SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment )*
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LASER POWER CORPORATION
(Name of Issuer)
Common Stock, par value $.001 per share
(Title of Class of Securities)
51806K 10 4
(CUSIP Number)
Ronald Basso
Buchanan Ingersoll Professional Corporation
One Oxford Centre, 20th Floor
301 Grant Street
Pittsburgh, PA 15219
412-562-3943
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 21, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f)
or 13d-1(g), check the following box .
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Note: Schedules filed in paper format shall include a signed
original and five copies of the Schedule, including all exhibits.
See Rule 13d-7(b) for other parties to whom copies are to be sent.
(Continued on the following pages)
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* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF
ABOVE PERSONS:
II-VI Incorporated
I.R.S. IDENTIFICATION NO: 25-1214948
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED TO ITEMS
2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Pennsylvania
Number of Shares 7 SOLE VOTING POWER
Beneficially Owned by 1,250,100
Each Reporting Person 8 SHARED VOTING POWER
With 0
9 SOLE DISPOSITIVE POWER
1,250,100
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,250,100 Shares
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
Item 1. Interest In Securities Of The Issuer
This statement relates to the common stock, par value $.001 per
share (the "Laser Power Common Stock"), of Laser Power Corporation,
a Delaware corporation ("Laser Power"). The principal executive
offices of Laser Power are located at 12777 High Bluff Drive, San
Diego, California 92130.
Item 2. Identity And Background
This statement is being filed by II-VI Incorporated, a
Pennsylvania corporation (the "Reporting Person"). The Reporting
Person's principal executive offices and principal business are
located at 375 Saxonburg Boulevard, Saxonburg, Pennsylvania 16056.
The Reporting Person designs, manufactures and markets
optics and electro-optical components, devices and materials for
infrared, near-infrared, visible light, x-ray and gamma-ray
instrumentation. The Reporting Person's infrared products are used
primarily in high-power CO2 (carbon dioxide) lasers. These lasers
are used for industrial processing throughout the world. The
Reporting Person manufactures near-infrared and visible-light
products for industrial, scientific and medical applications and
solid-state (such as YAG and YLF) lasers. The Reporting Person
manufactures and markets solid-state x-ray and gamma-ray detector
products for the nuclear radiation detection industry. The majority
of the Reporting Person's revenues are attributable to the sale of
optical components for the industrial laser processing industry.
The name, business address and present principal occupation
or employment of any corporation or other organization in which such
employment is conducted and the citizenship of each director and
executive officer of the Reporting Person is set forth in Annex A,
which is incorporated herein by reference.
Neither the Reporting Person nor, to the best knowledge of
the Reporting Person, any person listed in Annex A, has, during the
last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source And Amount Of Funds Or Other Consideration
The Reporting Person purchased 1,250,000 shares of the
Laser Power Common Stock for an aggregate of $2,750,000. The
Reporting Person borrowed 100% of these funds from PNC Bank,
National Association, under an existing credit facility. This
credit facility is attached as Exhibit 1 to this Schedule 13D and
is incorporated herein by reference.
Item 4. Purpose Of Transaction
(a) through (i). The Reporting Person acquired the
1,250,100 shares of Laser Power Common Stock to facilitate the
acquisition of control of Laser Power by the Reporting Person by
means of a negotiated merger, the election of a majority of Laser
Power's Board of Directors, a tender offer, or otherwise.
By letter dated September 22, 1999, from Francis Kramer,
President and Chief Operating Officer of the Reporting Person, to
Robert G. Klimasewski, Chairman of Laser Power, a copy of which
letter is attached as Exhibit 2 to this Schedule 13D and is
incorporated herein by reference, the Reporting Person proposed to
acquire Laser Power by means of a negotiated merger. If the
proposed merger was consummated, the shareholders of Laser Power
would receive cash and common stock of the Reporting Person in
exchange for their Laser Power Common Stock, and all outstanding
shares of Laser Power Common Stock would be cancelled. By letter
dated September 22, 1999, from Mr. Klimasewski to Mr. Kramer, a copy
of which letter is attached as Exhibit 3 to this Schedule 13D and is
incorporated herein by reference, Laser Power rejected the Reporting
Person's proposal.
The Reporting Person intends to continue to seek to acquire
control of Laser Power and to that end the Reporting Person may (a)
acquire additional securities of Laser Power from time to time in
the open market, in private transactions, or otherwise; provided
that the Reporting Person may dispose of all or any of the shares of
Laser Power Common Stock it owns at any time in the open market or
in private transactions, in any case, in compliance with applicable
securities laws; (b) seek to negotiate a merger or other
extraordinary transaction with Laser Power by which the Reporting
Person would acquire control of Laser Power, which would likely
result in changes to the directors and management of Laser Power and
which could cause the outstanding Laser Power Common Stock to be
delisted from NASDAQ; (c) seek to change the present board of
directors and management of Laser Power; or (d) seek to change Laser
Power's charter or bylaws to eliminate or modify any provisions
which the Reporting Person determines may impede the acquisition of
control of Laser Power by the Reporting Person.
Further to subsection (c) of the preceding paragraph, the
Reporting Person presently intends to nominate a slate of directors
for election at Laser Power's 2000 annual meeting of shareholders to
replace the current directors on the Laser Power board of directors.
The Reporting Person has not yet determined the number or identity
of the persons it intends to nominate for election.
Item 5. Interest In Securities Of The Issuer
(a) As of the date hereof, the Reporting Person
beneficially owns 1,250,100 shares, or 14.7% of the issued and
outstanding Laser Power Common Stock.
(b) The Reporting Person has the sole power to vote or to
direct the vote of, and sole power to dispose or direct the
disposition of, 1,250,100 shares of Laser Power Common Stock.
(c) On June 17, 1999, the Reporting Person purchased 100
shares of Laser Power Common Stock on the open market at a price of
$0.75 per share. This transaction was effected through a broker-
dealer. Other than this transaction and the transaction described
in Item 3 above, which item is incorporated herein by reference,
there have been no transactions with respect to Laser Power Common
Stock within the last 60 days by the Reporting Person.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
There are no contracts, arrangements, understandings or
relationships among the persons named in Item 2 or between such
persons and any other person with respect to any securities of Laser
Power except that in connection with the purchase of Laser Power
Common Stock described in Item 3 above, Ask Proxima ASA ("Ask
Proxima"), which was the seller of the shares of Laser Power Common
Stock to the Reporting Person, was a party to a Registration Rights
Agreement dated June 13, 1997 with Laser Power (the "Registration
Rights Agreement") pursuant to which Ask Proxima had certain
registration rights with respect to such shares. The Reporting
Person believes that Ask Proxima's rights under the Registration
Rights Agreement, a copy of which is attached hereto as Exhibit 4
and is incorporated herein by reference, have been or soon will be
effectively assigned to the Reporting Person in accordance with the
terms of that agreement.
Item 7. Material To Be Filed As Exhibits
1. Amended and Restated Letter Agreement, dated March 26,
1999, by and between PNC Bank, National Association and II-VI
Incorporated for Committed Line of Credit and Japanese Yen Term
Loan.
2. Letter dated September 22, 1999 from Francis J. Kramer,
President and Chief Operating Officer of II-VI Incorporated to
Robert G. Klimasewski, Chairman of Laser Power Corporation.
3. Letter dated September 22, 1999 from Robert G. Klimasewski,
Chairman of Laser Power Corporation, to Francis J. Kramer, President
and Chief Operating Officer of II-VI Incorporated.
4. Registration Rights Agreement dated as of June 13, 1997 by
and among Laser Power Corporation, Proxima Corporation (now Ask
Proxima) and Union Miniere Inc.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: September 29, 1999 /s/ James Martinelli
James Martinelli
Chief Financial Officer
ANNEX A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
II-VI INCORPORATED
The following table sets forth the name, business address and
principal occupation or employment at the present time for each
director and executive officer of II-VI Incorporated. Unless
otherwise noted, each person is a citizen of the United States. In
addition, unless otherwise noted, each person's business address is
II-VI Incorporated, 375 Saxonburg Boulevard, Saxonburg, Pennsylvania
16056.
DIRECTORS OF II-VI INCORPORATED
Carl J. Johnson Chairman and Chief Executive Officer
of II-VI Incorporated.
Francis J. Kramer President and Chief Operating Officer
of II-VI Incorporated.
Thomas E. Mistler President and Chief Executive Officer,
ESCO Holding Corp. and Engineered
Arresting Systems Corporation.
His business address is: 2550 Market
Street, Aston, Pennsylvania 19014.
Richard W. Bohlen Retired; formerly Senior Vice President,
Operations, Rockwell International
Corporation. His address is: c/o II-VI
Incorporated, 375 Saxonburg Boulevard,
Saxonburg, Pennsylvania 16056
Duncan A.J. Morrison President of ARRI Canada Ltd. Mr. Morrison
is a Canadian citizen. His business address
is: ARRI Canada Ltd., 26 Irwin Avenue,
Toronto, Ontario, M4Y 1L2 Canada.
Peter W. Sognefest President and Chief Executive Officer of
Xymox Technology, Inc. His business address
is: Xymox Technologies, Inc., 9099 West Dean
Road, Milwaukee, Wisconsin 53224.
EXECUTIVE OFFICERS OF II-VI INCORPORATED
(WHO ARE NOT ALSO DIRECTORS)
Herman E. Reedy Vice President and General Manager of
Quality and Engineering
James Martinelli Treasurer and Chief Financial Officer
AMENDED AND RESTATED LETTER AGREEMENT
March 26, 1999
II-VI Incorporated
375 Saxonburg Boulevard
Saxonburg, PA 16056
Attention: James Martinelli
Treasurer and Chief Financial Officer
Re: $15,000,000 Committed Line of Credit
237,000,000 Japanese Yen Term Loan
Gentlemen:
We are pleased to inform you that PNC Bank, National Association (the
"Bank") has approved II-VI Incorporated's (the "Borrower") request for
(i) a renewal, restatement and increase of its existing $10,000,000
unsecured, committed line of credit (the "Existing Line of Credit"), as
presently governed by the terms of that certain Letter Agreement dated
September 25, 1997 (the "Existing Letter Agreement") and as evidenced by
Borrower's $10,000,000 Committed Line of Credit Note to the Bank, dated
September 25, 1997 (the "Existing Line Note") and (ii) a restatement of
its existing 237,000,000 Japanese Yen rate protection term loan (the
"Existing Rate Protection Term Loan"), as presently governed by the
terms of the Existing Letter Agreement and as evidenced by Borrower's
237,000,000 Rate Protection Term Note (Euro-Yen/Cap) to the Bank, dated
September 25, 1997 (the "Existing Rate Protection Term Note"). Upon
execution of this letter (the "Agreement"), the Existing Letter
Agreement shall be deemed canceled and all of the indebtedness
outstanding thereunder shall be governed by the terms and conditions of
this Agreement and the Notes. All the details regarding your restated
loans are outlined in the following sections of this Agreement.
1. Defined Terms. Words and terms used herein without definition
shall have the respective meanings assigned thereto on Schedule I
attached hereto.
2. The Line of Credit.
(a) Commitment. The first credit facility covered by this
Agreement is a committed revolving line of credit (the "Line of Credit")
under which the Borrower may request and the Bank, subject to the terms
and conditions of this letter, agrees to make advances ("Advances") in
Dollars or Optional Currency to the Borrower from time to time under the
Line of Credit until the Expiration Date, in an aggregate amount not to
exceed at any time the Line of Credit Commitment minus the Letters of
Credit Outstanding. Subject to the terms and conditions hereof, the
Borrower shall have the right to borrow, repay and reborrow amounts
under the Line of Credit until the Expiration Date; provided that
principal amounts outstanding and all accrued unpaid interest under the
Line of Credit shall be repaid in full on or before the Expiration Date.
(b) Extension of Expiration Date Borrower may request that the
Expiration Date be extended for all or a portion of the Line of Credit
Commitment to a date which is no later than the 364th day after the
then-current Expiration Date; provided that (i) any such extension
request shall be made in writing (an "Extension Request") by Borrower
and delivered to the Bank no earlier than sixty (60) days prior to (but
no later than thirty (30) days prior to) the then-current Expiration
Date, and (ii) no more than two (2) such 364-day Extension Requests may
be made by the Borrower. The Bank may, in its sole discretion without
any obligation whatsoever, accept or reject such Extension Request by
giving written notice to the Borrower no later than fifteen (15) days
prior to the then-effective Expiration Date; provided that any failure
by the Bank to so notify the Borrower shall be deemed a rejection by the
Bank of such Extension Request and the Line of Credit Commitment will
terminate (and the principal amount outstanding and all accrued and
unpaid interest under the Line of Credit shall be due and payable in
full) on the then-current Expiration Date. If the Bank accepts such
Extension Request, the Expiration Date shall be automatically extended
to the date which is the 364th day after the then-current Expiration
Date.
Borrower acknowledges and agrees that (x) the Bank has not made any
representations to the Borrower regarding its intent to agree to any
extensions set forth in this Section, (y) the Bank shall have no
obligation to extend the Expiration Date, and (z) the Bank's agreement
to one extension shall not commit the Bank to any additional extensions.
(c) Note. The Borrower's obligation to repay the Advances shall be
evidenced by an amended and restated promissory note (which shall amend
and restate the Existing Line Note) in the form of Exhibit A attached
hereto (the "Line of Credit Note").
(d) Advance Procedures. The Borrower may request Advances under the
Line of Credit upon giving oral or written notice to the Bank by 11:00
a.m. (Pittsburgh, Pennsylvania time) (i) on the day (which shall be a
Business Day) of the proposed Advance, in the case of Advances bearing
interest at the Base Rate Option, (ii) three (3) Business Days prior to
the proposed Advance, in the case of Advances bearing interest at the
Euro-Rate Option, or (iii) four (4) Business Days prior to the proposed
Advance, in the case of Advances funded in an Optional Currency (which
Advance must bear interest at the Euro-Rate Option); in each case
specifying the date and the Dollar or Dollar Equivalent (if applicable)
amount thereof, the Euro-Rate Interest Period pursuant to Section 2(g)
of this Agreement (if applicable), and for Advances to be funded in an
Optional Currency, the currency in which the Advance is to be funded.
Any oral request for an Advance shall be followed promptly thereafter by
the Borrower's written confirmation to the Bank. The Borrower
authorizes the Bank to accept telephonic requests for Advances, and the
Bank shall be entitled to rely upon the authority of any person
providing such instructions. The Borrower hereby indemnifies and
holds the Bank harmless from and against any and all damages, losses,
liabilities, costs and expenses (including reasonable attorneys' fees
and expenses) which may arise or be created by the acceptance of
telephone requests or making Advances. The Bank will enter on its books
and records, which entry when made will be presumed correct, the date
and amount of each Advance, the interest rate and interest period
applicable thereto, as well as the date and amount of each payment.
(e) Rate of Interest. Each Advance outstanding under the Line of
Credit will bear interest at a rate or rates per annum as may be
selected by the Borrower from the interest rate options set forth below
(except that no Advance to which the Base Rate Option shall apply may be
made in an Optional Currency):
(i) Base Rate Option. A rate of interest per annum (computed on the
basis of a year of 365 or 366 days, as the case may be, and the actual
number of days elapsed) equal to the sum of the Base Rate plus the
Applicable Margin. If and when the Prime Rate or the Federal Funds
Effective Rate changes, the rate of interest with respect to any Advance
to which the Base Rate Option applies will change automatically without
notice to the Borrower, effective on the date of any such change.
(ii) Euro-Rate Option. A rate of interest per annum (computed on the
basis of a year of 360 days and the actual number of days elapsed
(provided that for Advances made in an Optional Currency for which a 365
day basis is the only market practice available to the Bank, such rate
shall be calculated on the basis of a year of 365 or 366 days, as the
case may be, and the actual number of days elapsed) equal to the sum of
the Euro-Rate plus the Applicable Margin, for the applicable Euro-Rate
Interest Period. The Euro-Rate shall be adjusted with respect to any
Advance to which the Euro-Rate Option applies on and as of the effective
date of any change in the Euro-Rate Reserve Percentage. The Bank shall
give prompt notice to the Borrower of the Euro-Rate as determined or
adjusted in accordance herewith.
The foregoing notwithstanding, it is understood that the Borrower may
select different Interest Rate Options to apply simultaneously to
different portions of the Advances and may select up to seven (7)
different Euro-Rate Interest Periods to apply simultaneously to
different portions of the Advances bearing interest under the Euro-Rate
Option. In no event will the rate of interest hereunder exceed the
maximum rate allowed by law.
(iii) Euro-Rate Unascertainable or Unavailable. If the
Bank determines (which determination shall be final and conclusive)
that, by reason of circumstances affecting the interbank eurodollar
market generally, deposits in dollars (in the applicable amounts) are
not being offered to banks in the interbank eurodollar market for the
selected term, or adequate means do not exist for ascertaining the Euro-
Rate, then the Bank shall give notice thereof to the Borrower.
Thereafter, until the Bank notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, (a) the availability of
the Euro-Rate Option shall be suspended, and (b) the interest rate for
all Advances then bearing interest under the Euro-Rate Option shall be
converted at the expiration of the then current Euro-Rate Interest
Period(s) to, and any new Advances shall be made at, the Base Rate
Option.
(iv) Illegality. In addition, if, after the date of this Agreement,
the Bank shall determine (which determination shall be final and
conclusive) that any enactment, promulgation or adoption of or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by a governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline,
request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall make it unlawful
or impossible for the Bank to make or maintain or fund loans under the
Euro-Rate Option, the Bank shall notify the Borrower. Upon receipt of
such notice, until the Bank notifies the Borrower that the circumstances
giving rise to such determination no longer apply, (a) the availability
of the Euro-Rate Option shall be suspended, and (b) the interest rate on
all Advances then bearing interest under the Euro-Rate Option shall be
converted to the Base Rate Option either (i) on the last day of the then
current Euro-Rate Interest Period(s) if the Bank may lawfully continue
to maintain Advances under the Euro-Rate Option to such day, or (ii)
immediately if the Bank may not lawfully continue to maintain Advances
under the Euro-Rate Option.
(f) Default Rate. After the principal amount of all or any part of
the Advances shall have become due and payable, whether by acceleration
or otherwise, and upon the occurrence and during the continuance of any
Event of Default, all Advances and Reimbursement Obligations shall bear
interest at a rate per annum, and the Letter of Credit Fee shall be
increased by an amount, equal to 200 basis points (2%) per annum above
the rate otherwise in effect (the "Default Rate"). The Default Rate
shall continue to apply whether or not judgment shall be entered on the
Line of Credit Note.
(g) Interest Rate Election. Subject to the terms and conditions of
this Agreement, at the end of each Euro-Rate Interest Period applicable
to any Advance, the Borrower may renew the Euro-Rate Option applicable
to such Advance or convert such Advance to the Base Rate Option;
provided that, during any period in which any Event of Default (as
hereinafter defined) has occurred and is continuing, any Advances
bearing interest under the Euro-Rate Option shall, at the Bank's sole
discretion, be converted at the end of the applicable Euro-Rate Interest
Period to the Base Rate Option and the Euro-Rate Option will not be
available to Borrower with respect to any new Advances until such Event
of Default has been cured by the Borrower or waived by the Bank. The
Borrower shall notify the Bank of each election of an Interest Rate
Option, each conversion from one Interest Rate Option to another, the
amount of the Advances then outstanding to be allocated to each Interest
Rate Option and where relevant the interest periods therefor. In the
case of converting to the Euro-Rate Option, such notice shall be given
at least three (3) Business Days prior to the commencement of any Euro-
Rate Interest Period. If no notice of conversion or renewal is timely
received by the Bank, the Borrower shall be deemed to have converted
such advance to the Base Rate Option. Any such election shall be
promptly confirmed by the Borrower in writing by such method as the Bank
may require.
(h) Optional Currencies. The Bank will determine the Dollar Equivalent
amount of (i) proposed Advances or Letters of Credit to be denominated
in an Optional Currency as of the requested Borrowing Date or date of
issuance, as the case may be, (ii) outstanding Advances or Letters of
Credit Outstanding denominated in an Optional Currency as of the last
Business Day of each month, and (iii) outstanding Advances denominated
in an Optional Currency as of the end of each Euro-Rate Interest Period
(each such date under clauses (i) through (iii) a "Computation Date").
(i) The Bank shall be under no obligation to make Advances or issue
Letters of Credit requested by the Borrower which are denominated in an
Optional Currency if Bank notifies the Borrower by 12:00 noon
(Pittsburgh, PA time) three (3) Business Days prior to the Borrowing
Date or date of issuance for such Advance or Letter of Credit that the
Optional Currency is not then available for such Advances or Letter of
Credit. If the Borrower receives a notice described in the preceding
sentence, the Borrower may, by notice to the Bank not later than 5:00
p.m. (Pittsburgh, PA time) three (3) Business Days prior to the
Borrowing Date or date of issuance for such Advance or Letter of Credit,
withdraw the request for such Advance or Letter of Credit and the Bank
shall not make such Advance or issue such Letter of Credit. If the
Borrower does not withdraw such request before such time, the Borrower
shall be deemed to have requested that the Advance or Letter of Credit
shall be made in Dollars in an amount equal to the Dollar Equivalent
amount of such Advance or Letter of Credit and shall bear interest under
the Base Rate Option.
(ii) If the Borrower delivers a notice requesting that the Bank renew
the Euro-Rate Option with respect to an outstanding Advance denominated
in an Optional Currency, the Bank shall be under no obligation to renew
such Euro-Rate Option if Bank delivers to the Borrower a notice by 12:00
noon (Pittsburgh, PA time) three (3) Business Days prior to the
effective date of such renewal that it cannot continue to provide
Advances in such Optional Currency. If the Bank has so notified the
Borrower that any such continuation of Advances denominated in an
Optional Currency is not then available, any notice of renewal with
respect thereto shall be deemed withdrawn, and such Optional Currency
Advance shall be redenominated into a Base Rate Advance in Dollars with
effect from the last day of the Euro-Rate Interest Period with respect
to any such Optional Currency Advance. The Bank will promptly notify
the Borrower of any such redenomination, and in such notice, the Bank
will state the aggregate Dollar Equivalent amount of the redenominated
Optional Currency Advance as of the Computation Date with respect
thereto.
(iii) The Borrower shall pay to the Bank from time to time in Dollars
the Bank's then in effect customary fees and administrative expenses
payable with respect to Advances denominated in an Optional Currency or
Letters of Credit issued in an Optional Currency as the Bank may
generally charge or incur in connection with the funding, maintenance,
modification (if any), assignment or transfer (if any), negotiation, and
administration of Advances denominated in an Optional Currency or
Letters of Credit issued in an Optional Currency.
(iv) Notwithstanding anything contained herein to the contrary, the
entire amount of principal of and interest on any Advance made in an
Optional Currency shall be repaid in the same Optional Currency in which
such Advance was made, provided, however, that if it is impossible or
illegal for Borrower to effect payment of an Advance in the Optional
Currency in which such Advance was made, or if Borrower defaults in its
obligations to do so, the Bank may in its sole discretion permit such
payment to be made (i) at and to a different location, subsidiary,
affiliate or correspondent of the Bank, or (ii) in the Equivalent Amount
of Dollars or (iii) in an Equivalent Amount of such other currency
(freely convertible into Dollars) as the Bank may in its sole discretion
designate. Upon any events described in (i) through (iii) of the
preceding sentence, Borrower shall make such payment and Borrower agrees
to hold Bank harmless from and against any loss incurred by Bank arising
from the cost to Bank of any premium, any costs of exchange, the cost of
hedging and covering the Optional Currency in which such Advance was
originally made, and from any change in the value of Dollars, or such
other currency, in relation to the Optional Currency that was due and
owing. Such loss shall be calculated for the period commencing with the
first day of the Euro-Rate Interest Period for such Advance and
continuing through the date of payment thereof. Without prejudice to
the survival of any other agreement of Borrower hereunder, Borrower's
obligations under this Section 2(h)(iv) shall survive termination of
this Agreement.
(v) Notwithstanding anything contained herein to the contrary, Bank
may, with respect to notices by Borrower for Advances in an Optional
Currency or voluntary prepayments of less than the full amount of an
Optional Currency Advance, engage in reasonable rounding of the Optional
Currency amounts requested to be loaned or repaid; and, in such event,
Bank shall promptly notify Borrower of such rounded amounts and
Borrower's request or notice shall thereby be deemed to reflect such
rounded amounts.
(vi) If on any Computation Date the Dollar Equivalent Line of Credit
Usage is equal to or greater than the Line of Credit Commitment as a
result of a change in exchange rates between one (1) or more Optional
Currencies and Dollars, then the Bank shall notify the Borrower of the
same. The Borrower shall pay or prepay Advances (subject to Borrower's
indemnity obligations under Section 2(m) hereof) within three (3)
Business Days after receiving such notice by an amount such that the
Dollar Equivalent Line of Credit Usage shall not exceed the Line of
Credit Commitment after giving effect to such payments or prepayments.
(vii) If (a) as a result of the implementation of the European monetary
union, any Optional Currency ceases to be lawful currency of the nation
issuing the same and is replaced by a European common currency (the
"Euro") or (b) any Optional Currency and the Euro are at the same time
recognized by any governmental authority of the nation issuing such
currency as lawful currency of such nation and the Bank shall so request
in a notice delivered to the Borrower, then any amount payable hereunder
by any party hereto in such Optional Currency shall instead be payable
in the Euro and the amount so payable shall be determined by translating
the amount payable in such Optional Currency to the Euro at the exchange
rate recognized by the European Central Bank for the purpose of
implementing the European monetary union. Prior to the occurrence of
the event or events described in clause (a) of (b) of the preceding
sentence, each amount payable hereunder in any Optional Currency will,
except as otherwise provided herein, continue to be payable only in that
Optional Currency.
The Borrower agrees at the request of the Bank, to compensate the Bank
for any loss, cost, expense or reduction in return that Bank shall
reasonably determine shall be incurred or sustained by the Bank as a
result of the implementation of the European monetary union and that
would not have been incurred or sustained but for the transactions
provided for herein. A certificate of the Bank setting forth the Bank's
determination of the amount or amounts necessary to compensate Bank
shall be delivered to the Borrower, and shall be conclusive absent
manifest error so long as such determination is made on a reasonable
basis. The Borrower shall pay the Bank the amount shown as due on any
such certificate within ten (10) days after the receipt thereof.
The parties hereto agree, at the time of or at any time following the
implementation of the European monetary union, to use reasonable efforts
to enter into an agreement amending this Agreement in order to reflect
the implementation of such monetary union, to permit (if feasible) the
Euro to qualify as an Optional Currency under the terms and conditions
of the definition of such term and to place the parties hereto in the
position with respect to the settlement of payments of the Euro as they
would have been with respect to the settlement of the Optional
Currencies it replaced.
(viii) For all purposes of this Agreement and the Line of Credit
Note with respect to any aspects of the Euro-Rate, any Advance under the
Euro-Rate Option or any Optional Currency, Bank shall be presumed to
have obtained rates, funding, currencies, deposits, and the like in the
applicable interbank market regardless whether it did so or not; and
Bank's determination of amounts payable under, and actions required or
authorized by this Agreement shall be calculated, at Bank's option, as
though Bank funded its Advances under the Euro-Rate Option through the
purchase of deposits of the types and maturities corresponding to the
deposits used as a reference in accordance with the terms hereof in
determining the Euro-Rate applicable to such Advances, whether in fact
that is the case.
(i) Taxes.
(i) No Deductions. All payments made by Borrower hereunder and under
the Notes and Reimbursement Agreement shall be made free and clear of
and without deduction for any present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on the net income of Bank and all
income and franchise taxes applicable to Bank (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings, and
liabilities being hereinafter referred to as "Taxes"). If Borrower
shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under the Notes or the Reimbursement Agreement,
(i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section) Bank receives an amount
equal to the sum it would have received had no such deductions been
made, (ii) Borrower shall make such deductions and (iii) Borrower shall
timely pay the full amount deducted to the relevant tax authority or
other authority in accordance with applicable law.
(ii) Stamp Taxes. In addition, Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges, or similar levies which arise from any payment made hereunder
or from the execution, delivery, or registration of, or otherwise with
respect to, this Agreement, the Notes or the Reimbursement Agreement
(hereinafter referred to as "Other Taxes").
(iii) Indemnification for Taxes Paid by Bank. Borrower shall indemnify
Bank for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by Bank and any liability
(including penalties, interest, and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days
from the date Bank makes written demand therefor.
(iv) Certificate. Promptly upon the Bank's request from time to time,
Borrower shall furnish to Bank the original or a certified copy of a
receipt evidencing payment of any Taxes or Other Taxes. If no Taxes
are payable in respect of any payment by Borrower, such Borrower shall,
if so requested by Bank, provide a certificate of an officer of Borrower
to that effect.
(v) Survival. Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this Section shall survive the payment in full of
principal and interest hereunder and under any instrument delivered
hereunder.
(j) Judgment Currency Procedures for Judgments.
(i) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder or under the Notes or
Reimbursement Agreement in any currency (the "Original Currency") into
another currency (the "Other Currency"), the parties hereby agree, to
the fullest extent permitted by law, that the rate of exchange used
shall be that at which in accordance with normal banking procedures Bank
could purchase the Original Currency with the Other Currency after any
premium and costs of exchange on the Business Day preceding that on
which final judgment is given.
(ii) The obligation of Borrower in respect of any sum due from Borrower
to Bank hereunder shall, notwithstanding any judgment in an Other
Currency, whether pursuant to a judgment or otherwise, be discharged
only to the extent that, on the Business Day following receipt by Bank
of any sum adjudged to be so due in such Other Currency, Bank may in
accordance with normal banking procedures purchase the Original Currency
with such Other Currency. If the amount of the Original Currency so
purchased is less than the sum originally due to Bank in the Original
Currency, Borrower agrees, as a separate obligation and notwithstanding
any such judgment or payment, to indemnify Bank against such loss.
(k) Payment Terms of Line of Credit. The Borrower shall pay accrued
interest on the unpaid principal balance of the Line of Credit Note in
arrears: (a) for the portion of the Advances bearing interest under the
Base Rate Option, on the last Business Day of each calendar quarter
during the term of the Line of Credit, (b) for the portion of the
Advances bearing interest under the Euro-Rate Option, on the last day of
the respective Euro-Rate Interest Period for each such Advance, (c) if
any Euro-Rate Interest Period is longer than three (3) months, then also
on the three (3) month anniversary of such interest period and every
three (3) months thereafter, and (d) for all Advances, at maturity,
whether by acceleration of the Line of Credit Note or otherwise, and
after maturity, on demand until paid in full. All outstanding Advances
under the Line of Credit and accrued interest thereon shall be due and
payable in full on the Expiration Date.
(l) Prepayment of Advances. The Borrower shall have the right to
prepay at any time and from time to time, in whole or in part, without
penalty, any Advance under the Line of Credit which is accruing interest
under the Base Rate Option. If the Borrower prepays all or any part of
any Advance which is accruing interest under the Euro-Rate Option on
other than the last day of the applicable Euro-Rate Interest Period, the
Borrower shall pay to the Bank, on demand therefore, all amounts due
pursuant to paragraph (m) below, including the Cost of Prepayment, if
any.
(m) Yield Protection. The Borrower shall pay to the Bank, on written
demand therefor, together with the written evidence of the justification
therefor, all direct costs incurred, losses suffered or payments made by
Bank by reason of any change in law or regulation or its interpretation
imposing any reserve, deposit, allocation of capital, or similar
requirement (including without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) on the Bank, its holding
company or any of their respective assets. In addition, the Borrower
agrees to indemnify the Bank against any liabilities, losses or expenses
(including loss of margin, any loss or expense sustained or incurred in
liquidating or employing deposits from third parties, and any loss or
expense incurred in connection with funds acquired to effect, fund or
maintain any Advance (or any part thereof) bearing interest under the
Euro-Rate Option) which the Bank sustains or incurs as a consequence of
either (i) the Borrower's failure to make a payment on the due date
thereof, (ii) the Borrower's revocation (expressly, by later
inconsistent notices or otherwise) in whole or in part of any notice
given to Bank to request, convert, renew or prepay any Advance, or (iii)
the Borrower's payment, prepayment or conversion of any Advance bearing
interest under the Euro-Rate Option on a day other than the last day of
the applicable Euro-Rate Interest Period, including but not limited to
the Cost of Prepayment. "Cost of Prepayment" means an amount equal to
the present value, if positive, of the product of (a) the difference
between (i) the yield, on the beginning date of the applicable interest
period, of a U.S. Treasury obligation with a maturity similar to the
applicable interest period minus (ii) the yield, on the prepayment date,
of a U.S. Treasury obligation with a maturity similar to the remaining
maturity of the applicable interest period, and (b) the principal amount
to be prepaid, and (c) the number of years, including fractional years
from the prepayment date to the end of the applicable interest period.
The yield on any U.S. Treasury obligation shall be determined by
reference to Federal Reserve Statistical Release H.15(519) "Selected
Interest Rates". For purposes of making present value calculations, the
yield to maturity of a similar maturity U.S. Treasury obligation on the
prepayment date shall be deemed the discount rate. The Cost of
Prepayment shall also apply to any payments made after acceleration of
the maturity of the Advances. The Bank's determination of an amount
payable under this paragraph shall, in the absence of manifest error, be
conclusive and shall be payable on demand.
(n) Conversion of Advances to a Term Loan. Provided that no Event of
Default or Default exists on either the date such Term Conversion
Request is delivered or on the Conversion Date, the Borrower shall have
the option, by delivering written notice (the "Term Conversion
Request"), which notice shall be irrevocable, to the Bank no earlier
than twenty (20) days prior to (but no later than ten (10) days prior
to) the Initial Expiration Date, to convert the principal amount of
Advances then outstanding on the Initial Expiration Date, or a portion
thereof, to an amortizing term loan (the "Term Loan") payable over a two
(2) year period (based upon a five (5) year amortization) as set forth
below. Commencing on the last day of the calendar quarter immediately
following the month in which the Conversion Date occurs, the principal
balance of the Term Loan shall be paid in seven (7) equal consecutive
quarterly installments of principal in an amount determined by dividing
the principal balance of the Term Loan on the Conversion Date by twenty
(20), with one (1) final balloon payment on the second anniversary of
the Conversion Date in an amount equal to the remaining outstanding
principal balance under the Term Loan. The obligation of the Borrower
to repay the Term Loan shall be evidenced by a separate promissory note
in form and content satisfactory to the Bank (the "Term Note").
Interest on the unpaid balance of the Term Loan will be charged at the
rates, and be payable on the dates and times, as set forth in the Term
Note.
Upon the Borrower's election to convert the principal amount of Advances
then outstanding on the Initial Expiration Date (or a portion thereof)
to a Term Loan, then assuming the Bank, in its sole discretion, decides
to extend the Expiration Date in accordance with Section 2(b) hereof,
the Line of Credit Commitment shall be permanently reduced by an amount
equal to the principal amount of such Term Loan automatically without
need for any further action or documentation.
(o) Reduction of Line of Credit Commitment. Subject to the indemnity
provisions of Section 2(m) hereof, the Borrower shall have the right at
any time and from time to time upon five (5) Business Days' prior
written notice to the Bank to permanently terminate, or from time to
time permanently reduce in whole or in minimal principal amounts of
$5,000,000, or an integral multiple thereof, the Line of Credit
Commitment in effect at such time. Any such reduction or termination
shall be accompanied by (i) the payment in full of any Commitment Fee
then accrued on the amount of such reduction or termination, and (ii) if
on any date when the Line of Credit Commitment is reduced the Dollar
Equivalent Line of Credit Usage exceeds the Line of Credit Commitment as
so reduced, then the payment of an amount equal to such excess so that,
after giving effect to such payment, the Dollar Equivalent Line of
Credit Usage does not exceed the Line of Credit Commitment as so
reduced. Additionally, to the extent the Letters of Credit
Outstanding exceed the Line of Credit Commitment as so reduced, then on
any such date when the Line of Credit Commitment is reduced the Borrower
shall make a deposit (in an amount equal to such excess) into the Cash
Collateral Account. From the effective date of any such reduction, the
obligations of Borrower to pay the Commitment Fee pursuant to Section 19
hereof shall correspondingly be reduced or cease. Notice of such
reduction shall be irrevocable once given and the portion of the Line of
Credit Commitment so reduced shall not be available for borrowing once
such notice has been given.
3. The Letters of Credit.
(a) Subject to the terms and conditions hereof, the Borrower may
request that the Bank, in lieu of cash Advances under the Line of
Credit, issue a letter of credit (each a "Letter of Credit") for the
account of the Borrower by delivering to the Bank a completed
application and a reimbursement agreement (a "Reimbursement Agreement")
for Letters of Credit in such form as the Bank may specify from time to
time by no later than 10:00 a.m., Pittsburgh time, at least three (3)
Business Days, or such shorter period as may be agreed to by the Bank,
in advance of the proposed date of issuance. Each Letter of Credit
shall be either a standby letter of credit or a commercial letter of
credit and may be denominated in either Dollars or an Optional Currency.
Subject to the terms and conditions hereof, the Bank will issue for the
account of the Borrower one or more Letters of Credit in Dollars or an
Optional Currency provided that each Letter of Credit shall (A) have a
maximum maturity of twelve (12) months from the date of issuance in the
case of standby Letters of Credit and six (6) months from the date of
issuance in the case of commercial Letters of Credit, and (B) in no
event expire later than ten (10) Business Days prior to the Expiration
Date, and provided further that in no event shall (i) the Dollar
Equivalent amount of Letters of Credit Outstanding exceed, at any one
time, $5,000,000 or (ii) the Dollar Equivalent Line of Credit Usage
exceed, at any one time, the Line of Credit Commitment. This Agreement
is not a pre-advice for the issuance of a Letter of Credit and is not
irrevocable.
(b) Borrower agrees to be bound by the terms of the Bank's letter of
credit application and Reimbursement Agreement and the Bank's written
regulations and customary practices relating to Letters of Credit. In
the event of a conflict between such application or Reimbursement
Agreement and this Agreement, this Agreement shall govern. It is
understood and agreed that, except in the case of gross negligence or
willful misconduct, the Bank shall not be liable for any error,
negligence and/or mistakes, whether of omission or commission, in
following Borrower's instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.
4. The Term Loan.
(a) Type of Facility. The second credit facility covered by this
Agreement is Borrower's Existing Rate Protection Term Loan (the "Rate
Protection Term Loan") in the amount of 237,000,000 Japanese Yen.
(b) Interest Rate. Amounts outstanding under the Rate Protection Term
Loan will bear interest at the rate or rates as provided in the Rate
Protection Term Note.
(c) Repayment. Principal of, and interest accrued on, the Rate
Protection Term Loan shall be payable on the dates and times as provided
in the Rate Protection Term Note.
(d) Note. The obligation of the Borrower to repay the Rate Protection
Term Loan shall continue to be evidenced by the Existing Rate Protection
Term Note (the "Rate Protection Term Note"). The Borrower acknowledges
and agrees that, effective the date of this Agreement, Section 4 of the
Rate Protection Term Note (entitled "Other Loan Documents") is hereby
amended by substituting the date "September 25, 1997" contained therein
and replacing it with the following date and words "March 26, 1999, and
any amendments, modifications, renewals or restatements thereof".
5. Use of Proceeds. The proceeds of the Advances and Letters of
Credit shall be used by the Borrower to fund working capital needs of
the Borrower and other general corporate purposes and to fund Permitted
Acquisitions and Permitted Stock Repurchases. The proceeds of the Rate
Protection Term Loan were used by the Borrower to fund foreign exchange
transactions as provided under the Existing Letter Agreement.
6. Loan Documents. This Agreement, the Line of Credit Note, the Term
Note (if applicable), the Rate Protection Term Note, the Reimbursement
Agreement, the Guarantees and the other loan documents referenced herein
and/or delivered pursuant hereto are collectively referred to as the
"Loan Documents".
7. Guarantees. The Borrower must cause each Guarantor to execute
and deliver to the Bank a guaranty and suretyship agreement
(collectively, the "Guarantees"), in substantially the form of Exhibit B
attached hereto, under which each Guarantor will unconditionally jointly
and severally guarantee the due and punctual payment of all indebtedness
owed to the Bank by the Borrower.
8. Collateral. (a) If at any time the Leverage Ratio is greater than
1.50 to 1.0 for a period of two (2) consecutive quarters (the "Trigger
Date"), the Borrower shall (within ten (10) Business Days from Bank's
demand therefore and at Borrower's sole cost and expense) pledge (or
cause to be pledged) to the Bank, as collateral security for all
obligations owing by Borrower to Bank under the Loan Documents (i) a
first priority perfected lien on all of Borrower's and its domestic
Subsidiaries' accounts receivable, inventory, equipment, fixtures,
chattel paper, documents, instruments and general intangibles, and (ii)
a first priority perfected lien on 65% of the voting stock of Borrower's
foreign Subsidiaries. Failure to timely pledge such collateral and
stock shall constitute an Event of Default.
(b) If the Leverage Ratio is less than or equal to 1.5 to 1.0 for a
period of four (4) consecutive quarters after the Trigger Date, then the
Bank shall release, at Borrower's expense, the collateral described in
subsection (a) above with the exception that the pledged stock of
Borrower's foreign Subsidiaries will not be released.
9. Conditions to Lending. The obligation of the Bank to make any
Advance under the Line of Credit or issue any Letter of Credit is
subject to the conditions that:
(a) in the case of the initial Advance and initial Letter of Credit
hereunder, the Borrower shall (i) provide to the Bank this Agreement,
the Line of Credit Note, the Reimbursement Agreement, and the
Guarantees, each duly executed by the Borrower and the Guarantors, as
the case may be; (ii) provide to the Bank evidence of the due
authorization by the Borrower and the Guarantors of this Agreement, the
Line of Credit Note, the Reimbursement Agreement and the Guarantees;
(iii) provide to the Bank such other instruments as the Bank shall
reasonably require in form and substance satisfactory to the Bank; and
(iv) provide to the Bank an opinion of counsel to the Borrower and the
Guarantors addressing such matters relating to the Borrower and the
Guarantors and this transaction as the Bank may request.
(b) each request for an Advance (including the initial Advance) under
the Line of Credit or the issuance of a Letter of Credit (including the
initial Letter of Credit) shall constitute a certification by the
Borrower that the Borrower shall have performed and complied with all
agreements and conditions herein required under this Agreement, and at
the time of such Advance or Letter of Credit, no condition or event
shall exist which constitutes a Default or an Event of Default.
The Bank will not be obligated to make any Advance under the Line of
Credit or issue any Letter of Credit if any Event of Default or Default
shall have occurred and be continuing.
10. Affirmative Covenants. Unless waived in writing by the Bank or
until payment in full of the Rate Protection Term Loan, the Term Loan
(if applicable), the Line of Credit and all Reimbursement Obligations,
and the termination of the Line of Credit and cancellation of all
Letters of Credit:
(a) The Borrower shall maintain books and records in accordance with
GAAP and give representatives of the bank access thereto at all
reasonable times, including permission to examine, copy and make
abstracts from any of such books and records and such other information
as the Bank may from time to time reasonably request, and the Borrower
will make available to the Bank for examination copies of any reports,
statements or returns which the Borrower may make to or file with any
governmental department, bureau or agency, federal or state.
(b) Within 90 days of the end of the Borrower's fiscal year, the
Borrower will deliver to the Bank (i) its annual report on Securities
and Exchange Commission Form 10K, and (ii) its consolidated balance
sheet and consolidated statement of income, retained earnings and cash
flows for the fiscal year, audited and certified without qualification
by a certified public accountant acceptable to the Bank and prepared in
accordance with GAAP, together with (A) a certificate in substantially
the form of Exhibit C attached hereto (a "Compliance Certificate") from
the Chief Financial Officer of the Borrower setting forth detailed
calculations necessary to demonstrate Borrower's compliance with the
financial covenants set forth below for the period then ended, and
showing whether any Event of Default exists and, if so, the nature
thereof and the corrective measures Borrower proposes to take, and (B)
any management letters of Borrower's accountants addressed to the
Borrower.
(c) Within 45 days of the end of each of the Borrower's fiscal
quarters, the Borrower will deliver to the Bank its quarterly report on
Securities and Exchange Commission Form 10Q.
(d) Within 45 days of the end of each of the Borrower's first three
fiscal quarters, the Borrower will deliver to Bank its consolidated
balance sheets and consolidated statements of income, retained earnings
and cash flow together with a Compliance Certificate from the Chief
Financial Officer of the Borrower setting forth detailed calculations
necessary to demonstrate Borrower's compliance with the financial
covenants set forth below for the period then ended, and showing whether
any Event of Default exists and, if so, the nature thereof and the
corrective measures Borrower proposes to take.
(e) The Borrower will promptly submit to Bank such other information
relating to the Borrower as the Bank may reasonably request.
(f) The Borrower will pay and discharge when due all indebtedness and
all taxes, assessments, charges, levies and other liabilities imposed
upon the Borrower, its income, profits, property or business, except
those which currently are being contested in good faith by appropriate
proceedings and for which the Borrower shall have set aside adequate
reserves or made other adequate provision with respect thereto
acceptable to the Bank in its sole discretion.
(g) The Borrower will do all things necessary to maintain, renew and
keep in full force and effect its organizational existence and all
rights, permits and franchises necessary to enable it to continue its
business; continue in operation in substantially the same manner as at
present; keep its properties in good operating condition and repair; and
make all necessary and proper repairs, renewals, replacements, additions
and improvements thereto.
(h) The Borrower will maintain with financially sound and reputable
insurers, insurance with respect to its property and business against
such casualties and contingencies, of such types and in such amounts as
is customary for established companies engaged in the same or similar
business and similarly situated.
(i) The Borrower will comply with all laws applicable to the Borrower
and to the operation of its business (including any statute, rule or
regulation relating to employment practices and pension benefits or to
environmental, occupational and health standards and controls).
(j) The Borrower shall cause, at all times, the indebtedness
outstanding under this Agreement to rank at least pari passu with all
other indebtedness for borrowed money of the Borrower, the principal
amount of which is in excess of $1,000,000.
11. Negative Covenants. Unless waived in writing by the Bank or
until payment in full of the Rate Protection Term Loan, the Term Loan
(if applicable), the Line of Credit and all Reimbursement Obligations,
and the termination of the Line of Credit and cancellation of all
Letters of Credit, the Borrower covenants and agrees that it will not,
without the Bank's prior written consent:
(a) Make or permit any material change in the nature of its business
as carried on as of the date of this Agreement or permit any change in
control of more than a majority of its board of directors or its voting
stock.
(b) Create, assume, incur or suffer to exist any mortgage,
pledge, encumbrance, security interest, lien or charge of any kind upon
any of its property (including without limitation the stock of
Borrower's foreign Subsidiaries), now owned or hereafter acquired, or
acquire or agree to acquire any kind of property under conditional sales
or other title retention agreements; provided, however, that the
foregoing restrictions shall not prevent the Borrower from:
(i) incurring liens for taxes, assessments or governmental charges or
levies which shall not at the time be due and payable or can thereafter
be paid without penalty or are being contested in good faith by
appropriate proceedings diligently conducted and with respect to which
it has created adequate reserves;
(ii) making pledges or deposits to secure obligations under workers'
compensation laws or similar legislation;
(iii) granting additional liens or security interests to secure existing
or future indebtedness in an aggregate principal amount at any time not
to exceed $1,000,000; or
(iv) granting liens or security interests in favor of the Bank.
(c) Create, incur, guarantee, endorse (except endorsements in the
course of collection), assume or suffer to exist any indebtedness,
except:
(i) indebtedness to the Bank;
(ii) open account trade debt incurred in the ordinary course of
business and not past due; or
(iii) existing indebtedness and future indebtedness (including without
limitation any Seller Notes) in an aggregate principal amount at any
time not to exceed $1,750,000, and any refinancings thereof; provided
that the amount of the refinancing indebtedness is not more than the
outstanding amount of the refinanced indebtedness.
(d) Liquidate, or dissolve, or merge or consolidate with any person,
firm, corporation or other entity (except for mergers or consolidations
where the Borrower is the surviving entity), or sell, lease, transfer or
otherwise dispose of all or any substantial part of its property or
assets, whether now owned or hereafter acquired (except for the sale of
non-material assets in an aggregate fair market value not to exceed
$1,000,000 at any time).
(e) Make acquisitions of all or substantially all of the property or
assets of any person, firm, corporation or other entity, except for
Permitted Acquisitions.
(f) Declare or pay any dividends on or make any distribution with
respect to any class of its equity, or purchase, redeem, retire or
otherwise acquire any of its equity, except for Permitted Stock
Repurchases.
(g) Make or have outstanding any loans or advances to or otherwise
extend credit to any person, firm or corporation, except in the ordinary
course of business.
(h) Enter into (or permit any of its Subsidiaries to enter into) any
agreement with any person which prohibits it (or its Subsidiaries) from
granting any liens on any of its property (real or personal) to the
Bank.
12. Financial Covenants. Unless waived in writing by the Bank or until
payment in full of the Rate Protection Term Loan, the Term Loan (if
applicable), the Line of Credit and all Reimbursement Obligations, and
the termination of the Line of Credit and cancellation of all Letters of
Credit:
(a) Minimum Net Worth. The Borrower will not allow its Tangible Net
Worth to be less than $41,000,000 at any time, (i) to be increased at
the end of each fiscal quarter commencing on March 31, 1999 by an amount
equal to (x) 50% of Borrower's net income (if a positive number) for the
fiscal quarter most recently then ending, and (y) 100% of the net cash
proceeds (defined as the cash proceeds received from any equity offering
net of reasonable transaction costs (including any underwriting,
brokerage or other customary selling commissions and reasonable legal,
advisory and other fees and expenses associated therewith and actually
incurred)) from the issuance by the Borrower of any equity securities or
other equity capital investments for the fiscal quarter most recently
then ending, and (ii) to be decreased by the amount (as calculated in
accordance with GAAP) attributed to any Permitted Stock Repurchase.
(b) Leverage Ratio. The Borrower will maintain as of the end of each
fiscal quarter, a Leverage Ratio of not greater than 2.5 to 1.
(c) Interest Coverage Ratio. The Borrower will maintain as of the end
of each fiscal quarter an Interest Coverage Ratio of at least 5.0 to
1.0.
(d) Capital Expenditures. The Borrower will not make Capital
Expenditures in any one fiscal year of the Borrower in excess of 125% of
the capital expenditures reflected in the Borrower's most recent five
year plan attached hereto as Schedule V. Carryover is not permitted.
13. Representations and Warranties. To induce the Bank to extend the
Line of Credit, and upon each request for the making of any Advance
under the Line of Credit or the issuance of any Letter of Credit to the
Borrower, the Borrower represents and warrants to the Bank as follows:
(a) The Borrower is duly organized, validly existing and in good
standing under the laws of the state of its incorporation or
organization and has the power and authority to own and operate its
assets and to conduct its business as now or proposed to be carried on,
and is duly qualified, licensed and in good standing to do business in
all jurisdictions where its ownership of property or the nature of its
business requires such qualification or licensing.
(b) The Borrower has the power to make and carry out the terms of the
Loan Documents and has taken all necessary corporate action to authorize
the execution, delivery and performance of the Loan Documents.
(c) The Loan Documents constitute the legally binding obligations of
the Borrower, enforceable against the Borrower in accordance with their
respective terms.
(d) All of the Borrower's domestic and foreign Subsidiaries in
existence on the date hereof are listed on Schedule III attached hereto.
(e) The making and performance of the Loan Documents do not and will
not violate in any respect any provisions of (i) any federal, state or
local law or regulation or any order or decree of any federal, state or
local governmental authority, agency or court, or (ii) the
organizational documents of the Borrower or of any of its Subsidiaries,
or (iii) any mortgage, contract or other undertaking to which the
Borrower is a party or which is binding upon the Borrower or any of its
Subsidiaries or any of their respective assets, and do not and will not
result in the creation or imposition of any security interest, lien,
charge or other encumbrance on any of their respective assets pursuant
to the provisions of any such mortgage, contract or other undertaking.
(f) Neither the Borrower nor any of its Subsidiaries is in default
with respect to any material order, writ, injunction or decree (i) of
any court or (ii) of any Federal, state, municipal or other governmental
instrumentality. The Borrower and each Subsidiary is substantially
complying with all applicable statutes and regulations of each
governmental authority having jurisdiction over its activities, except
where failure to comply would not have a material adverse effect on the
Borrower and its Subsidiaries, taken as a whole.
(g) There are no actions, suits, proceedings or governmental
investigations pending or, to the knowledge of the Borrower, threatened
against the Borrower which could result in a material adverse change in
its business, assets, operations, financial condition or results of
operations and there is no basis known to the Borrower or its officers
or directors for any such action, suit, proceedings or investigation.
(h) The Borrower's latest financial statements provided to the Bank
are true, complete and accurate in all material respects and fairly
present the financial condition, assets and liabilities, whether
accrued, absolute, contingent or otherwise and the results of the
Borrower's operations for the period specified therein. The Borrower's
financial statements have been prepared in accordance with GAAP. Since
the date of the latest financial statements provided to the Bank, the
Borrower has not suffered any damage, destruction or loss which has
materially adversely affected its business, assets, operations,
financial condition or results of operations.
(i) The Borrower has filed all returns and reports that are required
to be filed by it in connection with any federal, state or local tax,
duty or charge levied, assessed or imposed upon the Borrower or its
property, including unemployment, social security and similar taxes and
all of such taxes have been either paid or adequate reserve or other
provision has been made therefor.
(j) Each employee benefit plan as to which the Borrower may have any
liability complies in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974
("ERISA"), including minimum funding requirements, and (i) no Prohibited
Transaction (as defined under ERISA) has occurred with respect to any
such plan, (ii) no Reportable Event (as defined under Section 4043 of
ERISA) has occurred with respect to any such plan which would cause the
Pension Benefit Guaranty Corporation to institute proceedings under
Section 4042 of ERISA, (iii) the Borrower has not withdrawn from any
such plan or initiated steps to do so, and (iv) no steps have been taken
to terminate any such plan.
(k) The Borrower is in compliance, in all material respects, with all
Environmental Laws, including, without limitation, all Environmental
Laws in jurisdictions in which the Borrower owns or operates, or has
owned or operated, a facility or site, stores collateral, arranges or
has arranged for disposal or treatment of hazardous substances, solid
waste or other waste, accepts or has accepted for transport any
hazardous substances, solid waste or other wastes or holds or has held
any interest in real property or otherwise. Except as otherwise
disclosed Schedule IV attached hereto, no litigation or proceeding
arising under, relating to or in connection with any Environmental Law
is pending or, to the best of the Borrower's knowledge, threatened
against the Borrower, any real property which the Borrower holds or has
held an interest or any past or present operation of the Borrower. No
release, threatened release or disposal of hazardous waste, solid waste
or other wastes is occurring, or to the best of the Borrower's knowledge
has occurred, on, under or to any real property in which the Borrower
holds any interest or performs any of its operations, in violation of
any Environmental Law. As used in this Section, "litigation or
proceeding" means any demand, claim notice, suit, suit in equity,
action, administrative action, investigation or inquiry whether brought
by a governmental authority or other person, and "Environmental Laws"
means all provisions of laws, statutes, ordinances, rules, regulations,
permits, licenses, judgments, writs, injunctions, decrees, orders,
awards and standards promulgated by any governmental authority
concerning health, safety and protection of, or regulation of the
discharge of substances into, the environment.
(l) The Borrower owns or is licensed to use all patents, patent
rights, trademarks, trade names, service marks, copyrights, intellectual
property, technology, know-how and processes necessary for the conduct
of its business as currently conducted that are material to the
condition (financial or otherwise), business or operations of the
Borrower.
(m) No part of the proceeds of the Advances will be used for
"purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time in
effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors.
(n) As of the date hereof and after giving effect to the transactions
contemplated by the Loan Documents, (i) the aggregate value of the
Borrower's assets will exceed its liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities), (ii) the Borrower
will have sufficient cash flow to enable it to pay its debts as they
mature, and (iii) the Borrower will not have unreasonably small capital
for the business in which it is engaged.
(o) None of the Loan Documents contains or will contain any untrue
statement of material fact or omits or will omit to state a material
fact necessary in order to make the statements contained in this
Agreement or the Loan Documents not misleading. There is no fact known
to the Borrower which materially adversely affects or, so far as the
Borrower can now foresee, might materially adversely affect the
business, assets, operations, financial condition or results of
operation of the Borrower and which has not otherwise been fully set
forth in this Agreement or in the Loan Documents.
(p) The Borrower has reviewed the areas within its business and
operations which could be adversely affected by, and has developed or is
developing a program to address on a timely basis the risk that certain
computer applications used by the Borrower may be unable to recognize
and perform properly date-sensitive functions involving dates prior to
and after December 31, 1999 (the "Year 2000 Problem"). The Year 2000
Problem is not reasonably expected to result in any material adverse
effect on the business, properties, assets, financial condition, results
of operations or prospects of the Borrower, or the ability of the
Borrower to duly and punctually pay or perform its obligations hereunder
and under the other Loan Documents.
14. Events of Default. The occurrence of any of the following events
(whatever the reason therefor and whether voluntary, involuntary or
effected by operation of law) will be deemed to be an "Event of
Default":
(a) the nonpayment of any principal, interest, reimbursement
obligation or other indebtedness under this Agreement, the Notes or any
other Loan Document when due;
(b) The occurrence of any event of default or default and the lapse of
any notice or cure period under any Loan Document or any other debt,
liability or obligation to the Bank of any Obligor;
(c) the filing by or against the Borrower of any proceeding in
bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding (and, in the case of any such
proceeding instituted against the Borrower, such proceeding is not
dismissed or stayed within thirty (30) days of the commencement thereof
(provided that the Bank is not obligated to make any Advances or issue
any Letters of Credit under the Line of Credit during such 30 day
period));
(d) any assignment by the Borrower for the benefit of creditors, or
any levy, garnishment, attachment or similar proceeding (in excess of
$100,000 in the aggregate) is instituted against any property of the
Borrower held by or deposited with the Bank (and, in the case of any
levy, garnishment, attachment or similar proceeding instituted against
any such property of the Borrower, such proceeding is not dissolved
within ten (10) days of the commencement thereof (provided that the Bank
is not obligated to make any Advances or issue any Letters of Credit
under the Line of Credit during such ten (10) day period));
(e) a default with respect to any other indebtedness of any Obligor
for borrowed money in excess of $100,000 in the aggregate, if the effect
of such default is to cause or permit the acceleration of such debt;
(f) the commencement of any foreclosure or forfeiture proceeding,
execution or attachment against any collateral (having a fair market
value in excess of $100,000 in the aggregate) securing the obligations
of any Obligor to the Bank, and the failure of such Obligor to discharge
such proceeding within ten (10) days of the commencement thereof;
(g) the entry of a final judgment in excess of $100,000 in the
aggregate against any Obligor and the failure of such Obligor to
discharge the judgment within ten (10) days of the entry thereof;
(h) in the event that this Note or any guarantee executed by any
Guarantor is secured, the failure of any Obligor to provide the Bank
with additional collateral if in the opinion of the Bank at any time or
times, the market value of any of the collateral securing this Note or
any guarantee has depreciated;
(i) any material adverse change in the business, assets, operations,
financial condition or results of operations of any Obligor;
(j) any Obligor ceases doing business as a going concern;
(k) the revocation or attempted revocation, in whole or in part, of
any guarantee by any Guarantor;
(l) any representation or warranty made by any Obligor to the Bank in
any Loan Document, or any other documents now or in the future
evidencing or securing the obligations of any Obligor to the Bank, is
false, erroneous or misleading in any material respect; or
(m) the failure of any Obligor to observe or perform any covenant or
other agreement with the Bank contained in any Loan Document or any
other documents now or in the future evidencing or securing the
obligations of any Obligor to the Bank.
15. Consequences of an Event of Default. Upon the occurrence of an
Event of Default: (a) the Bank shall be under no further obligation to
make Advances hereunder or issue Letters of Credit, as the case may be;
(b) if an Event of Default specified in clause (c) or (d) above shall
occur, the unpaid principal balance of the Notes then outstanding and
all interest accrued thereon together with any additional amounts
payable hereunder and thereunder shall be immediately due and payable
without demand or notice of any kind; (c) if any other Event of Default
shall occur, the unpaid principal balance of the Notes then outstanding
and all interest accrued thereon together with any additional amounts
payable hereunder and thereunder, at the option of the Bank and without
demand or notice of any kind, may be accelerated and become immediately
due and payable; (d) the Bank may require the Borrower to, and the
Borrower shall thereupon, deposit in a non-interest-bearing account (the
"Cash Collateral Account") with the Bank, as cash collateral for its
obligations under the Loan Documents, an amount equal to the aggregate
maximum amount currently or at any time thereafter available to be drawn
on all outstanding Letters of Credit, and the Borrower hereby pledges to
the Bank, and grants to the Bank a security interest in, all such cash
collateral as security for such obligations. Upon the curing of all
existing Events of Default to the satisfaction of the Bank, the Bank
shall return such cash collateral to the Borrower; (e) at the option of
the Bank, the Notes will bear interest at the Default Rate from the date
of the occurrence of the Event of Default; and (f) the Bank may exercise
from time to time any of the rights and remedies available to the Bank
under the Loan Documents or under applicable law.
16. Right of Setoff. In addition to all liens upon and rights of
setoff against the money, securities or other property of the Borrower
given to the Bank by law, the Bank shall have, with respect to the
Borrower's obligations to the Bank under the Loan Documents and to the
extent permitted by law, a contractual possessory security interest in
and a contractual right of setoff against, and the Borrower hereby
assigns, conveys, delivers, pledges and transfers to the Bank all of the
Borrower's right, title and interest in and to, all deposits, moneys,
securities and other property of the Borrower now or hereafter in the
possession of or on deposit with, or in transit to, the Bank whether
held in a general or special account or deposit, whether held jointly
with someone else, or whether held for safekeeping or otherwise,
excluding, however, all IRA, Keogh, and trust accounts. Every such
security interest and right of setoff may be exercised without demand
upon or notice to the Borrower. Every such right of setoff shall be
deemed to have been exercised immediately upon the occurrence of an
Event of Default hereunder without any action of the Bank, although the
Bank may enter such setoff on its books and records at a later time.
17. Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted hereunder must be in writing
and will be effective upon receipt if delivered personally to such
party, or if sent by facsimile transmission with confirmation of
delivery, or by nationally recognized overnight courier service, to the
address set forth below or to such other address as any party may give
to the other in writing for such purpose.
To the Bank:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222
Attention: Mr. Eric Bruno, Assistant Vice President
Facsimile No.: (412) 762-7353
With a copy to:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222
Attention: Thomas S. Bott, Managing Counsel
Facsimile No.: (412) 762-4334
To the Borrower:
II - VI Incorporated
375 Saxonburg Boulevard
Saxonburg, Pennsylvania 16056
Attention: James Martinelli, Treasurer and Chief Financial Officer
Facsimile No.: (724) 352-5299
With a copy to:
Sherrard, German & Kelly, PC
One Oliver Plaza, 35th Floor
Pittsburgh, Pennsylvania 15222
Attention: Robert D. German, Esq.
Facsimile No.: (412) 261-6221
18. Documentation Fee. On the date of this Agreement, the
Borrower shall pay to the Bank a documentation fee of $5,000.00.
19. Commitment Fees. Accruing from the date hereof until the
Expiration Date, the Borrower agrees to pay to the Bank in Dollars a
commitment fee (the "Commitment Fee") equal to the Applicable Commitment
Fee Rate (computed on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed) on the average daily Equivalent
Amount in Dollars equal to the Line of Credit Commitment minus the sum
of all Advances then outstanding plus all Letters of Credit Outstanding.
All Commitment Fees shall be payable quarterly in arrears beginning June
30, 1999, and continuing on the last Business Day of each fiscal quarter
after the date hereof and on any date that the Line of Credit Commitment
is terminated or reduced as provided in Section 2(o) hereof, on the
Expiration Date, or upon acceleration of the Line of Credit Note.
20. Letter of Credit Fees. The Borrower shall pay to the Bank in
Dollars a fee (the "Letter of Credit Fee") on the daily average Dollar
Equivalent amount of outstanding standby Letters of Credit for the
period from such standby Letter of Credit's opening date to its expiry
date at a rate per annum equal to the then Applicable Margin applicable
to Advances bearing interest under the Euro-Rate Option, which fee shall
be payable on the last Business Day of each fiscal quarter, in arrears,
following the issuance of each standby Letter of Credit, and on the
Expiration Date. The Borrower shall also pay to the Bank in Dollars (i)
the Bank's then in effect customary fees payable with respect to
commercial Letters of Credit and (ii) the Bank's then in effect
customary fees and administrative expenses payable with respect to all
Letters of Credit as the Bank may generally charge or incur from time to
time in connection with the issuance, maintenance, modification (if
any), assignment or transfer (if any), negotiation, and administration
of Letters of Credit.
21. Expenses. The Borrower shall reimburse the Bank for the Bank's
expenses (including the reasonable fees and expenses of the Bank's
outside and in-house counsel) in connection with the collection of all
of the Borrower's obligations to Bank, including but not limited to
enforcement actions relating to the Loan Documents.
22. Depository. The Borrower will establish and maintain at the Bank
the Borrower's primary depository accounts.
23. Governing Law. This Agreement, the Notes and the other Loan
Documents shall be governed by the laws of the Commonwealth of
Pennsylvania, excluding its conflict of law rules.
24. Counterparts. This Agreement may be executed in counterparts,
each of which when executed by the Borrower and the Bank shall be
regarded as an original.
25. Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement between
the Borrower and the Bank concerning the Loans and supersedes all other
prior agreements and understandings, both written and oral, between the
parties with respect to the Loans.
26. Amendments and Waivers. No modification, amendment or waiver of
any provision of this Agreement nor consent to any departure by the
Borrower therefrom, will in any event be effective unless the same is in
writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Borrower in any case will entitle
the Borrower to any other or further notice or demand in the same,
similar or other circumstance.
27. Preservation of Rights. No delay or omission on the part of the
Bank to exercise any right or power arising hereunder will impair any
such right or power or be considered a waiver of any such right or power
or any acquiescence therein, nor will the action or inaction of the Bank
impair any right or power arising hereunder. The Bank's rights and
remedies hereunder are cumulative and not exclusive of any other rights
or remedies which the Bank may have under other agreements, at law or in
equity.
28. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the Borrower and the Bank and their respective
heirs, executors, administrators, successors and assigns; provided,
however, that the Borrower may not assign this Agreement in whole or in
part without the prior written consent of the Bank and the Bank at any
time may assign this Agreement in whole or in part.
29. Indemnity. The Borrower agrees to indemnify each of the Bank, its
directors, officers and employees and each legal entity, if any, who
controls the Bank (the "Indemnified Parties") and to hold each
Indemnified Party harmless from and against any and all claims, damages,
losses, liabilities and expenses (including, without limitation, all
reasonable fees of counsel with whom any Indemnified Party may consult
and all expenses of litigation or preparation therefor) which any
Indemnified Party may incur or which may be asserted against any
Indemnified Party in connection with or arising out of the matters
referred to in this Agreement or in the other Loan Documents by any
person, entity or governmental authority (including any person or entity
claiming derivatively on behalf of the Borrower), whether (a) arising
from or incurred in connection with any breach of a representation,
warranty or covenant by the Borrower, or (b) arising out of or resulting
from any suit, action, claim, proceeding or governmental investigation,
pending or threatened, whether based on statute, regulation or order, or
tort, or contract or otherwise, before any court or governmental
authority, which arises out of or relates to this Agreement, any other
Loan Document, or the use of the proceeds of the Loan; provided,
however, that the foregoing indemnity agreement shall not apply to
claims, damages, losses, liabilities and expenses solely attributable to
an Indemnified Party's gross negligence or willful misconduct. The
indemnity agreement contained in this Section shall survive the
termination of this Agreement, payment of any Loan and assignment of any
rights hereunder. The Borrower may participate at its expense in the
defense of any such action or claim.
30. Assignments and Participations. At any time, without any notice
to the Borrower, the Bank may sell, assign, transfer, negotiate, grant
participation in, or otherwise dispose of all or any part of the Bank's
interest in the Loans. The Borrower hereby authorizes the Bank to
provide, without any notice to the Borrower, any information concerning
the Borrower, including information pertaining to the Borrower's
financial condition, business operations or general creditworthiness, to
any person or entity which may succeed to or participate in all or any
part of the Bank's interest in the Loans.
31. Consent to Jurisdiction. The Borrower hereby agrees that any
action or proceeding arising out of or relating to this Agreement or the
other Loan Documents may be commenced in, and Borrower irrevocably
consents to the exclusive jurisdiction of, any state or federal court
located for the county or judicial district where the Bank's office
indicated above is located, and consents that all service of process be
sent by nationally recognized overnight courier service directed to the
Borrower at the Borrower's address set forth herein and service so made
will be deemed to be completed on the business day after deposit with
such courier; provided that nothing contained in this Agreement will
prevent the Bank from bringing any action, enforcing any award or
judgment or exercising any rights against the Borrower individually,
against any security or against any property of the Borrower within any
other county, state or other foreign or domestic jurisdiction. The
Borrower acknowledges and agrees that the venue provided above is the
most convenient forum for both the Bank and the Borrower. The Borrower
waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Agreement or any
other Loan Document.
32. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK IRREVOCABLY WAIVE
ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH LOAN
DOCUMENTS. THE BORROWER AND THE BANK ACKNOWLEDGE THAT THE FOREGOING
WAIVER IS KNOWING AND VOLUNTARY.
If the foregoing accurately reflects the understanding of the parties,
please execute the duplicate original of this Agreement and the other
Loan Documents and return them to me.
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Eric Bruno
Eric Bruno, Assistant Vice President
Agreed to and accepted, with the intent to be legally bound,
this 26th day of March, 1999
II-VI INCORPORATED
By: /s/ James Martinelli
Name: James Martinelli
Title: Treasurer and Chief Financial Officer
SCHEDULE I TO LETTER AGREEMENT
Defined Terms
In addition to the words and terms defined elsewhere in the Agreement,
the following words and terms shall have the following respective
meanings:
Advances shall have the meaning assigned to such term in Section 2(a) of
the Agreement.
Applicable Commitment Fee Rate shall mean the percentage rate per annum
based on the Leverage Ratio then in effect according to the pricing grid
on Schedule II to the Agreement across from the heading "Commitment
Fee". The Applicable Commitment Fee Rate shall be computed in
accordance with the parameters set forth on Schedule II to the
Agreement.
Applicable Margin shall mean the respective percentage spread to be
added to the Base Rate under the Base Rate Option and the Euro Rate
under the Euro-Rate Option based on the Leverage Ratio then in effect
according to the pricing grid on Schedule II to the Agreement across
from the headings "Base Rate" and "Euro-Rate", respectively. The
Applicable Margin shall be computed in accordance with the parameters
set forth on Schedule II to the Agreement.
Base Rate shall mean the greater of (i) the Prime Rate, or (ii) the
Federal Funds Effective Rate plus fifty (50) basis points (0.50%) per
annum.
Base Rate Option shall mean the interest rate option described in
Section 2(e)(i) of the Agreement.
Borrowing Date shall mean, with respect to any Advance, the date for the
making thereof or the renewal or conversion thereof at or to the same or
a different Interest Rate Option, which shall be a Business Day.
Business Day shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to be
closed for business in Pittsburgh, Pennsylvania; and (i) if the
applicable Business Day relates to any Advance to which the Euro-Rate
Option applies, such day must also be a day on which dealings are
carried on in the London interbank market, (ii) with respect to advances
or payments of Advances or any other matters relating to Advances
denominated in an Optional Currency, such day also shall be a day on
which dealings in deposits in the relevant Optional Currency are carried
on in the applicable interbank market, and (iii) with respect to
advances or payments of Advances denominated in an Optional Currency,
such day shall also be a day on which all applicable banks into which
Advance proceeds may be deposited are open for business and foreign
exchange markets are open for business in the principal financial center
of the country of such currency.
Capital Expenditures shall mean, for any period, the sum of, without
duplication, (a) all cash expenditures made, directly or indirectly, by
the Borrower and any of its Subsidiaries during such period for
equipment, fixed assets, real property or improvements, or for
replacements or substitutions therefor or additions thereto, that have
been or should be, in accordance with GAAP, reflected as additional
property, plant or equipment on a consolidated balance sheet of the
Borrower and its Subsidiaries.
Cash Collateral Account shall have the meaning assigned to such term in
Section 15 of the Agreement.
Closing Date shall mean the date upon which this Agreement has been
executed by the Borrower and the Bank and all conditions precedent
specified in Section 9 of the Agreement have been satisfied or waived by
the Bank.
Commitment Fee shall have the meaning assigned to such term in Section
19 of the Agreement.
Compliance Certificate shall have the meaning assigned to such term in
Section 10(b) of the Agreement.
Computation Date shall have the meaning assigned to such term in Section
2(h) of the Agreement.
Control shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract
or otherwise, including the power to elect a majority of the directors
or trustees of a corporation or trust, as the case may be.
Conversion Date shall mean the date upon which the Advances (or a
portion thereof) are converted to a term loan in accordance with Section
2(n) of the Agreement.
Cost of Prepayment shall have the meaning assigned to such term in
Section 2(m) of the Agreement.
Default shall mean any event or condition which with notice or passage
of time or both would constituted an Event of Default.
Default Rate shall have the meaning assigned to such term in Section
2(f) of the Agreement.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean the lawful
currency of the United States of America.
Dollar Equivalent shall mean, with respect to any amount of any
currency, the Equivalent Amount of such currency expressed in Dollars.
Dollar Equivalent Line of Credit Usage shall mean at any time the sum of
(i) the Dollar Equivalent amount of Advances then outstanding and (ii)
the Dollar Equivalent amount of Letters of Credit Outstanding.
EBIT shall mean, for any period, the consolidated net income (or net
loss) of the Borrower and its Subsidiaries for such period as determined
in accordance with GAAP, plus (a) the sum of (i) interest expense, (ii)
income tax expense, (iii) extraordinary or unusual losses deducted in
calculating net income, (iv) to the extent deducted in calculating net
income (or net loss), other non-cash charges, less (b) the sum of (i)
extraordinary or unusual gains added in calculating net income, (ii) to
the extent added in calculating net income (or net loss), other non-cash
credits.
EBITDA shall mean, for any period, the consolidated net income (or net
loss) of the Borrower and its Subsidiaries for such period as determined
in accordance with GAAP, plus (a) the sum of (i) interest expense, (ii)
income tax expense, (iii) depreciation expense, (iv) amortization
expense, (v) extraordinary or unusual losses deducted in calculating net
income, (vi) to the extent deducted in calculating net income (or net
loss), other non-cash charges, less (b) the sum of (i) extraordinary or
unusual gains added in calculating net income, (ii) to the extent added
in calculating net income (or net loss), other non-cash credits.
Equivalent Amount shall mean, at any time, as determined by Bank (which
determination shall be conclusive absent manifest error), with respect
to an amount of any currency (the "Reference Currency") which is to be
computed as an equivalent amount of another currency (the "Equivalent
Currency"): (i) if the Reference Currency and the Equivalent Currency
are the same, the amount of such Reference Currency, or (ii) if the
Reference Currency and the Equivalent Currency are not the same, the
amount of such Equivalent Currency converted from such Reference
Currency at Bank's spot selling rate (based on the market rates then
prevailing and available to Bank) for the sale of such Equivalent
Currency for such Reference Currency at a time determined by Bank on the
second Business Day immediately preceding the event for which such
calculation is made.
Equivalent Currency shall have the meaning assigned to such term in the
definition of Equivalent Amount.
Euro shall have the meaning assigned to such term in Section 2(h)(vii)
of the Agreement.
Euro-Rate shall mean the following: (A) with respect to any Advances
denominated in Dollars comprising any portion to which the Euro-Rate
Option applies for any Euro-Rate Interest Period, the interest rate per
annum determined by the Bank by dividing (the resulting quotient rounded
upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate of interest determined by the Bank in accordance with its usual
procedures (which determination shall be conclusive absent manifest
error) to be the average of the London interbank offered rates for U.S.
Dollars quoted by the British Bankers' Association as set forth on Dow
Jones Markets Service (formerly known as Telerate) display page 3750 (or
appropriate successor or, if the British Bankers' Association or its
successor ceases to provide such quotes, a comparable replacement
determined by the Bank) as of approximately 11:00 a.m. Greenwich Mean
Time two (2) Business Days prior to the first day of such Euro-Rate
Interest Period for an amount comparable to such Advance and having a
borrowing date and a maturity comparable to such Euro-Rate Interest
Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. Such Euro-Rate may also be expressed by the following
formula:
Average of London interbank offered rates on Dow Jones
Markets Service display page 3750 as quoted by
Euro-Rate = British Bankers' Association or appropriate successor
-----------------------------------------------------
1.00 - Euro-Rate Reserve Percentage
(B) with respect to any Advances denominated in Optional Currency
comprising any portion to which the Euro-Rate Option applies for any
Euro-Rate Interest Period, the interest rate per annum determined by
Bank by dividing (the resulting quotient rounded upward to the nearest
1/100th of 1 percent per annum) (i) the rate of interest per annum
determined by Bank in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the rate
of interest per annum for deposits in the relevant Optional Currency
quoted by British Bankers' Association and which appears on the relevant
Telerate Page (or, if no such quotation is available on such Telerate
Page, on the appropriate Reuters Screen) at approximately 9:00 a.m.,
Pittsburgh time, two (2) Business Days prior to the first day of such
Euro-Rate Interest Period for delivery on the first day of such Euro-
Rate Interest Period for a period, and in an amount, comparable to such
Euro-Rate Interest Period and principal amount of such Advance ("LIBO
Rate") by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. Such Euro-Rate may also be expressed by the following
formula:
LIBO Rate
Euro-Rate =
1 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Bank shall give prompt notice
to the Borrower of the Euro-Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest error.
The Euro-Rate for any Advances shall be based upon the Euro-Rate for the
currency in which such Advances are requested.
Euro-Rate Interest Period shall mean the period of one (1), two (2),
three (3) or six (6) months selected by the Borrower commencing on the
date of disbursement of an Advance and each successive period selected
by the Borrower thereafter; provided, that if a Euro-Rate Interest
Period would end on a day which is not a Business Day, it shall end on
the next succeeding Business Day, unless such day falls in the
succeeding calendar month in which case the Euro-Rate Interest Period
shall end on the next preceding Business Day. In no event shall any
Euro-Rate Interest Period end on a day after the Expiration Date.
Euro-Rate Option shall mean the interest rate option described in
Section 2(e)(ii) of the Agreement.
Euro-Rate Reserve Percentage shall mean the maximum percentage
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as
determined by the Agent which is in effect during any relevant period as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the reserve requirements (including
supplemental, marginal and emergency reserve requirements) with respect
to eurocurrency funding (currently referred to as "Eurocurrency
Liabilities") of a member bank in such System.
Event of Default shall have the meaning assigned to such term in Section
14 of the Agreement.
Expiration Date means March 25, 2000, or such later date as may be
designated by the Bank in writing its sole discretion in accordance with
Section 2(b) of the Agreement.
Extension Request shall have the meaning assigned to such term in
Section 2(b) of the Agreement.
Federal Funds Effective Rate shall mean for any day the rate per annum
(based on a year of 360 days and actual days elapsed and rounded upward
to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New
York (or any successor) on such day as being the weighted average of the
rates on overnight federal funds transactions arranged by federal funds
brokers on the previous trading day, as computed and announced by such
Federal Reserve Bank (or any successor) in substantially the same manner
as such Federal Reserve Bank computes and announces the weighted average
it refers to as the "Federal Funds Effective Rate" as of the date of
this Agreement; provided, if such Federal Reserve Bank (or its
successor) does not announce such rate on any day, the "Federal Funds
Effective Rate" for such day shall be the Federal Funds Effective Rate
for the last day on which such rate was announced.
GAAP shall mean generally accepted accounting principles in effect from
time to time consistently applied from period to period subject in the
case of interim statements to normal year-end adjustments.
Guarantor shall mean each of the Borrower's domestic subsidiaries as
listed on Schedule III attached to the Agreement, and any other
guarantor of the obligations of the Borrower to the Bank existing on the
date of the Agreement or arising in the future.
Guarantees shall have the meaning assigned to such term in Section 7 of
the Agreement.
Initial Expiration Date shall mean the date that is 364 days from the
date of the Agreement.
Interest Coverage Ratio shall mean the ratio of EBIT to the consolidated
interest expense of the Borrower and its Subsidiaries, measured on a
rolling four fiscal quarter basis.
Interest Rate Option shall mean the Base Rate Option or the Euro-Rate
Option.
Letter of Credit shall have the meaning assigned to that term in Section
3(a) of the Agreement.
Letter of Credit Fee shall have the meaning assigned to that term in
Section 20 of the Agreement.
Letters of Credit Outstanding shall mean at any time the sum of (i) the
aggregate undrawn Stated Amount of outstanding Letters of Credit and
(ii) the aggregate amount of all unpaid and outstanding Reimbursement
Obligations.
Leverage Ratio shall mean the ratio of Total Indebtedness to EBITDA,
measured on a rolling four fiscal quarter basis.
Line of Credit shall have the meaning assigned to such term in Section
2(a) of the Agreement.
Line of Credit Commitment shall mean $15,000,000, as the same may be
reduced pursuant to Sections 2(o) of the Agreement.
Line of Credit Note shall have the meaning assigned to such term in
Section 2(c) of the Agreement.
Loans shall mean the Line of Credit, the Rate Protection Term Loan and
the Term Loan (if applicable).
Loan Documents shall have the meaning assigned to such term in Section 6
of the Agreement.
Material Adverse Change shall mean any set of circumstances or events
which (a) has or could reasonably be expected to have any material
adverse effect upon the validity or enforceability of the Agreement or
any of the other Loan Documents, (b) is or could reasonably be expected
to be material and adverse to the business, properties, assets,
financial condition or results of operations of the Borrower and its
Subsidiaries, taken as a whole, (c) impairs materially or could
reasonably be expected to impair materially the ability of the Borrower
and its Subsidiaries taken as a whole to duly and punctually pay their
indebtedness, or (d) impairs materially or could reasonably be expected
to impair materially the ability of the Bank to enforce its legal
remedies pursuant to the Agreement or any other Loan Document.
Notes shall mean the Line of Credit Note, the Rate Protection Term Note
and the Term Note (if applicable).
Obligor means the Borrower and each Guarantor.
Optional Currency shall mean any of the following currencies (a) the
Australian dollar, (b) the British Pound Sterling, (c) the Canadian
dollar, (d) the Deutsche Mark, (e) the Italian Lira, (f) the Japanese
Yen, (g) the Spanish Peseta, and (h) the Singapore dollar, and any other
freely convertible foreign currency, as determined pursuant to the
currency codes in effect from time to time under ISO International
Standard 4217 or any successor thereto and as approved by the Bank in
writing in its sole discretion.
Original Currency shall have the meaning assigned to such term in
Section 2(j)(i) of the Agreement.
Other Currency shall have the meaning assigned to such term in Section
2(j)(i) of the Agreement.
Other Taxes shall have the meaning assigned to such term in Section
2(i)(ii) of the Agreement.
Overnight Rate shall mean for any day with respect to any Advances in an
Optional Currency, the rate of interest per annum as determined by the
Bank at which overnight deposits in the such currency, in an amount
approximately equal to the amount with respect to which such rate is
being determined, would be offered for such day in the applicable
offshore interbank market.
Permitted Acquisitions shall mean acquisitions by the Borrower of all or
substantially all of the assets or capital stock of any Person, provided
that (i) such Person is in a similar line of business as carried on by
the Borrower on the date of this Agreement, (ii) the board of directors
or other applicable governing body shall have consented to and approved
such acquisition, (iii) at the time of such acquisition no Event of
Default or Default then exists or would result therefrom, (iv) each of
the representations and warranties contained in Section 13 of the
Agreement shall be true and correct in all material respects both before
and after giving effect to such acquisition, and (v) any liens or
indebtedness assumed or issued in connection with such acquisition are
otherwise permitted under Section 11(b) or 11(c) of the Agreement.
Permitted Stock Repurchases shall mean the repurchase by Borrower of
shares of its capital stock, provided that the aggregate consideration
paid in connection with all such Permitted Stock Repurchases shall not
exceed $5,000,000 at any time.
Person shall mean any individual, company, partnership, limited
liability company, joint venture, corporation, association, business
trust, unincorporated organization, or any other entity.
Prime Rate shall mean for any day the rate publicly announced by the
Bank from time to time as its prime rate, which rate is not tied to any
external rate of interest or index and does not necessarily reflect the
lowest rate of interest actually charged by the Bank to any particular
class or category of customers.
Reimbursement Agreement shall have the meaning assigned to such term in
Section 3(a) of the Agreement.
Reimbursement Obligation shall mean the obligation of the Borrower to
reimburse the Bank in an amount equal to the Dollar Equivalent amount(s)
paid by the Bank under the Letters of Credit, plus accrued interest
thereon.
Reference Currency shall have the meaning assigned to such term in the
definition of Equivalent Amount.
Seller Notes shall mean any notes issued by the Borrower in connection
with any Permitted Acquisition, the payment of which are subject to the
terms and conditions of a Subordination Agreement executed in favor of
the Bank.
Stated Amount shall mean as to any Letter of Credit, the lesser of (i)
the face amount thereof, or (ii) the remaining available undrawn amount
thereof (regardless of whether any conditions for drawing could then be
met)
Subordination Agreement shall mean a subordination agreement in form and
content satisfactory to the Bank, whereby the payment of the Seller
Notes are subordinated to the prior payment in full of all obligations
owing by the Borrower to the Bank under the Loan Documents.
Subsidiary shall mean, at any time, any Person of which 50% or more (by
number of shares or number of votes) of the outstanding capital stock or
shares of beneficial interest normally entitled to vote for the election
of one or more directors (regardless of any contingency which does or
may suspend or dilute the voting rights) is at such time owned directly
or indirectly through one or more Subsidiaries by Borrower (including,
without limitation, the entities listed on Schedule III attached
hereto), or (ii) any Person which is Controlled or capable of being
Controlled by Borrower or one or more of Borrower's Subsidiaries.
Tangible Net Worth shall mean stockholder's equity in the Borrower less
any advances to third parties and any items properly classified as
intangibles, in accordance with generally accepted accounting
principles.
Taxes shall have the meaning assigned to such term in Section 2(i)(i) of
the Agreement.
Term Conversion Request shall have the meaning assigned to such term in
Section 2(n) of the Agreement.
Term Loan shall have the meaning assigned to such term in Section 2(n)
of the Agreement.
Term Note shall have the meaning assinged to such term in Section 2(n)
of the Agreement.
Total Indebtedness shall mean any and all indebtedness, obligations or
liabilities (whether matured or unmatured, liquidated or unliquidated,
direct or indirect, absolute or contingent or joint and several) of the
Borrower and its Subsidiaries for or in respect of: (i) borrowed money,
(ii) amounts raised under or liabilities in respect of any note purchase
or acceptance credit facility, (iii) reimbursement obligations
(contingent or otherwise) under any letter of credit, currency swap
agreement, hedging contracts, or other interest rate management device,
raw materials management device or commodities management device (except
raw materials or commodity management devices entered into in the
ordinary course of business), (iv) any other transaction (including
forward sale or purchase agreements, capitalized leases and conditional
sales agreements) having the commercial effect of a borrowing of money
entered into by Borrower or any of its Subsidiaries to finance its
operations or capital requirements (but not including trade payables and
accrued expenses incurred in the ordinary course of business which are
not represented by a promissory note or other evidence of indebtedness),
or (v) any guaranty of any of the foregoing.
Trigger Date shall have the meaning assigned to such term in Section
8(a) of the Agreement.
Year 2000 Problem shall have the meaning assigned to such term in
Section 13(p) of the Agreement.
<TABLE>
SCHEDULE II TO LETTER AGREEMENT
Pricing Grid 1
<CAPTION>
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
<S> <C> <C> <C> <C> <C>
BASIS FOR If the Leverage If the Leverage If the Leverage If the Leverage If the Leverage
PRICING Ratio is less Ratio is greater Ratio is greater Ratio is greater Ratio is greater
than or equal than 0.75 to 1.0 than 1.0 to 1.0 than 1.5 to 1.0 than 2.0 to 1.0.
to 0.75 to 1.0. but less than or but less than or but less than or
equal to 1.0 to equal to 1.5 to equal to 2.0 to
1.0. 1.0. 1.0.
EURORATE + 75 87.5 100 112.5 125
BASE RATE + 0 0 0 0 0
COMMITMENT
FEE 7.5 10 12.5 15 17.5
For purposes of determining the Applicable Margin and the Applicable Commitment Fee Rate:
(a) The Applicable Margin and the Applicable Commitment Fee Rate on the Closing Date shall be those
set forth under Level II.
(b) The Applicable Margin and the Applicable Commitment Fee Rate shall be recomputed as of the end
of each fiscal quarter ending after the Closing Date based on the Leverage Ratio as of such
quarter end; provided that if the Borrower fails to deliver the financial statements
required by Section 10(b) and 10(d) of the Agreement and the related Compliance Certificate by
the 90th day after any fiscal year, or the 45th day after any fiscal quarter, the Applicable
Margin and the Applicable Commitment Fee Rate shall be those that would apply if the Leverage
Ratio were greater than 2.0 to 1.0 and shall apply until such financial statements and Compliance
Certificate are delivered. Any increase or decrease in the Applicable Margin or the Applicable
Commitment Fee Rate computed as of a quarter end shall be effective on the date on which the
Compliance Certificate evidencing such computation is delivered under Section 10(b) and 10(d) of
the Agreement.
</TABLE>
SCHEDULE III TO LETTER AGREEMENT
Domestic Subsidiaries
Name Jurisdiction of Incorporation
* II-VI Delaware, Incorporated (Delaware)
* VLOC Incorporated (Pennsylvania)
Foreign Subsidiaries
Name Jurisdiction of Incorporation
* II-VI Singapore Pte., Ltd. (Singapore)
* II-VI Worldwide, Incorporated (Barbados)
* II-VI Japan Incorporated (Japan)
* II-VI U.K. Limited (United Kingdom)
* II-VI Optics (Suzhou) Co., Ltd. (China)
SCHEDULE IV TO LETTER AGREEMENT
Environmental Litigation
------------------------
None
SCHEDULE V TO LETTER AGREEMENT
II-VI Incorporated
Capital Expenditures Budget for Fiscal Years Ended June 30, 1999, 2000
and 2001 (Obtained from February 1999 Five Year Plan)
Fiscal Year Fiscal Year Fiscal Year
Ended Ended Ended
June 30, 1999 June 30, 2000 June 30, 2000
------------- ------------- -------------
Total Capital
Expenditures Budget $6,545,900 $8,684,200 $7,404,900
EXHIBIT "A" TO LETTER AGREEMENT
AMENDED AND RESTATED COMMITTED LINE OF CREDIT NOTE
$15,000,000.00 Pittsburgh, Pennsylvania
March 26, 1999
FOR VALUE RECEIVED, the undersigned, II-VI INCORPORATED, a Pennsylvania
corporation with an address at 375 Saxonburg Boulevard, Saxonburg, PA
16056 (herein called the "Borrower"), hereby promises to pay to the
order of PNC BANK, NATIONAL ASSOCIATION (the "Bank") the lesser of (i)
the principal sum of FIFTEEN MILLION AND 00/100 U.S. Dollars (U.S.
$15,000,000.00), or (ii) the aggregate unpaid principal balance of all
Advances made by the Bank to the Borrower pursuant to Sections 2 and 3
of the Letter Agreement dated as of March 26, 1999, between the Borrower
and the Bank (as the same may be amended, modified, renewed or restated
from time to time, the "Agreement"), payable on the Expiration Date.
The Borrower shall pay interest on the unpaid principal balance hereof
from time to time outstanding from the date hereof at the rate or rates
per annum and at the times as specified in the Agreement.
Upon the occurrence and during the continuation of an Event of Default,
the Borrower shall pay interest on the entire principal amount of the
then outstanding Advances evidenced by this Line of Credit Note at a
rate per annum (based on a year of 360 days and actual days elapsed)
equal to two hundred basis points (2% per annum) above the rate of
interest otherwise applicable with respect to such Advances. Such
interest rate will accrue before and after any judgment has been
entered.
If any payment or action to be made or taken hereunder shall be stated
to be or become due on a day which is not a Business Day, such payment
or action shall be made or taken on the next following Business Day and
such extension of time shall be included in computing interest or fees,
if any, in connection with such payment or action.
Subject to the provisions of the Agreement, payments of both principal
and interest shall be made without setoff, counterclaim or other
deduction of any nature at the office of the Bank located at 249 Fifth
Avenue, Pittsburgh, Pennsylvania 15222-2707, in lawful money of the
United States of America in immediately available funds.
This Note is the Line of Credit Note referred to in, and is entitled to
the benefits of, the Agreement and other Loan Documents, including the
representations, warranties, covenants, conditions, security interests
or liens contained or granted therein. The Agreement among other things
contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayment, in certain
circumstances, on account of principal hereof prior to maturity upon the
terms and conditions therein specified.
All capitalized terms used herein shall, unless otherwise defined
herein, have the same meanings given to such terms in the Agreement.
Except as otherwise provided in the Agreement, the Borrower waives
presentment, demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or
enforcement of this Line of Credit Note and the Agreement.
This Line of Credit Note shall bind the Borrower and its successors and
assigns, and the benefits hereof shall inure to the benefit of the Bank
and its successors and assigns. All references herein to the "Borrower"
and the "Bank" shall be deemed to apply to the Borrower and the Bank,
respectively, and their respective successors and assigns.
This Line of Credit Note and any other documents delivered in connection
herewith and the rights and obligations of the parties hereto and
thereto shall for all purposes be governed by and construed and enforced
in accordance with the internal laws of the Commonwealth of Pennsylvania
without giving effect to its conflicts of law principles.
This Line of Credit Note amends and restates, and is in substitution
for, that certain Committed Line of Credit Note in the original
principal amount of $10,000,000 payable to the Bank and dated September
25, 1997 (the "Existing Note"). However, without duplication, this Note
shall in no way extinguish, cancel or satisfy Borrower's unconditional
obligation to repay all indebtedness evidenced by the Existing Note or
constitute a novation of the Existing Note. Nothing herein is intended
to extinguish, cancel or impair the lien priority or effect of any
security agreement, pledge agreement or mortgage with respect to the
Borrower's obligations hereunder and under any other document relating
hereto.
WAIVER OF JURY TRIAL. THE BORROWER HEREBY WAIVES THE RIGHT TO TRIAL BY
JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY TYPE AS TO ALL
MATTERS AND THINGS ARISING OUT OF THIS NOTE.
IN WITNESS WHEREOF, the undersigned has executed this Line of Credit
Note by its duly authorized officers with the intention that it
constitute a sealed instrument.
[SEAL] II-VI INCORPORATED
Attest: /s/ Craig A. Creaturo By: /s/ James Martinelli
Name: Craig A. Creaturo Name: James Martinelli
Title: Corporate Controller Title: Treasurer and
II-VI Incorporated Chief Financial Officer
EXHIBIT "B" TO LETTER AGREEMENT
Guaranty and Suretyship Agreement PNCBANK
THIS GUARANTY AND SURETYSHIP AGREEMENT (this "Guaranty") is made and
entered into as of this 26th day of March, 1999, by II-VI DELAWARE,
INCORPORATED. (the "Guarantor"), with an address at 103 Springer
Building, 3411 Silverside Road, Wilmington, Delaware, 19810 in
consideration of the extension of credit by PNC BANK, NATIONAL
ASSOCIATION (the "Bank"), with an address at One PNC Plaza, 249 Fifth
Avenue, Pittsburgh, Pennsylvania 15222-2707 to II-VI INCORPORATED, a
Pennsylvania corporation with an address at 375 Saxonburg Blvd.,
Saxonburg, Pennsylvania 16056 (the "Borrower"), and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
1. Guaranty of Obligations. The Guarantor hereby guarantees, and
becomes surety for, the prompt payment and performance of all loans,
advances, debts, liabilities, obligations, covenants and duties owing by
the Borrower to the Bank or to any other direct or indirect subsidiary
of PNC Bank Corp., of any kind or nature, present or future (including
any interest accruing thereon after maturity, or after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether or not evidenced by any note, guaranty or other
instrument, whether arising under any agreement, instrument or document,
whether or not for the payment of money, whether arising by reason of an
extension of credit, opening of a letter of credit, loan, equipment
lease or guarantee, under any interest or currency swap, future, option
or other interest rate protection or similar agreement, or in any other
manner, whether arising out of overdrafts on deposit or other accounts
or electronic funds transfers (whether through automated clearing houses
or otherwise) or out of the Bank's non-receipt of or inability to
collect funds or otherwise not being made whole in connection with
depository transfer check or other similar arrangements, whether direct
or indirect (including those acquired by assignment or participation),
absolute or contingent, joint or several, due or to become due, now
existing or hereafter arising, and any amendments, extensions, renewals
or increases and all costs and expenses of the Bank incurred in the
documentation, negotiation, modification, enforcement, collection or
otherwise in connection with any of the foregoing, including reasonable
attorneys' fees and expenses (hereinafter referred to collectively as
the "Obligations"). If the Borrower defaults under any such
Obligations, the Guarantor will pay the amount due to the Bank.
2. Nature of Guaranty; Waivers. This is a guaranty of payment and not
of collection and the Bank shall not be required, as a condition of the
Guarantor's liability, to make any demand upon or to pursue any of its
rights against the Borrower, or to pursue any rights which may be
available to it with respect to any other person who may be liable for
the payment of the Obligations.
This is an absolute, unconditional, irrevocable and continuing guaranty
and will remain in full force and effect until all of the Obligations
have been indefeasibly paid in full, and the Bank has terminated this
Guaranty. This Guaranty will remain in full force and effect even if
there is no principal balance outstanding under the Obligations at a
particular time or from time to time. This Guaranty will not be
affected by any surrender, exchange, acceptance, compromise or release
by the Bank of any other party, or any other guaranty or any security
held by it for any of the Obligations, by any failure of the Bank to
take any steps to perfect or maintain its lien or security interest in
or to preserve its rights to any security or other collateral for any of
the Obligations or any guaranty, or by any irregularity,
unenforceability or invalidity of any of the Obligations or any part
thereof or any security or other guaranty thereof. The Guarantor's
obligations hereunder shall not be affected, modified or impaired by any
counterclaim, set-off, deduction or defense based upon any claim the
Guarantor may have against the Borrower or the Bank, except payment or
performance of the Obligations.
Notice of acceptance of this Guaranty, notice of extensions of credit to
the Borrower from time to time, notice of default, diligence,
presentment, notice of dishonor, protest, demand for payment, and any
defense based upon the Bank's failure to comply with the notice
requirements of the applicable version of Uniform Commercial Code Section
9-504 are hereby waived. The Guarantor waives all defenses based on
suretyship or impairment of collateral.
The Bank at any time and from time to time, without notice to or the
consent of the Guarantor, and without impairing or releasing,
discharging or modifying the Guarantor's liabilities hereunder, may (a)
change the manner, place, time or terms of payment or performance of or
interest rates on, or other terms relating to, any of the Obligations;
(b) renew, substitute, modify, amend or alter, or grant consents or
waivers relating to any of the Obligations, any other guaranties, or any
security for any Obligations or guaranties; (c) apply any and all
payments by whomever paid or however realized including any proceeds of
any collateral, to any Obligations of the Borrower in such order, manner
and amount as the Bank may determine in its sole discretion; (d) settle,
compromise or deal with any other person, including the Borrower or the
Guarantor, with respect to any Obligations in such manner as the Bank
deems appropriate in its sole discretion; (e) substitute, exchange or
release any security or guaranty; or (f) take such actions and exercise
such remedies hereunder as provided herein.
3. Repayments or Recovery from the Bank. If any demand is made at any
time upon the Bank for the repayment or recovery of any amount received
by it in payment or on account of any of the Obligations and if the Bank
repays all or any part of such amount by reason of any judgment, decree
or order of any court or administrative body or by reason of any
settlement or compromise of any such demand, the Guarantor will be and
remain liable hereunder for the amount so repaid or recovered to the
same extent as if such amount had never been received originally by the
Bank. The provisions of this section will be and remain effective
notwithstanding any contrary action which may have been taken by the
Guarantor in reliance upon such payment, and any such contrary action so
taken will be without prejudice to the Bank's rights hereunder and will
be deemed to have been conditioned upon such payment having become final
and irrevocable.
4. Financial Statements. Unless compliance is waived in writing by
the Bank or until all of the Obligations have been paid in full, the
Guarantor will promptly submit to the Bank such information relating to
the Guarantor's affairs (including but not limited to annual financial
statements and tax returns for the Guarantor) or any security for the
Guaranty as the Bank may reasonably request.
5. Enforceability of Obligations. No modification, limitation or
discharge of the Obligations arising out of or by virtue of any
bankruptcy, reorganization or similar proceeding for relief of debtors
under federal or state law will affect, modify, limit or discharge the
Guarantor's liability in any manner whatsoever and this Guaranty will
remain and continue in full force and effect and will be enforceable
against the Guarantor to the same extent and with the same force and
effect as if any such proceeding had not been instituted. The Guarantor
waives all rights and benefits which might accrue to it by reason of any
such proceeding and will be liable to the full extent hereunder,
irrespective of any modification, limitation or discharge of the
liability of the Borrower that may result from any such proceeding.
6. Events of Default. The occurrence of any of the following shall be
an "Event of Default" hereunder: (i) any Event of Default (as defined
in any of the Obligations); (ii) any default under any of the
Obligations that does not have a defined set of "Events of Default" and
the lapse of any notice or cure period provided in such Obligations with
respect to such default; (iii) demand by the Bank under any of the
Obligations that have a demand feature; (iv) the Guarantor's failure to
perform any of its obligations hereunder; (v) the falsity, inaccuracy or
material breach by the Guarantor of any written warranty, representation
or statement made or furnished to the Bank by or on behalf of the
Guarantor; or (vi) the termination or attempted termination of this
Guaranty. Upon the occurrence of any Event of Default, (a) the
Guarantor shall pay to the Bank the amount of the Obligations; or (b) on
demand of the Bank, the Guarantor shall immediately deposit with the
Bank, in U.S. dollars, all amounts due or to become due under the
Obligations, and the Bank may at any time use such funds to repay the
Obligations; or (c) the Bank in its discretion may exercise with respect
to any collateral any one or more of the rights and remedies provided a
secured party under the applicable version of the Uniform Commercial
Code; or (d) the Bank in its discretion may exercise from time to time
any other rights and remedies available to it at law, in equity or
otherwise.
7. Right of Setoff. In addition to all liens upon and rights of setoff
against the Guarantor's money, securities or other property given to the
Bank by law, the Bank shall have, with respect to the Guarantor's
obligations to the Bank under this Guaranty and to the extent permitted
by law, a contractual possessory security interest in and a contractual
right of setoff against, and the Guarantor hereby assigns, conveys,
delivers, pledges and transfers to the Bank all of the Guarantor's
right, title and interest in and to, all of the Guarantor's deposits,
moneys, securities and other property now or hereafter in the possession
of or on deposit with, or in transit to, the Bank or any other direct or
indirect subsidiary of PNC Bank Corp., whether held in a general or
special account or deposit, whether held jointly with someone else, or
whether held for safekeeping or otherwise, excluding, however, all IRA,
Keogh, and trust accounts. Every such security interest and right of
setoff may be exercised without demand upon or notice to the Guarantor.
Every such right of setoff shall be deemed to have been exercised
immediately upon the occurrence of an Event of Default hereunder without
any action of the Bank, although the Bank may enter such setoff on its
books and records at a later time.
8. Collateral. This Guaranty is secured by the property described in
any collateral security documents which the Guarantor executes and
delivers to the Bank and by such other collateral as previously may have
been or may in the future be granted to the Bank to secure any
obligations of the Guarantor to the Bank.
9. Costs. To the extent that the Bank incurs any costs or expenses in
protecting or enforcing its rights under the Obligations or this
Guaranty, including reasonable attorneys' fees and the costs and
expenses of litigation, such costs and expenses will be due on demand,
will be included in the Obligations and will bear interest from the
incurring or payment thereof at the Default Rate (as defined in any of
the Obligations).
10. Postponement of Subrogation. Until the Obligations are
indefeasibly paid in full, the Guarantor postpones and subordinates in
favor of the Bank any and all rights which the Guarantor may have to (a)
assert any claim against the Borrower based on subrogation rights with
respect to payments made hereunder, and (b) any realization on any
property of the Borrower, including participation in any marshalling of
the Borrower's assets.
11. Power to Confess Judgment. The Guarantor hereby empowers any
attorney of any court of record, after the occurrence of any Event of
Default hereunder, to appear for the Guarantor and, with or without
complaint filed, confess judgment, or a series of judgments, against the
Guarantor in favor of the Bank for the amount of the Obligations and an
attorney's commission of the greater of 10% of such principal and
interest or $1,000 added as a reasonable attorney's fee, and for doing
so, this Guaranty or a copy verified by affidavit shall be a sufficient
warrant. The Guarantor hereby forever waives and releases all errors in
said proceedings and all rights of appeal and all relief from any and
all appraisement, stay or exemption laws of any state now in force or
hereafter enacted.
No single exercise of the foregoing power to confess judgment, or a
series of judgments, shall be deemed to exhaust the power, whether or
not any such exercise shall be held by any court to be invalid,
voidable, or void, but the power shall continue undiminished and it may
be exercised from time to time as often as the Bank shall elect until
such time as the Bank shall have received payment in full of the
Obligations and costs. Notwithstanding the attorney's commission
provided for in the preceding paragraph (which is included in the
warrant for purposes of establishing a sum certain), the amount of
attorneys' fees that the Bank may recover from the Guarantor shall not
exceed the actual attorneys' fees incurred by the Bank.
12. Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted hereunder must be in writing
and will be effective upon receipt. Such notices and other
communications may be hand-delivered, sent by facsimile transmission
with confirmation of delivery and a copy sent by first-class mail, or
sent by nationally recognized overnight courier service, to the
addresses for the Bank and the Guarantor set forth above or to such
other address as one may give to the other in writing for such purpose.
13. Preservation of Rights. No delay or omission on the Bank's part to
exercise any right or power arising hereunder will impair any such right
or power or be considered a waiver of any such right or power, nor will
the Bank's action or inaction impair any such right or power. The
Bank's rights and remedies hereunder are cumulative and not exclusive of
any other rights or remedies which the Bank may have under other
agreements, at law or in equity. The Bank may proceed in any order
against the Borrower, the Guarantor or any other obligor of, or
collateral securing, the Obligations.
14. Illegality. In case any one or more of the provisions contained in
this Guaranty should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
15. Changes in Writing. No modification, amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantor
therefrom will be effective unless made in a writing signed by the Bank,
and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on
the Guarantor in any case will entitle the Guarantor to any other or
further notice or demand in the same, similar or other circumstance.
16. Entire Agreement. This Guaranty (including the documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written
and oral, between the Guarantor and the Bank with respect to the subject
matter hereof; provided, however, that this Guaranty is in addition to,
and not in substitution for, any other guarantees from the Guarantor to
the Bank.
17. Successors and Assigns. This Guaranty will be binding upon and
inure to the benefit of the Guarantor and the Bank and their respective
heirs, executors, administrators, successors and assigns; provided,
however, that the Guarantor may not assign this Guaranty in whole or in
part without the Bank's prior written consent and the Bank at any time
may assign this Guaranty in whole or in part.
18. Interpretation. In this Guaranty, unless the Bank and the
Guarantor otherwise agree in writing, the singular includes the plural
and the plural the singular; references to statutes are to be construed
as including all statutory provisions consolidating, amending or
replacing the statute referred to; the word "or" shall be deemed to
include "and/or", the words "including", "includes" and "include" shall
be deemed to be followed by the words "without limitation"; and
references to sections or exhibits are to those of this Guaranty unless
otherwise indicated. Section headings in this Guaranty are included for
convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose. If this Guaranty is executed by more
than one party as Guarantor, the obligations of such persons or entities
will be joint and several.
19. Indemnity. The Guarantor agrees to indemnify each of the Bank, its
directors, officers and employees and each legal entity, if any, who
controls the Bank (the "Indemnified Parties") and to hold each
Indemnified Party harmless from and against any and all claims, damages,
losses, liabilities and expenses (including all reasonable fees and
charges of internal or external counsel with whom any Indemnified Party
may consult and all expenses of litigation or preparation therefor)
which any Indemnified Party may incur or which may be asserted against
any Indemnified Party as a result of the execution of or performance
under this Guaranty; provided, however, that the foregoing indemnity
agreement shall not apply to claims, damages, losses, liabilities and
expenses solely attributable to an Indemnified Party's gross negligence
or willful misconduct. The indemnity agreement contained in this
Section shall survive the termination of this Guaranty. The Guarantor
may participate at its expense in the defense of any such claim.
20. Governing Law and Jurisdiction. This Guaranty has been delivered
to and accepted by the Bank and will be deemed to be made in the State
where the Bank's office indicated above is located. THIS GUARANTY WILL
BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE BANK AND THE
GUARANTOR DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE
BANK'S OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT OF LAWS
RULES. The Guarantor hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court in the county or judicial
district where the Bank's office indicated above is located; provided
that nothing contained in this Guaranty will prevent the Bank from
bringing any action, enforcing any award or judgment or exercising any
rights against the Guarantor individually, against any security or
against any property of the Guarantor within any other county, state or
other foreign or domestic jurisdiction. The Guarantor acknowledges and
agrees that the venue provided above is the most convenient forum for
both the Bank and the Guarantor. The Guarantor waives any objection to
venue and any objection based on a more convenient forum in any action
instituted under this Guaranty.
21. Equal Credit Opportunity Act. If the Guarantor is not an
"applicant for credit" under Section 202.2 (e) of the Equal Credit
Opportunity Act of 1974 ("ECOA"), the Guarantor acknowledges that (i)
this Guaranty has been executed to provide credit support for the
Obligations, and (ii) the Guarantor was not required to execute this
Guaranty in violation of Section 202.7(d) of the ECOA.
22. WAIVER OF JURY TRIAL. THE GUARANTOR IRREVOCABLY WAIVES ANY AND ALL
RIGHT THE GUARANTOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS GUARANTY, ANY
DOCUMENTS EXECUTED IN CONNECTION WITH THIS GUARANTY OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE GUARANTOR ACKNOWLEDGES THAT
THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Guarantor acknowledges that it has read and understood all the
provisions of this Guaranty, including the confession of judgment and
waiver of jury trial, and has been advised by counsel as necessary or
appropriate.
WITNESS the due execution hereof as a document under seal, as of the
date first written above, with the intent to be legally bound hereby.
[SEAL] II-VI DELAWARE, INCORPORATED
Attest: /s/ Craig A. Creaturo By: /s/ Francis J. Kramer
Name: Craig A. Creaturo Name: Francis J. Kramer
Title: Corporate Controller Title: President
II-VI Incorporated
Guaranty and Suretyship Agreement PNCBANK
THIS GUARANTY AND SURETYSHIP AGREEMENT (this "Guaranty") is made and
entered into as of this 26th day of March, 1999, by VLOC
INCORPORATED. (the "Guarantor"), with an address at 7826 Photonics
Drive, New Port Richey, Florida, 34655 in consideration of the extension
of credit by PNC BANK, NATIONAL ASSOCIATION (the "Bank"), with an
address at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania
15222-2707 to II-VI INCORPORATED, a Pennsylvania corporation with an
address at 375 Saxonburg Blvd., Saxonburg, Pennsylvania 16056 (the
"Borrower"), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.
1. Guaranty of Obligations. The Guarantor hereby guarantees, and
becomes surety for, the prompt payment and performance of all loans,
advances, debts, liabilities, obligations, covenants and duties owing by
the Borrower to the Bank or to any other direct or indirect subsidiary
of PNC Bank Corp., of any kind or nature, present or future (including
any interest accruing thereon after maturity, or after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether or not evidenced by any note, guaranty or other
instrument, whether arising under any agreement, instrument or document,
whether or not for the payment of money, whether arising by reason of an
extension of credit, opening of a letter of credit, loan, equipment
lease or guarantee, under any interest or currency swap, future, option
or other interest rate protection or similar agreement, or in any other
manner, whether arising out of overdrafts on deposit or other accounts
or electronic funds transfers (whether through automated clearing houses
or otherwise) or out of the Bank's non-receipt of or inability to
collect funds or otherwise not being made whole in connection with
depository transfer check or other similar arrangements, whether direct
or indirect (including those acquired by assignment or participation),
absolute or contingent, joint or several, due or to become due, now
existing or hereafter arising, and any amendments, extensions, renewals
or increases and all costs and expenses of the Bank incurred in the
documentation, negotiation, modification, enforcement, collection or
otherwise in connection with any of the foregoing, including reasonable
attorneys' fees and expenses (hereinafter referred to collectively as
the "Obligations"). If the Borrower defaults under any such
Obligations, the Guarantor will pay the amount due to the Bank.
2. Nature of Guaranty; Waivers. This is a guaranty of payment and not
of collection and the Bank shall not be required, as a condition of the
Guarantor's liability, to make any demand upon or to pursue any of its
rights against the Borrower, or to pursue any rights which may be
available to it with respect to any other person who may be liable for
the payment of the Obligations.
This is an absolute, unconditional, irrevocable and continuing guaranty
and will remain in full force and effect until all of the Obligations
have been indefeasibly paid in full, and the Bank has terminated this
Guaranty. This Guaranty will remain in full force and effect even if
there is no principal balance outstanding under the Obligations at a
particular time or from time to time. This Guaranty will not be
affected by any surrender, exchange, acceptance, compromise or release
by the Bank of any other party, or any other guaranty or any security
held by it for any of the Obligations, by any failure of the Bank to
take any steps to perfect or maintain its lien or security interest in
or to preserve its rights to any security or other collateral for any of
the Obligations or any guaranty, or by any irregularity,
unenforceability or invalidity of any of the Obligations or any part
thereof or any security or other guaranty thereof. The Guarantor's
obligations hereunder shall not be affected, modified or impaired by any
counterclaim, set-off, deduction or defense based upon any claim the
Guarantor may have against the Borrower or the Bank, except payment or
performance of the Obligations.
Notice of acceptance of this Guaranty, notice of extensions of credit to
the Borrower from time to time, notice of default, diligence,
presentment, notice of dishonor, protest, demand for payment, and any
defense based upon the Bank's failure to comply with the notice
requirements of the applicable version of Uniform Commercial Code Section
9-504 are hereby waived. The Guarantor waives all defenses based on
suretyship or impairment of collateral.
The Bank at any time and from time to time, without notice to or the
consent of the Guarantor, and without impairing or releasing,
discharging or modifying the Guarantor's liabilities hereunder, may (a)
change the manner, place, time or terms of payment or performance of or
interest rates on, or other terms relating to, any of the Obligations;
(b) renew, substitute, modify, amend or alter, or grant consents or
waivers relating to any of the Obligations, any other guaranties, or any
security for any Obligations or guaranties; (c) apply any and all
payments by whomever paid or however realized including any proceeds of
any collateral, to any Obligations of the Borrower in such order, manner
and amount as the Bank may determine in its sole discretion; (d) settle,
compromise or deal with any other person, including the Borrower or the
Guarantor, with respect to any Obligations in such manner as the Bank
deems appropriate in its sole discretion; (e) substitute, exchange or
release any security or guaranty; or (f) take such actions and exercise
such remedies hereunder as provided herein.
3. Repayments or Recovery from the Bank. If any demand is made at any
time upon the Bank for the repayment or recovery of any amount received
by it in payment or on account of any of the Obligations and if the Bank
repays all or any part of such amount by reason of any judgment, decree
or order of any court or administrative body or by reason of any
settlement or compromise of any such demand, the Guarantor will be and
remain liable hereunder for the amount so repaid or recovered to the
same extent as if such amount had never been received originally by the
Bank. The provisions of this section will be and remain effective
notwithstanding any contrary action which may have been taken by the
Guarantor in reliance upon such payment, and any such contrary action so
taken will be without prejudice to the Bank's rights hereunder and will
be deemed to have been conditioned upon such payment having become final
and irrevocable.
4. Financial Statements. Unless compliance is waived in writing by
the Bank or until all of the Obligations have been paid in full, the
Guarantor will promptly submit to the Bank such information relating to
the Guarantor's affairs (including but not limited to annual financial
statements and tax returns for the Guarantor) or any security for the
Guaranty as the Bank may reasonably request.
5. Enforceability of Obligations. No modification, limitation or
discharge of the Obligations arising out of or by virtue of any
bankruptcy, reorganization or similar proceeding for relief of debtors
under federal or state law will affect, modify, limit or discharge the
Guarantor's liability in any manner whatsoever and this Guaranty will
remain and continue in full force and effect and will be enforceable
against the Guarantor to the same extent and with the same force and
effect as if any such proceeding had not been instituted. The Guarantor
waives all rights and benefits which might accrue to it by reason of any
such proceeding and will be liable to the full extent hereunder,
irrespective of any modification, limitation or discharge of the
liability of the Borrower that may result from any such proceeding.
6. Events of Default. The occurrence of any of the following shall be
an "Event of Default" hereunder: (i) any Event of Default (as defined
in any of the Obligations); (ii) any default under any of the
Obligations that does not have a defined set of "Events of Default" and
the lapse of any notice or cure period provided in such Obligations with
respect to such default; (iii) demand by the Bank under any of the
Obligations that have a demand feature; (iv) the Guarantor's failure to
perform any of its obligations hereunder; (v) the falsity, inaccuracy or
material breach by the Guarantor of any written warranty, representation
or statement made or furnished to the Bank by or on behalf of the
Guarantor; or (vi) the termination or attempted termination of this
Guaranty. Upon the occurrence of any Event of Default, (a) the
Guarantor shall pay to the Bank the amount of the Obligations; or (b) on
demand of the Bank, the Guarantor shall immediately deposit with the
Bank, in U.S. dollars, all amounts due or to become due under the
Obligations, and the Bank may at any time use such funds to repay the
Obligations; or (c) the Bank in its discretion may exercise with respect
to any collateral any one or more of the rights and remedies provided a
secured party under the applicable version of the Uniform Commercial
Code; or (d) the Bank in its discretion may exercise from time to time
any other rights and remedies available to it at law, in equity or
otherwise.
7. Right of Setoff. In addition to all liens upon and rights of setoff
against the Guarantor's money, securities or other property given to the
Bank by law, the Bank shall have, with respect to the Guarantor's
obligations to the Bank under this Guaranty and to the extent permitted
by law, a contractual possessory security interest in and a contractual
right of setoff against, and the Guarantor hereby assigns, conveys,
delivers, pledges and transfers to the Bank all of the Guarantor's
right, title and interest in and to, all of the Guarantor's deposits,
moneys, securities and other property now or hereafter in the possession
of or on deposit with, or in transit to, the Bank or any other direct or
indirect subsidiary of PNC Bank Corp., whether held in a general or
special account or deposit, whether held jointly with someone else, or
whether held for safekeeping or otherwise, excluding, however, all IRA,
Keogh, and trust accounts. Every such security interest and right of
setoff may be exercised without demand upon or notice to the Guarantor.
Every such right of setoff shall be deemed to have been exercised
immediately upon the occurrence of an Event of Default hereunder without
any action of the Bank, although the Bank may enter such setoff on its
books and records at a later time.
8. Collateral. This Guaranty is secured by the property described in
any collateral security documents which the Guarantor executes and
delivers to the Bank and by such other collateral as previously may have
been or may in the future be granted to the Bank to secure any
obligations of the Guarantor to the Bank.
9. Costs. To the extent that the Bank incurs any costs or expenses in
protecting or enforcing its rights under the Obligations or this
Guaranty, including reasonable attorneys' fees and the costs and
expenses of litigation, such costs and expenses will be due on demand,
will be included in the Obligations and will bear interest from the
incurring or payment thereof at the Default Rate (as defined in any of
the Obligations).
10. Postponement of Subrogation. Until the Obligations are
indefeasibly paid in full, the Guarantor postpones and subordinates in
favor of the Bank any and all rights which the Guarantor may have to (a)
assert any claim against the Borrower based on subrogation rights with
respect to payments made hereunder, and (b) any realization on any
property of the Borrower, including participation in any marshalling of
the Borrower's assets.
11. Power to Confess Judgment. The Guarantor hereby empowers any
attorney of any court of record, after the occurrence of any Event of
Default hereunder, to appear for the Guarantor and, with or without
complaint filed, confess judgment, or a series of judgments, against the
Guarantor in favor of the Bank for the amount of the Obligations and an
attorney's commission of the greater of 10% of such principal and
interest or $1,000 added as a reasonable attorney's fee, and for doing
so, this Guaranty or a copy verified by affidavit shall be a sufficient
warrant. The Guarantor hereby forever waives and releases all errors in
said proceedings and all rights of appeal and all relief from any and
all appraisement, stay or exemption laws of any state now in force or
hereafter enacted.
No single exercise of the foregoing power to confess judgment, or a
series of judgments, shall be deemed to exhaust the power, whether or
not any such exercise shall be held by any court to be invalid,
voidable, or void, but the power shall continue undiminished and it may
be exercised from time to time as often as the Bank shall elect until
such time as the Bank shall have received payment in full of the
Obligations and costs. Notwithstanding the attorney's commission
provided for in the preceding paragraph (which is included in the
warrant for purposes of establishing a sum certain), the amount of
attorneys' fees that the Bank may recover from the Guarantor shall not
exceed the actual attorneys' fees incurred by the Bank.
12. Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted hereunder must be in writing
and will be effective upon receipt. Such notices and other
communications may be hand-delivered, sent by facsimile transmission
with confirmation of delivery and a copy sent by first-class mail, or
sent by nationally recognized overnight courier service, to the
addresses for the Bank and the Guarantor set forth above or to such
other address as one may give to the other in writing for such purpose.
13. Preservation of Rights. No delay or omission on the Bank's part to
exercise any right or power arising hereunder will impair any such right
or power or be considered a waiver of any such right or power, nor will
the Bank's action or inaction impair any such right or power. The
Bank's rights and remedies hereunder are cumulative and not exclusive of
any other rights or remedies which the Bank may have under other
agreements, at law or in equity. The Bank may proceed in any order
against the Borrower, the Guarantor or any other obligor of, or
collateral securing, the Obligations.
14. Illegality. In case any one or more of the provisions contained in
this Guaranty should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
15. Changes in Writing. No modification, amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantor
therefrom will be effective unless made in a writing signed by the Bank,
and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on
the Guarantor in any case will entitle the Guarantor to any other or
further notice or demand in the same, similar or other circumstance.
16. Entire Agreement. This Guaranty (including the documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written
and oral, between the Guarantor and the Bank with respect to the subject
matter hereof; provided, however, that this Guaranty is in addition to,
and not in substitution for, any other guarantees from the Guarantor to
the Bank.
17. Successors and Assigns. This Guaranty will be binding upon and
inure to the benefit of the Guarantor and the Bank and their respective
heirs, executors, administrators, successors and assigns; provided,
however, that the Guarantor may not assign this Guaranty in whole or in
part without the Bank's prior written consent and the Bank at any time
may assign this Guaranty in whole or in part.
18. Interpretation. In this Guaranty, unless the Bank and the
Guarantor otherwise agree in writing, the singular includes the plural
and the plural the singular; references to statutes are to be construed
as including all statutory provisions consolidating, amending or
replacing the statute referred to; the word "or" shall be deemed to
include "and/or", the words "including", "includes" and "include" shall
be deemed to be followed by the words "without limitation"; and
references to sections or exhibits are to those of this Guaranty unless
otherwise indicated. Section headings in this Guaranty are included for
convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose. If this Guaranty is executed by more
than one party as Guarantor, the obligations of such persons or entities
will be joint and several.
19. Indemnity. The Guarantor agrees to indemnify each of the Bank, its
directors, officers and employees and each legal entity, if any, who
controls the Bank (the "Indemnified Parties") and to hold each
Indemnified Party harmless from and against any and all claims, damages,
losses, liabilities and expenses (including all reasonable fees and
charges of internal or external counsel with whom any Indemnified Party
may consult and all expenses of litigation or preparation therefor)
which any Indemnified Party may incur or which may be asserted against
any Indemnified Party as a result of the execution of or performance
under this Guaranty; provided, however, that the foregoing indemnity
agreement shall not apply to claims, damages, losses, liabilities and
expenses solely attributable to an Indemnified Party's gross negligence
or willful misconduct. The indemnity agreement contained in this
Section shall survive the termination of this Guaranty. The Guarantor
may participate at its expense in the defense of any such claim.
20. Governing Law and Jurisdiction. This Guaranty has been delivered
to and accepted by the Bank and will be deemed to be made in the State
where the Bank's office indicated above is located. THIS GUARANTY WILL
BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE BANK AND THE
GUARANTOR DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE
BANK'S OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT OF LAWS
RULES. The Guarantor hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court in the county or judicial
district where the Bank's office indicated above is located; provided
that nothing contained in this Guaranty will prevent the Bank from
bringing any action, enforcing any award or judgment or exercising any
rights against the Guarantor individually, against any security or
against any property of the Guarantor within any other county, state or
other foreign or domestic jurisdiction. The Guarantor acknowledges and
agrees that the venue provided above is the most convenient forum for
both the Bank and the Guarantor. The Guarantor waives any objection to
venue and any objection based on a more convenient forum in any action
instituted under this Guaranty.
21. Equal Credit Opportunity Act. If the Guarantor is not an
"applicant for credit" under Section 202.2 (e) of the Equal Credit
Opportunity Act of 1974 ("ECOA"), the Guarantor acknowledges that (i)
this Guaranty has been executed to provide credit support for the
Obligations, and (ii) the Guarantor was not required to execute this
Guaranty in violation of Section 202.7(d) of the ECOA.
22. WAIVER OF JURY TRIAL. THE GUARANTOR IRREVOCABLY WAIVES ANY AND ALL
RIGHT THE GUARANTOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS GUARANTY, ANY
DOCUMENTS EXECUTED IN CONNECTION WITH THIS GUARANTY OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE GUARANTOR ACKNOWLEDGES THAT
THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Guarantor acknowledges that it has read and understood all the
provisions of this Guaranty, including the confession of judgment and
waiver of jury trial, and has been advised by counsel as necessary or
appropriate.
WITNESS the due execution hereof as a document under seal, as of the
date first written above, with the intent to be legally bound hereby.
[SEAL] VLOC INCORPORATED
Attest: /s/ Craig A. Creaturo By: /s/ Francis J. Kramer
Name: Craig A. Creaturo Name: Francis J. Kramer
Title: Corporate Controller Title: Vice President
II-VI Incorporated
EXHIBIT "C" TO LETTER AGREEMENT
COMPLIANCE CERTIFICATE
For the Fiscal Year Ended , 19
----------------- ----
or
For the Fiscal Quarter Ended _________________, 19___
-----------------, ---
Reference is hereby made to that certain Letter Agreement dated as of
March 26th, 1999 (the Credit Agreement, together with all exhibits and
schedules thereto and all extentions, renewals, amendments,
substitutions and replacements thereof, is hereinafter referred to as
the "Credit Agreement"), by and among II-VI INCORPORATED, a Pennsylvania
corporation (the "Borrower"), and PNC BANK, NATIONAL ASSOCIATION (the
"Bank"). All capitalized terms used herein as defined terms which are
not defined herein but which are defined in the Credit Agreement shall
have the same meanings herein as in the Credit Agreement.
This Compliance Certificate is being delivered to the Bank pursuant to
Section 10 of the Credit Agreement simultaneously with the delivery of
the annual or quarterly reports required by Section 10 of the Credit
Agreement for the fiscal period referred to above. The undersigned, the
Chief Financial Officer of the Borrower, hereby certifies to the Bank,
as follows:
1. CHECK ONE:
- ----- The annual audited financial statements being delivered to the
Bank with this Compliance Certificate are true, complete, and correct.
OR
- ----- The quarterly financial statements being delivered to the Bank
with this Compliance Certificate are true, complete and correct and
present fairly the financial position of the Borrower and the results of
its operations and its cash flows for the Fiscal Quarter set for above
in conformity with GAAP consistently applied (except that such financial
statements may not contain all of the footnote disclosures required by
GAAP).
2. No Default or Event of Default exists on the date of this
Compliance Certificate; no Default or Event of Default has occurred since
the date of the previously delivered Compliance Certificate; no Material
Adverse Change has occurred since the date of the previously delivered
Compliance Certificate; and no event has occurred since the date of the
previously delivered Compliance Certificate which may result in a
Material Adverse Change.
[NOTE: If any Default, Event of Default, Material Adverse Change, or
event which may result in a Material Adverse Change has occurred or is
continuing, set forth on a seperate sheet the nature thereof and the
action which the Borrower has taken, is taking or proposes to take with
respect thereto.]
3. The Borrower's compliance with the financial covenants set forth
in Section 12 of the Credit Agreement is as follows:
a. Net Worth. As of [insert date of current
-------------------
financial statements]:
(A) The Borrower's Tangible Net Worth was
---------------------
(B) Fifty percent (50%) of the Borrower's consolidated net income (if
positive) for the fiscal quarter ending was
----------------------------
$ .
-------------------------
(C) One hundred percent (100%) of the aggregate amount of net proceeds
of each equity offering for the fiscal quarter ending
equals $ .
- ---------------------- -----------------------------
(D) The sum of $41,000,000 plus the amount set forth in item (B) above
plus the amount set forth in item (C) above equals
$ .
----------------------
Under Section 12(a) of the Credit Agreement, the amount set forth in
item (A) above is required to be greater than or equal to the amount set
forth in item (D) above. Therefore, the Borrower [is/is not]
--------
in compliance with Section of the Credit Agreement.
-----
b. Leverage Ratio. As of [insert date of
----------------------
current financial statement]:
(A) The Borrower's Total Indebtedness was $ .
-----------------------
(B) The Borrower's EBITDA for the four (4) most recently completed
fiscal quarters (taken as a single accounting period) was
$ , determined as follows:
------------------------
The Sum of:
(i) The Borrower's consolidated net income for the four (4) most
recently completed fiscal quarters taken as a single accounting period
was $ ;
-------------------------
Excluding from consolidated net income:
(a) The Borrower's extraordinary or non-recurring items of gain or
loss (including those created by mandated changes in accounting
treatment) for the Borrower for the four (4) most recently completed
Fiscal quarters (taken as a single accounting period) were
$ ; and
------------------
(b) The Borrower's gains or losses accounted for on the equity method,
except to the extent of cash distributions received, for the four (4)
most recently completed fiscal quarters (taken as a single accounting
period) were $ ; plus
----------------
(ii) The Borrower's consolidated income tax expense for the four (4)
most recently completed fiscal quarters (taken as a single accounting
period) was $ ; plus
--------------------
(iii) The Borrower's consolidated interest expense for the four (4) most
recently completed fiscal quarters (taken as a single accounting period)
was $ ; plus
---------------
(iv) The Borrower's consolidated depreciation and amortization expenses
for the four (4) most recently completed fiscal quarters (taken as a
single accounting period) were $ ; and
-------------------
(v) Other consolidated non-cash expenses for the Borrower for the four
(4) most recently completed fiscal quarters (taken as a single
accounting period) were $ .
-----------------------------
(C) The ratio of the amount set forth in item (A) above to the amount
calculated in item (B) above is to 1.0.
-------
Under Section 12(b) of the Credit Agreement, the ratio set forth in item
(C) above is required to be less than or equal to 2.5 to 1.0. Therefore,
the Borrower [is/is not] in compliance with Section of the
-------
Credit Agreement.
c. Interest Coverage Ratio. As of [insert date of
------------------
current financial statements]:
(A) The Borrower's EBIT for the four (4) most recently completed
fiscal quarters (taken as a single accounting period) was
$ .
------------------------
(B) The Borrower's consolidated interest expense for the four (4) most
recently completed fiscal quarters (taken as a single accounting period)
was $ .
-------------------------
(C) The ratio of the amount set forth in item (A) above to the amount
set forth in item (B) above is to
---- -----
Under Section 12(c) of the Credit Agremeemnt, the ratio set forth in
item (C) above is required to be greater than or equal to 5.0 to 1.0.
Therefore, the Borrower [is/is not] in compliance with Section of
------
the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Compliance
Certificate as said officer, for and on behalf of the Borrower, on the
day of , .
- ------ ------------ --------
II-VI INCORPORATED
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
1 All pricing is expressed in basis points. A basis point is equal to
1/100 of 1%.
September 22, 1999
Mr. Robert G. Klimasewski
Chairman
Laser Power Corporation
12777 High Bluff Drive
San Diego, CA 92130
Dear Mr. Klimasewski:
We are disappointed that you have again elected not to pursue
serious discussions with us regarding the sale of Laser Power
Corporation (LPC) to II-VI Incorporated (II-VI). Such a transaction
is clearly compelling from the point of view of LPC's shareholders.
So that there is no misunderstanding regarding the seriousness
of our interest, we think it is appropriate to reiterate our
proposal in writing. II-VI proposes to acquire LPC in a negotiated
merger transaction. LPC shareholders would receive merger
consideration consisting of II-VI stock and cash with a value of
$3.00 for each share of LPC common stock. This price represents a
premium of over 100 percent on LPC's current market price. One-half
of the merger consideration would be in cash and the other half
would be in II-VI stock (with the actual number of II-VI shares to
be based on our stock price at closing and subject to a customary
two-way collar). Individual LPC shareholders would have the ability
to elect to receive cash or II-VI stock within these parameters.
We have adequate sources of financing, and therefore, our
proposal is not subject to any financing conditions. Although our
proposal is conditioned on the negotiation and execution of a
mutually acceptable merger agreement, we are prepared to negotiate a
merger agreement with representations, warranties, closing
conditions and termination rights that are customary for
transactions of this type. We are prepared to move as quickly as
possible to close the transaction.
Clearly, our proposal is more favorable to LPC shareholders
than the current status quo. Given the obvious immediate benefit of
a substantial premium to the current market price, we believe your
shareholders will react very favorably to this proposed transaction.
It is not clear whether or when LPC will deliver greater shareholder
value to all of its shareholders as an independent company.
We would welcome the opportunity to meet with you and other
members of your Board of Directors, senior management and advisers
as soon as practicable to explore more fully the benefits of our
proposal.
We further believe that your fiduciary duties require you to
consider our proposal with your Board of Directors.
Our Board of Directors fully supports this proposal, which is
consistent with II-VI's long-term growth strategy. As you can
appreciate with a proposal of this type, time is of the essence.
Accordingly, if you do not respond favorably to our proposal by
October 15, 1999, we will withdraw it and consider our alternatives.
I look forward to hearing from you shortly and to working with you
so that we may bring our clearly premium proposal to a vote of your
shareholders.
Sincerely,
/s/ Francis J. Kramer
President and Chief
Operating Officer
September 22, 1999
Mr. Francis J. Kramer
President and Chief Operating Officer
II-VI Incorporated
375 Saxonburg Blvd.
Saxonburg, PA 16056
Dear Mr. Kramer:
We are in receipt of your letter dated September 22, 1999. As
you know from prior discussions with a Committee of our Board of
Directors, the Committee has reported to the full Board of Directors
on each of your various oral proposals with respect to the possible
acquisition of the outstanding shares of Laser Power Corporation.
The Committee and the Board have evaluated each of your proposals,
including the proposal contained in your letter. The Board has
determined that none of your proposals to date has adequately
reflected the value inherent in the Company.
The Board of Directors and management of Laser Power remain
committed to increasing the value of the Company for its
stockholders.
Sincerely,
/s/ Robert G. Klimasewski
Chairman of the Board of Directors
LASER POWER CORPORATION
REGISTRATION RIGHTS AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. GENERAL 2
1.1 Effective Date 2
1.2 Definitions 2
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER 3
2.1 Restrictions On Transfer 3
2.2 Demand Registration 3
2.3 Piggyback Registrations 5
2.4 Expenses of Registration 6
2.5 Obligations of the Company 6
2.6 Termination of Registration Rights 7
2.7 Delay of Registration; Furnishing Information. 7
2.8 Indemnification 7
2.9 Assignment of Registration Rights 9
2.10 Amendment of Registration Rights 10
2.11 Limitation on Subsequent Registration Rights 10
2.12 Rule 144 Reporting 10
SECTION 3. MISCELLANEOUS. 10
3.1 Governing Law 10
3.2 Survival 10
3.3 Successors and Assigns 11
3.4 Entire Agreement 11
3.5 Severability 11
3.6 Delays Or Omissions 11
3.7 Notices 11
3.8 Titles and Subtitles 11
3.9 Counterparts 12
LASER POWER CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into
as of the 13th day of June, 1997, by and among LASER POWER
CORPORATION, a Delaware corporation (the "Company"), PROXIMA
CORPORATION, a Delaware corporation ("Proxima"), and UNION MINIERE
INC., a _______________ corporation ("Union Miniere").
RECITALS
WHEREAS, the Company and Proxima are parties to that certain Stock
Exchange Agreement of even date herewith (the "Stock Exchange
Agreement"), pursuant to which all of the shares of the Company's
Series A Preferred Stock held by Proxima will be exchanged for
1,193,252 shares of the Company's Common Stock (the "Proxima
Shares");
WHEREAS, the Company and Proxima have entered into the Amendment to
Stock Purchase Agreement of even date herewith, pursuant to which
the certain registration rights and certain other rights granted to
Proxima under that certain Stock Purchase Agreement, dated January
11, 1994, have been terminated;
WHEREAS, Proxima holds an additional [125,000] shares of the
Company's Common Stock (such shares and the Proxima Shares shall
hereinafter be referred to collectively as the "Proxima Shares");
WHEREAS, the Company and Union Miniere are parties to that certain
Securities Purchase Agreement, dated October 30, 1987, pursuant to
which Union Miniere purchased 725,000 shares of the Company's Common
Stock (the "Union Miniere Shares") and Convertible Subordinated
Debentures, as amended, in the aggregate principal amount of
$1,660,000 (the "Debentures");
WHEREAS, the Company and Union Miniere have entered into the
Amendment to the Securities Purchase Agreement, pursuant to which
certain registration rights and certain other rights granted to
Union Miniere under the Securities Purchase Agreement have been
terminated; and
WHEREAS, Union Miniere holds an additional 3,693 shares of the
Company's Common Stock received in lieu of Board of Directors fees
(such shares and the Union Miniere Shares shall hereinafter be
referred to collectively as the "Union Miniere Shares").
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in
this Agreement, the parties mutually agree as follows:
SECTION 1. GENERAL
.1 Effective Date. This Agreement shall become effective only upon
the closing of the Initial Offering, as defined below.
.2 Definitions. As used in this Agreement the following terms shall
have the following respective meanings:
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" means either Proxima or Union Miniere or any assignee of
record of the Registrable Securities in accordance with Section
2.9 hereof.
"Initial Offering" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under
the Securities Act.
"Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration
or ordering of effectiveness of such registration statement or
document.
"Registrable Securities" means (a) the Proxima Shares and the
Union Miniere Shares; (b) Common Stock issuable upon the conversion
of the Debentures and (c) any Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right
or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement
of, such shares. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by any Holder or a
person to the public either pursuant to a registration statement or
Rule 144 or sold in a private transaction in which the transferor's
rights under Section 2 of this Agreement are not assigned.
"Registrable Securities then Outstanding" shall be the number of
shares determined by calculating the total number of shares of the
Company's Common Stock that are Registrable Securities and either
(a) are then issued and outstanding or (b) are issuable pursuant to
then exercisable or convertible securities.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 2.2 and 2.3 hereof, including,
without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company,
reasonable fees and disbursements of a single special counsel for
the Holders and all other selling stockholders, if any, blue sky
fees and expenses and the expense of any special audits incident to
or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event
by the Company).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale.
"SEC" or "Commission" means the Securities and Exchange
Commission.
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER
.1 Restrictions On Transfer.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Registrable Securities unless and until:
(i) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement;
or
(ii) (A) The transferee has agreed in writing to be bound by
the terms of this Agreement, (B) such Holder shall have notified the
Company of the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances surrounding
the proposed disposition, and (C) if reasonably requested by the
Company, such Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under
the Securities Act. It is agreed that the Company will not require
opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
(b) Each certificate representing Registrable Securities shall
(unless otherwise permitted by the provisions of the Agreement) be
stamped or otherwise imprinted with a legend substantially similar
to the following (in addition to any legend required under
applicable state securities laws or as provided elsewhere in this
Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder
shall have obtained an opinion of counsel (which counsel may be
counsel to the Company) reasonably acceptable to the Company to the
effect that the securities proposed to be disposed of may lawfully
be so disposed of without registration, qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with
respect to such securities shall be removed upon receipt by the
Company of an order of the appropriate blue sky authority
authorizing such removal.
.2 Demand Registration.
(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from any Holder (the "Initiating
Holder") that the Company file a registration statement under the
Securities Act covering the registration of Registrable Securities,
then the Company shall, within thirty (30) days of the receipt
thereof, give written notice of such request to all Holders, and
subject to the limitations of this Section 2.2, use its best efforts
to effect, as soon as practicable, the registration under the
Securities Act of all Registrable Securities that the Holders
request to be registered. Proxima (including all of its permitted
transferees as a whole) and Union Miniere (including all of its
permitted transferees as a whole) shall each have the right to
request two (2) such registrations pursuant to this Section 2.2.
(b) The Registrable Securities covered by such request shall be
distributed by means of an underwriting. The right of any Holder to
include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing
to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the
Company (which underwriter or underwriters shall be reasonably
acceptable to the Initiating Holder). Notwithstanding any other
provision of this Section 2.2, if the underwriter advises the
Company that marketing factors require a limitation of the number of
securities to be underwritten (including Registrable Securities)
then the Company shall so advise all holders of the Company's
securities which would otherwise participate in such underwriting,
and the number of shares that may be included in the underwriting
shall be allocated, first, to the Holders on a pro rata basis based
on the total number of securities which are subject to registration
rights granted by the Company held by such holders. Any Registrable
Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) if a request for registration is received prior to the
completion of 12 full calendar months after the effective date of
the Company's registration statement on Form SB-2 filed in
connection with the Initial Offering; or
(ii) on behalf of Proxima (or any of its permitted
transferees) after the Company has effected two (2) registrations at
the request of Proxima (or any of its permitted transferee), and
such registrations have been declared or ordered effective; or
(iii) on behalf of Union Miniere (or any of its permitted
transferees) after the Company has effected two (2) registrations at
the request of Union Miniere (or any of its permitted transferee),
and such registrations have been declared or ordered effective; or
(iv) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate
signed by the Chairman of the Board stating that in the good faith
judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such
registration statement to be effected at such time, in which event
the Company shall have the right to defer such filing for a period
of not more than ninety (90) days after receipt of the request of
the Initiating Holder; provided that such right to delay a request
shall be exercised by the Company not more than once in any twelve
(12) month period.
.3 Piggyback Registrations. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to
the filing of any registration statement under the Securities Act
for purposes of a public offering of securities of the Company
(including, but not limited to, registration statements relating to
secondary offerings of securities of the Company, but excluding the
registration statement on Form SB-2 filed in connection with the
Initial Offering and registration statements relating to employee
benefit plans or with respect to corporate reorganizations or other
transactions under Rule 145 of the Securities Act), and will afford
each such Holder an opportunity to include in such registration
statement all or part of such Registrable Securities held by such
Holder. Each Holder desiring to include in any such registration
statement all or any part of the Registrable Securities held by it
shall, within fifteen (15) days after the above-described notice
from the Company, so notify the Company in writing. Such notice
shall state the intended method of disposition of the Registrable
Securities by such Holder. If a Holder decides not to include any
of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include its Registrable Securities in
any subsequent registration statement or registration statements as
may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein.
(a) Underwriting. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten
offering, the Company shall so advise the Holders of Registrable
Securities. In such event, the right of any such Holder to be
included in a registration pursuant to this Section 2.3 shall be
conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing
to distribute their Registrable Securities through such underwriting
shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by
the Company. Notwithstanding any other provision of the Agreement,
if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the
number of shares that may be included in the underwriting shall be
allocated, first, to the Company; second, to the Holders on a pro
rata basis based on the total number of Registrable Securities held
by the Holders; and third, to any stockholder of the Company (other
than a Holder) on a pro rata basis. No such reduction shall (i)
reduce the securities being offered by the Company for its own
account to be included in the registration and underwriting, or (ii)
reduce the amount of securities of each selling Holder (including
its permitted transferees) included in the registration below
fifteen percent (15%) of the total amount of securities included in
such registration; provided, however, if only one Holder (including
its permitted transferees) is participating in such registration,
then such reduction shall not be below twenty percent (20%) of the
total amount of the securities included in such registration.
(b) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it
under this Section 2.3 prior to the effectiveness of such
registration whether or not any Holder has elected to include
securities in such registration. The Registration Expenses of such
withdrawn registration shall be borne by the Company in accordance
with Section 2.4 hereof.
.4 Expenses of Registration. Except as specifically provided
herein, all Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 2.2 or
any registration under Section 2.3 herein shall be borne by the
Company; provided, however, the Company shall not be required to pay
for expenses of any registration begun pursuant to Section 2.2, and
the Initiating Holder (or any permitted transferee) shall forfeit
its right to one of its requested registrations pursuant to Section
2.2, if such request were subsequently withdrawn by the Initiating
Holder, unless the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holder
was not aware at the time of such request. All Selling Expenses
incurred in connection with any registrations hereunder, shall be
borne by the holders of the securities so registered pro rata on the
basis of the number of shares so registered. If the Holders are
required to pay the Registration Expenses, such expenses shall be
borne by the holders of securities (including Registrable
Securities) requesting such registration in proportion to the number
of shares for which registration was requested.
.5 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective,
and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration
statement effective for up to one hundred twenty (120) days or, if
earlier, until the Holder or Holders have completed the distribution
related thereto.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they
may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(d) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter(s) of such
offering. Each Holder participating in such underwriting shall also
enter into and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing.
.6 Termination of Registration Rights. All registration rights
granted under this Section 2 shall terminate and be of no further
force and effect six (6) years after the date of the Company's
Initial Offering. In addition, a Holder's registration rights shall
expire if (a) such Holder (together with its affiliates, partners
and former partners) holds less than two and one-half percent (2.5%)
of the Company's outstanding Common Stock or (b) all Registrable
Securities held by and issuable to such Holder (and its affiliates,
partners and former partners) may be sold under Rule 144 during any
ninety (90) day period.
.7 Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration
as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2 or 2.3 that the
selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them and
the intended method of disposition of such securities as shall be
required to effect the registration of their Registrable Securities.
.8 Indemnification. In the event any Registrable Securities are
included in a registration statement under Sections 2.2 or 2.3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers, directors and
legal counsel of each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any Violation or alleged Violation
by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement;
and the Company will reimburse each such Holder, partner, officer,
director, legal counsel, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement
contained in this Section 2.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld, nor shall the
Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director,
legal counsel, underwriter or controlling person of such Holder;
provided further that the indemnity agreement contained in this
Section 2.8(a) with respect to any preliminary prospectus shall not
inure to the benefit of any indemnified party from whom the person
asserting any loss, claim, damage, liability or action based upon
any untrue statement or alleged untrue statement of material fact or
omission or alleged omission to state therein a material fact
purchased shares covered by such prospectus, if a copy of the
prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was corrected had not been
sent or given to such person within the time required by the
Securities Act.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the
securities as to which such registration qualifications or
compliance is being effected, indemnify and hold harmless the
Company, each of its directors, its officers, and legal counsel and
each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other
Holder's partners, directors or officers or any person who controls
such Holder, against any losses, claims, damages or liabilities
(joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other
Holder may become subject under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of
or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder
under an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and each
such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, legal
counsel, controlling person, underwriter or other Holder, or
partner, officer, director, legal counsel or controlling person of
such other Holder in connection with investigating or defending any
such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that
the indemnity agreement contained in this Section 2.8(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably
withheld; provided further, that in no event shall any indemnity
under this Section 2.8(b) exceed the proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.8 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 2.8, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if
materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified
party under this Section 2.8, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than
under this Section 2.8.
(d) If the indemnification provided for in this Section 2.8 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or
liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent
permitted by applicable law contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the Violation(s)
that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Holder
hereunder exceed the proceeds from the offering received by such
Holder.
(e) The obligations of the Company and Holders under this Section
2.8 shall survive completion of any offering of Registrable
Securities in a registration statement and the termination of this
agreement. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation.
.9 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section
2 may be assigned by a Holder to a transferee or assignee of
Registrable Securities which acquires at least one hundred and
sixty-seven thousand (167,000) shares of Registrable Securities (as
adjusted for stock splits and combinations); provided, however, (i)
the transferor shall, within ten (10) days after such transfer,
furnish to the Company written notice of the name and address of
such transferee or assignee and the securities with respect to which
such registration rights are being assigned and (ii) such transferee
shall agree to be subject to all restrictions set forth in this Agreement.
.10 Amendment of Registration Rights. Any provision of this Section
2 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
each of Proxima and Union Miniere, or provided that if either
Proxima or Union Miniere has assigned its rights hereunder with
respect to any shares of Registrable Securities, then with the
written consent of the Holder or Holders of at least sixty-six and
two-thirds percent (66-2/3%) of the Registrable Securities then
outstanding that had been originally held by Proxima or Union
Miniere. Any amendment or waiver effected in accordance with this
Section 2.11 shall be binding upon each Holder and the Company. By
acceptance of any benefits under this Article II, Holders of
Registrable Securities hereby agree to be bound by the provisions
hereunder.
.11 Limitation on Subsequent Registration Rights. After the date of
this Agreement, the Company shall not, without the prior written
consent of the Holders of sixty-six and two-thirds percent (66-2/3%)
of the Registrable Securities then outstanding, enter into any
agreement with any holder or prospective holder of any securities of
the Company that would grant such holder registration rights senior
to those granted to the Holders hereunder.
.12 Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC
which may permit the sale of the Registrable Securities to the
public without registration, the Company agrees to use its best
efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or
analogous rule promulgated under the Securities Act, at all times
after the effective date of the Initial Offering; and
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act.
SECTION 3. MISCELLANEOUS.
.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely
within California.
.2 Survival. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any
Holder and the closing of the transactions contemplated hereby. All
statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant
hereto in connection with the transactions contemplated hereby shall
be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and
administrators of the parties hereto and shall inure to the benefit
of and be enforceable by each person who shall be a holder of
Registrable Securities from time to time; provided, however, that
prior to the receipt by the Company of adequate written notice of
the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the
person listed as the holder of such shares in its records as the
absolute owner and holder of such shares for all purposes, including
the payment of dividends or any redemption price.
.4 Entire Agreement. This Agreement, the Exhibits and Schedules
hereto, the Purchase Agreement and the other documents delivered
pursuant thereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and
no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
.5 Severability. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
.6 Delays Or Omissions. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon
any breach, default or noncompliance of the Company under this
Agreement shall impair any such right, power, or remedy, nor shall
it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar
breach, default or noncompliance thereafter occurring. It is
further agreed that any waiver, permit, consent, or approval of any
kind or character on any Holder's part of any breach, default or
noncompliance under the Agreement or any waiver on such Holder's
part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement,
by law, or otherwise afforded to Holders, shall be cumulative and
not alternative.
.7 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed
telex or facsimile if sent during normal business hours of the
recipient; if not, then on the next business day, (c) five (5) days
after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications
shall be sent to the party to be notified at the address as set
forth on the signature pages hereof or Exhibit A hereto or at such
other address as such party may designate by ten (10) days advance
written notice to the other parties hereto.
.8 Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
REGISTRATION RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
THE COMPANY:
LASER POWER CORPORATION
By: /s/ Glenn H. Sherman
Title: Chairman and Chief Executive Officer
THE HOLDERS:
PROXIMA CORPORATION
By:
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Title:
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UNION MINIERE INC.
By:
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Title:
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