause (iv), together with the aggregate amount of all Investments made pursuant
to Section 8.4(ii) on or after the Closing Date, shall not exceed an amount
equal to the sum of $35,000,000, plus 50% of aggregate Consolidated Restricted
----
Net Income for the period from February 1, 1996 through the most recent
Calculation Date preceding the date of such Restricted Payment with respect to
which the Agent shall have received the Required Financial Information, minus
-----
100% of
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Consolidated Restricted Net Income for any full fiscal year period for
which Consolidated Restricted Net Income is a negative amount and occurring
during the period from February 1, 1996 through the most recent fiscal year end
preceding the date of such Restricted Payment with respect to which the Agent
shall have received the Required Financial Information, plus the aggregate Net
----
Proceeds received by the Borrower and/or any of the Consolidated Subsidiaries
from all Equity Transactions consummated during the period from the Closing Date
through the most recent Calculation Date preceding the date of such Restricted
Payment with respect to which the Agent shall have received the Required
Financial Information, plus (without duplication) the sum of all proceeds and
----
other distributions received by the Borrower and/or any of the Consolidated
Subsidiaries from the operations or sales of Unconsolidated Subsidiaries and any
other asset or Investment of the Borrower or any Consolidated Subsidiary which
is not, in accordance with GAAP, shown as an asset or Investment, as applicable,
on a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries, for the period from the Closing Date through the most recent
Calculation Date preceding the date of such Restricted Payment with respect to
which the Agent shall have received the Required Financial Information, (B) if
such Restricted Payment pursuant to this clause (iv) is not a Restricted Payment
in cash and not a Restricted Payment consisting of a dividend or other
distribution payable solely in the same class of capital stock of the payee and
such Restricted Payment involves a dividend or other distribution of Property
having an aggregate Book Value in excess of $10,000,000, the Borrower shall have
first delivered to the Agent a Pro Forma Compliance Certificate demonstrating
that, upon giving effect to such Restricted Payment on a Pro Forma Basis, no
Default or Event of Default would exist as a result of a violation of Section
7.10(a) or Section 7.10(c) and (C) the aggregate cumulative amount of cash
Restricted Payments made by the Borrower on or after the Closing Date shall not
exceed an amount equal to the sum of $5,000,000, plus, after such time as
----
Consolidated Restricted Net Income for the period from and after February 1,
1996 exceeds $10,000,000 (as evidenced by financial statements delivered
pursuant to Section 7.1), 50% of aggregate Consolidated Restricted Net Income
for the period from February 1, 1996 through the most recent Calculation Date
preceding the date of such Restricted Payment with respect to which the Agent
shall have received the Required Financial Information, minus 100% of
-----
Consolidated Restricted Net Income for any full fiscal year period for which
Consolidated Restricted Net Income is a negative amount and occurring during the
period from February 1, 1996 through the most recent fiscal year end preceding
the date of such Restricted Payment with respect to which the Agent shall have
received the Required Financial Information.
8.6 Amendment of Charter Documents, Prepayments of Indebtedness, etc. The
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Borrower will not, nor will it permit any of its Consolidated Subsidiaries to
(i) amend, modify or change its articles of incorporation (or corporate charter
or other similar organizational document) or bylaws (or other similar document)
where such change would have a Material Adverse Effect or (ii) if any Default or
Event of Default has occurred and is continuing or would be directly or
indirectly caused as a result thereof, (A) after the issuance thereof, amend or
modify (or permit the amendment or modification of) any of the terms of any
Indebtedness if such amendment or modification would add or change any terms in
a manner materially adverse to the issuer of such Indebtedness, or shorten the
final maturity or average life to maturity or require any payment to be made
sooner than originally scheduled or increase the interest rate applicable
thereto or change any subordination provision thereof or (B) make (or give any
notice
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with respect thereto) any voluntary or optional payment, prepayment,
redemption or acquisition for value of (including without limitation, by way of
depositing money or securities with the trustee with respect thereto before due
for the purpose of paying when due), refund, refinance or exchange of any other
Indebtedness.
8.7 Transactions with Affiliates. The Borrower will not, nor will it
----------------------------
permit any of its Consolidated Subsidiaries to, enter into any transaction or
series of transactions with any officer, director, shareholder, Subsidiary or
Affiliate of such Person other than (a) advances of working capital to any
Credit Party, (b) transfers of cash and other Property to any Credit Party, (c)
transactions permitted by Section 8.1, Section 8.3, Section 8.4 or Section 8.5,
(d) any issuance or transfer to one or more members of the Dyson Family by the
Borrower of capital stock or other ownership interests in the Borrower,
including warrants or other rights to acquire such capital stock or other
ownership interests in the Borrower, (e) normal compensation and reimbursement
and advancement of expenses of and to officers and directors and (f) except as
otherwise specifically limited in this Credit Agreement, other transactions
which are entered into on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length
transactions with a Person other than an officer, director, shareholder,
Subsidiary or Affiliate of such Person.
8.8 Fiscal Year. Without prior written notice to the Agent, the Borrower
-----------
will not change its fiscal year.
8.9 Limitation on Restrictions on Subsidiary Dividends and Other
------------------------------------------------------------
Distributions, etc. The Borrower will not, nor will it permit any of its
- ------------------
Consolidated Subsidiaries to, directly or indirectly, create or otherwise cause,
incur, assume, suffer or permit to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Person to (a)
pay dividends or make any other distribution on any of such Person's capital
stock to the Borrower or any Consolidated Subsidiary, (b) pay any Indebtedness
owed to the Borrower or any Consolidated Subsidiary, (c) make loans or advances
to the Borrower or any Consolidated Subsidiary or (d) transfer any of its
Property to the Borrower or any Consolidated Subsidiary, other than, in the case
of any clauses (a) through (d) above, prohibitions or restrictions existing
under or by reason of (i) customary non-assignment and non-transfer provisions
entered into in the ordinary course of business, (ii) this Credit Agreement and
the other Credit Documents, (iii) the Senior Note Agreements and the Senior
Notes, in each case as in effect as of the Closing Date, (iv) any restriction or
encumbrance with respect to a Consolidated Subsidiary imposed pursuant to an
agreement which has been entered into for the sale or disposition of all or
substantially all of the capital stock or Property of such Consolidated
Subsidiary, so long as such sale or disposition is permitted under this Credit
Agreement, (v) restrictions and limitations imposed by corporate law or other
statutes and (vi) the matter set forth on Schedule 8.9.
------------
8.10 Sale Leasebacks. The Borrower will not, nor will it permit any of
---------------
its Consolidated Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as guarantor or other surety with respect to any lease,
whether an Operating Lease or a Capital Lease, of any Property (whether real or
personal or mixed), whether now owned or hereafter acquired, (i) which such
Person has sold or transferred or is to sell or transfer to any other Person
other than a Credit Party
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or (ii) which such Person intends to use for substantially the same purpose as
any other Property which has been sold or is to be sold or transferred by such
Person to any other Person in connection with such lease that would cause the
liabilities of the Borrower and the Consolidated Subsidiaries in respect of all
such transactions to exceed $5,000,000 in the aggregate at any time.
8.11 No Further Negative Pledges. The Borrower will not, nor will it
---------------------------
permit any of its Consolidated Subsidiaries (other than any Foreign Subsidiary
which is not a Guarantor) to, enter into, assume or become subject to any
agreement prohibiting or otherwise restricting the creation or assumption of any
Lien upon its Property, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation, other than (i) pursuant to the Senior Note Agreements and the
Senior Notes, in each case as in effect as of the Closing Date, (ii)
prohibitions against other Liens on specific Property encumbered to secure
payment of particular Indebtedness (which Indebtedness relates solely to such
specific Property, and improvements and accretions thereto, and is otherwise
permitted hereby), (iii) customary non-assignment or non-transfer provisions
entered into in the ordinary course of business, (iv) any restriction or
encumbrance with respect to a Consolidated Subsidiary imposed pursuant to an
agreement which has been entered into for the sale or disposition of all or
substantially all of the capital stock or Property of such Consolidated
Subsidiary, so long as such sale or disposition is permitted under this Credit
Agreement and (v) any agreement evidencing Indebtedness assumed by the Borrower
or any Consolidated Subsidiary in connection with an acquisition otherwise
permitted hereby or Indebtedness outstanding on the date a Person first becomes
a Subsidiary of the Borrower or any of its Subsidiaries, provided that such
--------
agreement was not created in contemplation of the acquisition of such Person and
does not extend to or cover any Property other than Property of the Person so
acquired by the Borrower or such Subsidiary.
8.12 Unconsolidated Subsidiaries. Except as otherwise permitted by
---------------------------
Section 8.4(ii) and subject to the definition of "Unconsolidated Subsidiary" set
forth in Section 1.1, the Borrower will not create, acquire or designate any
future Unconsolidated Subsidiaries; provided, however, that this Section 8.12
-------- -------
shall not restrict the creation or acquisition by any Unconsolidated Subsidiary
of a Subsidiary.
8.13 Speculative Real Estate Investments and Hedging Arrangements.
------------------------------------------------------------
Notwithstanding any provision to the contrary set forth in this Credit Agreement
(including without limitation Section 8.3(c)), the Borrower will not, nor will
it permit any of its Consolidated Subsidiaries to, (i) acquire any real property
solely for speculative purposes or (ii) enter into any Hedging Agreements for
speculative purposes.
SECTION 9
EVENTS OF DEFAULT
-----------------
9.1 Events of Default. An Event of Default shall exist upon the
-----------------
occurrence of any of the following specified events (each an "Event of
--------
Default"):
- -------
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(a) Payment. Any Credit Party shall
-------
(i) default in the payment when due of any principal of any of
the Loans or of any reimbursement obligations arising from drawings
under Letters of Credit, or
(ii) default, and such default shall continue for three (3) or
more Business Days, in the payment when due of any interest on the
Loans or on any reimbursement obligations arising from drawings under
Letters of Credit, or of any Fees or other amounts owing hereunder,
under any of the other Credit Documents or in connection herewith or
therewith; or
(b) Representations. Any representation or warranty made or deemed
---------------
to be made pursuant to Section 5.2 by any Credit Party herein, in any of
the other Credit Documents, or in any written statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was made or
deemed to have been made pursuant to Section 5.2; or
(c) Covenants. Any Credit Party shall
---------
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.8, 7.10 or 8.1
through 8.13, inclusive, or
(ii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) of this Section 9.1) contained in this
Credit Agreement or in any other Credit Document and such default
shall continue unremedied for a period of at least 30 days after
notice thereof by the Agent; or
(d) Other Credit Documents. Except as the result of or in connection
----------------------
with a dissolution, merger or disposition of a Consolidated Subsidiary
permitted by Section 8.3(a), Section 8.3(b) or Section 8.3(c) and except as
the result of any action or inaction by the Agent or any of the Lenders,
any Credit Document shall fail to be in full force and effect or to give
the Agent and/or the Lenders the Liens, rights, powers and privileges
purported to be created thereby; or
(e) Guaranties. Except as contemplated by Section 11.16, including
----------
as the result of or in connection with a dissolution, merger or disposition
of a Consolidated Subsidiary permitted by Section 8.3(a), Section 8.3(b) or
Section 8.3(c), the provisions of Section 4 shall cease to be in full force
and effect in respect of any Guarantor (including any Additional Credit
Party), or any Guarantor (including any Additional Credit Party) hereunder
or any Person acting
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by or on behalf of such Guarantor shall deny or disaffirm in writing such
Guarantor's obligations under Section 4, or, subject to applicable grace or
cure period set forth in this Section 9.1 in respect of which the
guaranteed obligation relates, any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to Section 4; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect
---------------
to the Borrower or any of its Consolidated Subsidiaries; or
(g) Defaults under Other Indebtedness. With respect to any
---------------------------------
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) in excess of $2,500,000 in the aggregate for the Borrower and
its Consolidated Subsidiaries taken as a whole, (A) the Borrower or any of
its Consolidated Subsidiaries shall (1) default in any payment when due and
payable (beyond the applicable grace period with respect thereto, if any)
with respect to any such Indebtedness, or (2) the occurrence and
continuance of a default in the observance or performance of a covenant
relating to such Indebtedness or contained in any instrument or agreement
evidencing or securing such Indebtedness, or any other event or condition
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause, any
such Indebtedness to become due prior to its stated maturity; or (B) any
such Indebtedness shall be declared due and payable prior to the stated
maturity thereof; or
(h) Judgments. One or more judgments or decrees shall be entered
---------
against the Borrower or any of its Consolidated Subsidiaries involving a
liability of $2,500,000 or more in the aggregate (to the extent not paid or
fully covered by insurance provided by a carrier who has acknowledged
coverage) and any such judgments or decrees shall not have been vacated,
discharged or stayed or bonded pending appeal within 60 days from the entry
thereof; or
(i) ERISA. Any of the following events or conditions, if such event
-----
or condition would involve possible taxes, penalties, and other liabilities
of the Borrower and/or its Consolidated Subsidiaries in an aggregate amount
in excess of $2,500,000: (1) any "accumulated funding deficiency," as such
term is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, shall exist with respect to any Plan, or any lien
shall arise on the assets of the Borrower, any Consolidated Subsidiary or
any ERISA Affiliate in favor of the PBGC or a Plan; (2) a Termination Event
shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA; (3) a Termination Event shall
occur with respect to a Multiemployer Plan or Multiple Employer Plan, which
is, in the reasonable opinion of the Agent, likely to result in (i) the
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termination of such Plan for purposes of Title IV of ERISA, or (ii) the
Borrower, any Consolidated Subsidiary or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of (within
the meaning of Section 4241 of ERISA), or insolvency or (within the meaning
of Section 4245 of ERISA) such Plan; or (4) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary responsibility shall occur which may subject the
Borrower, any Consolidated Subsidiary or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section
4975 of the Code, or under any agreement or other instrument pursuant to
which the Borrower, any Consolidated Subsidiary or any ERISA Affiliate has
agreed or is required to indemnify any person against any such liability;
or
(j) Senior Note Agreements. There shall occur and be continuing
----------------------
any Event of Default under and as defined in the Senior Note Agreements; or
(k) Ownership. There shall occur a Change of Control.
---------
9.2 Acceleration; Remedies. Upon the occurrence and during the
----------------------
continuance of an Event of Default, unless and until such Event of Default has
been waived by the Required Lenders or cured to the satisfaction of the Required
Lenders (pursuant to the voting procedures in Section 11.6), the Agent shall,
upon the request and direction of the Required Lenders, by written notice to the
Credit Parties take any of the following actions:
(i) Termination of Commitments. Declare the Commitments terminated
--------------------------
whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare the unpaid principal of and any accrued
------------
interest in respect of all Loans, any reimbursement obligations arising
from drawings under Letters of Credit and any and all other indebtedness or
obligations of any and every kind owing by the Borrower to the Agent and/or
any of the Lenders hereunder to be due whereupon the same shall be
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby waived by the Borrower.
(iii) Cash Collateral. Direct the Borrower to pay (and the Borrower
---------------
agrees that upon receipt of such notice, or upon the occurrence of an Event
of Default under Section 9.1(f), it will immediately pay) to the Senior
Creditor Agent additional cash, to be held by the Senior Creditor Agent,
for the benefit of the Lenders and the holders of the Senior Notes, in the
Cash Collateral Account an amount equal to the maximum aggregate amount
which may be drawn under all Letters of Credits then outstanding.
(iv) Enforcement of Rights. Enforce any and all rights and interests
---------------------
created and existing under the Credit Documents and all rights of set-off.
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Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations arising from drawings under Letters of
Credit, all accrued interest in respect thereof, all accrued and unpaid Fees and
other indebtedness or obligations owing to the Agent and/or any of the Lenders
hereunder automatically shall immediately become due and payable without the
giving of any notice or other action by the Agent or the Lenders.
SECTION 10
AGENCY PROVISIONS
-----------------
10.1 Appointment. Each Lender hereby designates and appoints NationsBank,
-----------
N.A. as administrative agent (in such capacity as Agent hereunder, the "Agent")
-----
of such Lender to act as specified herein and the other Credit Documents, and
each such Lender hereby authorizes the Agent as the agent for such Lender, to
take such action on its behalf under the provisions of this Credit Agreement and
the other Credit Documents and to exercise such powers and perform such duties
as are expressly delegated by the terms hereof and of the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere herein and in the other
Credit Documents, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein and therein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section 10 are solely for the benefit
of, and create agreements and obligations solely among, the Agent and the
Lenders and none of the Credit Parties shall have liabilities or obligations
under, or any rights as a third party beneficiary of the provisions hereof. In
performing its functions and duties under this Credit Agreement and the other
Credit Documents, the Agent shall act solely as agent of the Lenders and does
not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for any Credit Party or any of its
respective Affiliates.
10.2 Delegation of Duties. The Agent may execute any of its respective
--------------------
duties hereunder or under the other Credit Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible to the
Lenders for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
10.3 Exculpatory Provisions. The Agent and its officers, directors,
----------------------
employees, agents, attorneys-in-fact or affiliates shall not be (i) liable to
any Lender for any action lawfully taken or omitted to be taken by it or such
Person under or in connection herewith or in connection with any of the other
Credit Documents (except for its or such Person's own gross negligence or
willful misconduct), or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by any of the
Credit Parties contained herein or in any of the other Credit Documents or in
any certificate, report, document, financial statement or
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other written or oral statement referred to or provided for in, or received by
the Agent under or in connection herewith or in connection with the other Credit
Documents, or enforceability or sufficiency therefor of any of the other Credit
Documents, or for any failure of any Credit Party to perform its obligations
hereunder or thereunder. The Agent shall not be responsible to any Lender for
the effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any representations, warranties, recitals or statements made herein or
therein or made by the Borrower or any Credit Party in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Lenders or by or on behalf of the Credit
Parties to the Agent or any Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or of the existence or
possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties or any of its respective
Affiliates.
10.4 Reliance on Communications. The Agent shall be entitled to rely, and
--------------------------
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to any of the Credit Parties, independent
accountants and other experts selected by the Agent with reasonable care). The
Agent may deem and treat the Lenders as the owner of their respective interests
hereunder for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Agent in accordance with Section
11.3(b) hereof. The Agent shall be fully justified in failing or refusing to
take any action under this Credit Agreement or under any of the other Credit
Documents unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate according to the terms hereof or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or under any of the
other Credit Documents in accordance with a request of the Required Lenders (or
to the extent specifically provided in Section 11.6, all the Lenders) and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders (including their successors and assigns).
10.5 Information and Notices. (a) The Agent shall promptly deliver to
-----------------------
each of the Lenders a photocopy of any information or notices delivered to the
Agent (and not required to be separately delivered to the Lenders) pursuant to
the terms of this Credit Agreement or any other Credit Document (including
without limitation any information or notice referred to in Section 3.4(b) or
Section 7.1).
(b) The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or a Credit Party referring to the Credit
Document, describing such Default or Event of Default and
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stating that such notice is a "notice of default." In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
---------------------------------------
acknowledges that each of the Agent and its officers, directors, employees,
agents, attorneys-in-fact or affiliates has not made any representations or
warranties to it and that no act by the Agent or any affiliate thereof
hereinafter taken, including any review of the affairs of any Credit Party or
any of their respective Affiliates, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower, the other Credit Parties or their respective
Affiliates and made its own decision to make its Loans hereunder and enter into
this Credit Agreement. Each Lender also represents that it will, independently
and without reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Credit Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Borrower,
the other Credit Parties and their respective Affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, assets, property, financial or other conditions, prospects or
creditworthiness of the Borrower, the other Credit Parties or any of their
respective Affiliates which may come into the possession of the Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification. The Lenders agree to indemnify the Agent in its
---------------
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Commitments (or if the Commitments have expired or been terminated,
in accordance with the respective principal amounts of outstanding Loans and
Participation Interests of the Lenders), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the final payment of all of
the obligations of the Borrower hereunder and under the other Credit Documents)
be imposed on, incurred by or asserted against the Agent in its capacity as such
in any way relating to or arising out of this Credit Agreement or the other
Credit Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
- --------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent. If any indemnity furnished to the Agent for any purpose
shall, in the opinion of the
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Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section shall
survive the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder.
10.8 Agent in its Individual Capacity. The Agent and its affiliates may
--------------------------------
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower, its Subsidiaries or their respective Affiliates as though the
Agent were not the Agent hereunder. With respect to the Loans made by and all
obligations of the Borrower hereunder and under the other Credit Documents, the
Agent shall have the same rights and powers under this Credit Agreement as any
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
10.9 Successor Agent. The Agent may, at any time, resign upon 20 days'
---------------
written notice to the Lenders, and be removed with or without cause by the
Required Lenders upon 30 days' written notice to the Agent. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the notice of resignation or notice of removal, as appropriate, then the
retiring Agent shall select a successor Agent provided such successor is a
Lender hereunder or a commercial bank organized under the laws of the United
States of America or of any State thereof and has a combined capital and surplus
of at least $400,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations as Agent, as appropriate, under this Credit Agreement and the other
Credit Documents and the provisions of this Section 10.9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Credit Agreement.
10.10 Syndication Agent. The Syndication Agent, in its capacity as such,
-----------------
shall have no rights, powers, duties or obligations under this Credit Agreement
or any of the other Credit Documents.
SECTION 11
MISCELLANEOUS
-------------
11.1 Notices. Except as otherwise expressly provided herein, all notices
-------
and other communications shall be in writing and shall have been duly given and
shall be effective (i) when delivered on a Business Day, (ii) when transmitted
on a Business Day via telecopy (or other facsimile device) to the number set out
below, (iii) the Business Day following the Business Day on which the same has
been delivered prepaid to a reputable national overnight air courier service, or
(iv) the third Business Day following the day on which the same is sent by
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certified or registered mail, postage prepaid, in each case to the respective
parties at the address, in the case of the Borrower, Guarantors and the Agent,
set forth below, and, in the case of the Lenders, set forth on Schedule 2.1(a),
---------------
or at such other address as such party may specify by written notice to the
other parties hereto:
if to the Borrower or the Guarantors:
The Dyson-Kissner-Moran Corporation
565 Fifth Avenue, 4th Floor
New York, New York 10017-2413
Attn: Mr. M. Jerry Zilinskas
and
General Counsel
Telephone: (212) 661-4600
Telecopy: (212) 986-2268
if to the Agent, to it at the Agency Services Address defined in
Section 1.1;
with a copy to:
NationsBank, N.A.
767 Fifth Avenue
5th Floor
New York, New York 10153
Attn: Mark Stephanz
Telephone: (212) 407-5323
Telecopy: (212) 838-1811
11.2 Right of Set-Off. In addition to any rights now or hereafter granted
----------------
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default,
each Lender is authorized at any time and from time to time, without
presentment, demand, protest or further notice of any kind (other than as
required by Section 9.2), all of which rights (other than any such rights
arising under Section 9.2) being hereby expressly waived, to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit Party against due and owing
obligations and liabilities of such Person to such Lender hereunder or to such
Lender under the Notes, under the other Credit Documents or otherwise,
notwithstanding that any of such obligations or liabilities owing by such Lender
may be contingent or unmatured. Any Person purchasing a participation in the
Loans and Commitments hereunder pursuant to Section 3.13 or Section 11.3(d) may
exercise all rights of set-off as set forth herein with respect to its
participation interest as fully as if such Person were a Lender hereunder.
11.3 Benefit of Agreement.
--------------------
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(a) Generally. This Credit Agreement shall be binding upon and inure
---------
to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that none of the Credit Parties may
--------
assign or transfer any of its interests without prior written consent of
the Required Lenders; provided further that the rights of each Lender to
-------- -------
transfer, assign or grant participations in its rights and/or obligations
hereunder shall be limited as set forth in this Section 11.3, provided
--------
however that nothing herein shall prevent or prohibit any Lender from (i)
pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank, or (ii)
granting assignments or participation in such Lender's Loans and/or
Commitments hereunder to its parent company and/or to any Affiliate or
Consolidated Subsidiary of such Lender.
(b) Assignments. Each Lender may assign all or a portion of its
-----------
rights and obligations hereunder, pursuant to an assignment agreement
substantially in the form of Schedule 11.3(b), to (i) any Lender or any
----------------
Affiliate or Subsidiary of a Lender, or (ii) any other commercial bank or
financial institution reasonably acceptable to the Agent and, so long as no
Default or Event of Default has occurred and is continuing, the Borrower
(any such Person referred to in clause (i) or (ii) above being herein
referred to as "Eligible Assignee"); provided that (i) any such assignment
----------------- --------
(other than any assignment to an existing Lender) shall be in a minimum
aggregate amount of $5,000,000 (or, if less, the remaining amount of the
Commitment being assigned by such Lender) of the Commitments and in
integral multiples of $1,000,000 above such amount and (ii) each such
assignment shall be of a constant, not varying, percentage of all such
Lender's rights and obligations under this Credit Agreement. Subject to the
foregoing, any assignment hereunder shall be effective upon delivery to the
Agent of written notice of the assignment together with a transfer fee of
$3,500 payable to the Agent for its own account from and after the later of
(i) the effective date specified in the applicable assignment agreement and
(ii) the date of recording of such assignment in the Register pursuant to
the terms of subsection (c) below. The assigning Lender will give prompt
notice to the Agent and the Borrower of any proposed assignment. Upon the
effectiveness of any such assignment (and after notice to, and (to the
extent required pursuant to the terms hereof), with the prior consent of,
the Borrower as provided herein), the assignee shall become a "Lender" for
all purposes of this Credit Agreement, the other Credit Documents and the
Intercreditor Agreement and, to the extent of such assignment, the
assigning Lender shall be relieved of its obligations hereunder to the
extent of the Loans and Commitment components being assigned. Along such
lines, the Borrower agrees that, upon notice of, and (to the extent
required pursuant to the terms hereof), with the prior written consent of,
the Borrower, any such assignment and surrender of the appropriate Note or
Notes, it will promptly provide to the assigning Lender and to the assignee
separate promissory notes in the amount of their respective interests
substantially in the form of the original Note (but with notation thereon
that it is given in substitution for and replacement of the original Note
or any replacement notes thereof). By executing and delivering an
assignment agreement in accordance with this Section
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11.3(b), the assigning Lender thereunder and the assignee thereunder shall
be deemed to confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Lender represents and warrants that
it is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim; (ii) except as set forth in clause (i)
above, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement, any of
the other Credit Documents, the Intercreditor Agreement or any other
instrument or document furnished pursuant hereto or thereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Credit Agreement, any of the other Credit Documents, the
Intercreditor Agreement or any other instrument or document furnished
pursuant hereto or thereto or the financial condition of any Credit Party
or any of their respective Affiliates or the performance or observance by
any Credit Party of any of its obligations under this Credit Agreement, any
of the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee represents and warrants
that it is legally authorized to enter into such assignment agreement; (iv)
such assignee confirms that it has received a copy of this Credit
Agreement, the other Credit Documents, the Intercreditor Agreement and such
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such assignment agreement;
(v) such assignee will independently and without reliance upon the Agent,
such assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Credit
Agreement. the other Credit Documents and the Intercreditor Agreement; (vi)
such assignee appoints and authorizes the Agent to take such action on its
behalf and to exercise such powers under this Credit Agreement, any other
Credit Document or the Intercreditor Agreement as are delegated to the
Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the
terms of this Credit Agreement, the other Credit Documents and the
Intercreditor Agreement are required to be performed by it as a Lender.
(c) Maintenance of Register. The Agent shall maintain at one of its
-----------------------
offices in Charlotte, North Carolina a copy of each Lender assignment
agreement delivered to it in accordance with the terms of subsection (b)
above and a register for the recordation of the identity of the principal
amount, type and Interest Period of each Loan outstanding hereunder, the
names, addresses and the Commitments of the Lenders pursuant to the terms
hereof from time to time (the "Register"). The Agent will make reasonable
--------
efforts to maintain the accuracy of the Register and to promptly update the
Register from time to time, as necessary. The entries in the Register
shall be conclusive in the absence of demonstrable error and the Borrower,
the Agent and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrower and each Lender, at any reasonable time and from
time to time upon reasonable prior notice.
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(d) Participations. Each Lender may sell, transfer, grant or assign
--------------
participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall remain a
--------
"Lender" for all purposes under this Credit Agreement (such selling
Lender's obligations under the Credit Documents remaining unchanged and
undischarged) and the participant shall not constitute a Lender hereunder
or have any rights or benefits hereunder (except as expressly provided in
this subsection (d)), (ii) no such participant shall have, or be granted by
any Lender, rights to approve any amendment or waiver relating to this
Credit Agreement or the other Credit Documents except to the extent any
such amendment or waiver would (A) extend the final maturity of any Loan,
or any portion thereof, or reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any post-
default increase in interest rates) thereon or fees hereunder or reduce the
principal amount thereof, or increase the Commitments of the Lenders over
the amount thereof in effect (it being understood and agreed that a waiver
of any Default or Event of Default or of a mandatory reduction in the
Revolving Committed Amount shall not constitute an extension of the
maturity of any Loan, or any portion thereof, or a change in the terms of
any Commitment of any Lender) or (C) except as contemplated by Section
11.16, including as the result of or in connection with a dissolution,
merger or disposition of a Consolidated Subsidiary permitted by Section
8.3(a), Section 8.3(b) or Section 8.3(c), release or subordinate the Lien
of the Agent in all or substantially all of the Collateral or release all
or substantially all of the Guarantors from the guaranty obligations
hereunder, and (iii) sub-participations by the participant (except to an
affiliate, parent company or affiliate of a parent company of the
participant) shall be prohibited. In the case of any such participation,
the participant shall not have any rights against any Credit Party or other
party under this Credit Agreement or the other Credit Documents (the
participant's rights against the selling Lender in respect of such
participation to be exclusively those set forth in the participation
agreement with such Lender creating such participation) and all amounts
payable by, and all obligations of, the Borrower hereunder shall be
determined as if such Lender had not sold such participation, provided,
--------
however, that such participant shall be entitled to receive additional
-------
amounts under Sections 3.6, 3.9, 3.10 and 3.11 on the same basis as if it
were a Lender.
11.4 No Waiver; Remedies Cumulative. No failure or delay on the part of
------------------------------
the Agent or any Lender in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between the Agent or
any Lender and any of the Credit Parties shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Agent or any Lender would
otherwise have. Except as expressly set forth herein, no notice to or demand on
any Credit Party in any case shall entitle the Borrower or any
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other Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the Lenders
to any other or further action in any circumstances without notice or demand.
11.5 Payment of Expenses, etc. The Borrower agrees to: (i) pay all
------------------------
reasonable out-of-pocket costs and expenses (A) of the Agent in connection with
the negotiation, preparation, execution and delivery, syndication and
administration of this Credit Agreement and the other Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and expenses of Moore & Van Allen, PLLC, special counsel to
the Agent) and any amendment, waiver or consent relating hereto and thereto
including, but not limited to, any such amendments, waivers or consents
resulting from or related to any work-out, renegotiation or restructure relating
to the performance by the Credit Parties under this Credit Agreement and (B) of
the Agent and the Lenders in connection with enforcement of the Credit Documents
and the documents and instruments referred to therein (including, without
limitation, in connection with any such enforcement, the reasonable fees and
disbursements of counsel for the Agent and each of the Lenders); (ii) pay and
hold each of the Lenders harmless from and against any and all present and
future stamp and other similar taxes with respect to the foregoing matters and
save each of the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and (iii) indemnify each Lender,
its officers, directors, employees, representatives and agents from and hold
each of them harmless against any and all losses, liabilities, claims, damages
or expenses reasonably incurred by any of them as a result of, or arising out
of, or in any way related to, or by reason of (A) any investigation, litigation
or other proceeding (whether or not any Lender is a party thereto) related to
the entering into and/or performance of any Credit Document or the use of
proceeds of any Loans (including other extensions of credit) hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding or (B) the presence or Release of any Materials of Environmental
Concern at, under or from any Property owned, operated or leased by the Borrower
or any of its Consolidated Subsidiaries, or the failure by the Borrower or any
of its Consolidated Subsidiaries to comply with any Environmental Law (but
excluding, in the case of either of clause (A) or (B) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified).
11.6 Amendments, Waivers and Consents. Neither this Credit Agreement nor
--------------------------------
any other Credit Document nor any of the terms hereof or thereof may be amended,
changed, waived, discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing entered into by, or approved in writing
by, the Required Lenders and the Borrower; provided that no such amendment,
--------
change, waiver, discharge or termination shall, without the consent of each
Lender, (i) extend the final maturity of any Loan, or any portion thereof, or
reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any post-default increase in interest
rates) thereon or fees hereunder or reduce the principal amount thereof, or
increase the Commitments of the Lenders over the amount thereof in effect (it
being understood and agreed that a waiver of any Default or Event of Default or
of a
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mandatory reduction in the Revolving Committed Amount shall not constitute an
extension of the maturity of any Loan, or any portion thereof, or a change in
the terms of any Commitment of any Lender), (ii) except as contemplated by
Section 11.16, including as the result of or in connection with a dissolution,
merger or disposition of a Consolidated Subsidiary permitted by Section 8.3(a),
Section 8.3(b) or Section 8.3(c), release or subordinate the Lien of the Agent
in all or substantially all of the Collateral or release all or substantially
all of the Guarantors from the guaranty obligations hereunder, (iii) amend,
modify or waive any provision of this Section or Section 3.6, 3.10, 3.11, 3.12,
3.13, 5.1, 5.2, 9.1(a), 9.1(f), 11.2, 11.3, 11.5 or 11.9, (iv) reduce any
percentage specified in, or otherwise modify, the definition of "Required
Lenders" or (v) consent to the assignment or transfer by the Borrower (or any
Guarantor) of any of its rights and obligations under (or in respect of) the
Credit Documents to which it is a party; provided, further, that, upon the
-------- -------
occurrence and during the continuance of an Event of Default, the Required
Lenders may (with notice to, but without the consent of, the Borrower) amend the
order in which payments are allocated pursuant to Section 3.14(ii)(b) FIRST
through SIXTH. No provision of Section 2.2 may be amended without the consent of
the Issuing Lender, no provision of Section 2.3 may be amended without the
consent of the Swingline Lender and no provision of Section 10 may be amended
without the consent of the Agent.
11.7 Counterparts. This Credit Agreement may be executed in any number of
------------
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
11.8 Headings. The headings of the sections and subsections hereof are
--------
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Credit Agreement.
11.9 Survival. All indemnities set forth herein, including, without
--------
limitation, in Section 2.2(i), 3.9, 3.11, 10.7 or 11.5 shall survive the
execution and delivery of this Credit Agreement, the making of the Loans, the
issuance of the Letters of Credit, the repayment of the Loans, LOC Obligations
and other obligations under the Credit Documents and the termination of the
Commitments hereunder, and all representations and warranties made by the Credit
Parties herein shall survive delivery of the Notes and the making of the Loans
hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Credit Agreement or any other Credit
Document shall be brought in the courts of the State of New York in New
York County, or of the United States for the Southern District of New York,
and, by execution and delivery of this Credit Agreement, each of the Agent,
the Lenders and Credit Parties hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
such courts. Each of the Agent, the Lenders
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and Credit Parties further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address set out for notices pursuant to Section 11.1,
such service to become effective three (3) Business Days after such
mailing. Nothing herein shall affect the right of the Agent or the Lenders
or any Credit Party to serve process in any other manner permitted by law.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Credit Document brought in the
courts referred to in subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE AGENT,
THE LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability. If any provision of any of the Credit Documents is
------------
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
11.12 Entirety. This Credit Agreement together with the other Credit
--------
Documents represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
11.13 Binding Effect; Termination. (a) This Credit Agreement shall become
---------------------------
effective at such time on or after the Closing Date when it shall have been
executed by the Borrower, the Guarantors and the Agent, and the Agent shall have
received copies hereof (telefaxed or otherwise) which, when taken together, bear
the signatures of each Lender, and thereafter this Credit Agreement shall be
binding upon and inure to the benefit of the Borrower, the Guarantors, the Agent
and each Lender and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans, LOC
Obligations or any other amounts payable hereunder or under any of the other
Credit Documents shall remain outstanding and until all of the Commitments
hereunder shall have expired or been terminated.
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<PAGE>
11.14 Confidentiality. The Agent and the Lenders agree to keep
---------------
confidential (and to cause their respective affiliates, officers, directors,
employees, agents and representatives to keep confidential) all information,
materials and documents furnished to the Agent or any such Lender by or on
behalf of any Credit Party (whether before or after the Closing Date) which
relates to the Borrower or any of its Subsidiaries, including any and all
information and other materials obtained pursuant to Section 7.1 and 7.9 hereof
(the "Information"). Notwithstanding the foregoing, the Agent and each Lender
-----------
shall be permitted to disclose Information (i) to its affiliates, officers,
directors, employees, agents and representatives in connection with its
participation in any of the transactions evidenced by this Credit Agreement or
any other Credit Documents or the administration of this Credit Agreement or any
other Credit Documents; (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by any
Governmental Authority; (iii) to the extent such Information (A) becomes
publicly available other than as a result of a breach of this Credit Agreement
or any agreement entered into pursuant to clause (iv) below, (B) becomes
available to the Agent or such Lender on a non-confidential basis from a source
other than a Credit Party or (C) was available to the Agent or such Lender on a
non-confidential basis prior to its disclosure to the Agent or such Lender by a
Credit Party; (iv) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee or
participant) first specifically agrees in a writing furnished to and for the
benefit of the Credit Parties to be bound by the terms of this Section 11.14; or
(v) to the extent that the Borrower shall have consented in writing to such
disclosure. Nothing set forth in this Section 11.14 shall obligate the Agent or
any Lender to return any materials furnished by the Credit Parties.
11.15 Source of Funds. Each of the Lenders hereby represents and warrants
---------------
to the Borrower that at least one of the following statements is an accurate
representation as to the source of funds to be used by such Lender in connection
with the financing hereunder:
(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes assets
allocated to any separate account maintained by such Lender, such
Lender has disclosed to the Borrower the name of each employee
benefit plan whose assets in such account exceed 10% of the total
assets of such account as of the date of such purchase (and, for
purposes of this subsection (b), all employee benefit plans
maintained by the same employer or employee organization are deemed
to be a single plan); or
(c) such funds constitute assets of one or more specific benefit
plans which such Lender has identified in writing to the Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
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11.16 Release of Guarantors and Pledged Stock.
---------------------------------------
(a) Notwithstanding any provision of this Credit Agreement to the
contrary, in the event that any Guarantor or any other Subsidiary of the
Borrower whose capital stock or other equity interest is pledged to the
Senior Creditor Agent pursuant to any Collateral Documents shall cease to
be a Consolidated Subsidiary for any reason in accordance with the terms of
this Credit Agreement (including without limitation as permitted by Section
8.3(a), Section 8.3(b) or Section 8.3(c)) and shall also cease to be a
Consolidated Subsidiary under and as defined in the Senior Note Agreements,
then (i) if such Person is a Guarantor, such Person, automatically and
without further act on the part of the Senior Creditor Agent, the Agent,
the Lenders or the Senior Noteholders, shall be fully released and
discharged from its obligations under this Credit Agreement and the other
Credit Documents to which such Person is a party and, promptly upon the
request of the Borrower, the Agent (on behalf of the Lenders) shall, at the
Borrower's expense, execute such documents and take such other action
reasonably requested by the Borrower to evidence (or to enable the Senior
Creditor Agent to evidence) such release and discharge from all such
obligations and (ii) if the capital stock or other equity interest of such
Person is pledged to the Senior Creditor Agent pursuant to any Collateral
Documents, promptly upon the request of the Borrower, the Agent shall
promptly notify the Senior Creditor Agent that (A) the Senior Creditor
Agent is no longer acting as the secured party for the benefit of the Agent
and the Lenders (or any affiliates of any Lenders in respect of any Hedging
Agreements) with respect to such capital stock or other equity interest of
such Person, (B) the Senior Creditor Agent is authorized by the Agent and
the Lenders to deliver to the Borrower (or its designee) any stock or other
equity certificates (together with stock or other appropriate powers) which
the Senior Creditor Agent then holds pursuant to any Collateral Documents
and (C) the Senior Creditor Agent is authorized by the Agent and the
Lenders (and on their behalf), at the Borrower's expense, to execute such
documents and take such other action reasonably requested by the Borrower
to cause and evidence the capital stock or other equity interest or other
Collateral of such Person to be released from the liens and/or security
interests arising under such Collateral Documents.
(b) Notwithstanding any provision of this Credit Agreement to the
contrary, in the event that all or any portion of the capital stock or
other equity interest pledged to the Senior Creditor Agent pursuant to any
Collateral Documents is sold or otherwise transferred in accordance with
the terms of this Credit Agreement and the Senior Note Agreements, promptly
upon the request of the Borrower, the Agent shall promptly notify the
Senior Creditor Agent that (A) the Senior Creditor Agent is no longer
acting as the secured party for the benefit of the Agent and the Lenders
(or any affiliates of any Lenders in respect of any Hedging Agreements)
with respect to such capital stock or other equity interest, (B) the Senior
Creditor Agent is authorized by the Agent and the Lenders to deliver to the
Borrower (or its designee) any stock or other equity certificates (together
with stock or other appropriate powers) which the Senior Creditor Agent
then holds as evidence of such capital stock or other equity interest and
(C) the Senior Creditor Agent is authorized by the Agent and the Lenders
(and on their behalf), at the Borrower's
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expense, to execute such documents and take such other action reasonably
requested by the Borrower to cause and evidence the release of such capital
stock or other equity interest (together with any other Collateral
associated therewith) from the liens and/or security interests arising
under such Collateral Documents.
11.17 Conflict. To the extent that there is a conflict or inconsistency
--------
between any provision hereof, on the one hand, and any provision of any Credit
Document (other than the Intercreditor Agreement), on the other hand, this
Credit Agreement shall control.
[Signature Page to Follow]
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Credit Agreement to be duly executed and delivered as of the date first above
written.
BORROWER: THE DYSON-KISSNER-NORAN CORPORATION
- --------
a Delaware corporation
By /s/
-------------------------------------
Title Chairman and Chief Executive Officer
----------------------------------
GUARANTORS: BSB DIVERSIFIED COMPANY, INC.
- ----------
By /s/
-------------------------------------
Title President
----------------------------------
BUCILLA CORPORATION
By /s/
-------------------------------------
Title Vice President
----------------------------------
BURNER SYSTEMS INTERNATIONAL, INC.
By /s/
-------------------------------------
Title Vice President
----------------------------------
M.S. CHAMBERS & SON, INC.
By /s/
-------------------------------------
Title Vice President
----------------------------------
CONSOLIDATED GROUP, INC.
By /s/
-------------------------------------
Title Vice President
----------------------------------
[Signatures Continued]
S-1
<PAGE>
Signature Pages to
The Dyson-Kissner-Moran Corporation
Credit Agreement
CONSOLIDATED SCREEN-MAKERS, INC.
By /s/
-----------------------------
Title Vice President
-------------------------
CRITON CORPORATION
By /s/
-----------------------------
Title Vice President
-------------------------
DKM REALTY HOLDING CORP.
By /s/
-----------------------------
Title Vice President
-------------------------
DKM, LTD.
By /s/
-----------------------------
Title Vice President
-------------------------
J. A. SEXAUER, INC.
By /s/
-----------------------------
Title Vice President
--------------------------
KEARNEY-NATIONAL INC.
By /s/
-----------------------------
Title Vice President
-------------------------
[Signature Continued]
S-2
<PAGE>
Signature Pages to
The Dyson-Kissner-Moran Corporation
Credit Agreement
KN HOLDINGS, INC.
By /s/
-----------------------------
Title Vice President
-------------------------
MHC HOLDING CORP.
By /s/
----------------------------
Title Vice President
-------------------------
MUNCY BUILDING ENTERPRISES, INC.
By /s/
-----------------------------
Title Vice President
-------------------------
PLAID ENTERPRISES, INC.
By /s/
----------------------------
Title Vice President
-------------------------
SPECTROL ELECTRONICS CORPORATION
By /s/
-----------------------------
Title Vice President
-------------------------
THETFORD CORPORATION
By /s/
----------------------------
Title Vice President
-------------------------
[Signatures Continued]
S-3
<PAGE>
Signature Pages to
The Dyson-Kissner-Moran Corporation
Credit Agreement
TINICUM FINANCIAL CORPORATION
By /s/
----------------------------------
Title Vice President
--------------------------------
TRAYCO OF S.C., INC.
By /s/
----------------------------------
Title Vice President
--------------------------------
WABASH MAGNETICS, INC.
By /s/
----------------------------------
Title Vice President
--------------------------------
WESTERN POWER PRODUCTS, INC.,
By /s/
----------------------------------
Title Vice President
--------------------------------
AGENTS: NATIONSBANK, N.A., in its capacity as
Administrative Agent and Documentation
Agent
By /s/
-------------------------------
Title Vice President
-------------------------------
THE BANK OF NOVA SCOTIA, in its
capacity as Syndication Agent
By /s/
-------------------------------
Title Vice President
-------------------------------
S-4
<PAGE>
Signature Pages to
The Dyson-Kissner-Moran Corporation
Credit Agreement
LENDERS: NATIONSBANK, N.A.
By /s/
-------------------------------
Title Vice President
----------------------------
THE BANK OF NOVA SCOTIA,
By /s/
-------------------------------
Title Vice President
----------------------------
MELLON BANK, N.A.
By /s/
-------------------------------
Title Assistant Vice President
----------------------------
BANQUE PARIBAS
By /s/ /s/
----------------------------- -------------------------
Title General Manager Vice President
-------------------------- -------------------------
CIBC, INC.
By /s/ Timothy E. Doyle
-------------------------------
Title Authorized Signatory
----------------------------
ABN AMRO BANK N.V.
By /s/ /s/
-------------------------- ------------------------
Title Group Vice President Vice President
----------------------- ------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By /s/
-------------------------------
Title Authorized Agent
----------------------------
S-5
<PAGE>
Signature Pages to
The Dyson-Kissner-Moran Corporation
Credit Agreement
COMERICA BANK
By /s/
-------------------------------
Title Account Officer
----------------------------
FIRST UNION NATIONAL BANK
By /s/
-------------------------------
Title Vice President
----------------------------
FLEET BANK, NATIONAL ASSOCIATION
By /s/
-------------------------------
Title Vice President
----------------------------
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By /s/
-------------------------------
Title Vice President
----------------------------
WACHOVIA BANK OF GEORGIA, N.A.
By /s/
-------------------------------
TITLE Senior Vice President
----------------------------
THE BANK OF NEW YORK
By /s/
-------------------------------
Title Vice President
----------------------------
THE SUMITOMO BANK LIMITED,
NEW YORK BRANCH
By /s/
-------------------------------
Title Joint General Manager
----------------------------
S-6
<PAGE>
NationsBank Corporate Center
Charlotte, NC 28255
Tel 704 386-5000
NationsBank
September 8, 1997
The Dyson-Kissner-Moran Corporation
565 Fifth Avenue
Fourth Floor
New York, NY 10017-2413
Re: Credit Agreement dated as of June 26, 1996 among The
Dyson-Kissner-Moran Corporation ("the Borrower"), The Subsidiaries
of the Borrower from time to time party thereto, the Several Lenders
from time to time party thereto and NationsBank, N.A., as
Administrative Agent and Documentation Agent and The Bank of Nova
Scotia, as Syndication Agent (the "Credit Agreement")
Gentlemen:
Reference is made to the Credit Agreement described above, the defined terms of
which are incorporated herein by reference.
On behalf of the Required Lenders under the Credit Agreement, we hereby agree
with you to amend the Credit Agreement, effective August 1, 1997, in the
following respects:
1. The definition of "Consolidated Fixed Charge Coverage Ratio" set forth
in Section 1.1 of the Credit Agreement is amended in its entirety to read
as follows:
"Consolidated Fixed Charge Coverage Ratio" means, as of any
Calculation Date, the ratio of (a)(i) Consolidated EBITDA for the
four-quarter period ended as of such Calculation Date minus (ii)
Consolidated Capital Expenditures for the four-quarter period ended
as of such Calculation Date minus (iii) Consolidated Cash Taxes (to
the extent not related to extraordinary gains or losses or gains or
losses resulting from any disposition of capital stock, securities,
or Property) for the four-quarter period ended as of such
Calculation Date minus (iv) Consolidated Cash Restricted Payments
for the four-quarter period ended as of such Calculation Date to (b)
the sum of (i) Consolidated Interest Expense for the four-quarter
period ended as of such Calculation Date plus (ii) Consolidated
Scheduled Funded Indebtedness Payments for the four-quarter period
ended as of such Calculation Date.
<PAGE>
The Dyson-Kissner-Moran Corporation
September 9, 1997
Page 2
All references in the Credit Agreement and the other Credit Documents to the
"Credit Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby.
Except as modified hereby, all of the terms and provisions of the Credit
Agreement and the other Credit Documents shall remain in full force and effect.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York.
This letter agreement may be executed in one or more counterparts, each of which
constitute an original, and all of which taken together shall constitute a
single document.
Sincerely,
NATIONSBANK, N.A.,
as Administrative Agent
By: /s/ Diana Hamner Inman
------------------------------
Name: Diana Hamner Inman
Title: Vice President
ACCEPTED AND AGREED:
THE DYSON-KISSNER-MORAN CORPORATION
By /s/ Marc Feldman
------------------------------
Title: Vice President & Treasurer
cc: Those on the Attached Bank
Group Distribution List
<PAGE>
CONSENT, WAIVER AND AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS CONSENT, WAIVER AND AMENDMENT NO. 2 TO CREDIT AGREEMENT (this
"Amendment No. 2"), dated as of February 18, 1998, is entered into by and among
THE DYSON-KISSNER-MORAN CORPORATION, a Delaware corporation (the "Borrower"),
the subsidiaries of the Borrower identified on the signature pages hereto and
such other subsidiaries as may from time to time become a party to the Credit
Agreement (individually a "Guarantor" and collectively the "Guarantors"), the
several lenders identified on the signature pages hereto (the "Lenders"),
NATIONSBANK, N.A., as administrative agent (in such capacity, the "Agent") and
documentation agent (in such capacity, the "Documentation Agent") for the
Lenders and THE BANK OF NOVA SCOTIA, as syndication agent (in such capacity, the
"Syndication Agent").
RECITALS
WHEREAS, the Borrower, the Guarantors, the Lenders, the Agent, the
Documentation Agent and the Syndication Agent are party to that certain Credit
Agreement dated as of June 26, 1996 (as previously amended prior to the date
hereof, the "Existing Credit Agreement");
WHEREAS, the Borrower desires to repurchase 341,231 shares of its Class A
non-voting common stock held by or bequeathed to The Dyson Foundation (the "
1998 Stock Redemption");
WHEREAS, the parties hereto have agreed to permit the 1998 Stock
Redemption and to amend the Existing Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined herein or the
context otherwise requires, the following terms used in this Amendment No. 2,
including its preamble and recitals, have the following meanings:
"Additional Revolving Commitment" means, with respect to each
Lender, the additional commitment of such Lender in the amount identified
as its Additional Revolving Commitment on Schedule 1.1 hereto (i) to make
Revolving Loans in accordance with the provisions of Section 2.1(a), (ii)
to purchase participation interests in Letters of Credit in accordance
with the provisions of Section 2.2(c), and (iii) to purchase participation
interests in the Swingline Loans in accordance with the provisions of
Section 2.3(b)(iii).
<PAGE>
"Additional Revolving Committed Amount" means Seventy-Three Million
Dollars ($73,000,000).
"Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.
"Amendment Fee Letter" means that certain letter agreement, dated as
of the date hereof, between the Agent and the Borrower.
"Amendment No. 2 Effective Date" is defined in Subpart 4.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined herein or the
context otherwise requires terms used in this Amendment No. 2, including its
preamble and recitals, have the meanings provided in the Amended Credit
Agreement.
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 2
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II.
SUBPART 2.1. Amendment to Section 1.1. The following definitions in
Section 1.1 of the Existing Credit Agreement are amended in their entireties to
read as follows:
"Amendment No. 2 Effective Date" means the date as of which that
certain Consent, Waiver and Amendment No. 2 to Credit Agreement, dated as
of February 18, 1998, by and among the various parties to the Credit
Agreement, shall become effective in accordance with the terms of Subpart
4.1 thereof.
"Applicable Percentage" means, for purposes of calculating the
applicable interest rate for any day for any Eurodollar Loan or the
applicable rate of the Unused Fee for any day for purposes of Section
3.5(b) or the applicable rate of the Standby Letter of Credit Fee for any
day for purposes of Section 3.5(c)(i), the appropriate applicable
percentage corresponding to the Consolidated Debt Coverage Ratio in effect
as of the most recent Calculation Date:
2
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Pricing Pricing Pricing Pricing
Level I Level II Level III Level IV
- --------------------------------------------------------------------------------------------------------
If the Consolidated If the Consolidated If the
If the Consolidated Debt Coverage Ratio Debt Coverage Ratio Consolidated
Debt Coverage Ratio is greater than is greater than Debt Coverage
is equal to or 1.50 but equal to or 2.50 but equal to or Ratio is greater
less than 1.50 less than 2.50 less than 3.25 than 3.25
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Eurodollar Loan 0.40% 0.625% 0.875% 1.125%
- --------------------------------------------------------------------------------------------------------
Unused Fee 0.15% 0.25% 0.3125% 0.375%
- --------------------------------------------------------------------------------------------------------
Standby Letter of 0.40% 0.625% 0.875% 1.125%
Credit Fee
- --------------------------------------------------------------------------------------------------------
</TABLE>
Determination of the Applicable Percentages based on the Consolidated Debt
Coverage Ratio shall be made as of each Calculation Date. The Consolidated
Debt Coverage Ratio in effect as of a Calculation Date shall establish the
Applicable Percentages that shall be effective as of the date designated
by the Agent as the Applicable Percentage Change Date. The Agent shall
determine the Applicable Percentages as of each Calculation Date based
upon the Required Financial Information for such Calculation Date and
shall promptly notify the Borrower and the Lenders of the Applicable
Percentages so determined and of the Applicable Percentage Change Date.
Such determinations by the Agent of the Applicable Percentages shall be
conclusive absent demonstrable error. The initial Applicable Percentages
shall be based on Pricing Level II until the first Applicable Percent age
Change Date occurring after the Closing Date.
"Consolidated Adjusted Net Worth " means, as of any date, (a)
Consolidated Net Worth as of such date minus (b) the outstanding amount
of Consolidated New Long Term Investments as of such date plus (c)
proceeds and other distributions received by the Borrower and/or any of
the Consolidated Subsidiaries subsequent to February 1, 1998 from the
ownership interest in or operations or sales of Unconsolidated
Subsidiaries.
"Consolidated Fixed Charge Coverage Ratio" means, as of any
Calculation Date, the ratio of (a) (i) Consolidated EBITDA for the
four-quarter period ended as of such Calculation Date minus (ii)
Consolidated Capital Expenditures for the four-quarter period ended as of
such Calculation Date minus (iii) Consolidated Cash Taxes (to the extent
not related to extraordinary gains or losses or gains or losses resulting
from any disposition of
3
<PAGE>
capital stock, securities, or Property) for the four-quarter period ended
as of such Calculation Date minus (iv) Consolidated Cash Restricted
Payments for the four-quarter period ended as of such Calculation Date to
(b) the sum of (i) Consolidated Interest Expense for the four-quarter
period ended as of such Calculation Date plus (ii) Consolidated Scheduled
Funded Indebtedness Payments for the four-quarter period ended as of such
Calculation Date.
"Consolidated Interest Expense" means, for any period, all interest
expense (including the interest component under Capital Leases) of the
Borrower and its Consolidated Subsidiaries on a consolidated basis for
such period, as determined in accordance with GAAP; provided, however,
that Consolidated Interest Expense shall not include (i) the interest paid
as part of the Stock Repurchase or (ii) the costs and expenses of the
Borrower incurred in connection with the execution of the Credit Agreement
and the other Credit Documents and/or the Senior Note Agreements and the
Senior Notes, including, in each case, any amendments, waivers or consents
executed in connection with the 1998 Stock Redemption.
"Consolidated New Long Term Investments" means any Investments of
the type described in clauses (iii), (v)(B), (vi) (but only to the extent
of any such Investments arising after February 1, 1998 and pursuant to
Section 8.1 (f)(ii)(B)) and (ix) (but only to the extent of any such
Investments arising after February 1, 1998 and which do not result in a
Person becoming a Consolidated Subsidiary or which are not made by the
Borrower or any Consolidated Subsidiary) of the definition of "Permitted
Investments" set forth in this Section 1.1 (excluding, in any case,
Investments made in the Borrower or in any of its Consolidated
Subsidiaries, but including Investments consisting of a minority equity
interest (valued in accordance with GAAP) retained by the Borrower or a
Consolidated Subsidiary in connection with a sale after February 1, 1998
of a majority equity interest in a Consolidated Subsidiary) made by the
Borrower or any of its Consolidated Subsidiaries subsequent to February 1,
1998.
"Excess Net Proceeds" means, with respect to any Subsidiary
Dissolution made pursuant to Section 8.3(a)(ii) or any Asset Disposition
made pursuant to Section 8.3(c)(vii), the Net Proceeds of such Subsidiary
Dissolution or Asset Disposition, as applicable, which, together with the
Net Proceeds of all other dissolutions, liquidations or windings up
pursuant to Section 8.3(a)(ii) for the period from February 1, 1998
through and including the date of such Subsidiary Dissolution or Asset
Disposition, as applicable, and the Net Proceeds of all other sales,
leases, transfers or other dispositions pursuant to Section 8.3(c)(vii)
for the period from February 1, 1998 through and including the date of
such proposed Subsidiary Dissolution or Asset Disposition, as applicable,
exceed 30% of the Book Value of the Consolidated Subsidiaries as of the
most recent Calculation Date preceding such Subsidiary Dissolution or
Asset Disposition, as applicable, with respect to which the Agent shall
have received the Required Financial Information.
"Permitted Investments" means (i) cash and Cash Equivalents; (ii)
accounts receivable created, acquired or made in the ordinary course of
business and payable or
4
<PAGE>
dischargeable in accordance with customary trade terms; (iii) Investments
consisting of (A) any debt security, obligation or instrument received in
settlement of accounts receivable (created in the ordinary course of
business) from obligors and (B) any stock, obligations, securities or
other property received in settlement of accounts receivable (created in
the ordinary course of business) from bankrupt obligors; (iv) Investments
in the Borrower or in any Domestic Consolidated Subsidiary or in any
Foreign Consolidated Subsidiary which is or becomes a Guarantor (including
Investments and acquisitions which result in a Person becoming a
Consolidated Subsidiary, and, in the case of a Person becoming a Foreign
Consolidated Subsidiary, which result in such Foreign Consolidated
Subsidiary also becoming a Guarantor) provided that the Acquisition
Conditions, if applicable, are satisfied; (v) Investments of the Borrower,
any Domestic Consolidated Subsidiary or any Foreign Consolidated
Subsidiary which is a Guarantor in any Foreign Consolidated Subsidiary
which is not a Guarantor (including without limitation Guaranty
Obligations in respect of Indebtedness of any such Foreign Consolidated
Subsidiary to the extent permitted by Section 8.1(e)(ii)) (A) existing as
of February 1, 1998 or (B) made on or after February 1, 1998, provided
that the aggregate outstanding amount of all such Investments made on or
after February 1, 1998 shall not exceed, as of the date made, 30% of
Consolidated Adjusted Net Worth as of the then most recent Calculation
Date with respect to which the Agent shall have received the Required
Financial Information; (vi) Guaranty Obligations permitted by Section 8.1;
(vii) Intercompany Indebtedness permitted by Section 8.1(g); (viii)
obligations of the Borrower in respect of Hedging Agreements permitted by
Section 8. 1 (i); (ix) acquisitions permitted by Section 8.3 (d); (x)
transactions permitted by Section 8.7; (xi) advances or loans to
directors, officers, employees or agents that do not exceed $1,000,000 in
the aggregate at any one time outstanding for the Borrower and its
Consolidated Subsidiaries taken together; and (xii) Investments of the
Borrower or any Consolidated Subsidiary consisting of notes or other
securities of the other party under any, sale, lease, transfer or other
disposition of Property transaction otherwise permitted by Section 8.3(c)
and constituting a portion of the purchase price for the Property sold,
leased, transferred or otherwise disposed of in such transaction, provided
that the aggregate outstanding amount of all such Investments shall not
exceed at any time $15,000,000.
"Restricted Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of the
Borrower or any Consolidated Subsidiary, now or hereafter outstanding,
(ii) any redemption, retirement, sinking fund or similar payment, purchase
or other acquisition for value, direct or indirect, of any shares of any
class of stock of the Borrower, now or hereafter outstanding, and (iii)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock
of the Borrower, now or hereafter outstanding; provided that the term
"Restricted Payment" shall not include the 1997 Stock Redemption or the
1998 Stock Redemption.
"Termination Date" means February 18, 2003.
5
<PAGE>
SUBPART 2.2. Addition to Section 1.1. Section 1.1 of the Existing Credit
Agreement is amended by adding the following definitions in proper alphabetical
order:
"1997 Stock Redemption" means the redemptions made by the Borrower
during the fiscal year commencing February 1, 1997 of a total of 122,836
shares of its Class A nonvoting common stock for $29,064,000.
"1998 Stock Redemption" means the redemption, if any, by the
Borrower on or after February 1, 1998 (but no later than March 2, 1998) of
up to 341,231 shares of its Class A non-voting common stock bid by or
bequeathed to The Dyson Foundation for an aggregate redemption price not
to exceed $130,000,000.
SUBPART 2.3. Amendment to Section 2.1(a). Section 2.1(a) of the Existing
Credit Agreement is amended in its entirety to read as follows:
2.1 Revolving Loans.
(a) Revolving Commitment. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make available to the Borrower such
Lender's Commitment Percentage of revolving credit loans requested by the
Borrower in Dollars ("Revolving Loans") from time to time from the Closing
Date until the Termination Date, or such earlier date as the Revolving
Commitments shall have been terminated as provided herein for the purposes
hereinafter set forth; provided, however, that the sum of the aggregate
principal amount of outstanding Revolving Loans shall not exceed TWO
HUNDRED SEVENTY MILLION DOLLARS ($270,000,000.00) (as such aggregate
maximum amount may be reduced from time to time as provided in Section
3.4, the "Revolving Committed Amount"); provided, further, (i) with regard
to each Lender individually, the aggregate, principal amount of such
Lender's outstanding Revolving Loans plus such Lender's participation
interests in Letters of Credit plus such Lender's participation interests
in the Swingline Loans shall not exceed such Lender's Commitment
Percentage of the Revolving Committed Amount, and (ii) with regard to the
Lenders collectively, the aggregate principal amount of outstanding
Revolving Loans plus the aggregate principal amount of outstanding
Swingline Loans plus LOC Obligations outstanding shall not exceed the
Revolving Committed Amount. Revolving Loans may consist of Base Rate Loans
or Eurodollar Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the
provisions hereof, provided, however, that no more than 5 Eurodollar Loans
shall be outstanding hereunder at any time. For purposes hereof,
Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period. Revolving
Loans hereunder may be repaid and reborrowed in accordance with the
provisions hereof.
6
<PAGE>
SUBPART 2.4. Amendment to Section 7.10(d). Section 7. 1 0(d) of the
Existing Credit Agreement is amended in its entirety to read as follows:
7.10 Financial Covenants.
************
(d) Consolidated Adjusted Net Worth. At all times, Consolidated
Adjusted Net Worth shall be greater than or equal to 80% of Consolidated
Net Worth as of the last day of the calendar month immediately preceding
the Amendment No. 2 Effective Date; provided, however, that on and after
the date that the 1998 Stock Redemption shall have been consummated, the
1998 Stock Redemption shall be deemed to have occurred prior to the last
day of the fiscal month immediately preceding the Amendment No. 2
Effective Date.
SUBPART 2.5. Amendment to Section 8.1(f). Section 8.1(f) of the Existing
Credit Agreement is amended in its entirety to read as follows:
8.1 Indebtedness. The Borrower will not, nor will it permit any its
Consolidated Subsidiaries to, contract, create, incur, assume or permit to
exist any Indebtedness, except:
************
(f) Guaranty Obligations of the Borrower or any Consolidated
Subsidiary in respect of (i) Indebtedness of the Borrower or any
Consolidated Subsidiary otherwise permitted under this Section 8.1 and
(ii) Indebtedness of any Unconsolidated Subsidiary (A) set forth in
Schedule 8.1 or (B) to the extent otherwise permitted to be incurred under
the terms of Section 8.4(ii);
SUBPART 2.6. Amendment to Section 8.4. Section 8.4 of the Existing Credit
Agreern6nt is amended in its entirety to read as follows:
8.4 Investments. The Borrower will not, nor will it permit any of
its Consolidated Subsidiaries to, make Investments in or to any Persons,
except for (i) Permitted Investments and (ii) other Investments (including
Investments consisting of a minority equity interest retained by the
Borrower or a Consolidated Subsidiary in connection with a sale of a
majority equity interest in a Subsidiary valued in accordance with GAAP),
provided that (A) the aggregate amount of all Investments made pursuant to
this clause (ii) on or after February 1, 1998 (but excluding for purposes
of calculating such aggregate amount utilized the lesser of the Book
Value or purchase price of any previously included Investments in a Person
which subsequently has become a Guarantor), together with the aggregate
amount of 51 Restricted Payments made pursuant to Section 8.5(iv) on or
after February 1, 1998, shall not exceed an amount equal to the
7
<PAGE>
sum of $35,000,000, plus 50% of aggregate Consolidated Restricted Net
Income for the period from February 1, 1998 through the most recent
Calculation Date preceding the date of such Investment with respect to
which the Agent shall have received the Required Financial Information,
minus 100% of Consolidated Restricted Net Income for any full fiscal year
period for which Consolidated Restricted Net Income is a negative amount
and occurring during the period from February 1, 1998 through the most
recent fiscal year end preceding the date of such Investment with respect
to which the Agent shall have received the Required Financial Information,
plus the aggregate Net Proceeds received by the Borrower and/or any of the
Consolidated Subsidiaries from all Equity Transactions consummated during
the period from February 1, 1998 through the most recent Calculation Date
preceding the date of such Investment with respect to which the Agent
shall have received the Required Financial Information, plus (without
duplication) the sum of all proceeds and other distributions received by
the Borrower and/or any of the Consolidated Subsidiaries subsequent to
February 1, 1998 from the operations or sales of Unconsolidated
Subsidiaries and any other asset or Investment of the Borrower or any
Consolidated Subsidiary which is not, in accordance with GAAP, shown as an
asset or Investment, as applicable, on a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries, for the period from February
1, 1998 through the most recent Calculation Date preceding the date of
such Investment with respect to which the Agent shall have received the
Required Financial Information, and (B) if such Investment pursuant to
this clause (ii) involves an amount in excess of $10,000,000, the Borrower
shall have first delivered to the Agent and each of the Lenders a Pro
Forma Compliance Certificate demonstrating that, upon giving effect to
such Investment on a Pro Forma Basis, no Default or Event of Default would
exist as a result of a violation of Section 7. 10(a) or Section 7.10(c).
SUBPART 2.7. Amendment to Section 8.5. Section 8.5 of the Existing Credit
Agreement is amended in its entirety to read as follows:
8.5 Restricted Payments. The Borrower will not, nor will it permit
any of its Consolidated Subsidiaries to, directly or indirectly, declare,
order, make or set apart any sum for or pay any Restricted Payment, except
for (i) the Stock Repurchase, (ii) Restricted Payments to the Borrower or
any Domestic Consolidated Subsidiary, (iii) Restricted Payments by a
Foreign Subsidiary to a Foreign Consolidated Subsidiary and (iv) other
Restricted Payments, provided that (A) the aggregate amount of all
Restricted Payments made pursuant to this clause (iv), together with the
aggregate amount of all Investments made pursuant to Section 8.4(ii) on or
after February 1, 1998, shall not exceed an amount equal to the sum of
$35,000,000, plus 50% of aggregate Consolidated Restricted Net Income for
the period from February 1, 1998 through the most recent Calculation Date
preceding the date of such Restricted Payment with respect to which the
Agent shall have received the Required
8
<PAGE>
Financial Information, minus 100% of Consolidated Restricted Net Income
for any full fiscal year period for which Consolidated Restricted Net
Income is a negative amount and occurring during the period from February
1, 1998 through the most recent fiscal year end preceding the date of such
Restricted Payment with respect to which the Agent shall have received the
Required Financial Information, plus the aggregate Net Proceeds received
by the Borrower and/or any of the Consolidated Subsidiaries from all
Equity Transactions consummated during the period from February 1, 1998
through the most recent Calculation Date preceding the date of such
Restricted Payment with respect to which the Agent shall have received the
Required Financial Information, plus (without duplication) the sum of all
proceeds and other distributions received by the Borrower and/or any of
the Consolidated Subsidiaries from the operations or sales of
Unconsolidated Subsidiaries and any other asset or Investment of the
Borrower or any Consolidated Subsidiary which is not, in accordance with
GAAP, shown as an asset or Investment, as applicable, on a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries, for the
period from February 1, 1998 through the most recent Calculation Date
preceding the date of such Restricted Payment with respect to which the
Agent shall have received the Required Financial Information, (B) if such
Restricted Payment pursuant to this clause (iv) is not a Restricted
Payment in cash and not a Restricted Payment consisting of a dividend or
other distribution payable solely in the same class of capital stock of
the payee and such Restricted Payment involves a dividend or other
distribution of Property having an aggregate Book Value in excess of
$10,000,000, the Borrower shall have first delivered to the Agent a Pro
Forma Compliance Certificate demonstrating that, upon giving effect to
such Restricted Payment on a Pro Forma Basis, no Default or Event of
Default would exist as a result of a violation of Section 7.10(a) or
Section 7.10(c) and (C) the aggregate cumulative amount of cash Restricted
Payments made by the Borrower on or after February 1, 1998 shall not
exceed an amount equal to the sum of $5,000,000, plus, after such time as
Consolidated Restricted Net Income for the period from and after February
1, 1998 exceeds $10,000,000 (as evidenced by financial statements
delivered pursuant to Section 7.1), 50% of aggregate Consolidated
Restricted Net Income for the period from February 1, 1998 through the
most recent Calculation Date preceding the date of such Restricted Payment
with respect to which the Agent shall have received the Required Financial
Information, minus 100% of Consolidated Restricted Net Income for any full
fiscal year period for which Consolidated Restricted Net Income is a
negative amount and occurring during the period from February 1, 1998
through the most recent fiscal year end preceding the date of such
Restricted Payment with respect to which the Agent shall have received the
Required Financial Information.
SUBPART 2.8. Replacement of Schedule 2.1(a). Schedule 2.1(a) to the
Existing Credit Agreement is replaced in its entirety with a new schedule in the
form of Schedule 2.1(a) attached hereto.
SUBPART 2.9. Replacement of Schedule 8.1. Schedule 8.1 to the Existing
Credit Agreement is replaced in its entirety with a new schedule in the form of
Schedule 8.1 attached hereto.
9
<PAGE>
PART III
CONSENT AND WAIVER; TERMINATION OF CERTAIN COMMITMENTS
SUBPART 3.1. Amendment of Senior Notes and Senior Note Agreements. The
Lenders hereby consent to the amendment of the Senior Notes and Senior Note
Agreements in the form provided pursuant to Subpart 4.1.5 hereof and waive any
violation of Section 8.6 that occurs as a result thereof.
SUBPART 3.2. Financial Information. The Lenders hereby waive any violation
of Section 7. 1 (a)(iii) of the Credit Agreement resulting from the failure of
the Borrower to furnish or cause to be furnished to the Agent audited financial
statements for Patterson Broad casting, Inc. for fiscal year 1997.
SUBPART 3.3. Termination of Certain Commitments. The Commitments of CIBC,
Inc. and The Sumitomo Bank, Limited, New York Branch under the Existing Credit
Agreement shall be terminated and reallocated among the other Lenders, and the
Commitments of the Lenders under the Existing Credit Agreement (as amended
hereby) shall be reallocated as provided in Schedule 2.1(a) attached hereto.
CIBC, Inc. and The Sumitomo Bank, Limited, New York Branch join in the execution
of this Amendment No. 2 for the purposes of acknowledging and consenting to the
termination of their Commitments under the Existing Credit Agreement.
PART IV
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1. Amendment No. 2 Effective Date. This Amendment No. 2 shall be
and become effective as of the date, in any event not to be later than February
27, 1998 (such effective date being herein referred to as the "Amendment No. 2
Effective Date"), when all of the conditions set forth in this Subpart 4.1 shall
have been satisfied, and thereafter this Amendment No. 2 shall be known, and
may be referred to, as "Amendment No. 2."
SUBPART 4.1.1. Execution of Counterparts of Amendment. The Agent shall
have received executed counterparts (or other evidence of execution, including
facsimile signatures, satisfactory to the Agent) of this Amendment No. 2, which
collectively shall have been duly executed on behalf of each of the Borrower,
the Guarantors and each of the Lenders.
SUBPART 4.1.2. Execution of Amended, Restarted and Substituted Promissory
Notes. The Agent shall have received for each Lender an appropriate original
Amended, Restated and Substituted Revolving Note in substantially the form of
Schedule 4.1.2 attached hereto, in each case executed by the Borrower.
SUBPART 4.1.3. Representations and Warranties. The representations and
warranties contained in Subpart 5.4 of this Amendment No. 2 shall be true and
correct on and as of the Amendment No. 2 Effective Date.
10
<PAGE>
SUBPART 4.1.4. Sale of Patterson Broadcasting, Inc. The Agent shall have
received a certificate executed by an officer of the Borrower stating that the
sale of Patterson Broadcasting, Inc. shall have been consummated.
SUBPART 4.1.5. Amendment of Senior Notes and Senior Note Agreements. The
Agent shall have received a copy, certified by an officer of the Borrower as
true and complete, of each amendment to a Senior Note or Senior Note Agreement
as originally executed and delivered, and no further amendment or modification
thereof shall have been entered into which shall not have been approved by the
Required Lenders.
SUBPART 4.1.6. Opinion. The Agent shall have received an opinion, or
opinions, satisfactory to the Agent, addressed to the Agent on behalf of the
Lenders and dated as of the date hereof, from John H. FitzSimons, Esq., General
Counsel of the Borrower, including, but not limited to, the authority of the
Credit Parties to enter into this Amendment No. 2 and each amendment to a Senior
Note or Senior Note Agreement.
SUBPART 4.1.7. Amendment Fees. The Borrower shall have paid to the Agent
(i) for the account of each Lender, a fee equal to 10 basis points on the amount
of such Lender's Revolving Commitment (immediately prior to giving effect to
this Amendment No. 2), (ii) for the account of each Lender extending an
Additional Revolving Commitment, a fee equal to 15 basis points on the amount of
such Lender's Additional Revolving Commitment and (iii) for the account of the
Agent, the amendment arrangement fee set forth in the Amendment Fee Letter.
SUBPART 4.1.8. Other Documents. The Agent shall have received
acknowledgments from Kearney-National, Inc. and Thetford Corporation of the
amendments made by this Amendment No. 2 and confirmation that their execution of
this Amendment No. 2 shall not affect the legality, validity or binding nature
of their obligations under the UK Pledge Agree ment to which they are a party.
SUBPART 4.1.9. Other Documents. The Agent shall have received such other
documents as the Agent, any Lender or counsel to the Agent may reasonably
request.
PART V
MISCELLANEOUS
SUBPART 5.1. Cross-References. References in this Amendment No. 2 to any
Part or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment No. 2.
SUBPART 5.2. Instrument Pursuant to Existing Credit Agreement. This
Amendment No. 2 is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Agreement.
11
<PAGE>
SUBPART 5.3. References in Other Credit Documents. At such time as this
Amendment No. 2 shall become effective pursuant to the terms of Subpart 4.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to, the Amended Credit Agreement.
SUBPART 5.4. Representations and Warranties. Each Credit Party hereby
represents and warrants that (i) each Credit Party that is party to this
Amendment No. 2: (a) has the requisite corporate power and authority to execute,
deliver and perform this Amendment No. 2, as applicable and (b) is duly
authorized to, and has been authorized by all necessary corporate action, to
execute, deliver and perform this Amendment No. 2, (ii) the Borrower has no
claims, counterclaims, offsets, or defenses to the Credit Documents and the
performance of its obligations thereunder, or if the Borrower has any such
claims, counterclaims, offsets, or defenses to the Credit Documents or any
transaction related to the Credit Documents, the same are hereby waived,
relinquished and released in consideration of the Lenders' execution and
delivery of this Amendment No. 2, (iii) the representations and warranties
contained in Section 6 of the Existing Credit Agreement are, subject to the
limitations set forth therein, true and correct in all material respects on and
as of the date hereof as though made on and as of such date (except for those
which expressly relate to an earlier date) and (iv) no Default or Event of
Default exists under the Existing Credit Agreement on and as of the date hereof
or will occur as a result of the transactions contemplated hereby.
SUBPART 5.5. Liens. The Borrower and the Guarantors (i) affirm the liens
and security interests created and granted in the Credit Documents and agree
that this Amendment No. 2 shall in no manner adversely affect or impair such
liens and security interest and (ii) acknowledge and agree that the Amended,
Restated and Substituted Revolving Notes issued pursuant to Subpart 4.1.2 in an
aggregate principal amount of $270,000,000 shall be secured by the Collateral
pledged pursuant to the Pledge Agreements.
SUBPART 5.6. Acknowledgment of Guarantors. The Guarantors acknowledge and
consent to all of the terms and conditions of this Amendment No. 2 and agree
that this Amendment No. 2 and all documents executed in connection herewith do
not operate to reduce or discharge the Guarantors' obligations under the Amended
Credit Agreement or the other Credit Documents. The Guarantors further
acknowledge and agree that the Guarantors have no claims, counterclaims,
offsets, or defenses to the Credit Documents and the performance of the
Guarantors' obligations thereunder or if the Guarantors did have any such
claims, counterclaims, offsets or defenses to the Credit Documents or any
transaction related to the Credit Documents, the same are hereby waived,
relinquished and released in consideration of the Lenders' execution and
delivery of this Amendment No. 2.
SUBPART 5.7. No Other Changes. Except as expressly modified and amended in
this Amendment No. 2, all the terms, provisions and conditions of the Credit
Documents shall remain unchanged and shall continue in full force and effect.
12
<PAGE>
SUBPART 5.8. Counterparts. This Amendment No. 2 may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SUBPART 5.9. Entirety. This Amendment No. 2, the Amended Credit Agreement
and the other Credit Documents embody the entire agreement between the parties
and supersede all prior agreements and understandings, if any, relating to the
subject matter hereof. These Credit Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties.
SUBPART 5.10. Governing Law. THIS AMENDMENT NO. 2 AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SUBPART 5.11. Successors and Assigns. This Amendment No. 2 shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
[Signatures to Follow]
13
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment No. 2 to be duly executed and delivered as of the date first
above written.
BORROWER: THE DYSON-KISSNER-MORAN CORPORATION
By /s/ Matthew J. Zilinskas
--------------------------------------
Name: Matthew J. Zilinskas
Title: Vice President
GUARANTORS: BSB DIVERSIFIED COMPANY. INC.
By /s/ Robert D. Farley
--------------------------------------
Name: Robert D. Farley
Title: President
BUCILLA CORPORATION
By /s/ Robert D. Farley
--------------------------------------
Name: Robert D. Farley
Title: Vice President
BURNER SYSTEMS INTERNATIONAL, INC.
By /s/ Marc Feldman
--------------------------------------
Name: Marc Feldman
Title: Vice President
M.S. CHAMBERS & SON, INC.
By /s/ Marc Feldman
--------------------------------------
Name: Marc Feldman
Title: Vice President
CONSOLIDATED GROUP, INC.
By /s/ Matthew J. Zilinskas
--------------------------------------
Name: Matthew J. Zilinskas
Title: Vice President
1
<PAGE>
CONSOLIDATED SCREEN-MAKERS, INC.
By /s/ Matthew J. Zilinskas
--------------------------------------
Name: Matthew J. Zilinskas
Title: Vice President
CRITON CORPORATION
By /s/ Robert D. Farley
--------------------------------------
Name: Robert D. Farley
Title: Vice President
DKM HOLDING CORP.
By /s/ Matthew J. Zilinskas
--------------------------------------
Name: Matthew J. Zilinskas
Title: Vice President
DKM, LTD.
By /s/ Marc Feldman
--------------------------------------
Name: Marc Feldman
Title: Vice President
J.A. SEXAUER INC.
By /s/ John H. FitzSimons
--------------------------------------
Name: John H. FitzSimons
Title: Vice President
KEARNEY-NATIONAL, INC.
By /s/ Matthew J. Zilinskas
--------------------------------------
Name: Matthew J. Zilinskas
Title: Vice President
KN HOLDINGS, INC.
By /s/ Matthew J. Zilinskas
--------------------------------------
Name: Matthew J. Zilinskas
Title: Vice President
2
<PAGE>
K-P-F ELECTRIC CO.
By /s/ Matthew J. Zilinskas
--------------------------------------
Name: Matthew J. Zilinskas
Title: Vice President
MUNCY BUILDING ENTERPRISES, INC.
By /s/ Marc Feldman
--------------------------------------
Name: Marc Feldman
Title: Vice President
NORCOLD, INC.
By /s/ Marc Feldman
--------------------------------------
Name: Marc Feldman
Title: Vice President
PLAID ENTERPRISES, INC.
By /s/ John H. FitzSimons
--------------------------------------
Name: John H. FitzSimons
Title: Vice President
SPECTROL ELECTRONICS CORPORATION
By /s/ Matthew J. Zilinskas
--------------------------------------
Name: Matthew J. Zilinskas
Title: Vice President
THETFORD CORPORATION
By /s/ Marc Feldman
--------------------------------------
Name: Marc Feldman
Title: Vice President
TRAYCO OF S.C., INC.
By /s/ Marc Feldman
--------------------------------------
Name: Marc Feldman
Title: Vice President
3
<PAGE>
UNIVERSAL TUBULAR SYSTEMS, INC.
By /s/ Marc Feldman
--------------------------------------
Name: Marc Feldman
Title: Vice President
WABASH MAGNETICS, INC.
By /s/ Matthew J. Zilinskas
--------------------------------------
Name: Matthew J. Zilinskas
Title: Vice President
4
<PAGE>
AGENTS: NATIONSBANK, N.A., in its capacity as
Administrative Agent and Documentation Agent
By /s/ Diana H. Inman
--------------------------------------
Name: Diana H. Inman
Title: Vice President
THE BANK OF NOVA SCOTIA, in its
capacity as Syndication Agent
By /s/ Stephen E. Lockhart
--------------------------------------
Name: Stephen E. Lockhart
Title: Vice President
LENDERS: NATIONSBANK, N.A.
By /s/ Diana H. Inman
--------------------------------------
Name: Diana H. Inman
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ Stephen E. Lockhart
--------------------------------------
Name: Stephen E. Lockhart
Title: Vice President
MELLON BANK, N.A.
By /s/ David N. Smith
--------------------------------------
Name: David N. Smith
Title: Vice President
By /s/ John J McCormick /s/ Robert G. Carino
-----------------------------------------
Name: John J McCormick Robert G. Carino
Title: Vice President Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Judith L. MayBerry
--------------------------------------
Name: JUDITH L. MAYBERRY
Title: AUTHORIZED AGENT
COMERICA BANK
By /s/ Steven J. McCormack
--------------------------------------
Name: STEVEN J. McCORMACK
Title: ACCOUNT REPRESENTATIVE
FIRST UNION NATIONAL BANK
By /s/ James J. McKenna
--------------------------------------
Name: James J. McKenna
Title: Executive Vice President
FLEET BANK NATIONAL ASSOCIATION
By /s/ Michael Merlo
--------------------------------------
Name: Michael Merlo
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By /s/ Lillian Kim
--------------------------------------
Name: LILLIAN KIM
Title: Assistant Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ James F. McCreary
--------------------------------------
Name: JAMES F. MCCREARY
Title: SVP
THE BANK OF NEW YORK
By /s/ Eliza S. Adams
--------------------------------------
Name: Eliza S. Adams
Title: Vice President
CIBC, INC.
By /s/ Timothy Doyle
--------------------------------------
Name: TIMOTHY DOYLE
Title: MANAGING DIRECTOR
CIBC Oppenheimer Corp. AS AGENT
THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By /s/ John C. Kissinger
--------------------------------------
Name: John C. Kissinger
Title: Joint General Manager
5
<PAGE>
Schedule 1.1
ADDITIONAL REVOLVING COMMITMENTS
Additional
Revolving
Lender Commitment
- ------ ----------
NationsBank, N.A. $6,000,000
The Bank of Nova Scotia $6,000,000
Mellon Bank, N.A. $3,000,000
Banque Paribas $3,000,000
The First National Bank of Chicago $5,000,000
Comerica Bank $10,000,000
First Union National Bank $10,000,000
Fleet Bank, National Association' $10,000,000
Bank of Tokyo-Mitsubishi $2,000,000
Trust Company
Wachovia Bank of Georgia, N.A. $9,000,000
The Bank of New York $9,000,000
<PAGE>
Schedule 2.1(a)
LENDERS
Revolving Revolving
Committed Commitment
Lender Amount Percentage
- ------ ------ ----------
NationsBank. N.A. $35,500,000 13.148148148148100%
Independence Center
100 North Tryon Street
NC-001-15-04
Charlotte, NC 28255
ATTN: Carol Lindsay
Phone: (704) 386-9372
Fax: (704) 386-9923
The Bank of Nova Scotia $35,500,000 13.148148148148100%
One Liberty Plaza
New York, NY 10006
ATTN: Alan Reiter
Phone: (212) 225-5028
Fax: (212) 225-5090
Mellon Bank, N.A. $23,000,000 8.518518518518520%
Mellon Financial Services
3 Mellon Bank Center
1531202
Pittsburg, PA 15259
ATTN: Caroline Walsh
Phone: (412) 234-8285
Fax: (412) 236-2028
Banque Paribas $23,000,000 8.518518518518520%
787 Seventh Ave., 32nd Floor
New York, NY 100 19
ATTN: Ro Toyoshima
Phone: (212) 841-2390
Fax: (212) 841-2333
<PAGE>
The First National Bank of Chicago $23,000,000 8.518518518518520%
153 West 51st Street
New York, NY 100 19
ATTN: Stephen E. McDonald
Phone: (212) 373-1580
Fax: (212) 373-1180
Comerica Bank $23,000,000 8.518518518518520%
500 Woodward Avenue
Detroit, MI 48226
ATTN: Mark Grover
Phone: (313) 222-9030
Fax: (313) 222-3776
First Union National Bank $23,000,000 8.518518518518520%
50 Main Street
11th Floor - NY 10004
White Plains, NY 10606
ATTN: Joseph Markey
Phone: (914) 286-5038
Fax: (914) 286-5001
Fleet Bank, National Association $23,000,000 8.518518518518520%
1133 Avenue of the Americas
40th Floor
New York, NY 10036
ATT.: Mike Merlo
Phone: (212) 703-1705
Fax: (212) 703-1724
<PAGE>
Bank of Tokyo-Mitsubishi $15,000,000 5.55555555555550%
Trust Company
1251 Avenue of the Americas
New York, NY 10020-1104
ATTN: Lillian Kim
Phone: (212) 782-4228
Fax: (212) 782-6445
Wachovia Bank of Georgia, N.A. $23,000,000 8.518518518518520%
152 West 57th Street
37th Floor
New York, NY 10019
ATTN: Relationship Manager
Phone: (212) 603-7705
Fax: (212) 603-7729
The Bank of New York $23,000,000 8.518518518518520%
One Wall Street
22nd Floor
New York, NY 10286
ATTN: Eliza S. Adams
Phone: (212) 635-1370
Fax: (212) 635-1480
<PAGE>
SCHEDULE 8.1
EXISTING GUARANTY OBLIGATION IN
RESPECT OF INDEBTEDNESS OF
UNCONSOLIDATED SUBSIDIARIES
(a) Existing Guaranty Obligations:
None
(b) Existing Indebtedness:
<TABLE>
<CAPTION>
Outstanding
Amount
Debtor Lender Description (12/28/97)
------ ------ ----------- ----------
<S> <C> <C> <C>
Spectrol Reliance Ltd. Lloyds Bank Line of credit in the amount 0
of (pound)525,000.00
Thetford B.V. ABN/Amro Bank Revolving credit agreement 0
in the amount of Dfl.
6,000,000
Plain Enterprises, Inc. Life Insurance Co. of Mortgage on Plaid head $2,586,094
Virginia quarters in Norcross,
Georgia
Burner Systems City of Chattanooga, Industrial Development $4,500,000
International, Inc. Tennessee Bond secured by Mortgage
on Burner Systems
International Inc. facility
DKM Equitable Life Insurance Life Insurance Loan $113,772
Company
Bucilla Corporation Pennsylvania Industrial Mortgage on real property $848,771
Development Authority owned by Bucilla Corp.
located in Hazelton, PA
DKM Cornell University Promissory note for $3,647,796
redemption of DKM Class
A non-voting stock
DKM Fox Chase Cancer Center Promissory note for $3,631,574
redemption of DKM Class
A non-voting stock
</TABLE>
<PAGE>
Schedule 4.1.2
FORM OF AMENDED, RESTATED AND SUBSTITUTED REVOLVING NOTE
$__________________ February 18, 1998
FOR VALUE RECEIVED, THE DYSON-KISSNER-MORAN CORPORATION, a Delaware
corporation (the "Borrower") hereby promises to pay to the order of
____________________, its successors and assigns (the "Lender"), at the office
of NationsBank, N.A., as Agent (the "Agent"), at 101 N. Tryon Street,
Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such
other place or places as the holder hereof may designate), at the times set
forth in the Credit Agreement dated as of June 26, 1996 among the Borrower, the
Guarantors from time to time party thereto, the Lender and certain other lenders
from time to time party thereto, the Agent and The Bank of Nova Scotia, as
Syndication Agent (as amended as of the date hereof and as it may be amended,
modified, extended or restated from time to time hereafter, the "Credit
Agreement"; all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event later than the
Termination Date, in Dollars and in immediately available funds, the principal
amount of __________________ DOLLARS ($__________) or, if less than such
principal amount, the aggregate unpaid principal amount of all Revolving Loans
made by the Lender to the Borrower pursuant to the Credit Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates selected in accordance with
Section 2. 1 (d) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default. the
balance outstanding hereunder shall, if so determined by the Required Lenders,
bear interest as provided in Section 3.1 of the Credit Agreement. Further, in
the event the payment of all sums due hereunder is accelerated under the terms
of Section 9.2 of the Credit Agreement, this Note shall become immediately due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all reasonable out-of-pocket costs of collection, including reasonable
attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be endorsed by the holder hereof on Schedule A attached hereto and incorporated
herein by reference, or on a continuation thereof which shall be attached hereto
and made a part hereof; provided, however, that any failure to endorse such
information on such schedule or continuation thereof shall not in any manner
affect
<PAGE>
the obligation of the Borrower to make payments of principal and interest in
accordance with the terms of this Note.
This Note and the Loans evidenced hereby may be transferred in whole or in
part subject to the terms and conditions set forth in Section 11.3 of the Credit
Agreement and only by registration of such transfer on the Register maintained
by or on behalf of the Borrower as provided in Section 11.3(c) of the Credit
Agreement.
This Note amends and restates and is given in substitution for, that
certain Revolving Promissory Note dated June 26, 1996 executed by the Borrower
in favor of the Lender (the "Replaced Note"). This Note represents the same
indebtedness evidenced by the Replaced Note and is secured by the same
collateral securing the Replaced Note.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.
THE DYSON-KISSNER-MORAN CORPORATION
By_________________________
Title_______________________
<PAGE>
SCHEDULE A TO THE
AMENDED, RESTATED AND SUBSTITUTED REVOLVING NOTE
OF_________________
DATED FEBRUARY 18,1998
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
- ---- ---- ------ --------- -------- ------- --------
<PAGE>
FOURTH FLOOR
NEW YORK, NEW YORK 10017-2413
TELEPHONE (212) 661-4600
FACSIMILE (212) 986-7169
April 8, 1999
To each of the Lenders party to the
Credit Agreement referred to below
Re: Credit Agreement dated as of June 26, 1996 among The
Dyson-Kissner-Moran Corporation ("the Borrower"), the Subsidiaries
of the Borrower from time to time party thereto, the Several Lenders
from time to time party thereto and NationsBank, N.A., as
Administrative Agent and Documentation Agent and The Bank of Nova
Scotia, as Syndication Agent (as amended from time to time, the
"Credit Agreement")
Ladies and Gentlemen:
Reference is made to the Credit Agreement described above, the defined terms of
which are incorporated herein by reference.
This letter, when countersigned by you, shall constitute your agreement with us
to the following:
1. Subject to satisfaction of the condition contained in Paragraph 2
below:
(a) Condition (2) appearing in the definition of "Acquisition
Conditions" contained in Section 1.1 of the Credit Agreement shall
not apply to the acquisition transaction described in the letter
from the Borrower to the Lenders attached hereto as Annex I (the
"Acquisition"), provided that such transaction shall have been
consummated by (A) acquisition by the Borrower of all of the capital
stock of the applicable target corporation and (B) merger of such
target corporation into a whollyowned Subsidiary of the Borrower on
or before December 31, 1999.
<PAGE>
(b) Clause (B) contained in the definition of "Pro Forma Basis"
appearing in Section 1. 1 of the Credit Agreement is hereby amended
and restated to read as follows:
(B) for purposes of any such calculation in respect of any
acquisition of capital stock or securities or any purchase, lease
or other acquisition of Property as referred to in Section 8.3(d)
or any Investment as referred to in Section 8.4(ii), (1) any
Indebtedness incurred by the Borrower or any of its Consolidated
Subsidiaries in connection with such transaction shall be deemed to
have been incurred as of the most recent Calculation Date preceding
the date of such transaction with respect to which the Agent has
received the Required Financial Information and (2) income statement
items (whether positive or negative, including without limitation
EBITA and interest expense) attributable to the Property acquired in
such transaction or to the Investment comprising such transaction,
as applicable, shall be included to the extent relating to any
period occurring prior to the date of such transaction; and
(c) Section 7.11 of the Agreement is amended by adding at the end of
Section 7.11 the following paragraph:
Notwithstanding anything to the contrary contained in this Section
7.11, no person which becomes a Subsidiary of the Borrower in a
transaction otherwise permitted under this Agreement and involving
the making of a tender offer by the Borrower (or one of its
Subsidiaries) for the capital stock of such Person or such Person's
parent corporation shall be required to become a Guarantor hereunder
or to pledge the stock of any of such Person's Subsidiaries until
the earliest to occur of (i) the date that at least 90% of the
capital stock of such Person is owned by the Borrower (directly or
indirectly through Subsidiaries), (ii) the date that such Person is
merged with the Borrower or any Subsidiary of the Borrower and (iii)
the date 180 days after the date that such Person becomes a
Subsidiary of the Borrower.
2. The waivers and amendments set forth in Paragraph 1 above shall become
effective as of the date hereof when the terms of this letter shall have been
agreed to in writing by the Required Lenders.
2
<PAGE>
3. In consideration of the waivers and amendments requested hereby, the
Borrower shall pay to the Administrative Agent for the account of each Lender
which executes this letter, a waiver fee (the "Waiver Fee") equal to 1/8% on
each such Lender's Commitment In effect on the date hereof. The Waiver Fee shall
be payable as follows: (a) one-half of the Waiver Fee shall be payable on the
date as of which the waivers and amendments set forth herein become effective
pursuant to the terms of Paragraph 2 above and (b) one-half of the Waiver Fee
shall be payable upon consummation of the Acquisition.
Except as modified hereby, all of the terms and provisions of the Credit
Agreement and the other Credit Documents shall remain in full force and effect.
This letter agreement may be executed In one or more counterparts, each of which
constitute an original, and all of which taken together shall constitute a
single document.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Sincerely yours,
THE DYSON-KISSNER-MORAN CORPORATION
By: /s/ M.J. Zilinskas
----------------------------------------
Name: M.J. Zilinskas
Title: Vice President and Chief Financial Officer
Accepted & Agreed:
AGENTS: NATIONSBANK, N.A., in its capacity
as Administrative Agent and
Documentation Agent
By: /s/ David H. Strickert
----------------------------------------
Name: David H. Strickert
Title: Vice President
THE BANK OF NOVA SCOTIA, in its
capacity as Syndication Agent
By:
----------------------------------------
Name:
Title:
3
<PAGE>
3. In consideration of the waivers and amendments requested hereby, the
Borrower shall pay to the Administrative Agent for the account of each Lender
which executes this letter, a waiver fee (the "Waiver Fee") equal to 1/8% on
each such Lender's Commitment In effect on the date hereof. The Waiver Fee shall
be payable as follows: (a) one-half of the Waiver Fee shall be payable on the
date as of which the waivers and amendments set forth herein become effective
pursuant to the terms of Paragraph 2 above and (b) one-half of the Waiver Fee
shall be payable upon consummation of the Acquisition.
Except as modified hereby, all of the terms and provisions of the Credit
Agreement and the other Credit Documents shall remain in full force and effect.
This letter agreement may be executed In one or more counterparts, each of which
constitute an original, and all of which taken together shall constitute a
single document.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Sincerely yours,
THE DYSON-KISSNER-MORAN CORPORATION
By: /s/ M.J. Zilinskas
----------------------------------------
Name: M.J. Zilinskas
Title: Vice President and Chief Financial Officer
Accepted & Agreed:
AGENTS: NATIONSBANK, N.A., in its capacity
as Administrative Agent and
Documentation Agent
By:
----------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA, in its
capacity as Syndication Agent
By: /s/ Stephen E. Lockhart
----------------------------------------
Name: Stephen E. Lockhart
Title: Vice-President
3
<PAGE>
LENDERS: NATIONSBANK N.A.
By: /s/ David H. Strickert
--------------------------------
Name: David H. Strickert
Title: Vice President
THE BANK OF NOVA SCOTIA
By:
--------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
--------------------------------
Name:
Title:
BANQUE PARIBAS
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
Title:
COMERICA BANK
By:
--------------------------------
Name:
Title:
4
<PAGE>
LENDERS: NATIONSBANK N.A.
By:
--------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By: /s/ Stephen E. Lockhart
--------------------------------
Name: Stephen E. Lockhart
Title: Vice-President
MELLON BANK, N.A.
By:
--------------------------------
Name:
Title:
BANQUE PARIBAS
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
Title:
COMERICA BANK
By:
--------------------------------
Name:
Title:
4
<PAGE>
LENDERS: NATIONSBANK N.A.
By:
--------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
--------------------------------
Name:
Title:
MELLON BANK, N.A.
By: /s/ David N. Smith
--------------------------------
Name: David N. Smith
Title: Vuce President
BANQUE PARIBAS
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
Title:
COMERICA BANK
By:
--------------------------------
Name:
Title:
4
<PAGE>
LENDERS: NATIONSBANK N.A.
By:
--------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
--------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
--------------------------------
Name:
Title:
PARIBAS
By: /s/ John J McCormick /s/ Ro Toyoshima
-------------------------------- ----------------------------
Name: John J McCormick Ro Toyoshima
Title: Vice President Assistant Vice President
By:
--------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
Title:
COMERICA BANK
By:
--------------------------------
Name:
Title:
4
<PAGE>
LENDERS: NATIONSBANK N.A.
By:
--------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
--------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
--------------------------------
Name:
Title:
BANQUE PARIBAS
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Stephen E. McDonald
--------------------------------
Name: STEPHEN E. MCDONALD
Title: FIRST VICE PRESIDENT
COMERICA BANK
By:
--------------------------------
Name:
Title:
4
<PAGE>
LENDERS: NATIONSBANK N.A.
By:
--------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
--------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
--------------------------------
Name:
Title:
BANQUE PARIBAS
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
Title:
COMERICA BANK
By: /s/ Robert M. Ramirez
--------------------------------
Name: Robert M. Ramirez
Title: Account Officer
4
<PAGE>
FIRST UNION NATIONAL BANK
By: /s/ Christopher Strauss
--------------------------------
Name: CHRISTOPHER STRAUSS
Title: Vice President
FLEET BANK, NATIONAL ASSOCIATION
By:
--------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
--------------------------------
Name:
Title:
WACHOVIA BANK, N.A.
successor by merger to Wachovia Bank of Georgia, N.A.
By:
--------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title:
5
<PAGE>
FIRST UNION NATIONAL BANK
By:
--------------------------------
Name:
Title:
FLEET BANK, NATIONAL ASSOCIATION
By: /s/ Christian J. Covello
--------------------------------
Name: CHRISTIAN J. COVELLO
Title: VICE PRESIDENT
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
--------------------------------
Name:
Title:
WACHOVIA BANK, N.A.
successor by merger to Wachovia Bank of Georgia, N.A.
By:
--------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title:
5
<PAGE>
FIRST UNION NATIONAL BANK
By:
--------------------------------
Name:
Title:
FLEET BANK, NATIONAL ASSOCIATION
By:
--------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Lillian Kim
--------------------------------
Name: LILLIAN KIM
Title: Vice President
WACHOVIA BANK, N.A.
successor by merger to Wachovia Bank of Georgia, N.A.
By:
--------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title:
5
<PAGE>
FIRST UNION NATIONAL BANK
By:
--------------------------------
Name:
Title:
FLEET BANK, NATIONAL ASSOCIATION
By:
--------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
--------------------------------
Name:
Title:
WACHOVIA BANK, N.A.
successor by merger to Wachovia Bank of Georgia, N.A.
By: /s/ M. Eugene Wood, III
--------------------------------
Name: M. Eugene Wood, III
Title: Senior Vice President
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title:
5
<PAGE>
FIRST UNION NATIONAL BANK
By:
--------------------------------
Name:
Title:
FLEET BANK, NATIONAL ASSOCIATION
By:
--------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
--------------------------------
Name:
Title:
WACHOVIA BANK, N.A.
successor by merger to Wachovia Bank of Georgia, N.A.
By:
--------------------------------
Name:
Title:
THE BANK OF NEW YORK
By: /s/ Eliza S. Adams
--------------------------------
Name: ELIZA S. ADAMS
Title: VICE PRESIDENT
5
<PAGE>
EXHIBIT 99(C)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
by and among
THE DYSON-KISSNER-MORAN CORPORATION,
DKM ACQUISITION CORP.
and
OPTEK TECHNOLOGY, INC.
dated as of
May 12, 1999
================================================================================
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of May 12, 1999, by and among
THE DYSON-KISSNER-MORAN CORPORATION, a Delaware corporation ("Parent"), DKM
ACQUISITION CORP., a Delaware corporation and a wholly-owned Subsidiary of
Parent ("Purchaser"), and OPTEK TECHNOLOGY, INC., a Delaware corporation (the
"Company"). Certain capitalized terms used in this Agreement have the meanings
ascribed to them in Article VIII.
WHEREAS, the Board of Directors of each of Parent, Purchaser and the
Company have approved, and deem it fair to, advisable and in the best interests
of their respective stockholders to consummate, the acquisition of the Company
by Parent and Purchaser upon the terms and subject to the conditions set forth
herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser make a
cash tender offer to acquire all shares of the issued and outstanding common
stock, $.01 par value, of the Company (the "Shares") for $25.50 per share, net
to the seller in cash, upon the terms and subject to the conditions set forth
herein;
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Parent, Purchaser and the Company have approved this
Agreement and the Merger (as herein defined) following the Offer (as herein
defined) pursuant to which Purchaser shall merge with and into the Company and
outstanding Shares shall be converted into the right to receive the Offer Price
(as herein defined) in cash, without interest, all in accordance with the DGCL
(as herein defined) and upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and has resolved to recommend that the holders of
such Shares tender their Shares pursuant to the Offer and approve and adopt this
Agreement and the Merger upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger; and
WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
1
<PAGE>
concurrently with the execution and delivery of this Agreement, Parent is
entering into an Option Agreement (the "Company Option Agreement") with the
Company pursuant to which, among other things and subject to the terms and
conditions thereof, the Company has granted Parent an option to purchase up to
19.9% of the Shares issued and outstanding as of the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
---------
(a) As promptly as practicable (but in no event later than
five business days after the public announcement of the execution hereof),
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding Shares at a price of $25.50 per Share, net
to the seller in cash (such price, or such higher price per Share as may be paid
in the Offer, being referred to herein as the "Offer Price"), subject to the
conditions set forth in Annex A hereto.
(b) The obligations of Purchaser to commence the Offer and to
accept for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agreement and the conditions set forth in Annex A hereto.
(c) Purchaser expressly reserves the right to modify the terms
of the Offer; provided, that, without the Company's prior written consent,
-------- ----
Purchaser shall not decrease the Offer Price, change the form of consideration
to be paid in the Offer or decrease the number of Shares sought or amend any
other condition of the Offer in any manner adverse to the holders of the Shares
(other than with respect to insignificant changes or amendments and subject to
the penultimate sentence of this Section 1.1) or impose additional conditions
without the written consent of the Company; provided further, however, that, if
---------------- -------
on the initial scheduled expiration date
2
<PAGE>
of the Offer, which shall be 20 business days after the date that the Offer is
commenced, all conditions to the Offer shall not have been satisfied or waived,
Purchaser may, from time to time until such time as all such conditions are
satisfied or waived, in its sole discretion, extend the expiration date. In
addition, the Offer Price may be increased and the Offer may be extended to the
extent required by applicable Law in connection with such increase, in each case
without the consent of the Company. Purchaser shall, on the terms and subject to
the prior satisfaction or waiver of the conditions of the Offer, accept for
payment and pay for Shares validly tendered as promptly as practicable;
provided, however, that if, immediately prior to the initial expiration date of
- -------- -------
the Offer, the Shares validly tendered and not withdrawn pursuant to the Offer
equal less than 90% of the outstanding Shares, Purchaser may extend the Offer,
in one or more extensions, for a period not to exceed 20 business days,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer.
Section 1.2 Company Actions.
---------------
(a) The Company hereby approves of and consents to the Offer
and represents that the Board of Directors of the Company, at a meeting duly
called and held, has (i) unanimously determined that each of the Agreement, the
Company Option Agreement, the Offer and the Merger (as defined in Section 2.1)
are fair to and in the best interests of the stockholders of the Company, (ii)
unanimously approved this Agreement, the Company Option Agreement, the Offer,
the acquisition of Shares pursuant to the Offer and the Merger for purposes of
Section 203 of the DGCL (the "Section 203 Approval"), (iii) received the opinion
of ABN AMRO Incorporated, financial advisor to the Company, to the effect that
the Offer Price to be received by holders of Shares pursuant to the Offer and
the Merger Consideration (as defined herein) pursuant to the Merger is fair to
the stockholders of the Company from a financial point of view, (iv) approved
this Agreement and the Company Option Agreement and the transactions
contemplated hereby and thereby, including the Offer and the Merger
(collectively, the "Transactions") and (v) resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares thereunder to
Purchaser and approve and adopt this Agreement and the Merger. The Company has
been advised by each of its directors and by each executive officer who as of
the date hereof is actually aware (to the Knowledge of the Company) of the
Transactions that each such Person currently intends to tender pursuant to the
Offer all Shares owned by such Person.
3
<PAGE>
(b) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listings or computer files containing the names and
addresses of all holders of record of the Shares as of a recent date, and shall
furnish Purchaser with such additional information (including, but not limited
to, updated lists of holders of the Shares and their addresses, mailing labels
and lists of security positions) and such assistance as Purchaser or its agents
may reasonably request in communicating the Offer to the record and beneficial
holders of the Shares. Subject to the requirements of applicable Law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Purchaser and its affiliates and
associates shall hold in confidence the information contained in any such
labels, listings and files and all other information delivered pursuant to this
Section 1.2(b), will use such information only in connection with the Offer and
the Merger and, if this Agreement shall be terminated, will deliver to the
Company all copies, extracts or summaries of such information in their
possession or the possession of their agents.
Section 1.3 SEC Documents.
-------------
(a) On the date the Offer is commenced, Parent and Purchaser
shall file with the United States Securities and Exchange Commission (the "SEC")
a Tender Offer Statement on Schedule 14D-1 in accordance with the Exchange Act
with respect to the Offer (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1
will include, as exhibits, the Offer to Purchase and a form of letter of
transmittal (collectively, together with any amendments and supplements thereto,
the "Offer Documents"). Concurrently with the filing of the Schedule 14D-1 by
Parent and Purchaser, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 in accordance with the
Exchange Act (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-9"), which shall, except as otherwise
provided herein, contain the recommendation referred to in clause (v) of Section
1.2(a) hereof, and the Company shall also file therewith the information
required to be distributed to the stockholders of the Company pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors pursuant to Section 1.4 hereof
(b) Parent and Purchaser will take all steps necessary to
ensure that the Offer Documents, and the Company will take all steps necessary
to
4
<PAGE>
ensure that the Schedule 14D-9 and the information required to be distributed to
the stockholders of the Company pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder as is necessary to enable Parent's
designees to be elected to the Company's Board of Directors pursuant to Section
1.4 hereof, will comply in all material respects with the provisions of
applicable Federal and state securities Laws. Each of Parent and Purchaser will
take all steps necessary to cause the Offer Documents, and the Company will take
all steps necessary to cause the Schedule 14D-9 and the information required to
be distributed to the stockholders of the Company pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder as is necessary to enable
Parent's designees to be elected to the Company's Board of Directors pursuant to
Section 1.4 hereof, to be filed with the SEC and to be disseminated to holders
of the Shares, in each case as and to the extent required by applicable Federal
and state securities Laws and Parent or Purchaser will supply the Company any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1. Each of
Parent and Purchaser, on the one hand, and the Company, on the other hand, will
promptly correct any information provided by it for use in the Offer Documents
and the Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and Purchaser will take all steps necessary
to cause the Offer Documents, and the Company will take all steps necessary to
cause the Schedule 14D-9, as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable Federal and state securities Laws. Parent and its counsel
shall be given a reasonable opportunity to review and comment upon the Schedule
14D-9 and all amendments and supplements thereto prior to their filing with the
SEC or dissemination to stockholders of the Company. The Company agrees to
provide Parent and its counsel with copies of any written comments that the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and each of Parent
and Purchaser agrees to provide the Company and its counsel with copies of any
written comments that Parent, Purchaser or their counsel may receive from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
of such comments.
Section 1.4 Directors.
---------
(a) Promptly after the purchase of and payment for any Shares
by Purchaser or any of its affiliates as a result of which Purchaser and its
affiliates own beneficially at least a majority of then outstanding Shares,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number,
5
<PAGE>
on the Company's Board of Directors as is equal to the product of the total
number of directors on such Board (giving effect to the increase in the size of
such Board pursuant to this Section 1.4) multiplied by the percentage that the
number of Shares beneficially owned by Purchaser (including Shares so accepted
for payment) bears to the total number of Shares then outstanding. In
furtherance thereof, the Company shall, upon request of Parent, use its best
efforts promptly either to increase the size of its Board of Directors or to
secure the resignations of such number of its incumbent directors, or both, as
is necessary to enable such designees of Parent to be so elected or appointed to
the Company's Board of Directors, and the Company shall take all actions
available to the Company to cause such designees of Parent to be so elected or
appointed. At such time, the Company shall, if requested by Parent, also take
all action necessary to cause Persons designated by Parent to constitute at
least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors, (ii) each board of directors (or similar body) of each Subsidiary of
the Company and (iii) each committee (or similar body) of each such board.
(b) Notwithstanding the provisions of this Section 1.4, the
parties hereto shall use their respective reasonable best efforts to ensure that
at least two of the members of the Board shall, at all times prior to the
Effective Time (as defined in Section 2.2 hereof) be, Continuing Directors. From
and after the time, if any, that Parent's designees constitute a majority of the
Company's Board of Directors, any amendment or modification of this Agreement,
any amendment to the Company's Certificate of Incorporation or By-Laws
inconsistent with this Agreement, any termination of this Agreement by the
Company, any extension of time for performance of any of the obligations of
Parent or Purchaser hereunder, any waiver of any condition to the Company's
obligations hereunder or any of the Company's rights hereunder or other action
by the Company hereunder may be effected only by the action of a majority of the
Continuing Directors of the Company, which action shall be deemed to constitute
the action of any committee specifically designated by the Board of Directors of
the Company to approve the actions contemplated hereby and the Transactions and
the full Board of Directors of the Company; provided, that, if there shall be no
-------- ----
Continuing Directors, such actions may be effected by majority vote of the
entire Board of Directors of the Company; provided, further, that, if there be
-------- ------- ----
no such Continuing Directors, Purchaser shall not decrease the Offer Price or
change the form of consideration to be paid in the Merger. The provisions of
this Section 1.4 are in addition to and shall not limit any rights which
Purchaser, Parent or any of their affiliates may have as a holder or beneficial
owner of Shares as a matter of applicable Law with respect to the election of
directors or otherwise.
6
<PAGE>
ARTICLE II
THE MERGER
Section 2.1 The Merger. (a) Upon the terms and subject to the
----------
conditions of this Agreement, and in accordance with the DGCL, at the Effective
Time (as defined in Section 2.2 hereof), the Company and Purchaser shall
consummate a merger (the "Merger") pursuant to which (x) Purchaser shall be
merged with and into the Company and the separate corporate existence of
Purchaser shall thereupon cease and (y) the Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the Laws of the State of
Delaware.
(b) Pursuant to the Merger, at the Effective Time, (x) the
Certificate of Incorporation of Purchaser, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation; provided, however, that Article FIRST of the Certificate of
-------- -------
Incorporation shall be amended to read in its entirety as follows: "FIRST: The
name of the corporation is Optek Technology, Inc." and (y) the By-Laws of
Purchaser, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation, each until thereafter changed or amended
as provided therein and by the DGCL.
(c) The directors of Purchaser at the Effective Time shall be
the initial directors of the Surviving Corporation until their respective
successors are duly elected and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws. The officers of the Company at the
Effective Time shall be the initial officers of the Surviving Corporation until
their respective successors are duly elected and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
(d) The Merger shall have the effects specified in the
applicable provisions of the DGCL.
Section 2.2 Effective Time. Subject to the terms and conditions of
--------------
this Agreement, Parent, Purchaser and the Company will cause a certificate of
merger or, if applicable, a certificate of ownership and merger (as applicable,
the "Certificate of Merger"), to be executed and filed on the date of the
Closing (as defined in Section 2.3) (or on such other date as Parent and the
Company may agree)
7
<PAGE>
with the Secretary of State of Delaware (the "Secretary of State") as provided
in the DGCL. The Merger shall become effective on the date on which the
Certificate of Merger has been duly filed with the Secretary of State or such
time as is agreed upon by the parties and specified in the Certificate of
Merger, and such time is hereinafter referred to as the "Effective Time".
Section 2.3 Closing. The closing of the Merger (the "Closing") shall
-------
take place at 10:00 a.m., local time, on a date to be specified by the parties,
which shall be no later than the second business day after satisfaction or
waiver of all of the conditions set forth in Article VI hereof (the "Closing
Date"), at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York, 10022, unless another date or place is agreed to in
writing by the parties hereto.
Section 2.4 Conversion of Capital Stock. As of the Effective Time,
---------------------------
by virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Purchaser:
(a) Purchaser Capital Stock. Each issued and outstanding
-----------------------
share of common stock, par value $.01 per share, of Purchaser shall be converted
into and become one fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Purchaser-Owned Stock.
--------------------------------------------------------
All Shares that are owned by the Company or any Subsidiary of the Company and
any Shares owned by Parent, Purchaser or any Subsidiary of Parent or Purchaser
shall be cancelled and retired and shall cease to exist and no consideration
shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share
------------------
(other than Shares to be cancelled in accordance with Section 2.4(b) and
Dissenting Shares (as herein defined)) shall be converted into the right to
receive the Offer Price in cash, without interest (the "Merger Consideration").
All such Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 2.5,
without interest.
8
<PAGE>
Section 2.5 Exchange of Certificates.
------------------------
(a) Paying Agent. Prior to the Effective Time, Parent shall
------------
designate a bank, trust company or other Person, reasonably acceptable to the
Company, to act as agent for the holders of the Shares in connection with the
Merger (the "Paying Agent") to receive the funds to which holders of the Shares
shall become entitled pursuant to Section 2.4(c). Parent shall, from time to
time, make available to the Paying Agent funds in amounts and at times necessary
for the payment of the Merger Consideration as provided herein. All interest
earned on such funds shall be paid to Parent.
(b) Exchange Procedures. As soon as reasonably practicable
-------------------
after the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates") whose Shares
were con converted into the right to receive the Merger Consideration pursuant
to Section 2.4, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form not inconsistent with this Agreement as Parent may specify) and (ii)
instructions for use in surrendering the Certificates in exchange for payment of
the Merger Consideration. Upon surrender of a Certificate for cancellation to
the Paying Agent, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Paying Agent, Parent
shall cause the Paying Agent to pay to the holder of such Certificate the Merger
Consideration, and the Certificate so surrendered shall forthwith be cancelled.
In the event of a surrender of a Certificate representing Shares which are not
registered in the transfer records of the Company under the name of the Person
surrendering such Certificate, payment may be made to a Person other than the
Person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall pay any transfer or other
Taxes required by reason of payment to a Person other than the registered holder
of such Certificate or establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 2.5, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration which the holder thereof has the right to receive in
respect of such Certificate pursuant to the provisions of this Article II. No
interest shall be paid or will accrue on the Merger Consideration payable to
holders of Certificates pursuant to the provisions of this Article II.
9
<PAGE>
(c) Transfer Books; No Further Ownership Rights in Shares.
-----------------------------------------------------
At the Effective Time, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers of the Shares
on the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided for herein or by applicable Law. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Article
II.
(d) Termination of Fund; No Liability. At any time
---------------------------------
following six months after the Effective Time, the Surviving Corporation shall
be entitled to require the Paying Agent to deliver to it any funds (including
any interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar Laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, none of Parent, the Surviving Corporation or the Paying Agent
shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
(e) Lost Certificates. If any Certificate shall have been
-----------------
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent shall pay in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration pursuant to this Agreement.
Section 2.6 Withholding Taxes. Parent and Purchaser shall be
-----------------
entitled to deduct and withhold, or cause the Paying Agent to deduct and
withhold, from the Offer Price or the Merger Consideration payable to a holder
of Shares pursuant to the Offer or the Merger any withholding and stock transfer
Taxes and such amounts as are required under the Code, or any applicable
provision of state, local or foreign Tax law. To the extent that amounts are so
withheld by Parent or Purchaser, such withheld amounts shall be treated for all
purposes of this Agreement
10
<PAGE>
as having been paid to the holder of the Shares in respect of which such
deduction and withholding was made by Parent or Purchaser.
Section 2.7. Stock Options. (a) At or immediately prior to the
-------------
Effective Time, each then outstanding option to purchase any shares of capital
stock of the Company (in each case, an "Option"), whether or not then vested or
exercisable, shall be cancelled by the Company. In consideration of such
cancellation of Options with an exercise price of less than the Offer Price, the
Company (or, at Parent's option, the Purchaser) shall pay to such holders of
Options an amount in respect thereof equal to the product of (A) the excess, if
any, of the Offer Price over the exercise price of each such Option and (B) the
number of Shares previously subject to the Option immediately prior to its
cancellation (such payment to be net of withholding taxes and without interest).
(b) The Company shall take all actions necessary and
appropriate so that all stock option or other equity based plans maintained with
respect to the Shares, including, without limitation, the plans listed in
Section 3.3 hereof ("Option Plans"), shall terminate as of the Effective Time
and the provisions in any other Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company shall be deleted as of the Effective Time,
and the Company shall use its best efforts to ensure that following the
Effective Time no holder of an Option or any participant in any Option Plan
shall have any right thereunder to acquire any capital stock of the Company,
Parent, Purchaser or the Surviving Corporation.
(c) Prior to the Effective Time, the Company shall (i)
obtain all necessary consents from, and provide (in a form acceptable to Parent)
any required notices to, holders of Options and (ii) amend the terms of the
applicable Option Plan, in each case as is necessary to give effect to the
provisions of paragraphs (a) and (b) of this Section 2.7.
Section 2.8. Appraisal Rights. Notwithstanding anything in
----------------
this Agreement to the contrary, Shares (the "Dissenting Shares") that are issued
and outstanding immediately prior to the Effective Time and which are held by
stockholders who did not vote in favor of the Merger and who comply with all of
the relevant provisions of Section 262 of the DGCL (the "Dissenting
Stockholders") shall not be converted into or be exchangeable for the right to
receive the Merger Consideration, unless and until such holders shall have
failed to perfect or shall have effectively withdrawn or lost their rights to
appraisal under the DGCL. If any
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Dissenting Stockholder shall have failed to perfect or shall have effectively
withdrawn or lost such right, such holder's Shares shall thereupon be converted
into and become exchangeable for the right to receive, as of the Effective Time,
the Merger Consideration without any interest thereon. The Company shall give
Parent (i) prompt notice of any written demands for appraisal of any Shares,
attempted withdrawals of such demands and any other instruments served pursuant
to the DGCL and received by the Company relating to stockholders' rights of
appraisal, and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. Neither the Company nor
the Surviving Corporation shall, except with the prior written consent of
Parent, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for payment. If any Dissenting Stockholder shall fail to
perfect or shall have effectively withdrawn or lost the right to dissent, the
Shares held by such Dissenting Stockholder shall thereupon be treated as though
such Shares had been converted into the right to receive the Merger
Consideration pursuant to Section 2.4(c).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as
follows:
Section 3.1 Organization, Standing and Corporate Power. Each of
------------------------------------------
the Company and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction in
which it is organized and has the requisite corporate power and authority to
carry on its business as it is now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect on the Company. The Company has delivered to Parent
complete and correct copies of the Certificate of Incorporation of the Company
and By-Laws of the Company, in each case as amended to the date of this
Agreement, and has delivered the certificates of incorporation and by-laws or
other organizational documents of its Subsidiaries, in each case as amended as
of the date of this Agreement. The respective certificates of incorpo-
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ration and by-laws or other organizational documents of the Subsidiaries of the
Company do not contain any provision limiting or otherwise restricting the
ability of the Company to control such Subsidiaries. Except as set forth on
Schedule 3.1 of the Company Disclosure Schedule, the Company has delivered to
Parent true and complete copies of all minutes of its Board of Directors since
November 1, 1995.
Section 3.2 Subsidiaries. (a) Exhibit 21 to the Company's Annual
------------
Report on Form 10-K for the fiscal year ended October 30, 1998 and Schedule 3.2
of the disclosure schedule delivered by the Company to Parent at or prior to the
execution of this Agreement (the "Company Disclosure Schedule") together include
the names, jurisdictions of incorporation and capitalization of all of the
Subsidiaries of the Company. All the outstanding shares of capital stock of, or
other equity interests in, each Subsidiary of the Company have been validly
issued and are fully paid and nonassessable and are owned directly or indirectly
by the Company, free and clear of all Liens and free of any other restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests).
(b) The Company does not directly or indirectly
beneficially own any securities or other beneficial ownership interests in any
other entity (including through joint ventures or partnership arrangements)
other than (i) the Subsidiaries of the Company or (ii) as disclosed on Schedule
3.2 of the Company Disclosure Schedule.
Section 3.3 Capital Structure. The authorized capital stock of
-----------------
the Company consists of 25,000,000 Shares and 1,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Shares"). As of the date hereof,
(i) 7,642,773 Shares were issued and outstanding and no Preferred Shares were
issued and outstanding, (ii) 930,034 Shares were reserved for issuance upon
exercise of outstanding Options, with an average exercise price of $16.11 and
(iii) 76,268 Shares were issued and are held in the Company's treasury. Except
as set forth above or on Schedule 3.3 of the Company Disclosure Schedule, as of
the date of this Agreement: (i) no shares of capital stock or other voting
securities of the Company are issued, reserved for issuance or outstanding; (ii)
there are no stock appreciation rights, phantom stock units, restricted stock
grants, contingent stock grants or Benefit Plans which grant awards of any of
the foregoing, and there are no other outstanding contractual rights to which
the Company is a party the value of which is based on the value of Shares; (iii)
all outstanding shares of capital stock of the Company are, and all Shares which
may be issued will be, when so issued, duly authorized, validly
13
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issued, fully paid and nonassessable and not subject to preemptive rights; and
(iv) there are no bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote. Except as set forth above, as of the date of this Agreement, there are
no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or
any of its Subsidiaries is a party or by which any of them is bound obligating
the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. There are no outstanding contractual obligations of the Company
or any of its Subsidiaries, to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its Subsidiaries. Schedule 3.3
of the Company Disclosure Schedule accurately sets forth information regarding
the current exercise price, date of grant and number of outstanding Options for
each holder of Options pursuant to any Company Option Plan. Following the
Effective Time, no holder of Options will have any right to receive shares of
common stock of the Surviving Corporation upon exercise of Options.
Section 3.4 Authority; Noncontravention; Company Action. The
-------------------------------------------
Company has the requisite corporate power and authority to enter into this
Agreement and the Company Option Agreement and to consummate the transactions
contemplated by the Company Option Agreement and, subject to approval of this
Agreement by the holders of a majority of the outstanding Shares, to consummate
the Merger contemplated by this Agreement. The execution, delivery and
performance of this Agreement and the Company Option Agreement by the Company
and the consummation by the Company of the Transactions have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to approval of this Agreement by the holders
of a majority of the outstanding Shares. This Agreement and the Company Option
Agreement have been duly executed and delivered by the Company and, assuming
this Agreement constitutes the valid and binding obligation of Parent and
Purchaser, constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion
14
<PAGE>
of the court before which any proceeding therefor may be brought. Except as set
forth on Schedule 3.4 of the Company Disclosure Schedule, the execution,
delivery and performance of this Agreement and the Company Option Agreement do
not, and the consummation of the Transactions (including the changes in the
composition of the Board of Directors of the Company) and compliance with the
provisions of this Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of the Company or any of its Subsidiaries under,
or result in the termination of, or require that any consent be obtained or any
notice be given with respect to, (i) the Certificate of Incorporation or By-laws
of the Company or the comparable charter or organizational documents of any of
its Subsidiaries, (ii) any loan or credit agreement note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or Permit applicable
to the Company or any of its Subsidiaries or their respective properties or
assets or (iii) any Law applicable to the Company or any of its Subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
or (iii), any such conflicts, violations, defaults, rights, Liens, losses of a
material benefit, consents or notices that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any other
Person, is required by the Company or any of its Subsidiaries in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the Transactions, except for (i) the filings, permits,
authorizations, consents and approvals set forth in Section 3.4 of the Company
Disclosure Schedule, or as may be required under, and other applicable
requirements of, the Securities Act, the Exchange Act, the HSR Act, any
applicable state securities or "blue sky" Laws and the DGCL, and (ii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, (x) impair, in any material respect, the ability of the
Company to perform its obligations under this Agreement, (y) prevent or
significantly delay the consummation of the Transactions or (z) have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole. The Board
of Directors of the Company has taken all appropriate action so that neither
Parent nor Purchaser will be an "interested stockholder" within the meaning of
Section 203 of the DGCL by virtue of Parent, Purchaser and the Company entering
into this Agreement or the Company Option Agreement or any other agreement
contemplated hereby or thereby and consummating the Transactions.
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Section 3.5 SEC Documents; Financial Statements. The Company
-----------------------------------
has filed all SEC Documents required to be filed by it since November 1, 1995
(the "Company's SEC Documents"). As of their respective dates, (i) the Company's
SEC Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents,
and (ii) none of the Company's SEC Documents contained at the time of their
filing any untrue statement 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. The financial statements of the Company included in the Company's
SEC Documents, as of the dates of such SEC Documents, were true and complete and
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles ("GAAP") in the United States applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly presented the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth on Schedule 3.5 of the Company Disclosure Schedule and except as set
forth in the Company's SEC Documents filed and publicly available prior to the
date of this Agreement, and except for liabilities and obligations incurred in
the ordinary course of business consistent with past practice since the date of
the most recent consolidated balance sheet included in the Company's SEC
Documents filed and publicly available prior to the date of this Agreement,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise).
Section 3.6 Schedule 14D-9; Offer Documents; Proxy Statement.
------------------------------------------------
Neither the Schedule 14D-9, any other document required to be filed by the
Company with the SEC in connection with the Transactions, nor any information
supplied by the Company for inclusion in the Offer Documents shall, at the
respective times the Schedule 14D-9, any such other filings by the Company, the
Offer Documents or any amendments or supplements thereto are filed with the SEC
or are first published, sent or given to stockholders of the Company, as the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement will
16
<PAGE>
not, on the date the Proxy Statement (including any amendment or supplement
thereto) is first mailed to stockholders of the Company, contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not misleading or shall,
at the time of the Special Meeting (as hereinafter defined) or at the Effective
Time, omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Special Meeting which shall have become false or misleading in any material
respect. The Schedule 14D-9, any other document required to be filed by the
Company with the SEC in connection with the Transactions and the Proxy
Statement will, when filed by the Company with the SEC, comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to the statements made in any
of the foregoing documents based on and in conformity with information supplied
by or on behalf of Parent or Purchaser in writing specifically for inclusion
therein.
Section 3.7 Absence of Certain Changes or Events. Except as
------------------------------------
set forth in the Company's SEC Documents or on Schedule 3.7 of the Company
Disclosure Schedule, since October 30, 1998, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course, and (i)
there has not been any Material Adverse Change in the Company and its
Subsidiaries, taken as a whole and (ii) neither the Company nor any of its
Subsidiaries has taken any of the actions prohibited by Section 5.1 or otherwise
acted in such a way as to impair, prevent or impede the consummation of the
Transactions.
Section 3.8 Litigation. Except as specifically set forth in
----------
the Company's SEC Documents or on Schedule 3.8 of the Company Disclosure
Schedule, there are (i) no suits, actions or proceedings pending or, to the
Knowledge of the Company, threatened against the Company or any of its
Subsidiaries that, individually or in the aggregate, could have a Material
Adverse Effect on the Company, (ii) no complaints, lawsuits, charges or other
proceedings pending or, to the Knowledge of the Company, threatened in any forum
by or on behalf of any present or former employee of the Company or any of its
Subsidiaries, any applicant for employment or classes of the foregoing alleging
breach of any express or implied contract of employment, any applicable Law
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment relationship
that, individually or in the aggregate, could have a Material
17
<PAGE>
Adverse Effect on the Company, (iii) no judgments, decrees, injunctions or
orders of any Governmental Entity or arbitrator outstanding against the Company
that, individually or in the aggregate, could have a Material Adverse Effect on
the Company and (iv) no orders, writs, judgments, injunctions, decrees,
determinations or awards applicable to the Trademarks or the Other Intellectual
Property.
Section 3.9 Absence of Changes in Benefit Plans; SEC
----------------------------------------
Disclosure. Except as disclosed on Schedule 3.9 of the Company Disclosure
- ----------
Schedule, there has not been any adoption or amendment by the Company or any of
its Subsidiaries or any ERISA Affiliate (as defined in Section 3.10 hereof) of
any Benefit Plan (as defined in Section 3.10 hereof) since October 30, 1998.
Except as disclosed on Schedule 3.9 of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries has any formal plan or commitment to
create any additional Benefit Plan or modify or change any existing Benefit Plan
that would affect any employee or terminated employee of the Company or a
Subsidiary of the Company. All employment, consulting, severance, termination,
change in control or indemnification agreements, arrangements or understandings
between the Company or any of its Subsidiaries and any current or former officer
or director of the Company or any of its Subsidiaries which are required to be
disclosed in the Company's SEC Documents have been disclosed therein.
Section 3.10 Employee Benefits; ERISA. (a) Schedule 3.10 of
------------------------
the Company Disclosure Schedule contains a true and complete list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
employment, severance or termination pay, health insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, other than a non-material fringe benefit plan,
sponsored, maintained or contributed to or required to be contributed to (at any
time during the past six years) by the Company or any of its Subsidiaries or by
any trade or business, whether or not incorporated (an "ERISA Affiliate"), that
is a member of a "controlled group" within the meaning of section 4001 of the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA") of which the Company or a
Subsidiary is a member or which is under "common control" within the meaning of
Section 4001 of ERISA, with the Company or a Subsidiary, for the benefit of any
employee or terminated employee of the Company, its Subsidiaries or any ERISA
Affiliate, whether formal or informal (the "Benefit Plans").
18
<PAGE>
(b) With respect to each Benefit Plan, the Company has made
available a true and complete copy thereof (including all amendments thereto),
as well as true and complete copies of the two most recent annual reports, if
required under ERISA, with respect thereto; the two most recent actuarial
reports, if required under ERISA, with respect thereto; the two most recent
reports prepared with respect thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting for Pensions; the most recent
Summary Plan Description, together with each Summary of Material Modifications,
if required under ERISA with respect thereto; if the Benefit Plan is funded
through a trust or any third party funding vehicle, the trust or other funding
agreement (including all amendments thereto) and the latest financial statements
thereof; and the most recent determination letter received from the Internal
Revenue Service with respect to each Benefit Plan that is intended to be
qualified under section 401 of the Code.
(c) No liability to the Pension Benefit Guaranty
Corporation ("PBGC") under Title IV of ERISA has been incurred by the Company,
its Subsidiaries or any ERISA Affiliate since the effective date of ERISA that
has not been satisfied in full, and no condition exists that presents a material
risk to the Company, its Subsidiaries or any ERISA Affiliate of incurring a
liability under such Title, other than liability for premiums due the PBGC
(which premiums have been paid when due). Each Benefit Plan has been operated
and administered in all material respects in accordance with its terms and
applicable Law, including but not limited to ERISA and the Code.
(d) The PBGC has not instituted proceedings to terminate
any Benefit Plan and no condition exists that presents a material risk that such
proceedings will be instituted.
(e) No Benefit Plan is subject to Section 302 of the Code
or Title IV of ERISA.
(f) Neither the Company, nor any Subsidiary of the Company,
nor any trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which the Company or any Subsidiary
of the Company, any such trust, or any trustee or administrator thereof, or any
party dealing with any Benefit Plan or any such trust could be subject to either
a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a tax
imposed pursuant to section 4975 or 4976 of the Code.
19
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(g) All employee Benefit Plans that are subject to the laws
of any jurisdiction outside the United States are in material compliance with
such applicable laws, including relevant tax laws, and the requirements of any
trust deed under which they are established.
(h) Each Benefit Plan which is intended to be "qualified"
within the meaning of section 401(a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under section 501(a) of the Code
and no event has occurred to cause the loss of such qualified or exempt status.
(i) No Benefit Plan provides health, death or medical
benefits (whether or not insured) with respect to current or former employees of
the Company or its Subsidiaries beyond their retirement or other termination of
service (other than (a) coverage mandated by applicable Law or (b) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary).
(j) The consummation of the Transactions, alone, will not
(a) entitle any current or former employee or officer of the Company or any
Subsidiary to severance pay, unemployment compensation or any other payment, (b)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer, (c) result in any prohibited
transaction described in section 406 of ERISA or section 4975 of the Code for
which an exemption is not available, or (d) require the Company or any ERISA
Affiliate to fund or make any payments to any trust or other funding vehicle in
respect of any Benefit Plan.
(k) There are no pending, anticipated or, to the knowledge
of the Company, threatened claims by or on behalf of any Benefit Plan, by any
employee or beneficiary covered under any such Benefit Plan, or otherwise
involving any such Benefit Plan (other than routine claims for benefits).
Section 3.11 Taxes.
-----
(a) Each of the Company and each of its Subsidiaries has duly
and timely filed (or has had duly and timely filed on its behalf) all Tax
Returns required to be filed by it, and all such Tax Returns are true, complete
and correct. Each of the Company and each of its Subsidiaries has paid (or has
had paid on its behalf) all Taxes due and owing by them and the most recent
financial statements contained in the Company's SEC Documents reflect adequate
reserves in accordance with generally accepted accounting principles for all
Taxes payable by the Company or its
20
<PAGE>
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements.
(b) Each of the Company and each of its Subsidiaries has
complied with all applicable Laws relating to the payment and withholding of
Taxes (including, without limitation, the withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code or similar provisions under any applicable
foreign Laws) and have, within the time and in the manner prescribed by
applicable Laws, withheld from employee wages and paid over to the proper
Governmental Entity all amounts required to be so withheld and paid over under
all applicable Laws.
(c) Except as set forth on Schedule 3.11 of the Company
Disclosure Schedule, (i) no deficiencies for any Taxes have been threatened,
proposed, asserted or assessed (either in writing or orally) against the Company
or any of its Subsidiaries, (ii) no Governmental Entity is conducting or
proposing to conduct an audit with respect to Taxes or any Tax Returns of the
Company or any of its Subsidiaries, (iii) no extension or waiver of the statute
of limitations with respect to Taxes or any Tax Return has been granted by the
Company or any of its Subsidiaries, which remains in effect, (iv) neither the
Company nor any of its Subsidiaries is a party to any agreement or arrangement
to allocate, share or indemnify another party for Taxes, (v) there are no Liens
for Taxes upon the assets of the Company or any of its Subsidiaries, except for
Liens for Taxes not yet due, (vi) no jurisdiction where either the Company or
any of its Subsidiaries does not file a Tax Return has asserted or otherwise
made a claim that the Company or any of its Subsidiaries is required to file a
Tax Return for such jurisdiction, (vii) neither the Company nor any of its
Subsidiaries has agreed to make, or is required to make, any adjustment under
Section 481(a) of the Code (or comparable provision under state, local or
foreign Tax laws) by reason of a change in accounting method or otherwise and
the Company and each of its Subsidiaries do not have knowledge that the Internal
Revenue Service has proposed any such adjustment or change in accounting method,
(viii) neither the Company nor any of its Subsidiaries could have any liability
for Taxes under Section 1.1502-6 of the Treasury regulations promulgated under
the Code or any comparable state, local or foreign Tax laws or by contract or
otherwise, (ix) neither the Company nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code (or any predecessor provision) or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by the Company or any of its Subsidiaries, (x) all Tax deficiencies which
have been claimed, proposed or asserted against the Company or any of its
Subsidiaries have been fully paid or finally settled, and no issue has been
21
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raised in any examination by the Taxing Authority, which by application of
similar principles, could be expected to result in the proposal or assertion of
a Tax deficiency against the Company or any of its Subsidiaries for another year
not so examined, (xi) the Company has filed, as a common parent corporation of
an affiliated group (within the meaning of Section 1504(a) of the Code) a
consolidated return for Federal income tax purposes on behalf of such affiliated
group and (xii) no power of attorney has been granted by or with respect to the
Company or any of its Subsidiaries with respect to any matter relating to
Taxes.
(d) Schedule 3.11 of the Company Disclosure Schedule sets forth
the taxable years of the Company or any of its Subsidiaries as to which the
respective statutes of limitations with respect to Taxes have not expired and,
with respect to such taxable years, those years for which examinations have been
completed, those years for which examinations are presently being conducted,
those years for which examinations have not been initiated and those years for
which required Returns have not yet been filed.
Section 3.12 No Excess Nondeductible Payments.
--------------------------------
(a) Except as set forth on Schedule 3.12 of the Company
Disclosure Schedule, no amounts payable as a result of the Transactions under
the Benefit Plans or any other plans or arrangements will constitute a
"parachute payment" as such term is defined in Section 280G of the Code, without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
(b) Neither the Company nor any of its Subsidiaries is a party
to any contract, agreement or other arrangement which could result in the
payment of amounts that could be nondeductible by reason of Section 162(m) of
the Code.
Section 3.13 Compliance with Applicable Laws.
-------------------------------
Except as set forth on Schedule 3.13 of the Company Disclosure
Schedule:
(a) The Company and each of its Subsidiaries have complied and
are presently complying in all material respects with all applicable Laws, and
neither the Company nor any of its Subsidiaries has received notification of any
asserted present or past failure to so comply, except such non-compliance that
(i) has not and will not
22
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prevent the Company from carrying on its business substantially as now
conducted, or (ii) would not be reasonably expected to (x) result in a Material
Adverse Effect on the Company or (y) materially impair the ability of the
parties hereto to consummate the Transactions.
(b) Each of the Company and its Subsidiaries has in effect, or
has timely filed applications for, all material Permits necessary for it to own,
lease or operate its properties and assets and to carry on its business
substantially as now conducted and there are no appeals nor any other actions
pending to revoke any such Permits, and there has occurred no material default
or violation under any such Permits.
(c) Each of the Company and its Subsidiaries is, and has been,
and each of the Company's former Subsidiaries, while a Subsidiary of the
Company, was in compliance in all material respects with all applicable
Environmental Laws, and there are no circumstances or conditions that would be
reasonably likely to prevent or interfere with compliance by the Company or its
Subsidiaries in the future with Environmental Laws (or Permits issued
thereunder).
(d) Neither the Company nor any Subsidiary of the Company has
received any written claim, demand, notice, complaint, court order,
administrative order or request for information from any Governmental Entity or
private party, alleging violation of, or asserting any noncompliance with or
liability under or potential liability under, any Environmental Laws, except for
matters which are no longer threatened or pending or for which the Company or
its Subsidiaries are not subject to further requirements pursuant to an
administrative or court order, judgment or settlement agreement.
(e) During the period of ownership or operation by the Company
and its Subsidiaries of any of their respective current or previously owned or
leased properties, there have been no Releases of Hazardous Material in, on,
under or affecting such properties and none of the Company or its Subsidiaries
have disposed of any Hazardous Material or any other substance either on said
owned or leased properties or at other properties, in a manner that has led, or
could reasonably be anticipated to lead, to a Release. Prior to the period of
ownership or operation by the Company and its Subsidiaries of any of their
respective current or previously owned or leased properties, to the knowledge of
the Company, no Hazardous Material was disposed of at such current or previously
owned or leased properties, and there were no Releases of Hazardous Material in,
on, under or affecting any such property.
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(f) Neither the Company nor any of its Subsidiaries has entered
into any agreement that may require it to pay to, reimburse, guarantee, pledge,
defend, indemnify, or hold harmless any Person for or against any Environmental
Liabilities and Costs.
(g) Neither the Company nor any of its Subsidiaries has treated,
stored or disposed of "hazardous waste", as that term is defined in the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., analogous state Laws,
--------
or the regulations promulgated thereunder, such that the Company or any of its
Subsidiaries would be required to obtain a permit under said Laws for such
treatment, storage or disposal.
(h) The Company has provided to Parent true and correct copies
of all environmental studies and reports in its possession or in the possession
of its representatives, agents or consultants, prepared within the last five
years, relating to (i) the Company's and its Subsidiaries' compliance with
Environmental Laws; (ii) the environmental condition of the Company's and its
Subsidiaries' currently owned or leased properties, including, but not limited
to, the extent of any on-site contamination at any of such properties, results
of investigations at such properties, remedial action plans for such properties,
and asbestos surveys; and (iii) the environmental condition of any properties
formerly owned or operated by the Company or any of its Subsidiaries, or of any
other location at which the Company or any of its Subsidiaries is subject to an
environmental claim, including, but not limited to, the extent of any on-site
contamination at any such properties, results of investigations at such
properties and remedial action plans at such properties.
Section 3.14 Intellectual Property. The Company and its
---------------------
Subsidiaries own or are validly licensed, or otherwise possess legally
enforceable rights, to use the Trademarks and Other Intellectual Property and
the consummation of the Transactions will not alter or impair such ability in
any respect. Schedule 3.14(a) of the Company Disclosure Schedule sets forth a
complete and accurate list of all Trademarks and Other Intellectual Property
held by the Company. Schedule 3.14(b)of the Company Disclosure Schedule sets
forth a complete and accurate list of all license agreements relating to the
foregoing to which the Company or any of its Subsidiaries is a party. The
Company and its Subsidiaries are the sole and exclusive owners of the Trademarks
and Other Intellectual Property, free and clear of all Liens and free of all
licenses except those set forth on Schedule 3.14(b) of the Company Disclosure
Schedule. There are no oppositions, cancellations, invalidity proceedings,
interferences or re-examination proceedings presently pending with respect to
the
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Trademarks and Other Intellectual Property. The conduct of the business of the
Company and its Subsidiaries and the Trademarks and Other Intellectual Property
do not infringe any rights of any Person, and, except as set forth on Schedule
3.14(c) of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has received any written notice from any other Person pertaining to
or challenging the right of the Company or any of its Subsidiaries to use any of
the Trademarks or Other Intellectual Property. To the Company's knowledge, no
third party is infringing upon any of the Trademarks or Other Intellectual
Property. Neither the Company nor any of its Subsidiaries has made any claim of
a violation or infringement by others of its rights to or in connection with the
Trademarks and Other Intellectual Property which is still pending. The Company
and its Subsidiaries take reasonable measures to protect the confidentiality of
their trade-secrets and other confidential information.
Section 3.15 Properties. Each of the Company and each of its
----------
Subsidiaries has sufficiently good and valid title to, or an adequate leasehold
interest in, its material properties and assets (including the Real Property) in
order to allow it to conduct, and continue to conduct, its business as currently
conducted in all material respects. Except as set forth on Schedule 3.15 of the
Company Disclosure Schedule, such material tangible properties and assets
(including the Real Property) are sufficiently free of Liens to allow the
Company and each of its Subsidiaries to conduct, and continue to conduct, its
business as currently conducted in all material respects and the consummation of
the Transactions will not alter or impair such ability in any material respect.
Except as set forth on Schedule 3.15 of the Company Disclosure Schedule, the
Company and/or its Subsidiaries have good, valid, marketable and fee simple
title to all the Fee Property, free and clear of all Liens.
Section 3.16 Contracts. (a) Except as set forth in the Company's
---------
SEC Documents or Schedule 3.16 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is a party to or bound by (i) any "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC), (ii) any non-competition agreement or any other agreement or obligation
which purports to limit in any respect the manner in which, or the localities in
which, all or any material portion of the business of the Company and its
Subsidiaries, taken as a whole, may be conducted, (iii) any transaction,
agreement, arrangement or understanding with any Affiliate that would be
required to be disclosed under Item 404 of regulation S-K under the Securities
Act, (iv) any voting or other agreement governing how any Shares shall be
voted, (v) any material agreement with any stockholders of the Company, (vi) any
acquisition, merger, asset purchase or sale agreement or
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(vii) any contract or other agreement which would prohibit or materially delay
the consummation of the Merger or any of the Transactions (all contracts of the
type described in clauses (i) - (vii) being referred to herein as "Company
Material Contracts"). Each Company Material Contract is valid and binding on
the Company (or, to the extent a Subsidiary of the Company is a party, such
Subsidiary) and is in full force and effect, and the Company and each Subsidiary
of the Company have, in all material respects, performed all obligations
required to be performed by them to date under each Company Material Contract,
except where such noncompliance, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. Neither the Company nor any
Subsidiary of the Company knows of, or has received notice of, any violation or
default under (nor, to the knowledge of the Company, does there exist any
condition which with the passage of time or the giving of notice or both would
result in such a violation or default under) any Company Material Contract.
(b) Except as disclosed in the Company's SEC Documents or on
Schedule 3.16 of the Company Disclosure Schedule or as provided for in this
Agreement, neither the Company nor any of its Subsidiaries is a party to any
oral or written (i) employment or consulting agreements not terminable on thirty
(30) days' or less notice, (ii) union or collective bargaining agreement, (iii)
agreement with any executive officer or other key employee of the Company or any
of its Subsidiaries the benefits of which are contingent or vest, or the terms
of which are materially altered, upon the occurrence of a transaction involving
the Company or any of its Subsidiaries of the nature contemplated by this
Agreement and the Company Option Agreement, (iv) agreement with respect to any
executive officer or other key employee of the Company or any of its
Subsidiaries providing any term of employment or compensation guarantee or (v)
agreement or plan, including any stock option, stock appreciation right,
restricted stock or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the Transactions or the value of any of the benefits of
which will be calculated on the basis of any of the Transactions.
Section 3.17 Labor Relations. Except to the extent set forth in
---------------
the Company's SEC Documents or Schedule 3.17 of the Company Disclosure Schedule,
(i) the Company and each of its Subsidiaries is, and has at all times been, in
material compliance with all applicable Laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and is not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
Law, except where the failure to
26
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comply would not be reasonably likely to cause a Material Adverse Effect on the
Company; (ii) there is no labor strike, slowdown, stoppage or lockout actually
pending, or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries; and (iii) neither the Company nor any of
its Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization.
Section 3.18 Products Liability; Recalls. (a) Except as set
---------------------------
forth in Schedule 3.18 of the Company Disclosure Schedule, (i) there is no
notice, demand, claim, action, suit, inquiry, hearing, proceeding, notice of
violation or investigation of a civil, criminal or administrative nature
(collectively, "Notices") pending or threatened before any Governmental Entity
in which a Product is alleged to have a Defect or relating to or resulting from
any alleged failure to warn or from any alleged breach of express or implied
warranties or representations; (ii) no valid basis exists for any such demand,
claim, action, suit, inquiry, hearing, proceeding, notice of violation or
investigation; (iii) no demand, claim, action, suit, inquiry, hearing,
proceeding, notice of violation or investigation referred to in clause (i) or
(ii) of this Section 3.18 would, if adversely determined, have, individually or
in the aggregate, a Material Adverse Effect on the Company; (iv) there has not
been any Occurrence; (v) there has not been any recall, rework, retrofit or
post-sale warning (collectively, "Recalls") of any Product, or any investigation
or consideration of or decision made by any person or entity concerning whether
to undertake or not to undertake any Recalls and the Company has received no
Notices from any Governmental Entity or any other person with respect to the
foregoing; and (vi) there are no defects in design, manufacturing, materials, or
workmanship, including, without limitation, any failure to warn, or any breach
of express or implied warranties or representations, which involve any Product,
other than, with respect to clauses (ii), (v) and (vi), those which could not
have a Material Adverse Effect.
(b) Section 3.18 of the Company Disclosure Schedule sets forth
all Notices received by the Company or its Subsidiaries since November 1, 1995
and the amount of the reserves provided therefor.
Section 3.19 Applicability of State Takeover Statutes. The
----------------------------------------
Section 203 Approval is valid and in full force and effect. Section 203 of the
DGCL will not apply to the Company Option Agreement, the Offer, the acquisition
of Shares pursuant to the Offer or the Merger. No other state takeover statute
or similar statute or regulation applies or purports to apply to the Offer, the
Merger or the other Transactions.
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Section 3.20 Voting Requirements. The affirmative vote of the
-------------------
holders of a majority of all the Shares entitled to vote approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the
Transactions.
Section 3.21 Brokers. No broker, investment banker, financial
-------
advisor or other Person, other than ABN AMRO Incorporated, the fees and expenses
of which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has provided Parent true and correct copies of all agreements between
the Company and ABN AMRO Incorporated, including, without limitations, any fee
arrangements.
Section 3.22 Opinion of Financial Advisor. The Company has
----------------------------
received the opinion of ABN AMRO Incorporated, to the effect that, as of the
date of this Agreement, the consideration to be received in the Offer and the
Merger by the Company's stockholders is fair to the Company's stockholders from
a financial point of view, and a complete and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to Parent.
The Company has been authorized by ABN AMRO Incorporated to permit the inclusion
of such opinion in its entirety in the Offer Documents and the Schedule 14D-9
and the Proxy Statement, so long as such inclusion is in form and substance
reasonably satisfactory to ABN AMRO Incorporated.
Section 3.23 Year 2000.
---------
Except as set forth on Schedule 3.23 of the Company Disclosure
Schedule or the Company's SEC Documents:
(a) all of the Computer Programs, computer firmware, computer
hardware (whether general or special purpose) and other similar or related items
of automated, computerized and/or software system(s) that are used or relied on
by the Company or by any of its Subsidiaries in the conduct of their respective
businesses will not malfunction, will not cease to function, will not generate
incorrect data, and will not provide incorrect results when processing,
providing, and/or receiving (i) date-related data into and between the twentieth
and twenty-first centuries and (ii) date-related data in connection with any
valid date in the twentieth and twenty-first centuries;
28
<PAGE>
(b) all of the products and services sold, licensed, rendered or
otherwise provided by the Company or by any of its Subsidiaries in the conduct
of their respective businesses will not malfunction, will not cease to function,
will not generate incorrect data and will not produce incorrect results when
processing, providing and/or receiving (i) date-related data into and between
the twentieth and twenty-first centuries and (ii) date-related data in
connection with any valid date in the twentieth and twenty-first centuries; and
neither the Company nor any of its Subsidiaries is or shall be subject to claims
or liabilities arising from their failure to do so; and
(c) neither the Company nor any of its Subsidiaries has made
other representations or warranties regarding the ability of any product or
service sold, licensed, rendered or otherwise provided by the Company or by any
of its Subsidiaries in the conduct of their respective businesses to operate
without malfunction, to operate without ceasing to function, to generate
correct data and to produce correct results when processing, providing and/or
receiving (i) date-related data into and between the twentieth and twenty-first
centuries and (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
Section 3.24 Absence of Questionable Payments. Neither the
--------------------------------
Company nor any of its Subsidiaries nor any director, officer, agent, employee
or other person acting on behalf of the Company or any of its Subsidiaries, has
used any corporate or other funds for unlawful contributions, payments, gifts,
or entertainment, or made any unlawful expenditures relating to political
activity to government officials or others or established or maintained any
unlawful or unrecorded funds in violation of Section 30A of the Exchange Act.
Neither the Company nor any of its Subsidiaries nor any current director,
officer, agent, employee or other person acting on behalf of the Company or any
of its Subsidiaries, has accepted or received any unlawful contributions,
payments, gifts or expenditures. The Company and each of its Subsidiaries which
is required to file reports pursuant to Section 12 or 15(d) of the Exchange Act
is in compliance with the provisions of Section 13(b) of the Exchange Act.
Section 3.25 Full Disclosure. The Company has not failed to
---------------
disclose to Parent any facts material to the business, results of operations,
assets, liabilities, financial condition or prospects of the Company. No
representation or warranty by the Company in this Agreement and no statement
contained in any document (including, without limitation, financial statements
and the Company Disclosure Schedule), certificate, or other writing furnished or
to be furnished by the Company
29
<PAGE>
to Parent or any of its Representatives pursuant to the provisions hereof or in
connection with the Transactions, contains or will contain any untrue statement
of material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows:
Section 4.1 Organization, Standing and Corporate Power. Each
------------------------------------------
of Parent and Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction in which each is incorporated
and has the requisite corporate power and authority to carry on its business as
now being conducted. Each of Parent and Purchaser is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed (individually or in the aggregate)
would not have a Material Adverse Effect on Parent.
Section 4.2 Authority; Noncontravention. Parent and Purchaser
---------------------------
have the requisite corporate power and authority to enter into this Agreement
and to consummate the Transactions. The execution and delivery of this Agreement
and the Company Option Agreement by Parent and Purchaser and the consummation by
Parent and Purchaser of the Transactions have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser, as applicable.
This Agreement and the Company Option Agreement have been duly executed and
delivered by Parent and Purchaser and, assuming this Agreement and the Company
Option Agreement constitute the valid and binding obligation of the Company,
constitute a valid and binding obligation of each such party, enforceable
against each such party in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar Laws now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific
30
<PAGE>
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
The execution and delivery of this Agreement and the Company Option Agreement do
not, and the consummation of the Transactions will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien upon any of the properties or assets of Parent
under, (i) the certificate of incorporation or by-laws of Parent or Purchaser,
(ii) any Law applicable to Parent or Purchaser or their respective properties or
assets, other than, in the case of clause (ii), any such conflicts, violations,
defaults, rights or Liens that individually or in the aggregate would not (x)
impair in any material respect the ability of Parent and Purchaser to perform
their respective obligations under this Agreement or (y) prevent or impede the
consummation of any of the Transactions. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity or any other Person is required by Parent or Purchaser in connection with
the execution and delivery of this Agreement and the Company Option Agreement or
the consummation by Parent or Purchaser, as the case may be, of any of the
Transactions, except for (i) the filings, permits, authorizations, consents and
approvals set forth in Schedule 4.2 of the disclosure schedule delivered by
Parent to the Company at or prior to the execution of this Agreement (the
"Parent Disclosure Schedule"), or as may be required under, and other applicable
requirements of, the Securities Act, the Exchange Act, the HSR Act, any
applicable state securities or "blue sky" Laws and the DGCL, and (ii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, prevent the consummation of or materially impair the ability
of Parent or Purchaser to consummate the Transactions.
Section 4.3 Proxy Statement; Offer Documents. The Offer
--------------------------------
Documents and any other documents to be filed by Parent with the SEC or any
other Government Entity in connection with the Merger and the other Transactions
will (in the case of the Offer Documents and any such other documents filed with
the SEC under the Securities Act or the Exchange Act) comply as to form in all
material respects with applicable provisions of the Exchange Act and the
Securities Act, respectively, and the rules and regulations thereunder. None of
the Offer Documents, any other documents required to be filed by Parent or
Purchaser with the SEC in connection with the Transactions, nor any information
supplied by Parent or Purchaser for inclusion in the Schedule 14D-9 or in the
information required to be distributed to the stockholders of the Company
pursuant to Section 14(f) of the
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Exchange Act and Rule 14f-1 promulgated thereunder as is necessary to enable
Parent's designees to be elected to the Company's Board of Directors pursuant to
Section 1.4 hereof shall, at the respective times the Offer Documents or any
amendments and supplements thereto, any such other filings by Parent or
Purchaser are filed with SEC or are first published, sent or given to
stockholders of the Company, as the case may be, or, in the case of the Proxy
Statement, on the date the Proxy Statement is first mailed to stockholders of
the Company, contain any untrue statement of a material fact, or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which they
are made, not misleading or shall, at the time of the Special Meeting (as
defined in Section 5.3) or at the Effective Time, omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Special Meeting which shall have
become false or misleading in any material respect. Notwithstanding the
foregoing, neither Parent nor Purchaser makes any representation or warranty
with respect to the statements made in any of the foregoing documents based on
and in conformity with information supplied by or on behalf of the Company in
writing specifically for inclusion therein.
Section 4.4 Operations of Purchaser. Purchaser is a wholly
-----------------------
owned Subsidiary of Parent and was formed solely for the purpose of engaging in
the Transactions and has not engaged in any business activities or conducted any
operations other than in connection with the Transactions.
Section 4.5 Brokers. No broker, investment banker, financial
-------
advisor or other Person, other than Bear, Stearns & Co. Inc., the fees and
expenses of which will be paid by Parent or Purchaser, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
Parent or Purchaser.
Section 4.6 Sufficient Funds. Either Parent or Purchaser has
----------------
available, or has made arrangements to obtain (through existing credit
arrangements or otherwise), sufficient funds to purchase all of the Shares
outstanding on a fully diluted basis at the Offer Price and to pay all fees and
expenses related to the Transactions.
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ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. After the date
---------------------------------
hereof and prior to the time the designees of Parent have been elected or
appointed to, and shall constitute a majority of, the Board of Directors of the
Company pursuant to Section 1.4 or the date, if any, on which this Agreement is
earlier terminated pursuant to Section 7.1, and except (i) as expressly
contemplated by this Agreement, (ii) as set forth on Schedule 5.1 of the Company
Disclosure Schedule or (iii) as agreed in writing by Parent:
(a) the Company shall and shall cause its Subsidiaries to
carry on their respective businesses in the ordinary course;
(b) the Company shall and shall cause its Subsidiaries to
use all reasonable best efforts consistent with good business judgment to
preserve intact their current business organizations, keep available the
services of their current officers and key employees and preserve their
relationships consistent with past practice with desirable customers, suppliers,
licensors, licensees, distributors and others having business dealings with them
to the end that their goodwill and ongoing businesses shall be unimpaired in all
material respects at the Effective Time;
(c) neither the Company nor any of its Subsidiaries shall,
directly or indirectly, amend its certificate of incorporation or by-laws or
similar organizational documents;
(d) Representatives of the Company and its Subsidiaries
shall confer at such times as Parent may reasonably request with one or more
Representatives of Parent to report material operational matters and the
general status of ongoing operations;
(e) neither the Company nor any of its Subsidiaries shall:
(i)(A) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that of
its Subsidiaries, except that a wholly-owned Subsidiary of the Company may
declare and pay a dividend or make advances to its parent or the Company or (B)
redeem, purchase or otherwise acquire directly or indirectly any of the
Company's capital stock or that of its Subsidiaries; (ii) issue, sell, pledge,
dispose of or encumber any additional shares
33
<PAGE>
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital stock
of any class of the Company or its Subsidiaries, other than Shares issued upon
the exercise of Options outstanding on the date hereof in accordance with the
Option Plans as in effect on the date hereof; or (iii) split, combine or
reclassify the outstanding capital stock of the Company or of any of the
Subsidiaries of the Company;
(f) except as permitted by this Agreement, neither the
Company nor any of its Subsidiaries shall acquire or agree to acquire (A) by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division thereof
(including entities which are Subsidiaries of the Company or any of the
Company's Subsidiaries) or (B) any assets, including real estate, except
purchases in the ordinary course of business consistent with past practice;
(g) neither the Company nor any of its Subsidiaries shall
make any new capital expenditure or expenditures, other than the specific
capital expenditures disclosed and set forth on Schedule 5.1 of the Company
Disclosure Schedule;
(h) neither the Company nor any of its Subsidiaries shall,
except in the ordinary course of business and except as otherwise permitted by
this Agreement, amend or terminate any Company Material Contract where such
amendment or termination would have a Material Adverse Affect on the Company,
or waive, release or assign any material rights or claims;
(i) neither the Company nor any of its Subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any
property or assets other than in the ordinary course of business and consistent
with past practice;
(j) neither the Company nor any of its Subsidiaries shall:
(i) enter into any employment or severance agreement with or grant any severance
or termination pay to any officer, director or key employee of the Company or
any its Subsidiaries; or (ii) hire or agree to hire any new or additional key
employees or officers;
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<PAGE>
(k) neither the Company nor any of its Subsidiaries shall,
except as required to comply with applicable Law or expressly provided in this
Agreement, (A) adopt, enter into, terminate, amend or increase the amount or
accelerate the payment or vesting of any benefit or award or amount payable
under any Benefit Plan or other arrangement for the current or future benefit or
welfare of any director, officer or current or former employee, except to the
extent necessary to coordinate any such Benefit Plans with the terms of this
Agreement, (B) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any director, officer or employee, (C) pay any benefit not
provided for under any Benefit Plan, (D) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Benefit Plan
(including the grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the removal of
existing restrictions in any Benefit Plans or agreements or awards made
thereunder) or (E) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement, contract
or arrangement or Benefit Plan;
(l) neither the Company nor any of its Subsidiaries shall:
(i) incur or assume any long-term debt, or except in the ordinary course of
business, incur or assume any short-term indebtedness in amounts not consistent
with past practice; (ii) incur or modify any material indebtedness or other
liability except as set forth on Schedule 5.1 of the Company Disclosure
Schedule; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person, except in the ordinary course of business and consistent with
past practice; (iv) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to wholly owned Subsidiaries of the
Company or customary loans or advances to employees in the ordinary course of
business and consistent with past practice); (v) settle any claims other than in
the ordinary course of business, in accordance with past practice and without
admission of liability; or (vi) enter into any material commitment or
transaction except in the ordinary course of business consistent with past
practice;
(m) neither the Company nor any of its Subsidiaries shall
change any of the accounting methods used by it unless required by GAAP;
(n) neither the Company nor any of its Subsidiaries shall
make or change any Tax election, amend any Tax Return, change an annual Tax
accounting period, adopt or change any method of Tax accounting, enter into any
closing agreement, settle or compromise any Tax claim or assessment, surrender
any
35
<PAGE>
right to claim a Tax refund, consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment or take or omit to
take any other action relating to Taxes except in the ordinary course of
business consistent with past practice;
(o) neither the Company nor any of its Subsidiaries shall
pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, of claims, liabilities or obligations reflected or reserved against
in, or contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated Subsidiaries; or, except in the
ordinary course of business consistent with past practice, waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its Subsidiaries is a party;
(p) neither the Company nor any of its Subsidiaries shall
(by action or inaction) amend, renew, terminate or cause to be extended any
lease, agreement or arrangement relating to any of the Leased Properties or
enter into any lease, agreement or arrangement with respect to any real
property;
(q) neither the Company nor any of its Subsidiaries will
enter into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing; and
(r) neither the Company nor any of its Subsidiaries shall
take any action that would result in (i) any of its representations and
warranties set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the conditions
to the Offer set forth in Annex A not being satisfied (subject to the Company's
right to take action specifically permitted by Section 5.5).
Section 5.2 Access; Confidentiality. The Company shall (and
-----------------------
shall cause each of its Subsidiaries to) afford to the Representatives of Parent
reasonable access on reasonable prior notice during normal business hours,
throughout the period prior to the earlier of the Effective Time or the
termination of this Agreement, to all of its properties, offices, employees,
contracts, commitments, books and
36
<PAGE>
records (including but not limited to Tax Returns) and any report, schedule or
other document filed or received by it pursuant to the requirements of federal
or state securities laws and shall (and shall cause each of its Subsidiaries to)
furnish promptly to Parent such additional financial and operating data and
other information as to its and its Subsidiaries' respective businesses and
properties as Parent may from time to time reasonably request. Parent and
Purchaser will make all reasonable efforts to minimize any disruption to the
businesses of the Company and its Subsidiaries which may result from the
requests for data and information hereunder and pursuant to Section 5.1(d)
hereof. Except as otherwise agreed to by the other party, Parent and the Company
will be bound by the terms of a letter agreement (the "Confidentiality
Agreement"), dated as of November 6, 1998 and supplemented as of December 15,
1998, by and between Parent and the Company.
Section 5.3. Special Meeting, Proxy Statement.
--------------------------------
(a) If required by applicable Law in order to consummate
the Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable Law, its Certificate of Incorporation and By-laws:
(i) as promptly as practicable following the acceptance for
payment and purchase of Shares by Purchaser pursuant to the Offer duly
call, give notice of, convene and hold a special meeting of its
stockholders (the "Special Meeting") for the purposes of considering
and taking action upon the approval of the Merger and the approval and
adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and (x)
obtain and furnish the information required to be included by the SEC
in the Proxy Statement (as hereinafter defined) and, after consultation
with Parent, respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement, including any amendment or
supplement thereto (the "Proxy Statement") to be mailed to its
stockholders at the earliest practicable date; provided that no
--------
amendment or supplement to the Proxy Statement will be made by the
Company without consultation with Parent and its counsel and (y) use
its reasonable best efforts to obtain the necessary approvals of the
Merger and this Agreement by its stockholders; and
37
<PAGE>
(iii) unless this Agreement has been terminated in
accordance with Article VII, subject to its rights pursuant to Section
5.5, include in the Proxy Statement the recommendation of its Board of
Directors that stockholders of the Company vote in favor of the
approval of the Merger and the approval and adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the
Shares then owned by it, Purchaser or any of its other Subsidiaries in favor of
the approval and adoption of this Agreement.
(c) Notwithstanding anything else herein or in this Section
5.3, in the event that Parent, Purchaser and any other Subsidiaries of Parent
shall acquire in the aggregate a number of the outstanding shares of each class
of capital stock of the Company, pursuant to the Offer or otherwise, sufficient
to enable Purchaser or the Company to cause the Merger to become effective under
applicable Law without a meeting of stockholders of the Company, the parties
hereto shall, at the request of Parent and subject to Article VI, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the consummation of such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
Section 5.4 Reasonable Efforts; Notification. (a) Upon the
--------------------------------
terms and subject to the conditions set forth in this Agreement, including
without limitation Section 5.5 hereto, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Offer and the Merger, and the other
Transactions, including (i) the preparation and filing with the SEC of the Offer
Documents, the Schedule 14D-9, the information required to be distributed to the
stockholders of the Company pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder as is necessary to enable Parent's designees
to be elected to the Company's Board or Directors pursuant to Section 1.4
hereof, the preliminary Proxy Statement and the Proxy Statement and all
necessary amendments or supplements thereto; (ii) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from any Governmental
Entity and the making of all necessary registrations and filings (including
filings with any Governmental Entity, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (iii) the obtaining of all
necessary consents, approvals
38
<PAGE>
or waivers from third parties, (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the Transactions, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (v) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of this Agreement.
(b) Each of the Company, Parent and Purchaser shall give
prompt notice to the other of (i) any of their representations or warranties
contained in this Agreement becoming untrue or inaccurate in any respect
(including receiving knowledge of any fact, event or circumstance which may
cause any representation qualified as to knowledge to be or become untrue or
inaccurate in any respect) or (ii) the failure by them to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied with
or satisfied by them under this Agreement; provided, however, that no such
-------- -------
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
Section 5.5 No Solicitation. (a) The Company shall not, nor
---------------
shall it permit any of its Subsidiaries to, nor shall it authorize (and shall
use its best efforts not to permit) any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of its Subsidiaries to, (i) solicit or initiate, or encourage, directly
or indirectly, any inquiries or the submission of, any Takeover Proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information or data with respect to or access to the properties of,
or take any other action to knowingly facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal or
(iii) enter into any agreement with respect to any Takeover Proposal or approve
or resolve to approve any Takeover Proposal; provided, that nothing contained in
-------- ----
this Section 5.5 or any other provision hereof shall prohibit the Company or the
Company's Board of Directors from (i) taking and disclosing to the Company's
stockholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or
(ii) making such disclosure to the Company's stockholders as, in the good faith
judgment of the Company's Board of Directors, after receiving written advice
from outside counsel, is required under applicable Law, provided that the
Company may not, except as permitted by Section 5.5(b), withdraw or modify, or
propose to withdraw or modify, its position with respect to the Offer or the
Merger or approve
39
<PAGE>
or recommend, or propose to approve or recommend any Takeover Proposal, or enter
into any agreement with respect to any Takeover Proposal. Upon execution of this
Agreement, the Company will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Notwithstanding the foregoing, prior to the time of
acceptance of Shares for payment pursuant to the Offer, the Company may furnish
information concerning its business, properties or assets to any Person or group
and may negotiate and participate in discussions and negotiations with such
Person or group concerning a Takeover Proposal if:
(x) such Person or group has submitted a Superior Proposal;
and
(y) the Board of Directors of the Company determines
in good faith after consultation with outside legal counsel that such
action is necessary for the Board of Directors of the Company to comply
with its fiduciary duty under Applicable Law.
The Company will promptly (but in no case later than 24 hours) notify Parent of
the existence of any proposal, discussion, negotiation or inquiry received by
the Company regarding any Takeover Proposal, and the Company will immediately
communicate to Parent the terms of any proposal, discussion, negotiation or
inquiry which it may receive regarding any Takeover Proposal and the identity of
the party making such proposal or inquiry or engaging in such discussion or
negotiation. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other Person in connection
with any Takeover Proposal which was not previously provided to Parent. The
Company will keep Parent informed of the status and details of any such Takeover
Proposal and of any amendments or proposed amendments to any Takeover Proposal
and will promptly (but in no case later than 24 hours) notify Parent of any
determination by the Company's Board of Directors that a Superior Proposal has
been made.
(b) Except as set forth in this Section 5.5(b), neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Board of Directors of the
Company or any such committee of the Offer, this Agreement or the Merger, (ii)
approve or recommend, or propose to approve or recommend, any Takeover Proposal
or (iii) enter into any agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing,
40
<PAGE>
subject to compliance with the provisions of this Section 5.5, prior to the time
of acceptance for payment of Shares pursuant to the Offer, the Company's Board
of Directors may withdraw or modify its approval or recommendation of the Offer,
this Agreement or the Merger, approve or recommend a Superior Proposal, or enter
into an agreement with respect to a Superior Proposal, in each case at any time
after the fifth business day following Parent's receipt of written notice
(including by facsimile) from the Company advising Parent that the Board of
Directors of the Company has received a Superior Proposal which it intends to
accept, specifying the material terms and conditions of such Superior Proposal
and identifying the Person making such Superior Proposal, but only if the
Company shall have caused its financial and legal advisors to negotiate with
Parent to make such adjustments to the terms and conditions of this Agreement as
would enable the Company to proceed with the Transactions on such adjusted
terms.
Section 5.6 Publicity. Except as required by Law or as
---------
permitted by Section 5.5, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party.
Section 5.7 Transfer Taxes. All liability for transfer or
--------------
other similar Taxes arising out of or related to the Offer and the Merger or the
consummation of any other Transaction, and due to the property owned by the
Company or any of its Subsidiaries or affiliates ("Transfer Taxes") shall be
borne by the Company, and the Company shall file or cause to be filed all Tax
Returns relating to such Transfer Taxes which are due.
Section 5.8 State Takeover Laws. Notwithstanding any other
-------------------
provision in this Agreement, in no event shall the Section 203 Approval be
withdrawn, revoked or modified by the Board of Directors of the Company. If any
state takeover statute other than Section 203 of the DGCL becomes or is deemed
to become applicable to the Company Option Agreement, the Offer, the acquisition
of Shares pursuant to the Offer or the Merger, the Company shall take all action
necessary to render such statute inapplicable to all of the foregoing.
Section 5.9 Indemnification and Insurance.
-----------------------------
(a) The Company shall, to the fullest extent permitted under
applicable Delaware Law, the terms of the Company's Certificate of Incorporation
or
41
<PAGE>
By-Laws and regardless of whether the Merger becomes effective, indemnify and
hold harmless, and, after the Effective Time, the Surviving Corporation shall,
to the fullest extent permitted under applicable Delaware Law, the terms of the
Surviving Corporation's Certificate of Incorporation or By-Laws, indemnify and
hold harmless, each present and former director, officer or employee of the
Company or any of its Subsidiaries (collectively, the "Indemnified Parties")
against any costs or expenses (including reasonable attorneys' fees), judgments,
losses, claims, damages and liabilities incurred in connection with, and amounts
paid in settlement of, any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative and wherever asserted,
brought or filed, (x) arising out of or pertaining to the Transactions or (y)
otherwise with respect to any acts or omissions or alleged acts or omissions
occurring at or prior to the Effective Time, in each case for a period of six
years after the date hereof. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period after
the Effective Time must be reasonably satisfactory to the Surviving Corporation,
(ii) after the Effective Time, the Surviving Corporation shall pay the
reasonable fees and expenses of such counsel, promptly after statements
therefor are received, and (iii) the Surviving Corporation will cooperate in the
defense of any such matter; provided, however, that the Surviving Corporation
-------- -------
shall not be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld or delayed); and provided,
--------
further, that, in the event that any claim or claims for indemnification are
- -------
asserted or made within such six year period, all rights to indemnification in
respect of any such claim or claims shall continue until the disposition of any
and all such claims. The Indemnified Parties as a group may retain only one law
firm to represent them with respect to any single action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. The
indemnity agreements of the Surviving Corporation in this Section 5.9(b) shall
extend, on the same terms to, and shall inure to the benefit of and shall be
enforceable by, each Person or entity who controls, or in the past controlled,
any present or former director, officer or employee of the Company or any of its
Subsidiaries.
(b) For a period of thirty-six months after the Effective
Time, Parent shall cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those Persons
who are currently covered by the Company's directors' and officers' liability
insurance policy (a copy of which has been made available to Parent) on terms
(including the amounts of coverage and the amounts of deductibles, if any) that
are no less favorable to the
42
<PAGE>
terms now applicable to them under the Company's current policies; provided,
--------
however, that in no event shall Parent or the Surviving Corporation be required
- -------
to expend in excess of 150% of the annual premium currently paid by the Company
for such coverage; and provided further, that, if the premium for such coverage
----------------
exceeds such amount, Parent or the Surviving Corporation shall purchase a policy
with the greatest coverage available for such 150% of the annual premium.
(c) This Section 5.9 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect
-----------------------------------------------
the Merger. The respective obligation of each party to effect the Merger shall
- ----------
be subject to the satisfaction on or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Purchaser, as the case may be, to the extent permitted by
applicable Law:
(a) this Agreement shall have been approved and adopted
by the requisite vote of the holders of Shares, if required by applicable Law
and the Certificate of Incorporation, in order to consummate the Merger;
(b) no statute, rule, regulation, order, decree or
injunction shall have been enacted, promulgated or issued by any Governmental
Entity precluding, restraining, enjoining or prohibiting consummation of the
Merger; and
(c) Parent, Purchaser or their affiliates shall have
purchased Shares pursuant to the Offer.
43
<PAGE>
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and
-----------
the Merger contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after approval of matters presented in
connection with the Merger by the stockholders of the Company:
(a) By the mutual written consent of Parent and the
Company; provided, however, that if Parent shall have a majority of the
-------- -------
directors pursuant to Section 1.4, such consent of the Company may only be given
if approved by the Continuing Directors.
(b) By either of Parent or the Company if (i) a
statute, rule or executive order shall have been enacted, entered or promulgated
prohibiting the Transactions on the terms contemplated by this Agreement or (ii)
any Governmental Entity shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the parties hereto
shall use their reasonable efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the Transactions and such order,
decree, ruling or other action shall have become final and non-appealable.
(c) By either of Parent or the Company if the
Effective Time shall not have occurred on or before December 31, 1999; provided,
--------
that the party seeking to terminate this Agreement pursuant to this Section
7.1(c) shall not have breached in any material respect its obligations under
this Agreement in any manner that shall have proximately contributed to the
failure to consummate the Merger on or before such date.
(d) By the Company:
(i) if the Company has entered into an
agreement with respect to a Superior Proposal or has approved or
recommended a Superior Proposal in accordance with Section 5.5(b),
provided the Company has complied with all provisions thereof,
including the notice provisions therein, and that it simultaneously
terminates this Agreement and makes simultaneous payment to the Parent
of the Expenses and the Termination Fee; or
44
<PAGE>
(ii) if Parent or Purchaser shall have terminated the Offer
or the Offer expires without Parent or Purchaser, as the case may be,
purchasing any Shares pursuant thereto; provided that the Company may
not terminate this Agreement pursuant to this Section 7.1(d)(ii) if the
Company is in material breach of this Agreement or the Company Option
Agreement;
(iii) if Parent, Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate this Agreement pursuant to
this Section 7.1(d)(iii) if the Company is in material breach of this
Agreement or the Company Option Agreement; or
(iv) if there shall be a material breach by Parent or
Purchaser of any of their representations, warranties, covenants or
agreements contained in this Agreement or the Company Option Agreement.
(e) By Parent or Purchaser:
(i) (A) if prior to the purchase of the Shares pursuant to
the Offer, the Board of Directors of the Company shall have withdrawn,
or modified or changed in a manner adverse to Parent or Purchaser, its
approval or recommendation of the Offer, this Agreement or the Merger
or shall have recommended or approved a Takeover Proposal; or
(B) there shall have been a material breach of any provision
of Section 5.5; or
(ii) if Parent or Purchaser shall have terminated the Offer
without Parent or Purchaser purchasing any Shares thereunder, provided
--------
that Parent or Purchaser may not terminate this Agreement pursuant to
this Section 7.1(e)(ii) if Parent or Purchaser is in material breach of
this Agreement; or
(iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, Parent, Purchaser or any of
their affiliates shall have failed to commence the Offer on or prior to
five business days following the date of the initial public
announcement of the Offer; or
45
<PAGE>
(iv) any Person or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act), other than Parent, Purchaser or
their affiliates or any group of which any of them is a member, shall
have acquired or announced its intention to acquire beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the Shares; or
(v) if the Company receives a Takeover Proposal from
any Person (other than Parent or Purchaser), and the Company's Board of
Directors takes a neutral position or makes no recommendation with
respect to such Takeover Proposal after a reasonable amount of time
(and in no event more than five business days following such receipt)
has elapsed for the Company's Board of Directors to review and make a
recommendation with respect to such Takeover Proposal; or
(vi) if there shall be a material breach by the Company
of any of its representations, warranties, covenants or agreements
contained in this Agreement or the Company Option Agreement.
Section 7.2 Effect of Termination. In the event of termination
---------------------
of this Agreement by either the Company or Parent or Purchaser as provided in
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Purchaser or the
Company, other than the provisions of Section 3.21, 4.5, 5.2, this Section 7.2
and Article VIII and except to the extent that such termination results from the
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as provided below, all
-----------------
fees and expenses incurred in connection with the Offer, the Merger, this
Agreement and the Transactions shall be paid by the party incurring such fees or
expenses, whether or not the Offer or the Merger is consummated.
(b) If (x) Parent or Purchaser terminates this
Agreement pursuant to Section 7.1(e)(i) or 7.1(e)(v) or (y) the Company
terminates this Agree-
46
<PAGE>
ment pursuant to Section 7.1(d)(i), then in each case, the Company shall pay, or
cause to be paid to Parent, at the time of termination, an amount equal to
$7,000,000 (the "Termination Fee") and an amount equal to Parent's and
Purchaser's actual and reasonably documented out-of-pocket expenses incurred by
Parent or Purchaser in connection with the Offer, the Merger, this Agreement and
the consummation of the Transactions, including, without limitation, the fees
and expenses payable to all banks, investment banking firms, and other financial
institutions and Persons and their respective agents and counsel incurred in
connection with acting as Parent's or Purchaser's financial advisor with respect
to, or arranging or committing to provide or providing any financing for, the
Transactions up to $1,500,000 (the "Expenses").
(c) In addition, if this Agreement is terminated (i) by either Parent
or the Company pursuant to Section 7.1(c) at any time when there is pending a
Superior Proposal, (ii) by Parent pursuant to Section 7.1(e)(ii), (iii) or (vi)
(other than by reason of a breach of Section 5.5) or (iii) by the Company
pursuant to Section 7.1(d)(ii) (except, in the case of Sections 7.1(e)(ii),
7.1(e)(iii) and 7.1(d)(ii), by reason of a failure of the conditions in
paragraphs (c) or (i) of Annex A) and at the time of any such termination,
Parent is not in material breach of this Agreement, then the Company shall pay
to Parent, at the time of termination, the Expenses. If, within 9 months after
any termination referred to in this paragraph (c), the Company shall enter into
an agreement with respect to a Takeover Proposal or any Person shall acquire 40%
of the outstanding Shares, then the Company shall pay the Termination Fee
concurrently with entering into any such agreement or, if sooner, within one day
after such acquisition.
(d) Any payments required to be made pursuant to this Section 8.1 shall
be made by wire transfer of same day funds to an account designated by Parent.
Section 8.2 Amendment and Modification. Subject to applicable
--------------------------
Law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto (which in the
case of the Company shall include approvals as contemplated in Section 1.4(c)),
at any time prior to the Closing Date with respect to any of the terms contained
herein; provided, however, that after the approval of this Agreement by the
-------- -------
stockholders of the Company, no such amendment, modification or supplement shall
reduce the amount or change the form of the Merger Consideration or otherwise
adversely affect the rights of stockholders.
47
<PAGE>
Section 8.3 Nonsurvival of Representations and Warranties.
---------------------------------------------
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time. This Section 8.3 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Time.
Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt, and shall
be given to the parties at the following addresses or telecopy numbers (or at
such other address or telecopy number for a party as shall be specified by like
notice):
(a) if to Parent or Purchaser, to:
The Dyson-Kissner-Moran Corporation
565 Fifth Avenue, 4/th/ Floor
New York, New York 10017
Attention: John FitzSimons, Esq.
Telecopy: 212-599-5105
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Attention: Stephen M. Banker, Esq.
(b) if to the Company, to:
Optek Technology, Inc.
1215 West Crosby Road
Carrollton, Texas 75006
Attention: Thomas R. Filesi
Telecopy: 972-323-2208
with a copy to:
Hewitt & Hewitt, P.C.
2612 Thomas Avenue
48
<PAGE>
Dallas, Texas 75204
Attention: Christopher M. Hewitt
Telecopy: 214-969-0238
with a copy to:
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202-3789
Attention: David H. Oden
Telecopy: 214-651-5940
Section 8.5 Interpretation. (a) The words "hereof," "herein" and
--------------
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a Person are also to
its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the
date hereof" and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to the date first written above. The phrase "made
available" in this Agreement shall mean that the information referred to has
been actually delivered to the party to whom such information is to be made
available.
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(c) The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
Section 8.6 Counterparts. This Agreement may be executed in
------------
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries;
----------------------------------------------
Rights of Ownership. This Agreement, the Confidentiality Agreement and the
- -------------------
Company Option Agreement: (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and (b) except as provided in Section
5.9, are not intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
Section 8.8 Severability. Any term or provision of this
------------
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 8.9 Governing Law. This Agreement shall be governed by
-------------
and construed in accordance with the Laws of the State of Delaware without
giving effect to the principles of conflicts or choice of law thereof or of any
other jurisdiction.
Section 8.10 Assignment. Neither this Agreement nor any of
----------
the rights, interests or obligations hereunder shall be assigned by any of the
parties
50
<PAGE>
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
Section 8.11 Enforcement. The parties agree that irreparable
-----------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the Transactions, (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court and (c) agrees that it will not bring any action relating to
this Agreement or any of the Transactions in any court other than a Federal or
state court sitting in the State of Delaware.
Section 8.12 Extension; Waiver. At any time prior to the
-----------------
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 8.2, waive compliance by the
other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
Section 8.13 Certain Undertakings of Parent. Parent shall
------------------------------
perform, or cause to be performed, any obligation of Purchaser under this
Agreement which shall have been breached by Purchaser.
51
<PAGE>
Section 8.14 Definitions. For purposes of this Agreement:
-----------
"Affiliate" has the meaning set forth in Rule 12b-2 of the Exchange
Act.
"Benefit Plans" has the meaning assigned thereto in Section 3.10.
"By-laws" means the by-laws of the Company as in effect on the date of
this Agreement.
"Certificate of Incorporation" means the certificate of incorporation
of the Company as in effect on the date of this Agreement.
"Certificate of Merger" has the meaning assigned thereto in Section
2.2.
"Certificates" has the meaning assigned thereto in Section 2.5.
"Closing" has the meaning assigned thereto in Section 2.3.
"Closing Date" has the meaning assigned thereto in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Optek Technology, Inc., a Delaware corporation.
"Company Disclosure Schedule" has the meaning assigned thereto in
Article III.
"Company Material Contract" has the meaning assigned thereto in Section
3.16.
"Company Option Agreement" has the meaning assigned thereto in the
recitals.
"Company's SEC Documents" has the meaning assigned thereto in Section
3.5.
"Computer Programs" means:
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(i) any and all computer software programs, including all
source and object code,
(ii) databases and compilations, including any and all
data and collections of data, whether machine
readable or otherwise,
(iii) billing, reporting, engineering and other management
information systems,
(iv) all descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the
foregoing,
(v) all content contained on any Internet site(s), and
(vi) all documentation, including user manuals and
training materials, relating to any of the
foregoing.
"Confidentiality Agreement" has the meaning assigned thereto in Section
5.2.
"Continuing Director" means (i) any member of the Board of Directors of
the Company as of the date hereof or (ii) any successor of a Continuing Director
who is (A) unaffiliated with, and not a designee or nominee of, Parent or
Purchaser, and (B) recommended to succeed a Continuing Director by a majority of
the Continuing Directors then on the Board of Directors of the Company, and in
each case under clauses (i) and (ii), who is not an employee of the Company.
"Defect" means a defect or impurity of any kind, whether in design,
manufacture, processing, or otherwise, including, without limitation, any
dangerous propensity associated with any reasonably foreseeable use of a
Product, or the failure to warn of the existence of any defect, impurity, or
dangerous propensity.
"DGCL" means the Delaware General Corporation Law, as amended.
"Dissenting Shares" has the meaning assigned thereto in Section 2.8.
"Dissenting Stockholders" has the meaning assigned thereto in Section
2.8.
"Effective Time" has the meaning assigned thereto in Section 2.2.
53
<PAGE>
"Environmental Laws" means all foreign, Federal, state and local Laws
relating to pollution or protection of human health, safety or the environment,
including, without limitation, Laws relating to Releases or threatened Releases
of Hazardous Materials into the indoor or outdoor environment (including,
without limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or handling of
Hazardous Materials, and all Laws and regulations with regard to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials, and all Laws relating to endangered or threatened species of fish,
wildlife and plants and the management or use of natural resources.
"Environmental Liabilities and Costs" means all liabilities,
obligations, responsibilities, obligations to conduct cleanup, losses, damages,
deficiencies, punitive damages, consequential damages, treble damages, costs and
expenses (including, without limitation, all reasonable fees, disbursements and
expenses of counsel, expert and consulting fees and costs of investigations and
feasibility studies and responding to government requests for information or
documents), fines, penalties, restitution and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future, resulting from any claim or demand, by any Person or entity, whether
based in contract, tort, implied or express warranty, strict liability, joint
and several liability, criminal or civil statute, including any Environmental
Law, or arising from environmental, health or safety conditions, or the Release
or threatened Release of Hazardous Materials into the environment.
"ERISA" has the meaning assigned thereto in Section 3.10.
"ERISA Affiliate" has the meaning assigned thereto in Section 3.10.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expenses" has the meaning assigned thereto in Section 8.1(b).
"Fee Properties"means all real property and interests in real property
owned in fee by the Company or one of its Subsidiaries.
"GAAP" has the meaning assigned thereto in Section 3.5.
54
<PAGE>
"Governmental Entity" means any (i) nation, state, county, city, town,
village, district or other jurisdiction of any nature; (ii) federal, state,
local, municipal, foreign or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official or entity and any court or other tribunal); or (iv)
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory or taxing authority or power of any
nature.
"Hazardous Materials" means all substances defined as hazardous
substances in the National Oil and Hazardous Substances Pollution Contingency
Plan, 40 C.F.R. (S) 300.5, or substances defined as hazardous substances,
hazardous materials, toxic substances, hazardous wastes, pollutants or
contaminants, under any Environmental Law, or substances regulated under any
Environmental Law, including, but not limited to, petroleum (including crude oil
or any fraction thereof), asbestos and polychlorinated biphenyls.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" has the meaning assigned thereto in Section 5.9.
"Knowledge" or "knowledge" means, with respect to the Company and/or
any Subsidiary thereof, the knowledge of any vice president, chief financial
officer, controller, and any officer superior to any of the foregoing and what
should have been known by any such Person after the conduct of a reasonable
investigation.
"Laws" means any administrative order, constitution, law, ordinance,
principle of common law, rule, regulation, statute, treaty, judgment, decree,
license or permit enacted, promulgated, issued, enforced or entered by any
Governmental Entity.
"Leased Properties" means all real property and interests in real
property leased by the Company or one of its Subsidiaries.
"Licenses" has the meaning assigned thereto in Section 3.14(c) hereof.
"Lien" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other security
arrangement, or any
55
<PAGE>
adverse right or interest, charge or claim of any nature whatsoever of, on, or
with respect to, any asset, property or property interest.
"Material Adverse Change" or "Material Adverse Effect" means, when used
in connection with the Company or Parent, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to result in
any change or effect) that is materially adverse to the business, properties,
assets, prospects, financial condition or results of operations of such party
and its Subsidiaries taken as a whole.
"Merger" has the meaning assigned thereto in Section 2.1.
"Merger Consideration" has the meaning assigned thereto in Section 2.4.
"Minimum Condition" has the meaning assigned thereto in Annex A.
"Occurrence" means any accident, happening or event which is caused or
allegedly caused by any alleged hazard or alleged defect in manufacture, design,
materials or workmanship including, without limitation, any alleged failure to
warn or any breach of express or implied warranties or representations with
respect to, or any such accident, happening or event otherwise involving, a
product (including any parts or components) which results or is alleged to have
resulted in injury or death to any person or damage to or destruction of
property, or other consequential damages, at any time.
"Offer" has the meaning assigned thereto in Section 1.1.
"Offer Documents" has the meaning assigned thereto in Section 1.3.
"Offer Price" has the meaning assigned thereto in Section 1.1.
"Offer to Purchase" has the meaning assigned thereto in Section 1.1.
"Option Plans" has the meaning assigned thereto in Section 2.7.
"Option" has the meaning assigned thereto in Section 2.7.
"Other Intellectual Property" shall mean all intellectual property
rights used in the business of the Company or any of its Subsidiaries as
currently conducted, including but not limited to all patents and patent
applications; copyrights, copyright
56
<PAGE>
registrations and applications (including copyrights in Computer Programs);
Computer Programs; technology, trade secrets, know-how, confidential
information, proprietary processes and formulae; "semiconductor chip product"
and "mask works" (as such terms are defined in 17 U.S.C. 901); and rights of
publicity and privacy relating to the use of the names, signatures, likenesses,
voices and biographical information of real persons; together with any and all
rights of renewal thereof and the right to sue for past, present or future
infringements or misappropriations thereof.
"Paying Agent" has the meaning assigned thereto in Section 2.5(a).
"Parent" means The Dyson-Kissner-Moran Corporation, a Delaware
corporation.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" means any Federal, state, local and foreign governmental
approval, authorization, certificate, filing, franchise, license, notice, permit
or right.
"Person" means an individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, labor union,
estate, trust, unincorporated organization or other entity, including any
Governmental Entity.
"Preferred Shares" has the meaning assigned thereto in Section 3.3.
"Product" means any product designed, manufactured, shipped, sold,
marketed, distributed and/or otherwise introduced into the stream of commerce by
or on behalf of the Company or any of its past or present Subsidiaries.
"Proxy Statement" has the meaning assigned thereto in Section 5.3.
"Purchaser" means DKM Acquisition Corp., a Delaware corporation.
"Real Property" means the Leased Properties and the Fee Properties.
"Recalls" has the meaning assigned thereto in Section 3.18
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without limitation,
ambient air, surface
57
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water, groundwater, and surface or subsurface strata) or into or out of any
property of any Hazardous Material, including the movement of Hazardous
Materials through or in the air, soil, surface water, groundwater or property.
"Representative" means, with respect to any Person, such Person's
officers, directors, employees, agents and representatives (including any
investment banker, financial advisor, accountant, legal counsel, agent,
representative or expert retained by or acting on behalf of such Person or its
Subsidiaries).
"Schedule 14D-1" has the meaning assigned thereto in Section 1.3.
"Schedule 14D-9" has the meaning assigned thereto in Section 1.3.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"SEC Documents" means reports, proxy statements, forms, and other
documents required to be filed with the SEC under the Securities Act and the
Exchange Act.
"Secretary of State" has the meaning assigned thereto in Section 2.2.
"Section 203 Approval" has the meaning assigned thereto in Section 1.2.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning assigned thereto in the recitals.
"Significant Subsidiaries" has the meaning assigned thereto in Rule
1-02 of Regulation S-X of the SEC.
"Special Meeting" has the meaning assigned thereto in Section 5.3.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture or other entity, whether incorporated or
unincorporated, of which such Person or any other Subsidiary of such Person (i)
owns, directly or indirectly, 50% or more of the outstanding voting securities
or equity interests, (ii) is entitled to elect at least a majority of the Board
of Directors or similar governing body or (iii) is a
58
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general partner (excluding such partnerships where such Person or any Subsidiary
of such Person do not have a majority of the voting interests in such
partnership).
"Superior Proposal" means an unsolicited bona fide proposal by a Third
Party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than a majority of the Shares then outstanding or all or
substantially all of the assets of the Company or to acquire, directly or
indirectly, the Company by merger or consolidation, and otherwise on terms which
the Board of Directors of the Company determines in good faith to be more
favorable to the Company's stockholders (taking into account the time period
reasonably believed necessary to consummate such transaction) than the Offer and
the Merger (based on advice of the Company's independent financial advisor that
the value of the consideration provided for in such proposal is superior to the
value of the consideration provided for in the Offer and the Merger), for which
financing, to the extent required, is then committed and which, in the good
faith reasonable judgment of the Board of Directors of the Company, is
reasonably likely to be consummated.
"Surviving Corporation" has the meaning assigned thereto in Section
2.1.
"Takeover Proposal" means any bona fide proposal or offer, whether in
writing or otherwise, from any Person other than Parent, Purchaser or any
affiliates thereof (a "Third Party") to acquire beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of all or
a material portion of the assets of the Company or any of its Subsidiaries or
20% or more of any class of equity securities of the Company or any of its
Subsidiaries pursuant to a merger, consolidation or other business combination,
sale of shares of capital stock, sale of assets, tender offer, exchange offer or
similar transaction with respect to either the Company or any of its
Subsidiaries, including any single or multi-step transaction or series of
related transactions, which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of or 20% or more of
the equity interest in either the Company or any of its Subsidiaries.
"Tax" or "Taxes" mean all taxes, charges, fees, levies, penalties or
other assessments imposed by any federal, state, local or foreign Taxing
Authority including but not limited to net income, gross income, receipts,
windfall profit, severance, property, production, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, transfer, stamp or environmental tax, or any other tax, custom, duty,
governmental fee or other like
59
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assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount imposed by any Governmental
Entity.
"Taxing Authority" shall mean a governmental authority or any
subdivision, agency, commission or authority thereof, any judicial body, or any
quasi-governmental or private body having jurisdiction over the assessment,
determination, collection or imposition of any Tax (including, without
limitation, the Internal Revenue Service).
"Tax Returns" mean all returns, reports or statements required to be
filed with any Governmental Entity with respect to any Tax (including any
attachments thereto), including, without limitation, any consolidated, unitary
or similar return, information return, claim for refund, amended return or
declaration of estimated Tax.
"Termination Fee" has the meaning assigned thereto in Section 8.1(b).
"Third Party" has the meaning assigned thereto in this Section 8.15
under "Takeover Proposal."
"Trademarks" shall mean all United States and foreign trademarks
(including service marks and trade names, whether registered or at common law),
registrations and applications therefor, owned or licensed by the Company or its
Subsidiaries, and the goodwill of the Company's and each of its Subsidiaries'
respective businesses associated therewith, together with any and all (i) rights
of renewal thereof and (ii) rights to sue for past, present and future
infringements or misappropriation thereof.
"Transactions" has the meaning assigned thereto in Section 1.2(a).
"Transfer Taxes" has the meaning assigned thereto in Section 5.7.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
THE DYSON-KISSNER-MORAN
CORPORATION
By: /s/ ROBERT R. DYSON
--------------------------------
Name: Robert R. Dyson
Title: Chairman and Chief Executive
Officer
DKM ACQUISITION CORP.
By: /s/ ROBERT R. DYSON
--------------------------------
Name: Robert R. Dyson
Title: Chairman and Chief Executive
Officer
OPTEK TECHNOLOGY, INC.
By: /s/ THOMAS R. FILESI
--------------------------------
Name: Thomas R. Filesi
Title: Chairman and Chief Executive
Officer
<PAGE>
ANNEX A
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CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement and Plan of Merger of which this Annex A is a part.
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may amend the Offer consistent with the terms of
the Merger Agreement or terminate the Offer and not accept for payment any
tendered Shares, if (i) there shall not have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of Shares which, when
added to the Shares, if any, beneficially owned by Parent or Purchaser, would
constitute at least a majority of the Shares outstanding on a fully diluted
basis (the "Minimum Condition"), (ii) any applicable waiting period under the
HSR Act has not expired or been terminated or any material consent required from
a foreign Governmental Entity has not been obtained, or (iii) at any time on or
after the date of the Merger Agreement and prior to the expiration of the Offer,
any of the following events shall occur:
(a) there shall be threatened by a Governmental Entity or
pending any suit, action or proceeding (i) seeking to prohibit or impose any
material limitations on Parent's or Purchaser's ownership or operation (or that
of any of their respective Subsidiaries or Affiliates) of all or a material
portion of their or the Company's businesses or assets, (ii) seeking to compel
Parent or Purchaser or their respective Subsidiaries and Affiliates to dispose
of or hold separate any material portion of the business or assets of the
Company or Parent and their respective Subsidiaries, in each case taken as a
whole, (iii) challenging the acquisition by Parent or Purchaser of any Shares
pursuant to the Offer or the Company Option Agreement, (iv) seeking to restrain
or prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other Transactions, (v) seeking to obtain from the
Company any damages that would be reasonably likely to have a Material Adverse
Effect on the Company, (vi) seeking to impose material limitations on the
ability of Purchaser, or rendering Purchaser unable, to accept for payment, pay
for or purchase some or all of the Shares pursuant to the Offer and the Merger,
(vii) seeking
A-1
<PAGE>
to impose material limitations on the ability of Purchaser or Parent effectively
to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by it on all matters properly
presented to the Company's stockholders, or (viii) which otherwise is reasonably
likely to have a Material Adverse Effect on the Company or, as a result of the
Transactions, Parent and its Subsidiaries; or
(b) there shall be any statute, rule, regulation, judgment, order
or injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any Governmental
Entity, other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i) through
(viii) of paragraph (a) above; or
(c) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the Nasdaq National
Market System, for a period in excess of three hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (3) the commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (4) any limitation or proposed limitation (whether
or not mandatory) by any United States governmental authority or agency that has
a material adverse effect generally on the extension of credit by banks or other
financial institutions, (5) any change in general financial bank or capital
market conditions which has a material adverse effect the ability of financial
institutions in the United States to extend credit or syndicate loans, (6) any
decline in either the Dow Jones Industrial Average or the Standard & Poor's
Index of 500 Industrial Companies by an amount in excess of 20% measured from
the close of business on the date of this Agreement or (7) in the case of any of
the situations in clauses (1) through (6) inclusive, existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or
(d) the representations and warranties of the Company set
forth in the Merger Agreement shall not be true and accurate as of any date up
to and including the date of consummation of the Offer as though made on or as
of such date (except for those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time which need only be true and accurate as of such date or with respect to
such period) or the Company shall
A-2
<PAGE>
have breached or failed to perform or comply with any obligation, agreement or
covenant required by the Merger Agreement to be performed or complied with by it
except, in each case where the failure of such representations and warranties to
be true and accurate (without giving effect to any limitation as to "knowledge,"
"materiality" or "material adverse effect" set forth therein), or the failure
to perform or comply with such obligations, agreements or covenants, do not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or a materially adverse effect on the ability to consummate the Offer or the
Merger; or
(e) there shall have occurred any events or changes which have
had or which are reasonably likely to have or constitute, individually or in the
aggregate, a Material Adverse Effect on the Company; or
(f) the Company's Board of Directors (i) shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, (ii) shall have recommended a Takeover Proposal, (iii)
shall have adopted any resolution to effect any of the foregoing or (iv) upon
request of Purchaser, shall fail to reaffirm its approval or recommendation of
the Offer, the Merger Agreement, or the Merger; or
(g) any Person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act), other than Parent, Purchaser or their affiliates or any
group of which any of them is a member, shall have acquired or announced its
intention to acquire beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the Shares; or
(h) the Company shall have breached or failed to perform any of
its agreements under the Company Option Agreement or breached any of its
representations and warranties in such agreement or such agreement shall not be
valid, binding and enforceable, except for such breaches or failures or failures
to be valid, binding and enforceable that do not materially and adversely affect
the benefits expected to be received by Parent and Purchaser under the Merger
Agreement or the Company Option Agreement; or
(i) the Merger Agreement shall have been terminated in accordance
with its terms;
A-3
<PAGE>
which, in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser) giving rise to such condition, makes it inadvisable to proceed with
the Offer and/or with such acceptance for payment of or payments for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be waived by Parent or Purchaser, in whole or in part, at any
time and from time to time, in the sole discretion of Parent or Purchaser. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
A-4
<PAGE>
EXHIBIT 99(C)(2)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 12, 1999 (the "Agreement"), between
Optek Technology, Inc., a Delaware corporation ("Issuer"), and The Dyson-
Kissner-Moran Corporation, a Delaware corporation ("Grantee").
WHEREAS, Issuer and Grantee have entered into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), providing for,
among other things, upon the terms and subject to the conditions thereof, the
merger of Purchaser with and into Issuer (the "Merger"); and
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Issuer agree, and Issuer
has agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
Capitalized terms used but not defined herein have the meanings set forth
in the Merger Agreement.
1. Grant of Option. (a) Upon the terms and subject to the conditions set
forth herein, Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase up to 1,520,912 shares (the "Option Shares")
of Issuer's common stock, par value $0.01 per share ("Issuer Common Stock"), at
a price of $25.50 per share (the "Purchase Price"), subject to adjustment as set
forth herein.
(b) In the event that any additional shares of Issuer Common Stock are
either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Agreement,
the number of Option Shares shall be increased or deceased, as appropriate, so
that, after such events, the number of Option Shares equals 19.9% of the number
of shares of Issuer Common Stock then issued and outstanding, without giving
effect to any shares subject to or issued pursuant to the Option. Nothing
contained in this Section 1(b) or elsewhere in this Agreement shall be deemed to
authorize Issuer or Grantee to breach any provision of the Merger Agreement.
<PAGE>
2. Exercise of Option. (a) Grantee may exercise the Option, with respect
to any or all of the Option Shares at any time and from time to time, subject to
the provisions of Section 2(c), after the Merger Agreement becomes terminable
under circumstances which could entitle Grantee to receive the Termination Fee
under Section 8.1 of the Merger Agreement (a "Triggering Event") except that (i)
subject to the last sentence of this Section 2(a), the Option will terminate and
be of no further force and effect upon the earliest to occur of (A) the purchase
of shares of Issuer Common Stock pursuant to the Offer, (B) six months after the
date on which a Triggering Event occurs and (C) termination of the Merger
Agreement in accordance with its terms prior to the occurrence of a Triggering
Event, unless, in the case of clauses (B) and (C), the Grantee could be entitled
to receive the Termination Fee following such time or termination upon the
occurrence of certain events, in which case the Option will not terminate until
the later of (x) six months following the time such fees become payable and (y)
the expiration of the period in which the Grantee has such right to receive the
Termination Fee and (ii) any purchase of Option Shares upon exercise of the
Option will be subject to compliance with the HSR Act and the obtaining or
making of any consents, approvals, orders, notifications or authorizations, the
failure of which to have obtained or made would have the effect of making the
issuance of Option Shares illegal (the "Regulatory Approvals") and no
preliminary or permanent injunction or other order by any court of competent
jurisdiction prohibiting or otherwise restraining such issuance shall be in
effect. Notwithstanding the termination of the Option, Grantee will be entitled
to purchase the Option Shares if it has exercised the Option in accordance with
the terms hereof prior to the termination of the Option, and the termination of
the Option will not affect any rights hereunder which by their terms do not
terminate or expire prior to or as of such termination.
(b) In the event that Grantee wishes to exercise the Option, it will send
to Issuer a written notice (an "Exercise Notice"; the date of which being herein
referred to as the "Notice Date") to that effect specifying (i) the number of
Option Shares, if any, Grantee wishes to purchase pursuant to this Section 2(b),
(ii) the number of Option Shares, if any, with respect to which Grantee wishes
to exercise its Cash-Out Right (as defined herein) pursuant to Section 7(c),
(iii) the denominations of the certificate or certificates evidencing the Option
Shares which Grantee wishes to purchase pursuant to this Section 2(b) and (iv) a
date not earlier than three business days nor later than 60 business days from
the Notice Date for the closing (an "Option Closing") of such purchase (an
"Option Closing Date"). Any Option Closing will be at an agreed location and
time in New York, New York on the applicable Option Closing Date or at such
later date as may be necessary so as to comply with clause (ii) of Section 2(a).
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<PAGE>
(c) Notwithstanding anything to the contrary contained herein, any exercise
of the Option and purchase of Option Shares shall be subject to compliance with
applicable laws and regulations, which may prohibit the purchase of all the
Option Shares specified in the Exercise Notice without first obtaining or making
certain Regulatory Approvals. In such event, if the Option is otherwise
exercisable and Grantee wishes to exercise the Option, the Option may be
exercised in accordance with Section 2(b) and Grantee shall acquire the maximum
number of Option Shares specified in the Exercise Notice that Grantee is then
permitted to acquire under the applicable laws and regulations, and if Grantee
thereafter obtains the Regulatory Approvals to acquire the remaining balance of
the Option Shares specified in the Exercise Notice, then Grantee shall be
entitled to acquire such remaining balance. Issuer agrees to use its reasonable
best efforts to assist Grantee in seeking the Regulatory Approvals.
In the event (i) Grantee receives official notice that a Regulatory
Approval required for the purchase of any Option Shares will not be issued or
granted or (ii) such Regulatory Approval has not been issued or granted within
six months of the date of the Exercise Notice, Grantee shall have the right to
exercise its Cash-Out Right (as defined herein) pursuant to Section 7(c) with
respect to the Option Shares for which such Regulatory Approval will not be
issued or granted or has not been issued or granted.
(d) If Grantee receives in aggregate (i) the Termination Fee and Expenses
pursuant to Section 8.1 of the Merger Agreement, (ii) amounts from the sale or
other disposition of the Option Shares, and (iii) amounts paid pursuant to
Section 7(c) hereof, and the aggregate of such amounts is in excess of the sum
of (A) $8,500,000 plus (B) the amounts paid by Grantee to purchase any Option
Shares, then Grantee, at its sole election, shall either (1) reduce the number
of Option Shares, (2) deliver to the Issuer for cancellation Option Shares
previously purchased by Grantee (valued, for the purposes of this Section 2(d)
at the average closing sale price per share of Issuer Common Stock (or if there
is no sale on such date then the average between the closing bid and ask prices
on any such day) as reported as reported on the Nasdaq National Market (or, if
not listed on the Nasdaq National Market, as reported on any other national
securities exchange or national securities quotation system on which the Issuer
Common Stock is listed or quoted, as reported in The Wall Street Journal
(Northeast edition), or, if not reported thereby, any other authoritative
source) for the twenty consecutive trading days preceding the day on which the
amount received by Grantee pursuant to clauses (d)(i), (ii) and (iii) above
exceeds the sum of the amounts in clauses (A) and (B) above), (3) pay cash to
the Issuer or (4) any combination thereof, so that the amount received by
Grantee pursuant to clauses (d)(i), (ii) and (iii) above shall not exceed the
sum of the amounts in clauses (A) and (B) above after taking into account
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<PAGE>
the foregoing actions. Notwithstanding any other provision of this Agreement,
nothing in this Agreement shall affect the ability of Grantee to receive nor
relieve Issuer's obligation to pay a fee pursuant to Section 8.1 of the Merger
Agreement.
3. Payment and Delivery of Certificates. (a) At any Option Closing,
Grantee will pay to Issuer in same day funds by wire transfer to a bank account
designated in writing by Issuer an amount equal to the Purchase Price multiplied
by the number of Option Shares to be purchased at such Option Closing.
(b) At any Option Closing, simultaneously with the delivery of same day
funds as provided in Section 3(a), Issuer will deliver to Grantee a certificate
or certificates representing the Option Shares to be purchased at such Option
Closing, which Option Shares will be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever. If at the time of issuance of
Option Shares pursuant to an exercise of the Option hereunder, Issuer shall have
issued any securities similar to rights under a shareholder rights plan, then
each Option Share issued pursuant to such exercise will also represent such a
corresponding right with terms substantially the same as and at least as
favorable to Grantee as are provided under any Issuer shareholder rights
agreement or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at an Option Closing will
have typed or printed thereon a restrictive legend which will read substantially
as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY IF SO REGISTERED OR IF AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE."
It is understood and agreed that the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have been
sold in compliance with the registration and prospectus delivery requirements of
the Securities Act, such Option Shares have been sold in reliance on and in
accordance with Rule 144 under the Securities Act or Grantee has delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel in
form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
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<PAGE>
4. Incorporation of Representations and Warranties of Issuer and Grantee.
The representations and warranties of Issuer and Grantee contained in Articles
III and IV of the Merger Agreement are hereby incorporated by reference herein
with the same force and effect as though made pursuant to this Agreement.
5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
Authorized Stock. Issuer has taken all necessary corporate and
other action to authorize and reserve and, subject to the expiration or
termination of any required waiting period under the HSR Act, to permit it
to issue, and, at all times from the date hereof until the obligation to
deliver Option Shares upon the exercise of the Option terminates, shall
have reserved for issuance, upon exercise of the Option, shares of Issuer
Common Stock necessary for Grantee to exercise the Option, and Issuer will
take all necessary corporate action to authorize and reserve (and shall at
all times maintain, free from pre-emptive rights, sufficient authorized and
reserved shares) for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 upon exercise
of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common
Stock or other securities which may be issuable upon exercise of the Option
or any other securities which may be issued pursuant to Section 7, upon
issuance pursuant hereto, will be duly and validly issued, fully paid and
nonassessable, and will be delivered free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever, including
without limitation any preemptive rights of any stockholder of Issuer.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
Purchase Not For Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be, and
the Option is not being, acquired by Grantee with a view to the public
distribution thereof. Neither the Option nor any of the Option Shares will
be offered, sold, pledged or otherwise transferred except in compliance
with, or pursuant to an exemption from, the registration requirements of
the Securities Act.
7. Adjustment upon Changes in Capitalization, Etc. (a) In the event of
any changes in Issuer Common Stock by reason of a stock dividend, stock split,
reverse
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<PAGE>
stock split, merger, recapitalization, combination, exchange of shares, or
similar transaction, the type and number of shares or securities subject to the
Option, and the Purchase Price therefor, will be adjusted appropriately, and
proper provision will be made in the agreements governing such transaction, so
that Grantee will receive upon exercise of the Option the number and class of
shares or other securities or property that Grantee would have received with
respect to Issuer Common Stock if the Option had been exercised immediately
prior to such event or the record date therefor, as applicable.
(b) Without limiting the parties' relative rights and obligations under the
Merger Agreement, in the event that the Issuer enters into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer will not be the continuing or surviving corporation in
such consolidation or merger, (ii) to permit any person, other than Grantee or
one of its subsidiaries, to merge into Issuer and Issuer will be the continuing
or surviving corporation, but in connection with such merger, the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other securities of Issuer
or any other person or cash or any other property, or the shares of Issuer
Common Stock outstanding immediately prior to the consummation of such merger
will, after such merger represent less than 50% of the outstanding voting
securities of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
subsidiaries, then, and in each such case, the agreement governing such
transaction will make proper provision so that the Option will, upon the
consummation of any such transaction and upon the terms and condition set forth
herein, be converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior to such
consolidation, merger, sale, or transfer, or the record date therefor, as
applicable and make any other necessary adjustments.
(c) If, at any time during the period commencing on the occurrence of a
Triggering Event and ending on the termination of the Option in accordance with
Section 2, Grantee sends to Issuer an Exercise Notice indicating Grantee's
election to exercise its right (the "Cash-Out-Right") pursuant to this Section
7(c), then Issuer shall pay to Grantee, on the Option Closing Date, in exchange
for the cancellation of the Option with respect to such number of Option Shares
as Grantee specifies in the Exercise Notice, an amount in cash (the "Cash-Out
Price") equal to the amount by which (A) the highest of (i) the price per share
of Issuer Common Stock at which a tender offer or exchange offer therefor has
been made, (ii) the highest price per share of Issuer
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<PAGE>
Common Stock to be paid by any third-party pursuant to an agreement with the
Issuer, (iii) the highest closing price within the six month period immediately
preceding the Notice Date per share of Issuer Common Stock as reported on the
Nasdaq National Market (or, if not listed on the Nasdaq National Market, as
reported on any other national securities exchange or national securities
quotation system on which the Issuer Common Stock is listed or quoted, as
reported in The Wall Street Journal (Northeast edition), or, if not reported
thereby, any other authoritative source) and (iv) in the event of a sale of all
or a substantial portion of Issuer's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment banking firm selected
by the Grantee, and reasonably acceptable to the Issuer, divided by the number
of shares of Issuer Common Stock outstanding at the time of such sale exceeds
(B) the Purchase Price, multiplied by the number of shares for which this Option
is then exercised. In determining the Cash-Out Price, the value of consideration
other than cash shall be determined by a nationally recognized investment
banking firm selected by the Grantee and reasonably acceptable to the Issuer.
Grantee will cooperate with the valuation work of any investment banking firm
selected pursuant to this Section 7(c). Notwithstanding the termination of the
Option, Grantee will be entitled to exercise its rights under this Section 7(c)
if it has exercised such rights in accordance with the terms hereof prior to the
termination of the Option.
8. Registration Rights.
(a) At any time and from time to time within three years of the date
hereof, Grantee may by written notice (a "Registration Notice") to Issuer
request Issuer to register under the Securities Act all or part of any Issuer
Common Stock beneficially owned by Grantee (collectively, the "Registrable
Securities") in order to permit the sale or other disposition of such securities
pursuant to, at the option of Grantee, (i) a shelf registration or (ii) a bona
fide, firm commitment underwritten public offering in which Grantee shall have
the right, including with respect to any takedown off the shelf, to select the
managing underwriter, which shall be reasonably acceptable to the Issuer, and
shall effect as wide a distribution of such Registrable Securities as is
reasonably practicable and shall use reasonable efforts to prevent any person or
group from purchasing through such offering shares representing more than 3% of
the shares of Issuer Common Stock then outstanding on a fully-diluted basis;
provided, however, that any such Registration Notice must relate to a number of
- -------- -------
shares equal to at least 40% of the Option Shares.
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<PAGE>
(b) Issuer shall use reasonable best efforts to effect, as promptly as
practicable, the registration under the Securities Act of the Registrable
Securities requested to be registered in the Registration Notice and to keep
such registration statement current; provided, however, that (i) Grantee shall
-------- -------
not be entitled to more than an aggregate of three effective registration
statements hereunder and (ii) Issuer will not be required to file any such
registration statement during any period of time (not to exceed 40 days after a
Registration Notice in the case of clause (A) below or 90 days after a
Registration Notice in the case of clauses (B) and (C) below) when (A) Issuer is
in possession of material non-public information which it reasonably believes
would be detrimental to be disclosed at such time and, based upon the advice of
outside securities counsel to Issuer, such information would have to be
disclosed if a registration statement were filed at that time; (B) Issuer would
be required under the Securities Act to include audited financial statements for
any period in such registration statement and such financial statements are not
yet available for inclusion in such registration statement; or (C) Issuer
determines, in its reasonable judgment, that such registration would interfere
with any financing, acquisition or other material transaction involving Issuer;
provided that the filing of such registration statement may not be delayed more
than an aggregate of 90 days after the Registration Notice. If the consummation
of the sale of any Registrable Securities pursuant to a registration hereunder
does not occur within 90 days after the filing with the SEC of the initial
registration statement therefor, the provisions of this Section shall again be
applicable to any proposed registration, it being understood that Grantee shall
not be entitled to more than an aggregate of three effective registration
statements hereunder. Issuer will use reasonable best efforts to cause each
such registration statement to become effective, to obtain all consents or
waivers of other parties which are required therefor, and to keep such
registration statement effective for such period not in excess of 180 calendar
days from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. Issuer shall use
reasonable best efforts to cause any Registrable Securities registered pursuant
to this Section to be qualified for sale under the securities or blue sky laws
of such jurisdictions as Grantee may reasonably request and shall continue such
registration or qualification in effect in such jurisdictions; provided,
--------
however, that Issuer shall not be required to qualify to do business in, or
- -------
consent to general service of process in, any jurisdiction.
(c) If Issuer effects a registration under the Securities Act of
Issuer Common Stock for its own account or for any other stockholders of Issuer
(other than on Form S-4 or Form S-8, or any successor form), it will allow
Grantee the right to participate in such registration, and such participation
will not affect the obligation of Issuer to effect demand registration
statements for Grantee under this Section 8, except
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<PAGE>
that, if the managing underwriters of such offering advise Issuer in writing
that in their opinion the number of shares of Issuer Common Stock requested to
be included in such registration exceeds the number which can be sold in such
offering, Issuer will include that portion of the shares requested to be
included therein equal to the product obtained by multiplying (i) the number of
shares which the underwriter has informed the Issuer can be included in the
offering and (ii) the percentage obtained by dividing (x) the total number of
shares of Issuer Common Stock held by Grantee and (y) the total number of shares
of Issuer outstanding.
(d) The registration rights set forth in this Section are subject to
the condition that Grantee shall provide Issuer with such information with
respect to Grantee Registrable Securities, the plan for distribution thereof,
and such other information with respect to Grantee as, in the reasonable
judgment of counsel for Issuer, is necessary to enable Issuer to include in a
registration statement all material facts required to be disclosed with respect
to a registration hereunder.
(e) A registration effected under this Section shall be effected at
Issuer's expense, except for underwriting discounts and commissions and the fees
and expenses of Grantee's counsel, and Issuer shall provide to the underwriters
such documentation (including certificates, opinions of counsel and "comfort"
letters from auditors) as are customary in connection with underwritten public
offerings and as such underwriters may reasonably require. In connection with
any registration, Grantee and Issuer agree to enter into an underwriting
agreement reasonably acceptable to each such party, in form and substance
customary for transactions of this type.
(f) In connection with a registration effected under this Section 8,
Issuer shall indemnify and hold harmless Grantee, its affiliates and controlling
persons and their respective officers, directors, agents and representatives
from and against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, all out-of-pocket expenses, investigation
expenses, expenses incurred with respect to any judgement and fees and
disbursements of counsel and accountants) arising out of or based upon any
statements contained in, or omissions or alleged omissions from, each
registration statement (and related prospectus) filed pursuant to this Section
8; provided, however, that Issuer shall not be liable in any such case to any
-------- -------
such persons to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement contained in, or omission or alleged omission from,
such registration statement or prospectus in reliance upon, and in conformity
with, written information furnished to Issuer specifically for use in the
preparation thereof by Grantee.
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<PAGE>
(g) In connection with a registration effected under this Section 8,
Grantee shall indemnify and hold harmless Issuer, its affiliates and controlling
persons and their respective officers, directors, agents and representatives
from and against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, all out-of-pocket expenses, investigation
expenses, expenses incurred with respect to any judgement and fees and
disbursements of counsel and accountants) arising out of or based upon any
statements contained in, or omissions or alleged omissions from, each
registration statement (and related prospectus) filed pursuant to this Section 8
that arises out of or is based upon an untrue statement contained in, or
omission or alleged omission from, such registration statement or prospectus in
reliance upon, and in conformity with, written information furnished to Issuer
specifically for use in the preparation thereof by Grantee.
9. Listing. If Issuer Common Stock or any other securities to be acquired
upon exercise of the Option are then listed on the Nasdaq (or any other national
securities exchange or national securities quotation system), Issuer, upon the
request of Grantee, will promptly file an application to list the shares of
Issuer Common Stock or other securities to be acquired upon exercise of the
Option on the Nasdaq (and any such other national securities exchange or
national securities quotation system) and will use reasonable efforts to obtain
approval of such listing as promptly as practicable.
10. Miscellaneous. (a) Expenses. Except as otherwise provided in the
Merger Agreement, each of the parties hereto will pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an instrument
in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive any
provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement and the
Merger Agreement (i) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject
10
<PAGE>
matter of this Agreement, and (ii) are not intended to confer upon any person
other than the parties any rights or remedies in respect of this Agreement.
(e) Counterparts. This Agreement may be executed in two or more counter
parts, all of which shall be considered one and the same agreement and shall
become effective when two or more counterparts have been signed by each of the
parties and delivered to the other parties.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware without giving effect to the
principles of conflicts or choice of law thereof or of any other jurisdiction.
(g) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt, and shall be given to the
parties at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as shall be specified by like notice):
If to Grantee, to:
The Dyson-Kissner-Moran Corporation
565 Fifth Avenue
4/th/ Floor
New York, New York 10017
Attention: John FitzSimons, Esq.
Telecopy: (212) 599-5105
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Stephen M. Banker, Esq.
Telecopy: (212) 735-2000
If to Issuer, to:
Optek Technology, Inc.
1215 West Crosby Road
Carrollton, Texas 75006
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<PAGE>
Attention: Thomas R. Filesi
Telecopy: 972-323-2208
with a copy to:
Hewitt & Hewitt, P.C.
2612 Thomas Avenue
Dallas, Texas 75204
Attention: Christopher M. Hewitt
Telecopy: 214-969-0238
with a copy to:
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202-3789
Attention: David H. Oden
Telecopy: 214-651-5940
(h) Assignment. Except as set forth herein, neither this Agreement, the
Option nor any of the rights, interests, or obligations under this Agreement may
be assigned, transferred or delegated, in whole or in part, by operation of law
or otherwise, by Issuer without the prior written consent of Grantee. Any
assignment, transfer or delegation in violation of the preceding sentence will
be void. Subject to the first and second sentences of this Section 11(h), this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
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<PAGE>
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the Transactions, (ii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (iii) agrees that it will not bring any action relating to this
Agreement or any of the Transactions in any court other than a Federal or state
court sitting in the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
OPTEK TECHNOLOGY, INC.
/s/ THOMAS R. FILESI
By:____________________________________
Name: Thomas R. Filesi
Title: Chairman and Chief Executive Officer
THE DYSON-KISSNER-MORAN
CORPORATION
/s/ ROBERT R. DYSON
By:____________________________________
Name: Robert R. Dyson
Title: Chairman and Chief Executive Officer
14
<PAGE>
EXHIBIT 99(C)(3)
THE DYSON-KISSNER-MORAN CORPORATION
565 FIFTH AVENUE
FOURTH FLOOR
NEW YORK, NEW YORK 10017-2413
TELEPHONE (212) 661-4600
FACSIMILE (212) 986-7169
November 6,1998
Optek Technology, Inc.
1215 W. Crosby Road
Carrollton, TX 75006
Attn: Thomas R. Filesi
Chairman and CEO
Dear Sir:
In connection with out mutual evaluation of a possible combination between the
Wabash Technologies ("Wabash") unit of Kearney-National Inc., a wholly-owned
subsidiary of The Dyson-Kissner-Moran Corporation ("DKM"), and Optek Technol
ogy, Inc. ("Optek"), DKM has requested information concerning Optek, and Optek
has requested information concerning Wabash. As a condition to being furnished
such information, each party agrees to treat any information concerning Wabash
or Optek which is furnished by the other (herein collectively referred to as the
"Evaluation Material") in accordance with the provisions of this letter. The
term "Evaluation Material" does not include information which (i) was or becomes
generally available to the public other than as a result of a disclosure by the
receiving party or its directors, officers, employees, agents or advisors, or
(ii) was or becomes available to the receiving party on a non-confidential basis
from another source provided that such source is not known to be bound by a
confidentiality agreement with the other party.
DKM and Optek hereby agree that the Evaluation Material they receive will be
used solely for the purpose of evaluating a possible transaction involving
Wabash and Optek and that such information will be kept confidential and not
disclosed to anyone else; provided, however, that (a) any of such information
may be disclosed to the parties' directors, officers, advisors and employees who
need to know such information for the purpose of evaluating any such possible
transaction (it being understood that such directors, officers, advisors and
employees shall be directed to treat such information confidentially), and (b)
any disclosure of such information may be made to which the disclosing party
consents in writing.
In addition the parties will not, and will direct their directors, officers,
advisors and employees not to: a) disclose to any person the fact that
discussions or negotiations are taking place concerning a possible transaction
involving Wabash and Optek; or b) contact or communicate with the employees,
lenders or customers of Wabash or Optek without the consent of DKM or Optek,
respectively.
<PAGE>
Optek Technology, Inc.
Attn: Thomas R. Filesi
November 5, 1998
Page Two
Each party understands and acknowledges that any and all information contained
in the Evaluation Material is being provided without any representation or
warranty, express or implied, as to the accuracy or completeness of the
Evaluation Material. It is further understood that the scope of any
representations and warranties to be given by the parties will be negotiated
along with other terms and conditions in arriving at a mutually acceptable form
of definitive agreement should discussions progress to such a point. Except as
set forth in such definitive agreement, neither party shall have any liability
to the other on account of the Evaluation Material.
In the event that we do not proceed with a transaction within a reasonable
period of time or at either party's request, each parry shall promptly return
all written material containing or reflecting any information contained in the
Evaluation Material and will not retain any copies, extracts or other
reproductions in whole or in part of such written material. All documents,
memoranda, notes and other writing whatsoever prepared by the receiving party or
its advisors based on the information contained in the Evaluation Material shall
be destroyed.
If you agree with the foregoing, please sign and return one copy of this letter.
Very truly yours,
THE DYSON-KISSNER-MORAN CORPORATION
By: /s/ Bruce A. Cauley
------------------------------
Bruce A. Cauley
Vice President
CONFIRMED AND AGREED:
OPTEK TECHNOLOGY, INC.
By: /s/ Thomas R. Filesi
------------------------------
Name: Thomas R. Filesi
Title: Chairman, CEO
<PAGE>
THE DYSON-KISSNER-MORAN CORPORATION
565 FIFTH AVENUE
FOURTH FLOOR
NEW YORK, NEW YORK 10017-2413
TELEPHONE (212) 661-4600
FACSIMILE (212) 986-7169
December 15,1998
Optek Technology, Inc.
1215 W. Crosby Road
Carrollton, TX 75006
Attn: Thomas R. Filesi
Chairman and CEO
Dear Tom:
This will serve to supplement our letter agreement of November 6, 1998. Terms
defined in the letter agreement shall have the same meanings when used in this
letter.
Non-Hire. DKM (for itself and its affiliates) agrees not to hire any current
employee of Optek or its subsidiaries, without the prior written consent of
Optek, until two years after the parties have terminated discussions concerning
a possible combination between Wabash and Optek. Optek agrees not to hire any
Current employee of DKM or its subsidiaries, without the prior written consent
of DKM, for the same period of time.
Stand-Still. DKM agrees that, until twelve months after Optek and DKM have
terminated discussions concerning a possible combination between Optek and
Wabash, unless specifically requested by Optek in writing, neither DKM nor any
of its affiliates (as such term is defined under the Securities Exchange Act of
1934, as amended (the " 1934 Act")) will in any manner, directly or indirectly,
(a) effect or seek, offer or propose (whether publicly or otherwise) to effect,
or cause or partici pate in or in any way assist any other person to effect or
seek, offer or propose (whether publicly or otherwise) to effect, or cause or
participate in, (i) any acquisi tion of any securities (or beneficial ownership
thereof or assets of Optek; (ii) any tender or exchange offer, merger or other
business combination involving Optek, (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to
Optek, or (iv) any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the Securities and Exchange Commission) to vote any voting
securities of Optek, (b) form, join or in any way participate in a "group" (as
defined in the 1934 Act) or otherwise act, alone or in concert with others, to
seek to control or influence the management, Board of Directors or policies of
Optek; (c) take any action which would force Optek to make a public announcement
regarding any of the types of matters set forth in subsection (a) above; or (d)
enter into any discussions or arrangements with any third party with respect to
any of the foregoing. DKM also agrees during such period not to request that
Optek, directly or indirectly, amend or waive any provision of this paragraph
(including this sentence).
<PAGE>
Optek Technology, Inc.
Attn: Thomas R. Filesi
November 5, 1998
Page Two
All the provisions of the letter agreement of November 6, 1998 shall remain in
full force and effect in accordance with their terms. If you agree with the
foregoing, please sign one copy of this letter and return it.
Very truly yours,
THE DYSON-KISSNER-MORAN CORPORATION
By: /s/ Bruce A. Cauley
------------------------------
Bruce A. Cauley
Vice President
CONFIRMED AND AGREED:
OPTEK TECHNOLOGY, INC.
By: /s/ Thomas R. Filesi
------------------------------
Name: Thomas R. Filesi
Title: Chairman, CEO
